PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
COMMISSION FILE NUMBER 1-5046
CONSOLIDATED FREIGHTWAYS, INC.
Incorporated in the State of Delaware
I.R.S. Employer Identification No. 94-1444798
3240 Hillview Avenue, Palo Alto, California 94304
Telephone Number (415) 494-2900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes xx No
Number of shares of Common Stock, $.625 par value,
outstanding as of July 31, 1996: 44,019,740
PAGE 2
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-Q
Quarter Ended June 30, 1996
___________________________________________________________________________
___________________________________________________________________________
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 3
Statements of Consolidated Income -
Three and Six Months Ended
June 30, 1996 and 1995 5
Statements of Consolidated Cash Flows -
Six Months Ended June 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
PAGE 3
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
(Dollars in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 123,064 $ 86,345
Trade accounts receivable, net of
allowances 792,044 762,134
Other accounts receivable 33,111 53,784
Operating supplies, at lower of average
cost or market 39,524 45,890
Prepaid expenses 82,628 69,374
Deferred income taxes 134,044 134,035
Total Current Assets 1,204,415 1,151,562
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 181,475 177,614
Buildings and improvements 582,898 562,760
Revenue equipment 1,109,522 1,073,505
Other equipment and leasehold improvements 404,268 377,644
2,278,163 2,191,523
Accumulated depreciation and amortization (1,146,027) (1,115,538)
1,132,136 1,075,985
OTHER ASSETS
Restricted funds 11,306 11,189
Deposits and other assets 98,808 88,573
Unamortized aircraft maintenance, net 125,918 114,636
Costs in excess of net assets of businesses
acquired, net of accumulated amortization 303,585 308,141
539,617 522,539
TOTAL ASSETS $2,876,168 $2,750,086
The accompanying notes are an integral part of these statements.
PAGE 4
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 287,216 $ 269,203
Accrued liabilities 494,139 474,028
Accrued claims costs 163,350 150,643
Current maturities of long-term debt and
capital leases 3,216 2,412
Short-term borrowings 122,000 50,000
Federal and other income taxes 6,586 12,938
Total Current Liabilities 1,076,507 959,224
LONG-TERM LIABILITIES
Long-term debt and guarantees 381,419 384,545
Long-term obligations under capital leases 110,931 110,965
Accrued claims costs 162,117 166,442
Employee benefits 246,515 236,131
Other liabilities and deferred credits 96,596 93,685
Deferred income taxes 78,090 76,734
Total Liabilities 2,152,175 2,027,726
SHAREHOLDERS' EQUITY
Preferred stock, no par value; authorized
5,000,000 shares:
Series B, 8.5% cumulative, convertible,
$.01 stated value; designated
1,100,000 shares; issued 946,301 and
954,412 shares, respectively 9 10
Additional paid-in capital, preferred stock 143,923 145,156
Deferred TASP compensation (111,899) (114,896)
Total Preferred Shareholders' Equity 32,033 30,270
Common stock, $.625 par value; authorized
100,000,000 shares; issued 51,512,452
and 51,451,490 shares, respectively 32,196 32,157
Additional paid-in capital, common stock 240,602 239,696
Cumulative translation adjustment (760) (2,028)
Retained earnings 604,820 608,399
Cost of repurchased common stock
(7,499,035 and 7,549,174 shares,
respectively) (184,898) (186,134)
Total Common Shareholders' Equity 691,960 692,090
Total Shareholders' Equity 723,993 722,360
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,876,168 $2,750,086
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
PAGE 5
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
<S> 1996 1995 1996 1995
REVENUES <C> <C> <C> <C>
CF MotorFreight $ 608,149 $ 599,092 $ 1,181,583 $ 1,207,517
Con-Way Transportation Services 316,653 288,122 618,494 563,012
Emery Worldwide 476,329 433,372 922,928 846,144
1,401,131 1,320,586 2,723,005 2,616,673
COSTS AND EXPENSES
CF MotorFreight
Operating Expenses 538,089 519,416 1,054,520 1,041,695
Selling and Administrative Expenses 63,516 60,809 125,273 120,141
Depreciation 16,209 16,539 32,682 33,230
617,814 596,764 1,212,475 1,195,066
Con-Way Transportation Services
Operating Expenses 233,433 216,338 463,485 419,878
Selling and Administrative Expenses 40,668 33,841 80,719 67,060
Depreciation 12,547 9,705 23,901 18,988
286,648 259,884 568,105 505,926
Emery Worldwide
Operating Expenses 383,698 353,459 749,401 692,634
Selling and Administrative Expenses 66,174 55,548 128,022 109,486
Depreciation 7,807 6,711 15,355 13,308
457,679 415,718 892,778 815,428
1,362,141 1,272,366 2,673,358 2,516,420
OPERATING INCOME (LOSS)
CF MotorFreight (9,665) 2,328 (30,892) 12,451
Con-Way Transportation Services 30,005 28,238 50,389 57,086
Emery Worldwide 18,650 17,654 30,150 30,716
38,990 48,220 49,647 100,253
OTHER INCOME (EXPENSE)
Investment income 145 397 223 522
Interest expense (10,086) (8,217) (19,990) (15,418)
Miscellaneous, net (598) 762 (886) 556
(10,539) (7,058) (20,653) (14,340)
Income Before Income Taxes 28,451 41,162 28,994 85,913
Income Taxes 14,795 18,935 15,058 39,520
Net Income 13,656 22,227 13,936 46,393
Preferred Stock Dividends 2,183 2,141 4,317 6,465
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 11,473 $ 20,086 $ 9,619 $ 39,928
Primary average shares outstanding (1) 44,876,168 44,390,346 44,898,563 44,276,122
PRIMARY EARNINGS PER SHARE $ 0.26 $ 0.45 $ 0.21 $ 0.95
FULLY DILUTED EARNINGS PER SHARE $ 0.24 $ 0.42 $ 0.21 $ 0.89
<FN>
(1) Includes the dilutive effect of stock options.
The accompanying notes are an integral part of these statements.
</TABLE>
PAGE 6
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
Six Months Ended
June 30,
1996 1995
(Dollars in thousands)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD $ 86,345 $ 95,711
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 13,936 46,393
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 77,854 71,039
Increase in deferred income taxes 1,853 4,275
Gains from property disposals, net (1,226) (821)
Changes in assets and liabilities:
Receivables (9,237) (43,856)
Prepaid expenses (13,254) (15,703)
Accounts payable 18,013 12,963
Accrued claims costs 8,382 64
Income taxes (6,352) 5,700
Incentive compensation 1,338 (25,093)
Accrued liabilities and other 13,995 16,118
Net Cash Provided by Operating Activities 105,302 71,079
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (129,785) (162,475)
Proceeds from sales of property 5,576 4,347
Net Cash Used by Investing Activities (124,209) (158,128)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt -- 98,890
Repayment of long-term debt and capital
lease obligations (2,356) (1,884)
Net borrowings under revolving lines of credit 72,000 8,000
Proceeds from issuance of common stock 948 2,402
Payments of common dividends (8,796) (7,982)
Payments of preferred dividends (6,170) (8,431)
Net Cash Provided by Financing Activities 55,626 90,995
Increase in Cash and Cash Equivalents 36,719 3,946
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 123,064 $ 99,657
The accompanying notes are an integral part of these statements.
PAGE 7
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements of Consolidated
Freightways, Inc. and subsidiaries (the Company) have been prepared by the
Company, without audit by independent public accountants, pursuant to the
rules and regulations of the Securities and Exchange Commission. In the
opinion of management, the consolidated financial statements include all
normal recurring adjustments necessary to present fairly the information
required to be set forth therein. Certain information and note disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
from these statements pursuant to such rules and regulations and,
accordingly, should be read in conjunction with the consolidated financial
statements included in the Company's 1995 Annual Report to Shareholders.
There have been no significant changes in the accounting policies of
the Company. There were no significant changes in the Company's
commitments and contingencies as previously described in the 1995 Annual
Report to Shareholders and related annual report to the Securities and
Exchange Commission on Form 10-K.
2. The Company and its subsidiaries are defendants in various lawsuits
incidental to their businesses. It is the opinion of management that the
ultimate outcome of these actions will not have a material adverse effect
on the Company's consolidated financial position or results of operations.
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's second quarter and six months revenues increased 6.1% and
4.1%, respectively, compared with the same periods in the prior year.
Second quarter revenues increased at all three operating units while the
six-month revenue increase came from Con-Way Transportation Services (Con-
Way) and Emery Worldwide which offset slightly lower six month revenues at
CF MotorFreight (CFMF). Much of the first half revenue increase came from
a late second quarter surge of business as the first quarter of 1996
yielded only a marginal improvement over the prior year.
Operating income for the second quarter was down 19.1% from the prior year
while the six-month operating income was down 50.5%. Operating income for
the second quarter was up at both Con-Way and Emery. CFMF had an operating
loss for both the quarter and six months ended June 30, 1996 compared to
operating income in the same periods in the prior year. Despite the
decline in operating income compared to the prior year, second quarter
operating income increased $28.3 million from the first quarter of 1996
reflecting reduced operating losses at CFMF and an improved business
environment.
PAGE 8
Other expense, net increased for the second quarter and first half of the
year compared to the same periods in the prior year due primarily to
increased interest expense on additional borrowings under the Company's
unsecured credit facilities and on the $100 million 7.35% Notes issued in
June of 1995.
The effective income tax rate for both the second quarter and first six
months of 1996 increased to approximately 52% from 46% in the respective
periods in the prior year as a result of a relatively higher proportion of
non-deductible items to taxable income compared with the prior year.
Significant variations in segment revenues and operating income are as
follows.
CF MOTORFREIGHT
CFMF second quarter revenues increased 1.5% from the prior year while six
month revenues were down 2.2%. Tonnage for the quarter and six months was
down 2.4% and 7.2%, respectively, with less-than-truckload (LTL) tonnage
down .5% for the quarter and 4.4% for the six months compared to last year.
Since the implementation of its freight flow improvement plan, Business
Accelerator System (BAS), in the fourth quarter of 1995, much of the
revenue improvement from the fourth quarter is a result of continued
restoration of volumes by way of increased customer acceptance of the
improved service. Also contributing to improved revenues for the quarter
are increased revenues from the operations of Menlo Logistics which are
combined with CFMF for reporting purposes.
The operating loss for the second quarter was $9.7 million compared to
operating income of $2.3 million for the second quarter of 1995, but
improved by $11.6 million compared to the first quarter of 1996. The first
half of 1996 operating loss was $30.9 million compared to operating income
of $12.5 million for the same period last year. Improved system
utilization in the second quarter contributed to reduced operating losses
compared with the previous two quarters. The losses in the second quarter
were due in part to higher fuel costs of about $3 million and a 3.5%
contractual labor wage and benefit increase beginning April 1, 1996.
Included in operating results of CFMF is operating income from Canadian
subsidiaries and Menlo Logistics totaling $5.9 million in the second
quarter and $9.5 million in the six-month period compared with $3.2 million
and $6.5 million in the respective periods in the prior year.
Since the implementation of BAS, management has steadily increased the
system utilization with increased volumes and has reduced costs by
increasing dock and city pickup and delivery productivity. Achieving
improved results of operations is dependent on continuing the restoration
of business levels lost during implementation of BAS to fully utilize the
freight flow system and further improve productivity and cost controls
throughout the operation. Management strategies are focused on achieving
improved results of operations by improving customer confidence in BAS with
superior service while continuing programs to reduce costs in the system.
PAGE 9
CON-WAY TRANSPORTATION SERVICES
Con-Way second quarter revenues increased 9.9% compared with the same
period in the prior year as did the revenues for the first half of 1996.
Tonnage was up 8.7% in the quarter and 6.6% for the six-month period
compared to the same periods in the prior year with LTL tonnage up 5.5% and
5.8% for the respective periods. Despite continued rate discounting by
competitors attempting to capture market share, revenue improvements were
almost equally attributable to both increased weight and higher rate levels
compared with the prior year periods.
Operating income for the second quarter increased 6.3% from the prior year
quarter while operating income in the six months ended June 30 was down
11.7%. The second quarter operating income improved in part by not
sacrificing rates to achieve greater tonnage growth. Payroll and fuel
cost increases were more than offset by improved volumes, improved system
utilization in new markets and other operating efficiencies. Fuel costs
were up approximately $2 million and $3 million for the second quarter and
first six months of 1996, respectively, compared to the prior year.
Con-Way management intends to continue with the strategies that yielded
improvements during the second quarter of the year. These strategies
include seeking to maintain pricing levels commensurate with Con-Way's
superior service levels, aggressive marketing programs emphasizing a full
complement of service offerings and continued emphasis on cost reductions.
EMERY WORLDWIDE
Emery second quarter revenues increased 9.9% from the prior year quarter
and six-month revenues increased 9.1% over the prior year. Most of the
revenue increase was caused by strong second quarter growth in domestic
revenues while international revenues increased less year-to-year because
of lower increases in US imports and volumes in Europe. The domestic and
international weight increases for the quarter were 17.0% and 9.3%,
respectively, and the domestic and international increases for the six
months ended June 30 were 13.7% and 10.5%, respectively, in each case
compared to the same periods in 1995. For both periods, rates were down
about 3% compared to the corresponding 1995 periods.
Operating income for the second quarter increased 5.6% compared to the
second quarter last year and six-month operating income declined 1.8% from
the same period in the prior year. Operating income improved in the quarter
because of increased revenues, reductions in airhaul and terminal costs and
improved utilization of the freight system after a slow start in the first
quarter. Both the quarter and six-month periods were adversely affected by
higher fuel costs of $4.1 million and $8.0 million, respectively, which
were offset by the absence of cargo excise taxes of about $4.0 million and
$7.0 million, respectively.
PAGE 10
Emery management continues to work toward improving revenue with expansions
of service offerings that provide more time-definite and new express
services, including an array of North American service offerings and new
European and Asian services to meet customer demands. These enhancements
include a new guaranteed 09:30 Service, Time-Definite Deferred Service and
expanded regional hub network. Management is also continuing efforts to
reduce international airhaul and agent costs as well as improve utilization
of its domestic freight system, efforts that contributed to improved
results in the second quarter of 1996. Although fuel costs began to
decline in the second quarter and into July of 1996, management anticipates
a reinstatement of the cargo excise tax in August that will offset some of
the fuel cost savings.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had $123.1 million in cash and cash
equivalents. Net cash flow from operations during the first half of 1996 of
$105.3 million was primarily the result of income from operations and
depreciation and amortization. Capital expenditures for the six months
ended June 30, 1996, were $129.8 million, a decrease of $32.7 million from
the same period in 1995. Debt repayment and preferred dividend requirements
during the first half of 1996 were $8.5 million. The Company borrowed
$72.0 million under various bank lines to finance its obligations bringing
the total borrowings under unsecured lines of credit to $122.0 million.
The Company intends to fund the remaining capital expenditure requirements
for the year with cash from operations supplemented by financing arrangements.
At June 30, 1996, $113.9 million of letters of credit were outstanding
under the Company's $300 million unsecured credit facility. In addition,
$77.6 million of letters of credit were outstanding and secured with Emery
receivables under the $100 million Emery receivables sale facility. Also at
June 30, 1996, $40.4 million of letters of credit were outstanding under
several unsecured letter of credit facilities. Under the above facilities
and other offered lines of credit, the Company has $157.3 million available
for additional borrowings and letter of credit needs.
OTHER
The Company's operations necessitate the storage of fuel in underground
tanks as well as the disposal of substances regulated by various federal
and state laws. The Company adheres to a stringent site-by-site tank
testing and maintenance program performed by qualified independent parties
to protect the environment and comply with regulations. Where clean-up is
necessary, the Company takes appropriate action.
Certain statements included herein constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and are subject to a number of risks and uncertainties. In
that regard, the following factors, among others, could cause actual
results and other matters to differ materially from those in such
statements: changes in general business and economic conditions; increasing
domestic and international competition and pricing pressure; changes in
fuel prices; uncertainty regarding the Company's ability to improve results
of operations through, among other things, implementation of BAS at CFMF;
PAGE 11
labor matters, including changes in labor costs, renegotiation of labor
contracts and the risk of work stoppages or strikes; changes in
governmental regulation; and environmental and tax matters. As a result of
the foregoing, no assurance can be given as to future results of operations
or financial condition.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
As previously reported, the Company has been designated a Potentially
Responsible Party by the Environmental Protection Agency with respect to
the disposal of hazardous substances at various sites. The Company expects
its share of the total cleanup costs of all sites will not have a material
adverse effect on its consolidated financial position or results of
operations. Certain legal matters are discussed in Note 2 in the Notes to
Consolidated Financial Statements in Part I of this form.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
10.1 Consolidated Freightways, Inc. Special Bonus Plan for 1996.
(11) Computation of Per Share Earnings
(12) Computation of Ratios of Earnings to Fixed Charges
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
PAGE 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company (Registrant) has duly caused this Form
10-Q Quarterly Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Consolidated Freightways, Inc.
(Registrant)
August 12, 1996 /s/Gregory L. Quesnel
Gregory L. Quesnel
Executive Vice President and
Chief Financial Officer
August 12, 1996 /s/Gary D. Taliaferro
Gary D. Taliaferro
Vice President and Controller
Exhibit 10.1
CONSOLIDATED FREIGHTWAYS, INC.
SPECIAL BONUS PLAN FOR 1996
THE PLAN
In order to motivate certain key employees more effectively,
Consolidated Freightways, Inc. (CF, Inc.) establishes a Special
Bonus Plan for 1996 (Plan) under which payments will be made to
designated executive personnel out of calendar year 1996 profits.
DESIGNATION OF PARTICIPANTS
Participants in this Plan shall be designated full-time executive
personnel of CF, Inc. subsidiaries. A master list of all Plan
participants will be maintained in the office of the Chief
Financial Officer of CF, Inc.
METHOD OF PAYMENT
Each Plan participant will be assigned specific Operating Profit
Ratio (O/R) performance goals.
Compensation for the assigned goals will be earned on a pro rata
basis for accomplishments between the Minimum level and the
Target O/R Goal. No special 1996 bonus will be earned by a
participant until the Minimum O/R Goal is achieved.
For 1996, payments under this Plan are limited to 50 percent of
each participant's annual compensation.
OPERATING RATIO
Operating Ratio is defined as: 1) operating expense before taxes,
interest and non-operating expenses, but, including all amounts
expensed under any qualified incentive and bonus plans; divided
by 2) net revenue. Since this Plan begins on July 1, 1996,
results for the third and fourth quarter only will be used.
ANNUAL COMPENSATION
Annual Compensation for Bonus Plan purposes for each Plan
participant is annualized salary (ie. weekly base salary as of
July 1, 1996 multiplied by 52) excluding any incentive or other
special compensation as of the first pay period following the
date the participant becomes eligible to participate in this
Plan. The term "special compensation" used herein includes
deferred salary arrangements wherein the participant could have
chosen to receive the deferred salary in the Plan year.
ELIGIBILITY FOR PAYMENT
Eligible employees will commence participation on July 1, 1996.
An employee who commences participation after the July 1 date
will receive a pro rata payment based on the number of full
calendar quarters of Plan participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently ( i) employed by
Consolidated Freightways, Inc. or any of its subsidiaries and
(ii) a Plan participant.
EXCEPTION 1. A Plan participant who is employed by CF,
Inc. or any of its subsidiaries through December 31, 1996
but leaves that employment or otherwise becomes ineligible
after December 31, 1996 but before the final payment is made
relating to 1996, unless terminated for cause, shall be
entitled to receive payments under this Plan resulting from
1996 Incentive Profits.
EXCEPTION 2. An appropriate pro rata payment will be made
(1) to a Plan participant who retires prior to December 31,
1996 pursuant to the Consolidated Freightways, Inc.
Retirement Plan or to the provisions of the Social Security
Act and who, at the time of retirement, was an eligible
participant in this Plan, (2) to the heirs, legatees,
administrators or executors of a Plan participant who dies
prior to December 31, 1996 and who, at the time of death,
was an eligible participant in this Plan, (3) to an eligible
Plan participant who is placed on an approved Medical,
Sabbatical, or Military Leave of Absence prior to December
31, 1996, or (4) to an eligible Plan participant who is
transferred to another subsidiary of CF, Inc. and who
remains an employee through December 31, 1996.
DATE OF PAYMENT
The Chief Executive Officer of CF, Inc. will select a date for
payment to eligible participants. Such date will be no later
than March 15, 1997.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is
prohibited by law.
AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN
The Compensation Committee of the Board of Directors of CF, Inc.
may at any time amend, suspend, or terminate the operation of
this Plan, by thirty-day written notice to the Plan participants,
and will have full discretion as to the administration and
interpretation of this Plan. No participant in this Plan shall
have any right to receive any payment under this Plan until the
date for payment.
DURATION OF PLAN
This Plan is effective from July 1, 1996 through December 31,
1996 only.
<TABLE>
Exhibit 11
<CAPTION>
COMPUTATION OF PER SHARE EARNINGS
The following is the computation of fully-diluted earnings per share:
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Dollars in thousands except per share data)
<S> <C> <C> <C> <C>
Net income available to common shareholders $ 11,473 $ 20,086 $ 9,619 $ 39,928
Non-discretionary adjustments under
the if-converted method:
Addback: Series C, preferred dividends - - - 2,207
Addback: Series B, preferred dividends,
net of tax benefits 2,183 2,141 4,317 4,258
Less: Replacement of funding
adjustment, net of tax benefits (1) (1,633) (1,655) (3,301) (3,286)
Net income available to common shareholders $ 12,023 $ 20,572 $ 10,635 $ 43,107
WEIGHTED AVERAGE SHARES OUTSTANDING:
Common shares 44,004,494 43,417,331 43,976,483 43,346,424
Equivalents - stock options 871,674 973,015 922,080 929,698
Series B, Preferred stock
if-converted method 4,473,885 4,364,104 4,473,885 4,364,104
49,350,053 48,754,450 49,372,448 48,640,226
FULLY DILUTED EARNINGS PER SHARE (2) $ 0.24 $ 0.42 $ 0.22 $ 0.89
<FN>
(1) Additional payment to the Company's Thrift and Stock Plan to replace the funding lost under the if-converted method.
(2) Fully diluted earnings per share was reported at $.21 per share on the Statement of Consolidated Income for the six
months ended June 30, 1996, as this computation indicates that the items included under the if-converted method
were anti-dilutive.
</TABLE>
<TABLE> Exhibit 12
<CAPTION>
CONSOLIDATED FREIGHTWAYS, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Six Months Ended
June 30, Year Ended December 31,
1996 1995 1995 1994 1993 1992 1991
(Dollars in thousands)
<S>
Fixed Charges: <C> <C> <C> <C> <C> <C> <C>
Interest Expense $ 19,990 $ 15,418 $ 34,325 $ 27,945 $ 30,333 $ 38,893 $ 46,703
Capitalized Interest 1,201 475 1,092 1,042 1,224 543 1,703
Preferred Dividends 6,170 6,224 12,419 12,475 12,551 12,618 12,691
Total Interest 27,361 22,117 47,836 41,462 44,108 52,054 61,097
Interest Component of
Rental Expense 35,293 37,429 73,004 62,304 57,585 55,773 58,052
Total Fixed Charges 62,654 59,546 120,840 103,766 101,693 107,827 119,149
Less:
Capitalized Interest 1,201 475 1,092 1,042 1,224 543 1,703
Preferred Dividends 6,170 6,224 12,419 12,475 12,551 12,618 12,691
Net Fixed Charges $ 55,283 $ 52,847 $ 107,329 $ 90,249 $ 87,918 $ 94,666 $ 104,755
Earnings:
Income (Loss)
Before Income Taxes $ 28,994 $ 85,913 $ 110,873 $ 111,920 $ 91,441 $ (10,733) $ (43,337)
Add: Net Fixed
Charges 55,283 52,847 107,329 90,249 87,918 94,666 104,755
Total Earnings $ 84,277 $ 138,760 $ 218,202 $ 202,169 $ 179,359 $ 83,933 $ 61,418
Ratio of Earnings to
Fixed Charges:
Total Earnings $ 84,277 $ 138,760 $ 218,202 $ 202,169 $ 179,359 $ 83,933 $ 61,418
Fixed Charges (1) 62,654 59,546 120,840 103,766 101,693 107,827 119,149
Ratio 1.3 x 2.3 x 1.8 x 1.9 x 1.8 x 0.8 x(2) 0.5X(2)
(1) Fixed Charges represent interest on capital leases and short-term and long-term debt, capitalized interest,
dividends on shares of the Series B Cumulative Convertible Preferred Stock used to pay debt service on notes
issued by the Company's Thrift and Stock Plan and the applicable portion of the consolidated rent expense
which approximates the interest portion of lease payments.
(2) Earnings were inadequate to cover fixed charges for the periods shown; the deficiency was $23.9 million
and $57.7 million for the years ended December 31, 1992 and 1991, respectively.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 123,064
<SECURITIES> 0
<RECEIVABLES> 816,750
<ALLOWANCES> (24,706)
<INVENTORY> 39,524
<CURRENT-ASSETS> 1,204,415
<PP&E> 2,278,163
<DEPRECIATION> (1,146,027)
<TOTAL-ASSETS> 2,876,168
<CURRENT-LIABILITIES> 1,076,507
<BONDS> 492,350
0
143,932
<COMMON> 272,798
<OTHER-SE> 307,263
<TOTAL-LIABILITY-AND-EQUITY> 2,876,168
<SALES> 0
<TOTAL-REVENUES> 2,723,005
<CGS> 0
<TOTAL-COSTS> 2,673,358
<OTHER-EXPENSES> 20,653
<LOSS-PROVISION> 3,059
<INTEREST-EXPENSE> 19,990
<INCOME-PRETAX> 28,994
<INCOME-TAX> 15,058
<INCOME-CONTINUING> 13,936
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,619
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
