<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 17, 1995
Commission File No. 1-8441
WORLDWAY CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1349996
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 YORKMONT ROAD, SUITE 400
CHARLOTTE, NORTH CAROLINA 28217
--------------------------------
(Address of principal executive office)
(704) 329-0123
--------------
(Registrant's telephone number, including area code)
CAROLINA FREIGHT CORPORATION
----------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
COMMON STOCK, $.50 PAR VALUE 6,561,672
------------------------------- ------------------------------
Class Outstanding at June 17, 1995
<PAGE> 2
WORLDWAY CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Part I. Financial Information:
---------------------
Item 1: Financial Statements
Consolidated Condensed Statements of Earnings--
Twelve and Twenty-four Weeks Ended June 17, 1995 and June 18, 1994 2
Consolidated Balance Sheets--
June 17, 1995 and June 18, 1994 3-4
Consolidated Statements of Cash Flows--
Twenty-four Weeks June 17, 1995 and June 18, 1994 5
Notes to Consolidated Condensed Financial Statements 6
Item 2: Management's Discussion and Analysis 7-9
Part II. Other Information 10
</TABLE>
<PAGE> 3
PART 1: ITEM 1. FINANCIAL INFORMATION
WORLDWAY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Twelve and Twenty-four Weeks Ended June 17, 1995 and June 18, 1994
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in Thousands, except share data)
Twelve Weeks Ended Twenty-four Weeks Ended
-------------------- -----------------------
June 17, June 18, June 17, June 18,
1995 1994 1995 1994
-------------------- --------------------
<S> <C> <C> <C> <C>
Operating revenue $182,823 $263,203 $374,160 $455,833
-------------------- --------------------
Operating expenses:
Employee compensation 119,370 148,916 241,293 271,607
Purchased transportation 27,529 39,428 54,220 62,068
Fuel and fuel taxes 9,530 11,728 19,686 22,399
Tires, repair parts and other operating supplies 10,369 10,945 20,770 20,576
Depreciation and amortization 7,760 8,080 15,688 16,189
Insurance premiums and claims 5,424 7,351 11,199 12,957
Communications and utilities 2,747 2,906 5,603 5,647
Operating taxes and licenses 2,810 2,877 5,674 5,638
Equipment and building rents 1,661 1,303 2,991 2,535
Gain on disposition of operating assets (1,149) (97) (5,485) (148)
General supplies and expenses 11,781 10,792 22,227 19,313
-------------------- --------------------
Total operating expenses 197,832 244,229 393,866 438,781
-------------------- --------------------
Earnings from operations (15,009) 18,974 (19,706) 17,052
Interest and other expense, net 2,891 2,933 5,550 5,336
-------------------- --------------------
Earnings (Loss) before income taxes (17,900) 16,041 (25,256) 11,716
Income tax (benefit) (6,537) 6,401 (9,047) 4,994
-------------------- --------------------
Net earnings (loss) before cumulative effect of change in
accounting principle (11,363) 9,640 (16,209) 6,722
Cumulative effect of change in accounting principle - - - (1,222)
-------------------- --------------------
Net earnings (loss) ($11,363) $9,640 ($16,209) $5,500
==================== ====================
Earnings (Loss) per share before cumulative
effect of change in accounting principle ($1.73) $1.46 ($2.47) $1.02
Cumulative effect of change in
accounting principle - - - ($0.19)
Earnings (Loss) per share ($1.73) $1.46 ($2.47) $0.83
Average common stock and common stock
equivalent shares outstanding 6,564,710 6,561,672 6,569,466 6,561,672
Cash dividends per common share $0.00 $0.00 $0.00 $0.00
</TABLE>
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<PAGE> 4
WORLDWAY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
June 17, December 31,
1995 1994
-------------------------
<S> <C> <C>
Assets
-------
Current assets:
Cash $ 1,837 $4,710
Temporary investments 2,150 5,011
Investments restricted under letter of credit arrangements
(at cost, which approximates market) 1,249 1,383
Customer and interline receivables, net 19,998 16,924
Customer receivables held by trust, net 24,878 38,782
Other receivables, net 17,725 13,260
Reinsurance balances receivable 10,729 12,149
Prepayments -
Tires on equipment in use 12,635 12,869
Other 12,978 6,871
Inventories of operating supplies 2,040 2,882
-----------------------
Total current assets 106,219 114,841
-----------------------
Plant and equipment, at cost:
Revenue and service equipment 251,026 260,378
Land and structures 165,036 180,706
Other equipment 66,408 63,947
Leasehold improvements 2,319 2,048
-----------------------
484,789 507,079
Less - accumulated depreciation and amortization (266,774) (275,145)
-----------------------
Net plant and equipment 218,015 231,934
-----------------------
Investments restricted under letter of credit arrangements
(at cost, which approximates market) 7,675 8,492
Other assets 16,167 15,047
-----------------------
$348,076 $370,314
=======================
</TABLE>
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<PAGE> 5
WORLDWAY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
June 17, December 31,
1995 1994
-----------------------
<S> <C> <C>
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 35,190 $ 34,525
Accrued wages, salaries and vacation pay 37,289 36,114
Claims and insurance accruals 24,735 31,860
Income taxes
Current (7,978) 1,439
Deferred 0 -
Other payables and accrued expenses 13,177 13,779
Current maturities of long-term debt 3,448 3,206
-----------------------
Total current liabilities 105,861 120,923
-----------------------
Long-term debt:
6 1/4% Convertible Subordinated Debentures, due 2011 49,994 49,994
Other long-term debt 19,669 18,283
-----------------------
Total long-term debt 69,663 68,277
-----------------------
Reserves and Deferred Credits:
Income taxes 17,656 17,779
Other deferred liabilities 8,557 7,813
Insurance claims 34,246 27,176
-----------------------
Total reserves and deferred credits 60,459 52,768
-----------------------
Stockholders' equity:
Preferred stock, $100 par value, 4% cumulative, authorized
25,000 shares, outstanding 22,112 shares 2,211 2,211
Common stock, $.50 par value, authorized 20,000,000
shares, outstanding 6,561,672 in 1995 and 1994 3,281 3,281
Paid-in capital 44,393 44,393
Retained earnings 62,208 78,461
-----------------------
Total stockholders' equity 112,093 128,346
-----------------------
$348,076 $370,314
=======================
</TABLE>
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<PAGE> 6
WORLDWAY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twenty-four Weeks Ended June 17, 1995 and June 18, 1994
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in Thousands)
Twenty-four Weeks Ended
-----------------------
June 17, June 18,
1995 1994
--------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) ($16,209) $ 5,500
Noncash items included in income:
Depreciation and amortization 15,688 16,189
Deferred income taxes (123) (5,919)
(Increase) Decrease in customer and interline receivables 10,830 (29,996)
Increase (Decrease) in accounts payable 665 18,552
Increase (Decrease) in claims payable and insurance accruals (54) 7,489
Net increase (decrease) in other working capital items (15,537) 14,965
Other, net (6,141) (4,068)
--------------------
Net cash provided by (used for) operating activities (10,881) 22,712
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of plant and equipment:
Revenue and service equipment (10,069) (5,259)
Land and structures (2,079) (1,072)
Other equipment and leasehold improvements (3,429) (1,343)
Proceeds from disposal of plant and equipment 20,389 1,469
--------------------
Net cash used for investing activities 4,812 (6,205)
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 1,666 15
Repayment of long-term debt (2,537) (4,112)
Net proceeds from (repayments of) revolving credit agreement 2,500 -
Common stock issued - -
Dividends on common and preferred stock (44) (44)
--------------------
Net cash provided by financing activities 1,585 (4,141)
--------------------
NET INCREASE IN CASH AND TEMPORARY INVESTMENTS (4,484) 12,366
CASH AND TEMPORARY INVESTMENTS AT BEGINNING OF YEAR 9,721 6,502
--------------------
CASH AND TEMPORARY INVESTMENTS AT END OF QUARTER $ 5,237 $ 18,868
====================
</TABLE>
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<PAGE> 7
WORLDWAY CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The accompanying consolidated condensed financial statements contain all
adjustments and eliminations which, in the opinion of management, are necessary
to present fairly the results of operations for the twelve and twenty-four
weeks ended June 17, 1995 and June 18, 1994, the financial position as of June
17, 1995 and December 31, 1994, and the cash flows for the twenty-four weeks
ended June 17, 1995 and June 18, 1994.
During the first quarter of 1994, the Securities and Exchange Commission issued
a new directive to publicly held corporations regarding the discount rates used
on reserves reported in the liabilities section of their balance sheets. This
directive requires that the discount rates used to reduce these obligations to
their present value be stated at a "risk free" rate. The effect of this change
is to reduce the discount rates used in computing the reserves on the
consolidated balance sheet of WorldWay Corporation from 7% to risk free rates.
The effect of this change is shown as a change in accounting principle of
$1,222,000 on the consolidated statement of earnings.
6
<PAGE> 8
PART I: ITEM 2. FINANCIAL INFORMATION
WORLDWAY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Revenue for the second quarter of 1995 was $182,823,000 as compared to
$263,203,000 for the second quarter of 1994. The Company incurred a net loss
in the second quarter of $11,363,000 or $1.73 per share versus net income of
$9,640,000 or $1.32 for the same time period in 1994. Results for the second
quarter of 1995 were adversely impacted by non-recurring costs associated with
the conversion of Carolina Freight Carriers Corporation to a Metropolitan and
Regional Distribution Center freight flow system along with a slowing economy.
Results for the second quarter of 1994 were positively impacted by a
significant increase in freight volumes in our less-than-truckload subsidiaries
due to the 24 day Teamsters strike. Carolina Freight Carriers Corporation and
Red Arrow Freight Lines, Inc., the Company's two unionized subsidiaries,
avoided the work stoppage by signing an interim agreement with the
International Brotherhood of Teamsters.
Year-to-date, the Company had revenue of $374,160,000 as compared to first half
1994 revenue of $455,833,000. Through the second quarter the Company recorded
a cumulative net loss of $16,209,000 or $2.47 per share; during the same time
period in 1994 the Company reported net income of $5,500,000 or $.83 per share.
The Company's fiscal year consists of three 12-week quarters and a final
16-week quarter.
During the second quarter of 1995, all of the Company's subsidiaries
experienced increased pricing competition, increased cost pressures, and
slowing freight volumes as a result of a decline in the national economy. The
largest impact of this economic slowdown occurred in the Company's
less-than-truckload (LTL) subsidiaries, which on a combined basis experienced a
4.9% decline in tonnage and a 4.7% decline in shipments versus the first
quarter of 1995.
Carolina Freight Carriers Corporation continued to incur significant
non-recurring costs associated with its conversion to a Metropolitan and
Regional Distribution Center freight flow system in the second quarter. The
Company estimates the impact of the primary cost categories as follows:
<TABLE>
<S> <C>
1. Lost productivity $ 1,650,000
2. Cost of hiring and training for new employees $ 650,000
3. Employee relocation cost $ 500,000
4. Other $ 900,000
-----------
$ 3,700,000
===========
</TABLE>
A majority of the non-recurring costs associated with the MRDC system were
incurred in the first half of 1995. On July 17, 1995, the final major
operational changes associated with the MRDC conversion were completed.
7
<PAGE> 9
As has been previously reported, the Company entered into an Agreement and
Plan of Merger with Arkansas Best Corporation and one of its subsidiaries, ABC
Acquisition Corporation, which provides for the acquisition of the Company's
common stock at a price of $11.00 per share in cash. Under the terms of the
Agreement, ABC Acquisition has commenced a tender offer for all outstanding
shares of the Company's common stock at $11.00 per share. Subject to
successful completion of the tender offer, and satisfaction of certain
conditions in the Agreement, ABC Acquisition will be merged into the Company
and all shares not purchased in the tender offer (other than shares held by
Arkansas Best Corporation, or the Company, or any of their respective
subsidiaries, or dissenting shareholders) will be converted into the right to
receive $11.00 per share in cash in the merger. Information regarding the
tender offer and merger has been distributed to all shareholders.
The shareholders of Carolina Freight Corporation voted on May 3, 1995, to
change the name of the Company to WorldWay Corporation. Filings to effect the
corporate name change were subsequently filed with the North Carolina Secretary
of State.
LIQUIDITY AND CAPITAL RESOURCES
Net working capital at June 17, 1995, was $.4 million and at December 31, 1994,
was a negative $6.1 million. Cash and cash equivalents were $5.2 million at
June 17, 1995, and $9.7 million at December 31, 1994.
On March 17, 1994, Carolina Freight Carriers Corporation (CFCC) and Red Arrow
Freight Lines (RAFL) entered into a new $45 million revolving credit and letter
of credit agreement with a group of banks. Under this agreement, credit
availability fluctuates with the level of collateral provided. As of June 23,
1995, this credit facility had $.4 million (approximately $2.3 million at June
17, 1995, $10 million at March 25, 1995 and $15 million at December 31, 1994)
of revolving line of credit availability and approximately $31.6 million ($35
million at December 31, 1994) of letters of credit availability. This facility
was fully utilized as of June 23, 1995 and is currently scheduled to expire in
August, 1995. Substantially all of their revenue and service equipment, $38.2
million ($45.8 million at December 31, 1994) of their land and structures and
the Corporation's customer receivables held by trust are pledged as collateral.
This agreement and other existing agreements contain restrictions regarding the
maintenance of specified debt-to-equity, tangible net worth, and cash flow
ratios. The interest rate for borrowings under this agreement will be, at the
Corporation's option, the lead bank's base rate or the reference bank's
Eurodollar rate that fluctuates (stated variable rate plus margin of 0 to 275
basis points) in part based on changes in certain financial ratios of the
Corporation. This agreement states that the occurrence of a material adverse
change in the Corporation's financial condition, as determined by the
participating banks, is an event of default. If an event of default occurs,
then the lenders may declare the outstanding borrowings under the agreement,
certain other debt, and all interest thereon to be due and payable. There were
$2.3 million outstanding borrowings under the terms of the revolving credit
agreement at June 17, 1995 and $.4 million as of June 23, 1995 (no outstanding
borrowings at March 25, 1995, and at December 31, 1994).
On June 23, 1995, the Company's subsidiaries entered into a second revolving
credit agreement with a syndicate of banks headed by Citicorp, N.A. The Loan
and Security Agreement is with Cardinal Freight Carriers, Inc., Innovative
Logistics Incorporated, CaroTrans International, and The Complete Logisitics
Company. This agreement is secured by the accounts receivable of the
aforementioned subsidiaries and is scheduled to expire in August, 1995. The
agreement provides for $5 million of revolving credit availability. As of June
23, 1995, $2.9 million of borrowings were outstanding under this agreement. In
addition, the Company has received a commitment for a new Revolving Credit and
Letter of Credit facility with another lender that would replace the existing
Revolving Credit Agreements with the Company's bank group. This new facility
will be secured by
8
<PAGE> 10
substantially all of the assets of the Company. This new commitment to provide
financing extends through August 31, 1995, and is subject to meeting certain
terms and conditions.
Capital expenditures (before proceeds from disposal of operating property of
$20.4 million in 1995 and $1.5 million in 1994) through the second quarter were
$15.6 million compared with $7.7 million in the prior year period. Planned
1995 capital expenditures are approximately $29.0 million. It is anticipated
that approximately $15.8 million will be expended on revenue and service
equipment, $5.5 million on terminal construction and renovation, and $7.7
million for office, computer, and terminal equipment.
Capital expenditures (before proceeds from disposal of operating property of
$7.7 million) during 1994 were $28.3 million. Of this amount, $17.4 million
was expended for revenue and service equipment, $4.0 million for acquisition,
construction, and renovation of land and buildings and $6.9 million for office,
shop, and terminal equipment. Capital expenditures were financed through
internally generated funds.
Management anticipates that 1995 capital expenditures and other working capital
requirements will be financed through internally generated funds and borrowings
under the revolving credit agreement. Management does not anticipate that the
maximum borrowing level under the revolving credit agreement will be exceeded
in 1995.
The long-term debt-to-equity ratio of the Corporation at June 17, 1995, was
62.1% compared with 53.2% at December 31, 1994. At the end of the second
quarter, the Company's current ratio improved to 1.0 versus .93 for the second
quarter of 1994. The Company's level of long-term debt declined slightly from
the second quarter of 1994, to a total of $69.7 million.
9
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
There are not now pending any material legal proceedings, other than ordinary
routine litigation incident to its business, to which the Company or its
subsidiaries are a party or to which any of their property is subject. During
the second quarter of 1995, no material litigation or governmental proceeding
was instituted or pending against the Company or its subsidiaries arising from
any alleged violation of any emission control standards or other environmental
regulations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 3(a)(ii) Articles of Amendment of Carolina Freight Corporation
dated May 3, 1995.
10(j)(vii) 1995 Nonqualified Stock Option Plan of WorldWay Corporation
and its Subsidiaries
27 Financial Data Schedule (for SEC purposes only.)
(b) Registrant did not file, nor was it required to file, with the Commission
in respect of any period in the quarter ended June 17, 1995, a report on Form
8-K.
10
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORLDWAY CORPORATION
(Registrant)
DATE: 8/1/95 BY: /s/ Lary R. Scott
------------------- ------------------------------
Lary R. Scott
Chief Executive Officer
DATE: 8/1/95 BY: /s/ Shawn W. Poole
------------------- ------------------------------
Shawn W. Poole
Chief Financial Officer
11
<PAGE> 1
EXHIBIT 3(a)(ii)
ARTICLES OF AMENDMENT
OF
CAROLINA FREIGHT CORPORATION
The undersigned corporation hereby submits these Articles of Amendment
for the purpose of amending its Articles of Incorporation:
1. The name of the Corporation is Carolina Freight Corporation.
2. The following amendments to the Articles of Incorporation of the
Corporation were adopted by its shareholders on the 3rd day of May, 1995, in
the manner prescribed by the North Carolina Business Corporation Act.
Shareholder approval was obtained for the following amendments as required by
the North Carolina Business Corporation Act.
(a) The section or article numbered "1" of the Articles of
Incorporation of the Corporation is amended so that, as amended, it
shall read as follows:
"1. The name of the Corporation is WorldWay
Corporation."
(b) The section or article numbered "9" of the Articles of
Incorporation of the Corporation is amended so that, as amended, it
shall read as follows:
"9. The number of directors constituting the Board
of Directors shall be not less than seven (7) nor more than
nine (9) as may be fixed or changed from time to time, within
the minimum and maximum, by the shareholders or by the Board
of Directors. The Directors shall be divided into three
classes, as nearly equal in number as possible, to serve in
the first instance until the annual meeting of shareholders to
be held in 1983 (Class III), 1984 (Class II), and 1985 (Class
I), respectively, or until their successors shall be elected
and shall qualify, and thereafter the successors in each class
of directors shall be elected to serve for terms of three
years and until their successors shall be elected and shall
qualify. In the event of any increase in the number of
directors, the
<PAGE> 2
additional directors shall be so classified that all classes
of directors shall be increased equally, as nearly as possible
and, in the event of any decrease in the number of directors,
all classes of directors shall be decreased equally, as nearly
as possible. In the event of death, resignation, retirement,
removal or disqualification of a director during his elected
term of office, his successor shall be elected to serve only
until the expiration of the term of his predecessor."
3. These articles will become effective at 3:45 P.M. on May 3, 1995.
This the 3rd day of May, 1995.
CAROLINA FREIGHT CORPORATION
By:__________________________________
John B. Yorke, Esq., Vice President
and General Counsel
<PAGE> 1
EXHIBIT 10(j)(vii)
CAROLINA FREIGHT CORPORATION AND SUBSIDIARIES
1995 NONQUALIFIED STOCK OPTION PLAN
1. PURPOSE. This 1995 Nonqualified Stock Option Plan (the
"Plan") is intended to advance the interests of Carolina Freight Corporation
(the "Company"), its subsidiaries and its shareholders by providing
participants an added sense of proprietorship and personal involvement in the
development and financial success of the Company and to encourage such
participants to remain with and devote their best efforts to the Company. It
is also intended that options issued pursuant to the Plan (the "Options") shall
satisfy the requirements of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
2. ADMINISTRATION. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee") except that no member of the Committee may exercise discretion
with respect to, or participate in, the administration of the Plan if, at any
time during the twelve-month period prior to any exercise or participation, he
or she has been granted or awarded stock, restricted stock, stock options,
stock appreciation rights or any other derivative security of the Company or an
affiliate thereof under this Plan or any similar plan of the Company, except as
permitted in Rule 16b-3(c)(2)(i)(A) through (D) under the Exchange Act.
Members of the Committee shall be subject to any additional restrictions
necessary to satisfy the requirements for disinterested administration of the
Plan as set forth in Rule 16b-3, as it may be amended from time to time.
Subject to the express provisions of the Plan, the Committee may interpret the
Plan, prescribe, amend and rescind rules and regulations relating to it,
determine the terms and provisions of awards under the Plan (which need not be
identical) and make such other determinations as it deems necessary or
advisable for the administration of the Plan. The decisions of the Committee
under the Plan shall be conclusive and binding. No member of the Board of
Directors of the Company or the Committee shall be liable for any action taken,
or determination made, hereunder in good faith.
3. SHARES SUBJECT TO PLAN. The maximum number of shares that may
be issued pursuant to the Plan is 500,000 and as of the effective date hereof,
that number of shares shall be authorized and reserved for issuance upon the
exercise of Options granted under the Plan. If any Option granted under the
Plan shall expire
<PAGE> 2
or terminate for any reason, without having been exercised in full, the
unpurchased shares covered by the Option shall be added to the shares otherwise
available for issuance upon the exercise of Options unless the Plan shall then
be terminated.
4. OPTIONS FOR INDEPENDENT DIRECTORS. The grant of options under
this Section 4 shall be limited to those directors of the Company who, on the
date of grant, are neither officers nor employees of the Company or any
subsidiary (such directors are referred to herein as "Eligible Directors").
On the next business day following the end of the Company's annual
shareholders' meeting in each year (the "Grant Date"), each Eligible Director
shall automatically receive from the Company an option to acquire 2,500 shares
of common stock at an exercise price equal to the closing sales prices of the
common stock on the Grant Date. Each such option shall be exercisable
immediately and at any time and from time to time thereafter (subject to the
following sentence) until and including the date which is the business day
immediately preceding the tenth anniversary of the Grant Date. In the event
that an Eligible Director ceases to be a director of the Company for any
reason, each option granted to such Eligible Director pursuant to this Section
4 will terminate on the first anniversary of the date such Eligible Director
ceased to be a director of the Company. Notice of each such option granted on
a Grant Date shall be given to each Eligible Director within a reasonable time
after the Grant Date.
This Section 4 may not be amended more frequently than once every six
months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder.
5. REGULAR GRANTS OF OPTIONS TO EMPLOYEES. The Committee may
grant options under this Plan to any employee of the Company or any of its
subsidiaries ("Employee"). In determining which Employees will be granted
options the Committee shall consider the duties of the Employees, their present
and potential contributions to the success of the Company, and such other
factors as the Committee deems relevant in connection with accomplishing the
purposes of the Plan. Options granted under this Plan to Employees shall be
subject to the following terms and conditions, and such other terms and
conditions not inconsistent with the Plan as the Committee shall determine to
be appropriate.
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<PAGE> 3
a. NUMBER OF SHARES. Each Option shall specify the
number of shares that may be purchased upon exercise of the Option, subject to
adjustment as provided in Section 10 below. No Employee shall be granted
Options to purchase more than 50,000 shares.
b. EXERCISE PRICE. The exercise price shall be the fair
market value of the shares subject to the Option as of the date of grant. Fair
market value for purposes of this paragraph shall be the closing price of the
Company's shares on the day of the grant of the Option.
c. RIGHT TO EXERCISE AND TERM. Any Option granted to an
Employee under this Section 5 of the Plan shall be exercisable in accordance
with the following terms and conditions:
i. An Option granted under this Section 5 shall
not be exercisable prior to the second anniversary of the grant of the
Option (except that in the event of the death or permanent disability
of the person receiving such Option, this condition shall be deemed
automatically waived.) The Option granted to any Employee under this
Plan shall vest according to the following schedule:
<TABLE>
<CAPTION>
Years After Date of Grant Percent Vested
------------------------- --------------
<S> <C>
less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
</TABLE>
The nonvested portion of an Employee's Options shall be considered
forfeited upon termination of his or her employment with the Company
for whatever reason. No Option granted hereunder shall be exercisable
more than ten years from the date that the Option is granted.
ii. In the event the employment of an Employee
then holding Options hereunder shall terminate by reason of death,
retirement (as defined below), permanent and total disability (as
determined by the
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<PAGE> 4
long-term disability plan applicable to such Employee), or under such
other circumstances as may be determined by the Committee, the vested
portion of said Options shall be exercisable by the former employee or
his or her successor in interest only during the period of one year
immediately following said termination of employment. "Retirement"
for the purposes of this paragraph is limited to the voluntary
termination of employment occurring at or after the employee either
attains age 65 or attains age 55 with fifteen years of service. In
the event of termination of employment under circumstances other than
as stated above, all Options then held shall terminate, and shall no
longer be exercisable, as of the date of termination of employment.
6. SPECIAL MATCHING GRANTS OF OPTIONS TO EMPLOYEES. Any officer
of the Company or any of its subsidiaries (including appointed officers) and
any Division Manager of Carolina Freight Carriers who, while this Plan is in
effect and while there are shares available for the grant of options provided
herein, purchase shares of the Company's common stock (other than purchases
directly from the Company pursuant to the exercise of options or similar
rights) will be entitled to receive from the Company options on the following
terms and conditions, and such other terms and conditions not inconsistent with
the Plan as the Committee shall determine to be appropriate.
a. NUMBER OF SHARES. Each Option shall be for the same
number of shares as the Employee purchased (the "Purchased Shares"), subject to
the limitation that an Employee shall not be entitled to receive Options
pursuant to this Section 6 for more than 5,000 shares with respect to purchases
made in any calendar year.
b. EXERCISE PRICE. The exercise price shall be the fair
market value of the shares subject to the Option as of the date of the
Employee's purchase of shares.
c. RIGHT TO EXERCISE AND TERM. Any Option granted to an
Employee under this Section 6 of the Plan shall be exercisable in accordance
with the following terms and conditions:
-4-
<PAGE> 5
i. An Option granted under this Section 6 shall
not be exercisable prior to the second anniversary of the grant of the
Option (except that in the event of the death or permanent disability
of the person receiving such Option, this condition shall be deemed
automatically waived.)
ii. If, prior to such second anniversary, the
Employee sells, transfers or otherwise ceases to own all (or a portion
of) the Purchased Shares, then all (or a like portion of) the Option
granted hereunder shall terminate and be considered forfeited.
iii. No Option granted hereunder shall be
exercisable more than ten years from the date that the Option is
granted.
iv. In the event the employment of an Employee
then holding Options hereunder shall terminate for any reason, the
said Options shall be exercisable by the former employee or his or her
successor in interest only during the period of one year immediately
following said termination of employment.
d. NOTIFICATION AND EVIDENCE. Any Employee who makes a
purchase of shares that will entitle him to the grant of Options hereunder
shall notify the Committee and provide satisfactory evidence of such purchase.
The date of grant with respect to any Options granted hereunder will be the
date the Employee purchased the Purchased Shares.
e. ADDITIONAL RULES. The Committee may adopt additional
rules with regard to the Options granted pursuant to this Section 6, including
without limitation (i) rules with regard to evidencing continued ownership of
the Purchased Shares during the period specified in 6(c)(ii) above and (ii)
rules to ensure compliance with Rule 10b-18 and any other applicable rule or
provision of the federal or state securities laws.
7. TERMS OF EXERCISE. Any Option granted under the Plan may be
exercised by the Eligible Director, Employee, by a legatee or legatees of such
Option under the Eligible Director's or Employee's last will, or by his or her
executors, personal representatives or distributees (the "Optionee"), (i) by
-5-
<PAGE> 6
delivering to the Secretary of the Company written notice of the number of
shares of common stock with respect to which the Option is being exercised, or
(ii) by delivering such notice to a broker-dealer with a copy to the Secretary
of the Company. The purchase price of common stock upon exercise of any Option
shall be paid in full (i) in cash or certified check by the Optionee, (ii) by a
broker-dealer to whom the Optionee has submitted an exercise notice consisting
of a fully endorsed Option, (iii) in common stock valued at its fair market
value on the date of exercise, (iv) by agreeing to surrender Options then
exercisable by the Optionee valued at the excess of the aggregate fair market
value of the common stock subject to such Options on the date of exercise over
the aggregate option exercise price of such common stock, (v) by directing the
Company to withhold such number of shares of common stock otherwise issuable
upon exercise of such Option having an aggregate fair market value on the date
of exercise equal to the exercise price of the Option, or (vi) by such other
medium of payment as the Committee, in its discretion, shall authorize, or by
any combination of (i), (ii), (iii), (iv), (v) and (vi), at the discretion of
the Committee. In the case of payment pursuant to (ii), (iii), (iv), (v) or
(vi) above, the Optionee's election must be made on or prior to the date of
exercise of the Option and must be irrevocable. The Company shall issue, in
the name of the Optionee, stock certificates representing the total number of
shares of common stock issuable pursuant to the exercise of any Option as soon
as reasonably practicable after such exercise. Upon the exercise of an Option,
the Committee shall have the right to require the Optionee to remit to the
Company in any such manner or combination of manners as it determines in its
sole discretion, an amount sufficient to satisfy all federal, state and local
withholding tax requirements prior to the delivery by the Company of any
certificate for shares of Common Stock.
8. TRANSFERABILITY LIMITED. No Option granted under the Plan
shall be transferable by the Grantee other than by will, or, by the laws of
descent and distribution of the state of his domicile at the time of his death.
During the Optionee's lifetime, the Option shall be exercised only by the
Optionee.
9. TERMINATION OR AMENDMENT OF PLAN. The Board of Directors of
the Company expressly retains the right to at any time terminate, suspend, or
amend the Plan, in any respect and as the Board of Directors deems advisable
under circumstances then
-6-
<PAGE> 7
prevailing, provided, however, that no amendment hereto shall expand the number
of shares of Company stock subject to the Plan, nor permit the grant of Options
to members of the Committee except pursuant to Section 4 above. The Board of
Directors shall submit any amendments to the shareholders of the Company for
approval to the extent necessary to maintain compliance with the requirements
of Rule 16b-3 of the Exchange Act.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; ACCELERATION OF
EXERCISE RIGHTS. The total amount of shares on which Options may be granted
under the Plan and option rights (both as to the number of shares and the
option exercise price per share) shall be appropriately adjusted for any
increase or decrease in the number of outstanding shares of common stock of the
Company resulting from payment of a stock dividend on the common stock, a
subdivision or combination of shares of the common stock or from a
reclassification of the common stock, and (in accordance with the provisions
contained in the next following paragraph) in the event of a merger or
consolidation.
After any merger of one or more corporations into the Company or any
subsidiary, any merger of the Company or any subsidiary into another
corporation, any consolidation of the Company or any subsidiary and one or more
other corporations, or any other corporate reorganization of any form involving
the Company or any subsidiary as a party thereto, which corporate
reorganization involves any exchange, conversion, adjustment or other
modification of the outstanding shares of common stock of the Company, each
employee holding Options at the time of such corporate reorganization shall, at
no additional cost, be entitled, upon any exercise of his or her Option, to
receive, in lieu of the number of shares as to which such Option shall then be
so exercised, the number and class of shares of stock or other securities or
such other property to which such employee would have been entitled to pursuant
to the terms of the agreement of merger or consolidation if at the time of such
merger or consolidation such optionee had been a holder of record of a number
of shares of common stock of the Company equal to the number of shares which
then remain exercisable under such Option. Comparable rights shall accrue to
such employee in the event of successive mergers or consolidations of the
character described above.
-7-
<PAGE> 8
The adjustments and the manner of application of the foregoing
provisions shall be determined by the Committee in its sole discretion. Any
such adjustment may provide for the elimination of any fractional share that
might otherwise become subject to an Option.
11. CHANGE IN CONTROL. In the event of (i) the adoption of a plan
of merger or consolidation of the Company math any other corporation as a
result of which the holders of the voting capital stock of the Company as a
group would receive less than 50% of the voting capital stock of the surviving
or resulting corporation, (ii) the approval by the Board of Directors of the
Company of an agreement providing for the sale or transfer (other than as
security for obligations of the Company) of substantially all the assets of the
Company, or (iii) in the absence of a prior expression of approval by the Board
of Directors of the Company, the acquisition of more than 20% of the Company's
voting capital stock by any person within the meaning of Section 13(d)(3) of
the Exchange Act; then any Option granted hereunder pursuant to Section 5 or 6
shall become immediately exercisable in full, subject to any appropriate
adjustments in the number of shares subject to the Option and the option
exercise price per share, and shall remain exercisable for the remaining term
of such Option, regardless of whether such Option has been outstanding for six
months or of any provision contained in the individually executed Nonqualified
Stock Option Agreement with respect thereto requiring that the Option or any
portion thereof be outstanding for a minimum amount of time prior to exercise,
subject to all of the terms hereof and the Option Agreement with respect
thereto not inconsistent with this paragraph.
12. RESTRICTIONS ON OPTION REPRICING. Except as set forth in
Sections 10 or 11 hereof, in no event shall the Board of Directors or the
Committee authorize any adjustment in the exercise or purchase price of or the
number of shares subject to an outstanding Option under this Plan, whether by
cancellation of an outstanding Option and a subsequent regranting of an Option,
by amendment or substitution of outstanding Option or by other means.
13. APPLICABLE LAW. This stock option plan is adopted by the
Company in the State of North Carolina and is to be construed and interpreted
in accordance with the laws of North Carolina.
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WORLDWAY CORPORATION FOR THE TWENTY-FOUR WEEKS ENDED
JUNE 17, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-17-1995
<CASH> 1,837
<SECURITIES> 0
<RECEIVABLES> 78,820
<ALLOWANCES> 5,490
<INVENTORY> 2,040
<CURRENT-ASSETS> 106,219
<PP&E> 484,789
<DEPRECIATION> 266,774
<TOTAL-ASSETS> 348,076
<CURRENT-LIABILITIES> 105,861
<BONDS> 69,663
<COMMON> 3,281
0
2,211
<OTHER-SE> 106,601
<TOTAL-LIABILITY-AND-EQUITY> 348,076
<SALES> 0
<TOTAL-REVENUES> 374,160
<CGS> 0
<TOTAL-COSTS> 393,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,155
<INTEREST-EXPENSE> 2,511
<INCOME-PRETAX> (25,256)
<INCOME-TAX> (9,046)
<INCOME-CONTINUING> (16,209)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,209)
<EPS-PRIMARY> (2.47)
<EPS-DILUTED> (2.47)
</TABLE>
