<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 34-0-17570
American Freightways Corporation
(Exact name of registrant as specified in its charter)
Arkansas 74-2391754
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
2200 Forward Drive, Harrison, Arkansas 72601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 741-9000
Not Applicable
(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 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
[] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Number of shares of common stock outstanding at March 31,
1995: 30,639,582.
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<TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted, except per share data)
March 31, December 31,
1995 1994
----------- ------------
(Unaudited) (Note)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 4,481 $ 3,999
Trade receivables, less allowance
for doubtful accounts
(1995-$664; 1994-$639) 49,042 39,818
Operating supplies and inventories 1,678 1,519
Prepaid expenses 7,225 4,247
Deferred income taxes 5,689 4,664
-------- --------
Total current assets 68,115 54,247
Property and equipment 435,234 396,594
Allowances for depreciation
and amortization (deduction) (107,031) (98,701)
--------- ---------
328,203 297,893
Other assets 2,917 3,208
--------- ----------
$399,235 $ 355,348
======== =========
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable $ 14,127 $ 13,358
Accrued expenses 31,022 24,449
Federal and state income taxes 841 233
Current portion of long-term debt 6,204 6,338
-------- ---------
Total current liabilities 52,194 44,378
Long-term debt, less current
portion (Note B) 129,840 104,843
Deferred income taxes 32,094 28,947
Shareholders' equity:
Common stock, par value $.01 per share--
authorized 250,000 shares;
issued and outstanding
30,640 in 1995 and 30,496 in 1994 306 305
Additional paid-in capital 94,995 93,347
Retained earnings 89,806 83,528
-------- ---------
185,107 177,180
-------- ---------
$399,235 $ 355,348
======== =========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1994,
has been derived from the audited consolidated financial statements
at that date.
See notes to condensed consolidated financial statements.
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(000's omitted, except per share data)
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<CAPTION>
Three Months Ended
March 31
1995 1994
--------------------
<S> <C> <C>
Operating revenue $132,533 $99,272
Operating expenses and costs:
Salaries, wages and benefits 73,407 53,939
Operating supplies and expenses 8,703 7,042
Operating taxes and licenses 5,736 4,356
Insurance 4,800 2,541
Communications and utilities 2,549 2,180
Depreciation and amortization 8,436 6,173
Rents and purchased transportation 10,697 11,052
Other 5,949 4,394
-------- -------
120,277 91,677
-------- -------
Operating income 12,256 7,595
Other income (expense):
Interest expense (2,199) (1,335)
Interest income 44 33
Gain on disposal of assets 5 0
Other, net 61 54
------- -------
(2,089) (1,248)
Income before income taxes 10,167 6,347
------ -------
Federal and state income taxes:
Current 1,789 1,450
Deferred 2,100 964
------- -------
3,889 2,414
------- -------
Net income $ 6,278 $ 3,933
======= =======
Net income per share $ 0.20 $ 0.14
======= =======
Average shares outstanding 31,376 28,881
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
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<TABLE>
<CAPTION>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31
1995 1994
------------------
(000's omitted)
<S> <C> <C>
Net cash provided by operating activities $13,606 $ (319)
Investing activities
Proceeds from sales of equipment 21 16
Capital expenditures (38,792) (26,472)
-------- ---------
Net cash used by investing activities (38,771) (26,456)
Financing activities
Principal payments on long-term debt (4,638) (304)
Proceeds from notes payable and
long-term borrowings 29,500 28,500
Proceeds from issuance of common stock 785 340
------- ---------
Net cash provided by financing activities 25,647 28,536
------- ---------
Net increase in cash and cash equivalents $ 482 $ 1,761
======= ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results of the three month period ended March 31, 1995, are not
necessarily indicative of the results that may be expected for the
year ending December 31, 1995. For further information, refer to
the Company's consolidated financial statements and footnotes
thereto included in Form 10-K for the year ended December 31, 1994.
NOTE B - LONG-TERM DEBT
As of March 31, 1995, the Company has outstanding borrowings of
$47,500,000 under its existing $75,000,000 unsecured revolving line
of credit. The proceeds of these borrowings were used for the
purchase of revenue equipment and for the purchase and construction
of terminal facilities. At March 31, 1995, the amount available
for borrowing under the line of credit was $27,500,000. In
addition to this credit facility, the Company has obtained letters
of credit totaling $7,000,000 to back the premium for the excess
coverage on its self-insurance plan.
As of March 31, 1995, the Company has outstanding borrowings of
$45,000,000 under an uncommitted Master Shelf Agreement which
provides for the issuance of up to $90,000,000 of senior promissory
notes with an average life not to exceed eight years.
NOTE C - COMMITMENTS
Commitments for the purchase of revenue equipment and the purchase
or construction of terminals aggregated approximately $44,954,000
at March 31, 1995.
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<TABLE>
<CAPTION>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following table sets forth, for the periods indicated, the
percentages of operating expenses and other items to operating
revenues:
Three Months Ended
March 31
1995 1994
------------------
<S> <C> <C>
Operating revenue 100.0% 100.0%
Operating expenses and costs:
Salaries, wages and benefits 55.4% 54.3%
Operating supplies and expenses 6.6% 7.1%
Operating taxes and licenses 4.3% 4.4%
Insurance 3.6% 2.6%
Communications and utilities 1.9% 2.2%
Depreciation and amortization 6.4% 6.2%
Rents and purchased transportation 8.1% 11.1%
Other 4.5% 4.4%
---------------
Total operating expenses and costs 90.8% 92.3%
---------------
Operating income 9.2% 7.7%
Interest expense (1.7)% (1.3)%
Other income, net 0.1% --%
---------------
Income before income taxes 7.6% 6.4%
Income taxes 2.9% 2.4%
---------------
Net income 4.7% 4.0%
===============
</TABLE>
Results of Operations
Revenue
Operating revenue for the three months ended March 31, 1995 was
$132,533,000, up 33.5%, compared to $99,272,000 for the three
months ended March 31, 1994. The growth in operating revenue was
primarily attributable to a 27.4% increase in tonnage handled by
the Company from new and existing customers. The major reasons for
this increase in tonnage were:
- - On January 1, 1995, the Company expanded its all-points
coverage to the states of North Carolina and South Carolina with
the opening of thirteen new terminals.
- - The Company continued to increase its market penetration into
existing service territories.
- - The deregulation of intra-state commerce as of January 1, 1995
by the Federal Aviation Administration Authorization Act of 1994.
In addition to the increase in tonnage, operating revenue was
increased by a 4.2% increase in revenue per hundred weight. The
major factors contributing to this increase in revenue per hundred
weight were:
- - A general rate increase of approximately 3.5% effective
January 1, 1995. General rate increases initially affect
approximately 50% of the Company's customers. The remaining
customers' rates are determined by contracts and guarantees and are
negotiated throughout the year.
<PAGE>
- - The Company's average length of haul increased 7.6% to 583
miles in the three months ended March 31, 1995 as compared to the
three months ended March 31, 1994. The increase in average length
of haul was primarily a result of the Company's expanded service
territory.
- - The percentage of the Company's total revenue that was
truckload (shipments greater than 10,000 pounds) declined to 8.1%
in the three months ended March 31, 1995 as compared to 8.7% in the
three months ended March 31, 1994.
Management expects that growth in operating revenue is sustainable
in the near future; however, the rate of growth will most likely
occur at a slower rate than that experienced in the three months
ended March 31, 1995. Any growth in operating revenue will
primarily be the result of increased tonnage handled by the
Company, as any future rate increases can be expected to be closely
tied to the overall rate of inflation and general economic
conditions.
Operating Expenses
Operating expenses as a percentage of operating revenue improved to
90.8% in the three months ended March 31, 1995 from 92.3% in the
three months ended March 31, 1994. This overall improvement was
primarily attributable to:
- - Rents and purchased transportation as a percentage of
operating revenue decreased to 8.1% in the three months ended
March 31, 1995 from 11.1% in the three months ended March 31,
1994. This decrease was due to two primary reasons. The
first was the Company's philosophy of utilizing Company-
operated terminals rather than contractor-operated terminals
in expansions of service territory, along with the conversion
of four contractor-operated terminals to Company-operated
terminals during 1994. Management does not expect significant
additional conversions of contractor-operated terminals to
Company-operated terminals in the near future. The second
primary reason for the decrease in rents and purchased
transportation as a percentage of operating revenue was the
decreased usage of rented equipment in favor of Company-owned
equipment. Management expects this increased utilization of
Company-owned equipment, rather than rented equipment, to
continue in the near term.
- - Operating supplies and expenses as a percentage of operating
revenue decreased to 6.6% in the three months ended March 31,
1995 from 7.1% in the three months ended March 31, 1994. This
decrease was primarily due to a 6.4% improvement in the
Company's linehaul load factor (the average tonnage
transported in a typical movement of freight between
terminals).
These improvements in operating expenses as a percentage of
operating revenue were partially offset by increases in the
following areas:
- - Salaries, wages and benefits as a percentage of operating
revenue increased to 55.4% in the three months ended March 31,
1995 from 54.3% in the three months ended March 31, 1994. The
utilization of Company-operated terminals in expansions of
service territory and the conversion of four contractor-
operated terminals to Company-operated terminals contributed
to this increase. In addition, the continuation of the
Company's philosophy of sharing its success with its
associates through increased wages and enhanced benefit
packages contributed to this increase. On March 6, 1995, the
Company increased the wages of its drivers, dockmen and
clerical workers by approximately 5.5%.
- - Insurance as a percentage of operating revenue increased to
3.6% in the three months ended March 31, 1995 from 2.6% in the
three months ended March 31, 1994. This increase was
primarily a result of the Company's increased experience of
accidents and cargo claims, particularly in the areas of cargo
care and liability insurance. During the twelve months prior
to March 31, 1995, accidents and cargo claims returned to
historical levels after being somewhat lower in the prior two
years. Management does not expect a continuation of the
upward trend in insurance expenses as they relate to operating
revenue but expects a stabilization of these expenses near
historical levels.
Other
Interest expense as a percentage of operating revenue increased to
1.7% in the three months ended March 31, 1995 from 1.3% in the
three months ended March 31, 1994. This increase was attributable
to increased costs of borrowing funds under the Company's variable-
rate, revolving line of credit facility, as well as an increase in
the overall amount of borrowings. The increased costs of borrowing
funds were a reflection of increased interest rates in the general
economy.
The effective tax rate of the Company was 38.3% for the first three
months of 1995, up from 38.0% for the same time period during 1994.
Net income for the three months ended March 31, 1995, was
$6,278,000, up 59.6%, from $3,933,000 for the three months ended
March 31, 1994.
<PAGE>
Liquidity and Capital Resources
The continued growth in operating revenue and the expansion of
service territory initiated on January 1, 1995 required significant
capital resources in the three months ended March 31, 1995.
Capital requirements during the three months ended March 31, 1995
consisted primarily of $38,771,000 in investing activities. The
Company invested $38,792,000 in capital expenditures during the
three months ended March 31, 1995 comprised of $25,346,000 in
additional revenue equipment, $9,622,000 in new terminal facilities
or the expansion of existing terminal facilities and $3,824,000 in
other equipment. Management expects capital expenditures for the
full year of 1995 will be approximately $110,000,000. However, the
amount of capital expenditures required in 1995 will be dependent
on the growth rate of the Company and the timing and size of any
future expansions of service territory. At March 31, 1995, the
Company had commitments for land, terminals, revenue and other
equipment of approximately $44,954,000. These commitments were for
the completion of projects in process at March 31, 1995, and for
the purchase of additional revenue equipment in anticipation of
increased revenue levels during the remainder of 1995.
The Company provided for its capital resource requirements in the
three months ended March 31, 1995 with cash from operations and
financing activities. Cash from operations totaled $13,606,000 in
the three months ended March 31, 1995 compared to $319,000 used by
operations in the three months ended March 31, 1994. This increase
was primarily attributable to the increase in net income in the
first quarter of 1995 compared to the first quarter of 1994, and
the amount of accounts payable outstanding. Financing activities
augmented cash flow by $25,647,000 in the three months ended March
31, 1995 by utilizing two primary sources of financing: the
revolving line of credit and the Master Shelf facility.
- - The Company experiences periodic cash flow fluctuations common
to the industry. Cash outflows are heaviest during the first
part of any given year while cash inflows are normally
weighted towards the last two quarters of the year. To smooth
these fluctuations and to provide flexibility to fund future
growth, the Company utilizes a variable-rate, unsecured
revolving line of credit of $75,000,000 provided by
NationsBank of Texas, N.A., Texas Commerce Bank, N.A. and
Wachovia Bank of Georgia, N.A. During the three months ended
March 31, 1995, the Company utilized this facility to provide
$10,500,000 of net financing, leaving $27,500,000 available
for borrowing. The Company also had $5,000,000 available
under its short-term, unsecured revolving line of credit with
NationsBank of Texas, N.A. In addition, the Company maintains
a $10,000,000 line of credit with NationsBank, N.A. to obtain
letters of credit to back premiums for excess coverage on its
self-insurance program. At March 31, 1995, the Company had
obtained letters of credit totaling $7,000,000 for this
purpose.
- - To assist in financing longer-lived assets, the Company has an
uncommitted Master Shelf Agreement with the Prudential
Insurance Company of America which provides for the issuance
of up to $90,000,000 in medium to long-term unsecured notes at
an interest rate calculated at issuance. During the three
months ended March 31, 1995, the Company utilized this
agreement to issue a $15,000,000 note at 8.55% with a ten year
maturity, leaving $45,000,000 available for borrowing.
Management expects that the Company's existing working capital and
its available lines of credit are sufficient to meet the Company's
commitments as of March 31, 1995, and to fund current operating and
capital needs. However, if additional financing is required,
management believes it will be available.
The Company uses off-balance sheet financing in the form of
operating leases primarily in two areas; terminal facilities and
computer equipment. At March 31, 1995, future rental commitments
on operating leases were $40,605,000. The Company prefers to
utilize operating leases for these two areas and plans to use them
in the future when such financing is available and suitable.
Environmental
At March 31, 1995, the Company had no outstanding inquiries with
any state or federal environmental agency.
Recent Events
On April 17, 1995, the Company expanded its service territory to
nine new cities including: Colorado Springs, Denver, Fort Collins
and Pueblo, Colorado; Des Moines, Iowa; Minneapolis/St. Paul,
Minnesota; Omaha, Nebraska; Madison and Milwaukee, Wisconsin.
<PAGE>
INDEX
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets--March 31, 1995 and
December 31, 1994
Condensed consolidated statements of income--Three months
ended March 31, 1995 and 1994
Condensed consolidated statements of cash flows--Three months
ended March 31, 1995 and 1994
Notes to condensed consolidated financial statements--
March 31, 1995
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On March 15, 1995, a complaint by American Freight System, Inc. of
Kansas City, Kansas, was filed, alleging, among other things,
federal trade name and trademark infringement. The lawsuit was
filed in the United States District Court, Kansas District, Case 95-
2125. Management reports that based upon American Freightways'
counsel's advice, the plaintiff's claims are without any merit and
we intend to aggressively defend this lawsuit.
Item 2. Changes in securities. See Item 4(c).
Item 4. Submission of Matters to a Vote of Security Holders.
a) The Annual Meeting of Shareholders was held March 28, 1995.
c) Below is a list of each proposal voted on and number of votes
cast at the 1995 Annual Shareholders' Meeting:
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<CAPTION>
1. TO FIX THE NUMBER OF DIRECTORS AT NINE AND TO ELECT NINE
DIRECTORS TO THE TERMS SET FORTH BELOW:
TERM FOR WITHHELD BROKER NON-VOTES
<S> <C> <C> <C> <C>
F. S. Garrison 3 YEARS 24,823,755 1,541,473 3,615,416
Ben A. Garrison 1 YEAR 24,822,045 1,543,183 3,615,416
Tom Garrison 2 YEARS 24,822,160 1,543,068 3,615,416
Will Garrison 1 YEAR 24,812,340 1,552,888 3,615,416
James R. Dodd 3 YEARS 24,440,769 1,924,459 3,615,416
Tony Balisle 1 YEAR 24,441,090 1,924,138 3,615,416
Frank Conner 2 YEARS 24,436,490 1,928,738 3,615,416
T. J. Jones 2 YEARS 24,450,595 1,914,633 3,615,416
Ken Reeves 3 YEARS 24,445,625 1,919,603 3,615,416
</TABLE>
<TABLE>
<CAPTION>
2. TO APPROVE AN AMENDMENT TO CERTAIN PROVISIONS OF THE
COMPANY'S ARTICLES OF INCORPORATION RELATING TO:
BROKER
FOR AGAINST NON-VOTES ABSTAIN
<S> <C> <C> <C> <C>
Part A Classification of the Board 19,982,863 4,237,674 5,519,936 243,171
Part B Removal of Directors only for cause 18,596,928 5,616,656 5,519,936 250,124
Part C Filling of vacancies on the Board 20,514,840 5,600,545 3,618,416 249,843
Part D Fixing the size of the Board 21,246,905 4,872,256 3,618,416 246,067
</TABLE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(3.i)Amended and Restated Articles of Incorporation
of American Freightways Corporation as of
April 12, 1995
(10) $15,000,000 note dated January 30, 1995,
issued under the $90,000,000 Master Shelf Agreement
with the Prudential Insurance Company of America
dated September 3, 1993
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during
the three month period ended March 31, 1995.
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.
AMERICAN FREIGHTWAYS CORPORATION
(Registrant)
Date: April 28, 1995 /s/James R. Dodd
James R. Dodd
Executive Vice President-Accounting &
Finance and Chief Financial Officer
<PAGE>
RSS027DA.WP5
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
AMERICAN FREIGHTWAYS CORPORATION
The undersigned President and Secretary of American
Freightways Corporation (the "Corporation"), hereby certify that
the Corporation has duly adopted these Second Amended and Restated
Articles of Incorporation as set forth below.
1. The name of this Corporation is American Freightways
Corporation (the "Corporation").
2. The street address of the Corporation's registered office
is 2200 Forward Drive, Harrison, Arkansas 72601, and the name of
the registered agent of the Corporation at that address shall be
Tom Garrison.
3. The nature of the business of the Corporation and the
primary object or purposes proposed to be transacted, promoted or
carried on by it, are as follows:
(a) To acquire and own property, both real and personal,
including common stock or other beneficial interests in
corporations, associations, trusts and other forms of business,
whether incorporated or unincorporated, and to provide services to
or for such businesses, and to engage in businesses related to any
such businesses, and to do any and all lawful acts necessary,
convenient, and advisable or desirable that may be incidental or
pertinent to such businesses.
(b) To conduct any other business enterprise not
contrary to law.
<PAGE>
(c) To buy, sell, lease, use, develop, mortgage, improve
and otherwise deal in and dispose of all types of real or personal
property in connection with the conduct of business carried on by
the Corporation.
(d) To exercise all of the powers enumerated in the
Arkansas Business Corporation Act of 1987 (the "Act"), the
Corporation elects to be governed by the Act.
4. The total amount of the authorized capital stock of this
Corporation is two hundred fifty million (250,000,000) shares of
common stock with one cent ($.01) par value each.
5. The name and post office address of the incorporator was:
NAME POST OFFICE ADDRESS
Gene C. Campbell P.O. Box 729
Harrison, AR 72602
6. (a) The number of directors constituting the entire
Board shall be not less than nine nor more than fifteen as fixed
from time to time by vote of a majority of the entire Board,
provided, however, that the number of directors constituting the
entire Board shall be nine until otherwise fixed by a majority of
the entire Board.
(b) The Board of Directors shall be divided into three
classes, as nearly equal in numbers as the then total number of
directors constituting the entire Board permits with the term of
office of one class expiring each year. At the 1995 annual meeting
of stockholders, directors of the first class shall be elected to
<PAGE>
hold office for a term expiring at the next succeeding annual
meeting, directors of the second class shall be elected to hold
office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any
vacancies in the Board of Directors for any reason, and any
directorship resulting from any increase in the number of
directors, shall be filled exclusively by the Board of Directors,
acting by a majority of the directors then in office, although less
than a quorum, and any director so chosen shall hold office until
the next election of the class for which such director shall have
been chosen or until the expiration of the term of the director(s)
whom such director(s) replaced, as applicable, and until his
successor shall be elected and qualified. Subject to the
foregoing, at each annual meeting of stockholders the successors to
the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding
annual meeting.
(c) Notwithstanding any other provisions of these
Articles of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law, these Articles of Incorporation or the By-Laws of
the Corporation), any director or the entire Board of Directors of
the Corporation may be removed at any time, but only for cause and
only by the affirmative vote of the holders of 66 2/3% or more of
<PAGE>
the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose. "Cause" shall mean that a court of competent
jurisdiction shall have definitely concluded that a director has
engaged in fraudulent or dishonest conduct or gross abuse of
authority or discretion with respect to the Corporation.
(d) Notwithstanding any other provision of these
Articles of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, these
Articles of Incorporation or By-Laws), the affirmative vote of the
holders of at least 66 2/3% of the outstanding shares of each
voting group of the Corporation entitled to vote with respect to
such matter shall be required to amend, alter, repeal or adopt any
provision inconsistent with any provision of Article 6 of these
Articles of Incorporation.
7. (a) The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation) by reason of
the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise,
<PAGE>
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to be the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in
<PAGE>
a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem
proper.
(c) To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to
in paragraph (a) or (b), or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under paragraph (a) or (b)
(unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is
proper in the circumstances because he has met the applicable
standards of conduct set forth in paragraphs (a) or (b). Such
determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not
<PAGE>
parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in
a written opinion, or (3) by the shareholders.
(e) Expenses (including attorneys' fees) incurred in
defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such
amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this Article
7.
(f) The indemnification provided by this Article 7 shall
not be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(g) The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation, partnership, joint
<PAGE>
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out
of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the
provisions of this Article 7.
(h) The powers and duties of the Corporation to
indemnify any person under this Article 7 shall apply with equal
force whether an action, suit, or proceeding is threatened or
commenced in this State or outside this State.
8. No member of the Board of Directors shall be liable to
the Corporation or the shareholders of the Corporation for any
monetary damages for breach of his duty as a director, provided
that this provision shall not eliminate or limit the liability of a
director:
(a) for any breach of the director's duty of loyalty to
the Corporation or its shareholders;
(b) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law;
(c) for liability under Ark. Code Ann. 4-27-833;
(d) for any transaction from which the director derived
an improper personal benefit;
(e) for any action, omission, transaction, or breach of
a director's duty creating any third-party liability to any person
or entity other than the Corporation or shareholder; or
<PAGE>
(f) for any act or omission occurring prior to the date
of filing these Amended and Restated Articles of Incorporation with
the Secretary of State.
9. Shareholders of the Corporation shall not have preemptive
rights.
10. Unless the Act provides otherwise, a quorum at any
meeting of the shareholders of the Corporation shall consist of a
majority of the votes entitled to be cast on the matter,
represented in person or by duly authorized proxy at such meeting.
11. In any election of directors, the shareholders of the
Corporation shall not be entitled to cumulative voting rights.
EXECUTED this ___ day of April, 1995.
/s/F.S. Garrison________________
F. S. Garrison, Chairman,
President and Chief Executive
Officer
/s/Tom Garrison_________________
Tom Garrison, Secretary-
Treasurer, Vice President
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION
AMERICAN FREIGHTWAYS, INC.
SENIOR NOTE
No. U-001
ORIGINAL PRINCIPAL AMOUNT: $15,000,000
ORIGINAL ISSUE DATE: January 30, 1995
INTEREST RATE: 8.85%
INTEREST PAYMENT DATES: April 30, July 30, October 30 and January
30
FINAL MATURITY DATE: January 30, 2005
PRINCIPAL INSTALLMENT DATES AND AMOUNTS: January 30, 2001,
$3,000,000; January 30, 2002, $3,000,000; January 30,
2003, $3,000,000; and January 30, 2004, $3,000,000.
FOR VALUE RECEIVED, the undersigned, American Freightways
Corporation, a corporation organized and existing under the laws of
the State of Arkansas ("AFC"), and American Freightways, Inc., a
corporation organized and existing under the laws of the State of
Arkansas ("AFI", AFC and AFI are collectively referred to herein as
the "Companies"), hereby promise to pay to The Prudential Insurance
Company of America, or registered assigns, the principal sum of
FIFTEEN MILLION DOLLARS ($15,000,000), payable in installments on
the Principal Installment Dates and in the amounts specified above,
and on the Final Maturity Date specified above in an amount equal
to the unpaid balance of the principal hereof, with interest
(computed on the basis of a 360-day year--30-day month) (a) on the
unpaid balance thereof at the Interest Rate per annum specified
above, payable on each Interest Payment Date specified above and on
the Final Maturity Date specified above, commencing with the
Interest Payment Date next succeeding the date hereof, until the
principal hereof shall have become due and payable, and (b) on any
overdue payment (including any overdue prepayment) of principal,
any overdue payment of interest, and any overdue payment of any
Yield-Maintenance Amount (as defined in the Note Agreement referred
to below), payable on each Interest Payment Date as aforesaid (or,
at the option of the registered holder hereof, on demand), at a
rate per annum from time to time equal to the greater of (i) 10.85%
or (ii) 2% over the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York
City as its Prime Rate.
Payments of principal of, and interest on, and any Yield-
Maintenance Amount payable with respect to, this Note are to be
made at the main office of Morgan Guaranty Trust Company of New
York in New York City or at such other place as the holder hereof
shall designate to the Companies in writing, in lawful money of the
United States of America.
This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant to a Master Shelf Agreement, dated as
of September 3, 1993, as amended (herein called the "Agreement"),
between the Companies and The Prudential Insurance Company of
America and is entitled to the benefits thereof. As provided in
the Agreement, this Note is subject to prepayment, in whole or from
time to time in part on the terms specified in the Agreement.
This Note is a registered Note and, as provided in the
Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of
transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of
transfer, the Companies may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Companies shall not be
affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement,
shall occur and be continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner and with
the effect provided in the Agreement.
This Note shall be construed and enforced in accordance with
the laws of the State of Texas.
AMERICAN FREIGHTWAYS CORPORATION
BY:/s/James R. Dodd
Executive Vice President and
Chief Financial Officer
AMERICAN FREIGHTWAYS, INC.
BY:/s/James R. Dodd
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1995 QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,481
<SECURITIES> 0
<RECEIVABLES> 49,706
<ALLOWANCES> 664
<INVENTORY> 1,678
<CURRENT-ASSETS> 68,115
<PP&E> 435,234
<DEPRECIATION> 107,031
<TOTAL-ASSETS> 399,235
<CURRENT-LIABILITIES> 52,194
<BONDS> 129,840
<COMMON> 306
0
0
<OTHER-SE> 184,801
<TOTAL-LIABILITY-AND-EQUITY> 399,235
<SALES> 0
<TOTAL-REVENUES> 132,533
<CGS> 0
<TOTAL-COSTS> 120,277
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 2,199
<INCOME-PRETAX> 10,167
<INCOME-TAX> 3,889
<INCOME-CONTINUING> 6,278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,278
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
<FN>
<F1>PROVISION FOR DOUBTFUL ACCOUNTS INCLUDED IN COSTS AND EXPENSES APPLICALBE TO
REVENUES
</FN>
</TABLE>
