<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted, except per share data)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------------------------
<S> <C> <C>
(Unaudited) (Note)
Assets
Current assets
Cash and cash equivalents $ 3,950 $ 3,999
Trade receivables, less allowance
for doubtful accounts (1995-$663;
1994-$639) 52,016 39,818
Operating supplies and inventories 1,983 1,519
Prepaid expenses 8,690 4,247
Deferred income taxes 5,276 4,664
Income taxes receivable 1,248 --
----------- -----------
Total current assets 73,163 54,247
Property and equipment 468,729 396,594
Allowances for depreciation and
amortization (deduction) (113,688) (98,701)
----------- -----------
355,041 297,893
Other assets 3,411 3,208
----------- -----------
$431,615 $ 355,348
=========== ============
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable $ 10,932 $ 13,358
Accrued expenses 29,021 24,449
Federal and state income taxes -- 233
Current portion of long-term debt 8,067 6,338
----------- -----------
Total current liabilities 48,020 44,378
Long-term debt, less current portion
(Note B) 152,897 104,843
Deferred income taxes 35,628 28,947
Shareholders' equity:
Common stock, par value $.01 per share--
authorized 250,000 shares; issued and
outstanding 30,773 in 1995
and 30,496 in 1994 308 305
Additional paid-in capital 96,808 93,347
Retained earnings 97,954 83,528
----------- -----------
195,070 177,180
----------- -----------
$431,615 $ 355,348
=========== ===========
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.
</TABLE>
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(000's omitted, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
----------------------------------------
<S> <C> <C> <C> <C>
Operating revenue $141,969 $123,656 $274,502 $222,928
Operating expenses and costs:
Salaries, wages and benefits 77,859 63,127 151,266 117,067
Operating supplies and
expenses 9,186 8,034 17,889 15,076
Operating taxes and licenses 5,817 4,697 11,554 9,054
Insurance 4,525 3,897 9,325 6,438
Communications and utilities 2,709 2,325 5,258 4,505
Depreciation and amortization 9,106 7,044 17,542 13,217
Rents and purchased
transportation 11,013 12,023 21,709 23,075
Other 6,230 5,429 12,179 9,822
-------------------- ------------------
126,445 106,576 246,722 198,254
-------------------- ------------------
Operating income 15,524 17,080 27,780 24,674
Other income (expense):
Interest expense (2,491) (1,908) (4,689) (3,243)
Interest income 32 91 75 124
Gain (loss) on disposal of
assets 39 ( 20) 44 ( 19)
Other, net 91 57 152 111
-------------------- ------------------
(2,329) (1,780) (4,418) (3,027)
Income before income taxes 13,195 15,300 23,362 21,647
-------------------- ------------------
Federal and state income taxes:
Current 1,080 5,350 2,868 6,800
Deferred 3,967 464 6,068 1,428
-------------------- ------------------
5,047 5,814 8,936 8,228
-------------------- ------------------
Net income $ 8,148 $ 9,486 $ 14,426 $ 13,419
===================== ==================
Net income per share $ 0.26 $ 0.32 $ 0.46 $ 0.46
====================== ==================
Average shares outstanding 31,426 29,906 31,401 29,393
====================== ==================
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30
1995 1994
-----------------------------
(000's omitted)
<S> <C> <C>
Net cash provided by operating activities $ 22,684 $ 17,432
Investing activities
Proceeds from sales of equipment 458 16
Capital expenditures (75,118) (45,435)
----------- -----------
Net cash used by investing activities (74,660) (45,419)
Financing activities
Principal payments on long-term debt (20,652) (46,859)
Proceeds from notes payable and
long-term borrowings 70,435 39,000
Proceeds from issuance of common stock 2,144 38,841
----------- -----------
Net cash provided by financing activities 51,927 30,982
----------- ------------
Net increase (decrease) in cash and cash
equivalent $ ( 49) $ 2,995
============ ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 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 six month period ended June 30, 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 June 30, 1995, the Company has outstanding borrowings of
$50,500,000 under its existing $125,000,000 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 June 30, 1995, the amount available for
borrowing under the line of credit was $74,500,000. In addition to
this credit facility, the Company has obtained letters of credit
totaling $7,000,000 to provide collateral on its self-insurance
plan. The line of credit bears interest at a variable interest
rate based upon the London Interbank rate or the lender's prime
rate in effect at the time of the borrowing.
As of June 30, 1995, the Company has outstanding borrowings of
$65,000,000 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 - COMMON STOCK OFFERING
On May 11, 1994, the Company sold 1,750,000 shares of its common
stock in a public offering at $18.25 per share. Proceeds to the
Company, net of underwriting discounts, commissions and other costs
were $30,145,000. On June 10, 1994, the underwriters exercised an
overallotment provision in the underwriting agreement for an
additional 375,000 shares of common stock. Net proceeds from the
exercise of the overallotment provision were $6,506,000.
NOTE D - COMMITMENTS
Commitments for the purchase of revenue equipment and the purchase
or construction of terminals aggregated approximately $40,982,000
at June 30, 1995.
<PAGE>
NOTE E - EARNINGS PER SHARE
<TABLE>
<CAPTION>
Quarter Ended June 30
1995 1994
-----------------------------
(Thousands omitted except
per share amounts)
<S> <C> <C>
Weighted average shares outstanding 30,721 29,049
Net effect of dilutive stock options
based on treasury stock method 705 857
----------- -----------
Total weighted average shares outstanding 31,426 29,906
=========== ===========
Net income $ 8,148 $ 9,486
=========== ===========
Earnings per common share and $ 0.26 $ 0.32
common share equivalents =========== ===========
Earnings per common share and common share equivalents are computed
by dividing net income by the weighted average number of shares of
common stock and common stock equivalents outstanding during the
period.
</TABLE>
<PAGE>
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:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
-------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue 100.0% 100.0% 100.0% 100.0%
Operating expenses and costs:
Salaries, wages and benefits 54.8% 51.0% 55.1% 52.5%
Operating supplies and expenses 6.5% 6.5% 6.5% 6.8%
Operating taxes and licenses 4.1% 3.8% 4.2% 4.1%
Insurance 3.2% 3.2% 3.4% 2.9%
Communications and utilities 1.9% 1.9% 1.9% 2.0%
Depreciation and amortization 6.4% 5.7% 6.4% 5.9%
Rents and purchased transportation 7.8% 9.7% 7.9% 10.3%
Other 4.4% 4.4% 4.5% 4.4%
-------------------------------------------
Total operating expenses and
costs 89.1% 86.2% 89.9% 88.9%
-------------------------------------------
Operating income 10.9% 13.8% 10.1% 11.1%
Interest expense 1.7% 1.5% 1.7% 1.5%
Other income, net 0.1% 0.1% 0.1% 0.1%
-------------------------------------------
Income before income taxes 9.3% 12.4% 8.5% 9.7%
Income taxes 3.6% 4.7% 3.2% 3.7%
-------------------------------------------
Net income 5.7% 7.7% 5.3% 6.0%
===========================================
</TABLE>
<PAGE>
Results of Operations
Results of operations for the three and six months ended June 30,
1994 were materially impacted by a 24-day strike during April 1994
called by the International Brotherhood of Teamsters against
several competing companies in the less-than-truckload industry.
As a result, comparisons of operations for the three and six months
ended June 30, 1995 to the strike-impacted periods from the
previous year were materially impacted.
Operating Revenue
- -----------------
Operating revenue for the six months ended June 30, 1995 was
$274,502,000, up 23.1%, compared to $222,928,000 for the six months
ended June 30, 1994. Operating revenue for the three months ended
June 30, 1995 was $141,969,000, up 14.8%, compared to $123,656,000
in the strike-impacted three months ended June 30, 1994. The
growth in operating revenue in the six months ended June 30, 1995
compared to the six months ended June 30, 1994 was primarily
attributable to a 21.2% 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.
- - On April 17, 1995, the Company expanded its service territory
with the addition of terminal locations in: Colorado Springs,
Denver, Fort Collins and Pueblo, CO; Des Moines, IA;
Minneapolis/St. Paul, MN; Omaha, NE; Madison and Milwaukee, WI.
In addition to the increase in tonnage, operating revenue for the
six months ended June 30, 1995 was affected by a 1.1% increase in
revenue per hundred weight as compared to the six months ended June
30, 1994. 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.
- - The Company's average length of haul increased 5.1%, to 581
miles, in the six months ended June 30, 1995 as compared to the six
months ended June 30, 1994. The increase in average length of haul
was primarily a result of the Company's expanded service territory.
Management expects that growth in operating revenue is sustainable
in the near future. 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 increased
to 89.9% in the six months ended June 30, 1995 from 88.9% in the
six months ended June 30, 1994. Operating expenses as a percentage
of operating revenue increased to 89.1% in the three months ended
June 30, 1995 from 86.2% in the three months ended June 30, 1994.
This overall increase was primarily attributable to:
- - Salaries, wages and benefits as a percentage of operating
revenue increased to 55.1% in the six months ended June 30, 1995
from 52.5% in the six months ended June 30, 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
3.4% in the six months ended June 30, 1995 from 2.9% in the six
months ended June 30, 1994. This increase was primarily a result
of increased experience of accident and cargo claims. During the
twelve months prior to June 30, 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
<PAGE>
upward trend in insurance expenses as they relate to operating
revenue but expects a stabilization of these expenses near
historical levels.
- - Depreciation and amortization as a percentage of operating
revenue increased to 6.4% in the six months ended June 30, 1995
from 5.9% in the six months ended June 30, 1994. This increase was
primarily a result of 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.
These increases in operating expenses as a percentage of operating
revenue were partially offset by improvements in the following
areas:
- - Rents and purchased transportation as a percentage of
operating revenue decreased to 7.9% in the six months ended June
30, 1995 from 10.3% in the six months ended June 30, 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. 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.
- - Operating supplies and expenses as a percentage of operating
revenue decreased to 6.5% in the six months ended June 30, 1995
from 6.8% in the six months ended June 30, 1994. This decrease was
primarily due to a 3.1% improvement in the Company's linehaul load
factor (the average tonnage transported in a typical movement of
freight between terminals).
Other
- -----
Interest expense as a percentage of operating revenue increased to
1.7% in the six months ended June 30, 1995 from 1.5% in the six
months ended June 30, 1994. This increase was primarily
attributable to increased costs of borrowing funds under the
Company's variable-rate, revolving line of credit facility. 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 six
months of 1995, up from 38.0% for the first six months of 1994.
Net income for the six months ended June 30, 1995, was $14,426,000,
up 7.5%, from $13,419,000 for the six months ended June 30, 1994.
Liquidity and Capital Resources
The continued growth in operating revenue and the expansion of
service territory initiated during 1995 required significant
capital resources in the six months ended June 30, 1995.
Capital requirements during the six months ended June 30, 1995
consisted primarily of $74,660,000 in investing activities. The
Company invested $75,118,000 in capital expenditures during the six
months ended June 30, 1995 comprised of $44,533,000 in additional
revenue equipment, $17,480,000 in new terminal facilities or the
expansion of existing terminal facilities and $13,105,000 in other
equipment. Management expects capital expenditures for the full
year of 1995 will be approximately $130,000,000. 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 June 30, 1995, the
Company had commitments for land, terminals, revenue and other
equipment of approximately $40,982,000. These commitments were for
the completion of projects in process at June 30, 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
six months ended June 30, 1995 with cash from operations and
financing activities. Cash from operations totaled $22,684,000 in
the six months ended June 30, 1995 compared to $17,432,000 in the
six months ended June 30, 1994. Financing activities augmented
cash flow by $51,927,000 in the six months ended June 30, 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
<PAGE>
utilizes a variable-rate, unsecured revolving line of credit
provided by NationsBank of Texas, N.A., Texas Commerce Bank, N.A.
and Wachovia Bank of Georgia, N.A. Effective May 31, 1995, the
limit of this line of credit facility was increased to $125,000,000
from $75,000,000. During the six months ended June 30, 1995, the
Company utilized this facility to provide $16,500,000 of net
financing, bringing outstanding borrowings under the facility to
$50,500,000 and leaving $74,500,000 available for borrowing. The
Company also maintains a short-term, unsecured revolving line of
credit with NationsBank of Texas, N.A. Effective May 9, 1995, the
limit of this short-term facility was increased to $7,500,000 from
$5,000,000. At June 30, 1995, $5,500,000 was available for
borrowing. In addition, the Company maintains a $10,000,000 line
of credit with NationsBank, N.A. to obtain letters of credit to
provide collateral for its self-insurance program. At June 30,
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 six months ended June 30,
1995, the Company utilized this agreement to issue a $15,000,000
note at 8.55% with a ten year maturity and a $20,000,000 note at
6.92% with a ten year maturity. The proceeds of these notes were
used primarily to repay borrowings from the revolving line of
credit or to fund capital expenditures. At June 30, 1995,
$25,000,000 was available under this facility 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 June 30, 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 June 30, 1995, future rental commitments on
operating leases were $42,347,000. 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 June 30, 1995, the Company had no outstanding inquiries with any
state or federal environmental agency.
Recent Events
Effective July 10, 1995, the Company expanded its all-points
coverage to the states of Colorado, Iowa, Nebraska and Wisconsin
with the opening of twelve new terminal locations.
Effective August 14, 1995, the Company will open seven terminal
locations in the state of Florida and provide all-points coverage
to that state. With the addition of Florida, the Company will
provide all-points coverage to 21 states.
<PAGE>
INDEX
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (unaudited)
- -------
Condensed consolidated balance sheets--June 30, 1995 and
December 31, 1994
Condensed consolidated statements of income--Three months
ended June 30, 1995 and 1994; Six months ended June 30, 1995
and 1994
Condensed consolidated statements of cash flows--Six months
ended June 30, 1995 and 1994
Notes to condensed consolidated financial statements--June 30,
1995
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings.
- -------
As was disclosed on Form 10-Q for the quarterly period ended March
31, 1995, a complaint was filed against the Company on March 15,
1995 by American Freight System, Inc. of Kansas City, Kansas
alleging among other things, federal trade name and trademark
infringement by the Company. On July 19, 1995, both parties agreed
upon a release and settlement of all claims arising from the
complaint. Under the settlement agreement, American Freightways
acquired all rights to the disputed trademark. The settlement will
not have a material impact upon American Freightways.
Item 6. Exhibits and Reports on Form 8-K
- ------
(a) Exhibits:
--------
(10) First Amendment to Amended and Restated
Credit Agreement among NationsBank of Texas, N.A.,
as agent, the Registrant and its subsidiary dated
May 31, 1995
$20,000,000 note dated June 15, 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 June 30, 1995.
<PAGE>
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: July 28, 1995 /s/James R. Dodd
James R. Dodd
Executive Vice President
Accounting & Finance
and Chief Financial Officer
<PAGE>
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "First Amendment"), dated as of May 31, 1995, is entered into
among AMERICAN FREIGHTWAYS CORPORATION, an Arkansas corporation
("AFC"), AMERICAN FREIGHTWAYS, INC., an Arkansas corporation
("AFI"; AFC and AFI are referred to collectively as the "Companies"
and individually as a "Company"), the banks listed on the signature
pages hereof (the "Lenders"), NATIONSBANK OF TEXAS, N.A., in its
capacity as agent (in said capacity, the "Agent").
BACKGROUND
----------
A. Companies, Lenders and Agent heretofore entered into that
certain Amended and Restated Credit Agreement, dated as of October
20, 1994 (the "Credit Agreement"; the terms defined in the Credit
Agreement and not otherwise defined herein shall be used herein as
defined in the Credit Agreement).
B. Companies, Lenders and Agent desire to make certain
amendments to the Credit Agreement to provide for an increase in
the amount of the Commitment.
NOW, THEREFORE, in consideration of the covenants, conditions
and agreements hereafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby
acknowledged, Companies, Lenders and Agent covenant and agree as
follows:
1. AMENDMENTS.
(a) The amount of "$75,000,000" set forth in the introductory
paragraph of the Credit Agreement is hereby amended to be
"$125,000,000."
(b) The definition of "Commitment" set forth in Article I of
the Credit Agreement is hereby amended to read as follows:
"Commitment means $125,000,000, as reduced from time
to time pursuant to Section 2.04 hereof."
2. REPRESENTATIONS AND WARRANTIES TRUE: NO EVENT OF
DEFAULT. By its execution and delivery hereof, each Company
represents and warrants that, as of the date hereof and after
giving effect to the amendments contemplated by the foregoing
Section 1:
(a) the representations and warranties contained in the
Credit Agreement are true and correct on and as of the date hereof
as made on and as of such date;
(b) no event has occurred and is continuing which constitutes
a Default or an Event of Default;
<PAGE>
(c) each Company has full power and authority to execute and
deliver this First Amendment, the $57,500,000 replacement Note
payable to the order of NationsBank of Texas, N.A. (the
"NationsBank Note"), the $42,500,000 replacement Note payable to
the order of Texas Commerce Bank National Association (the "Texas
Commerce Note"), and the $25,000,000 replacement Note payable to
the order of Wachovia Bank of Georgia, N.A. (the "Wachovia Note"),
and this First Amendment and the Credit Agreement, as amended
hereby, the NationsBank Note, the Texas Commerce Note and the
Wachovia Note constitute the legal, valid and binding obligations
of such Company, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and except as rights to
indemnity may be limited by federal or state securities laws; and
(d) no authorization, approval consent, or other action by,
notice to, or filing with, any governmental authority or other
Person (including, but not limited to, with respect to the
Prudential Debt), is required for the execution, delivery or
performance by each Company of this First Amendment, the
NationsBank Note, the Texas Commerce Note or the Wachovia Note.
3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall
be effective as of May 31, 1995 subject to the following:
(i) Agent shall have received counterparts of this First
Amendment executed by each Lender;
(ii) Agent shall have received counterparts of this First
Amendment executed by each Company;
(iii) NationsBank of Texas, N.A. shall have received
the executed NationsBank Note;
(iv) Texas Commerce Bank National Association shall have
received the executed Texas Commerce Note;
(v) Wachovia Bank of Georgia, N.A. shall have received
the executed Wachovia Note;
(vi) Agent shall have received certified copies of
resolutions of each Company authorizing execution, delivery
and performance of this First Amendment, the NationsBank Note,
the Texas Commerce Note and the Wachovia Note; and
(vii) Agent shall have received, in form and
substance satisfactory to Agent and its counsel, such other
documents, certificates and instruments as Agent shall
require.
<PAGE>
4. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this First Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder",
or words of like import shall mean and be a reference to the Credit
Agreement, as affected and amended hereby.
(b) The Credit Agreement, as amended by the amendments
referred to above, shall remain in full force and effect and is
hereby ratified and confirmed.
5. COSTS, EXPENSES AND TAXES. The Companies, jointly and
severally, agree to pay on demand all costs and expenses of Agent
in connection with the preparation, reproduction, execution and
delivery of this First Amendment and the other instruments and
documents to be delivered hereunder (including the reasonable fees
and out-of-pocket expenses of counsel for Agent with respect
thereto and with respect to advising Agent as to its rights and
responsibilities under the Credit Agreement, as hereby amended).
6. EXECUTION IN COUNTERPARTS. This First Amendment may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which when
taken together shall constitute but one and the same instrument.
7. GOVERNING LAW: BINDING EFFECT. This First Amendment
shall be governed by and construed in accordance with the laws of
the State of Texas and shall be binding upon each Company and each
Lender and their respective successors and assigns.
8. HEADINGS. Section headings in this First Amendment are
included herein for convenience of reference only and shall not
constitute a part of this First Amendment for any other purpose.
9. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY
THIS FIRST AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment as the date first above written.
AMERICAN FREIGHTWAYS CORPORATION
By: /s/James R. Dodd
Title: Executive Vice President -
Accounting & Finance
AMERICAN FREIGHTWAYS, INC.
By: /s/James R. Dodd
Title: Executive Vice President -
Accounting & Finance
NATIONSBANK OF TEXAS, N.A.
as Administrative Lender and as a Lender
By: /s/Steve Deily
Title: Senior Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By: /s/Scott Brunke
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/F. Alan Smith
Title: Vice President
<PAGE>
American Freightways Corporation
American Freightways, Inc.
SENIOR NOTE
No. V-001
ORIGINAL PRINCIPAL AMOUNT: $20,000,000
ORIGINAL ISSUE DATE: June 15, 1995
INTEREST RATE: 6.92%
INTEREST PAYMENT DATES: March 15, June 15, September 15 and
December 15
FINAL MATURITY DATE: June 15, 2005
PRINCIPAL INSTALLMENT DATES AND AMOUNTS:
June 15, 2001, $4,000,000; June 15, 2002, $4,000,000;
June 15, 2003, $4,000,000; and June 15, 2004, $4,000,000.
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
TWENTY MILLION DOLLARS ($20,000,000), 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) 8.92%
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
<PAGE>
"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.
<PAGE>
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
June 30, 1995 year to date consolidated financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,950
<SECURITIES> 0
<RECEIVABLES> 52,679
<ALLOWANCES> 663
<INVENTORY> 1,983
<CURRENT-ASSETS> 73,163
<PP&E> 468,729
<DEPRECIATION> 113,688
<TOTAL-ASSETS> 431,615
<CURRENT-LIABILITIES> 48,020
<BONDS> 152,897
<COMMON> 308
0
0
<OTHER-SE> 194,762
<TOTAL-LIABILITY-AND-EQUITY> 431,615
<SALES> 0
<TOTAL-REVENUES> 274,502
<CGS> 0
<TOTAL-COSTS> 246,722
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 4,689
<INCOME-PRETAX> 23,362
<INCOME-TAX> 8,936
<INCOME-CONTINUING> 14,426
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,426
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
<FN>
<F1>Provision for doubtful accounts included in costs and expenses applicable
to revenues.
</FN>
</TABLE>
