<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 June 30, 1998
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 No. 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: (870) 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 of 1934 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.
[X] Yes [ ] No
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 June 30, 1998:
31,635,418.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000'S OMITTED)
<TABLE>
JUNE 30, December 31,
1998 1997
----------- -----------
(UNAUDITED) (Note)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 5,598 $ 1,755
Trade receivables, less
Allowance for doubtful
accounts (1998-$1,911; 1997-$1,774) 88,063 78,700
Operating supplies and inventories 3,849 2,882
Prepaid expenses 13,761 8,671
Deferred income taxes 16,835 13,306
Income taxes receivable - 1
----------- -----------
Total current assets 128,106 105,315
Property and equipment 735,653 699,176
Accumulated depreciation and
amortization (257,896) (230,870)
----------- -----------
477,757 468,306
Other assets 2,112 1,952
----------- -----------
$ 607,975 $ 575,573
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 12,316 $ 12,910
Accrued expenses 67,260 54,114
Federal and state income taxes 3,278 -
Current portion of long-term debt 11,530 11,497
----------- -----------
Total current liabilities 94,384 78,521
Long-term debt, less
current portion (Note B) 209,920 210,411
Deferred income taxes 64,743 59,225
Shareholders' equity
Common stock, par value $.01 per share--
authorized 250,000 shares; issued and outstanding
31,635 in 1998 and 31,568 in 1997 316 316
Additional paid-in capital 105,515 104,832
Retained earnings 133,097 122,268
----------- -----------
238,928 227,416
----------- -----------
$ 607,975 $ 575,573
=========== ===========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1997,
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)
<TABLE>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUE $246,402 $219,088 $477,051 $412,140
OPERATING EXPENSES AND COSTS
Salaries, wages and benefits 149,547 130,272 292,977 248,577
Operating supplies and expenses 20,163 18,663 40,180 37,175
Operating taxes and licenses 10,446 8,877 20,441 17,478
Insurance 7,376 6,732 14,517 13,414
Communications and utilities 4,756 3,581 8,711 7,076
Depreciation and amortization 13,772 13,024 27,581 25,870
Rents and purchased
transportation 14,416 13,607 27,435 23,497
Other 10,039 8,760 20,017 17,079
------------------ ------------------
230,515 203,516 451,859 390,166
------------------ ------------------
OPERATING INCOME 15,887 15,572 25,192 21,974
OTHER INCOME (EXPENSE)
Interest expense (3,925) (4,174) (8,013) (8,260)
Interest income 65 67 129 122
Gain on disposal of assets 820 16 841 33
Other, net 24 9 52 19
------------------ ------------------
(3,016) (4,082) (6,991) (8,086)
INCOME BEFORE INCOME TAXES 12,871 11,490 18,201 13,888
------------------ ------------------
FEDERAL AND STATE INCOME TAXES
Current 4,156 2,088 5,383 3,381
Deferred 1,057 2,416 1,988 2,063
------------------ ------------------
5,213 4,504 7,371 5,444
------------------ ------------------
NET INCOME $ 7,658 $ 6,986 $ 10,830 $ 8,444
================== ==================
PER SHARE (NOTE D)
Net income-basic $ 0.24 $ 0.22 $ 0.34 $ 0.27
Net income-assuming dilution $ 0.24 $ 0.22 $ 0.34 $ 0.27
================== ==================
AVERAGE SHARES OUTSTANDING (NOTE D)
Basic 31,612 31,301 31,590 31,280
Assuming dilution 31,752 31,597 31,688 31,544
================== ==================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(000'S OMITTED)
<TABLE>
Six Months Ended
June 30
1998 1997
----------------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 39,892 $ 33,690
INVESTING ACTIVITIES
Proceeds from sales of assets 1,963 67
Capital expenditures (38,223) (27,983)
----------- -----------
Net cash used by investing activities (36,260) (27,916)
FINANCING ACTIVITIES
Principal payments on long-term debt (15,665) (55,694)
Proceeds from notes payable
and long-term borrowings 15,208 48,400
Proceeds from issuance of common stock 668 1,188
----------- -----------
Net cash provided (used)
by financing activities 211 (6,106)
----------- -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ 3,843 $ (332)
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1998
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, 1998, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998. 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, 1997.
NOTE B - LONG-TERM DEBT
As of June 30, 1998, the Company has outstanding borrowings of
$65,000,000 under its existing $160,000,000 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
Customer Center facilities. At June 30, 1998, the amount available
for borrowing under the line of credit was $95,000,000. In addition
to this credit facility, the Company has obtained letters of credit
totaling $3,976,000 to provide collateral on its self-insurance plan.
As of June 30, 1998, the Company has outstanding borrowings of
$129,250,000 under an uncommitted Master Shelf Agreement which
provides for the issuance of up to $140,000,000 of senior promissory
notes with an average life not to exceed twelve years. In addition,
the Company has outstanding an unsecured senior note for $20,000,000
payable in equal annual installments of $5,000,000 through November
2001.
NOTE C - COMMITMENTS
Commitments for the purchase of revenue equipment and the purchase or
construction of Customer Centers aggregated approximately $53,794,000
at June 30, 1998.
NOTE D - EARNINGS PER SHARE
Net income for purposes of basic earnings per share and earnings per
share--assuming dilution was $7,658,000 and $6,986,000 for the three
month periods ended June 30, 1998 and 1997, respectively. For the six
month periods ended June 30, 1998 and 1997, net income for purposes of
basic earnings per share and earnings per share--assuming dilution was
$10,830,000 and $8,444,000, respectively. A reconciliation of average
shares outstanding for these periods is presented below:
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---------------------------------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Average shares outstanding-basic 31,612 31,301 31,590 31,280
Effect of dilutive stock options 140 296 98 264
Average shares outstanding
-assuming dilution 31,752 31,597 31,688 31,544
========= ========= ========= =========
</TABLE>
NOTE E - RECENT ACCOUNTING PRONOUNCEMENTS
The impact of adoption of Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" which is effective for
fiscal years beginning after December 15, 1997 was not material.
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
revenue:
<TABLE>
Three Months Six Months
Ended Ended
June 30 June 30
1998 1997 1998 1997
------------------------------
<S> <C> <C> <C> <C>
Operating revenue 100.0% 100.0% 100.0% 100.0%
Operating expenses and costs:
Salaries, wages and benefits 60.7% 59.5% 61.4% 60.3%
Operating supplies and expenses 8.2% 8.5% 8.4% 9.0%
Operating taxes and licenses 4.2% 4.1% 4.3% 4.2%
Insurance 3.0% 3.1% 3.0% 3.3%
Communications and utilities 1.9% 1.6% 1.8% 1.7%
Depreciation and amortization 5.6% 5.9% 5.8% 6.3%
Rents and purchased transportation 5.9% 6.2% 5.8% 5.7%
Other 4.1% 4.0% 4.2% 4.2%
----- ----- ----- -----
Total operating expenses
and costs 93.6% 92.9% 94.7% 94.7%
----- ----- ----- -----
Operating income 6.4% 7.1% 5.3% 5.3%
Interest expense (1.6%) (1.9%) (1.7%) (2.0%)
Other income, net 0.4% 0.1% .2% 0.1%
----- ----- ----- -----
Income before income taxes 5.2% 5.3% 3.8% 3.4%
Income taxes 2.1% 2.1% 1.5% 1.3%
----- ----- ----- -----
Net income 3.1% 3.2% 2.3% 2.1%
===== ===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
Operating Revenue
Operating revenue for the six months ended June 30, 1998 was
$477,051,000, up 15.7%, compared to $412,140,000 for the six months
ended June 30, 1997. Operating revenue for the three months ended
June 30, 1998 was $246,402,000, up 12.5%, compared to $219,088,000 for
the three months ended June 30, 1997. The growth in operating revenue
was primarily the result of increased revenue per hundred weight and
increased tonnage from new and existing customers.
Tonnage handled by the Company during the six and three months ended
June 30, 1998, increased 12.8% and 9.3%, respectively, over the same
time periods of 1997. This increase in tonnage was mainly a result of
the following:
- - The Company continued to increase its market penetration into
existing service territories, particularly those geographic areas
added during 1995, 1996 and 1997. During 1995, the Company expanded
its all-points coverage to the states of Colorado, Florida, Iowa,
Nebraska, North Carolina, South Carolina and Wisconsin. 1996
expansions included the states of Delaware, Maryland, Minnesota,
Virginia and West Virginia. Effective August 4, 1997, all-points
coverage was added to the state of New Mexico.
<PAGE>
- - The continued increase in intrastate tonnage following the
deregulation of intrastate commerce effective January 1, 1995.
- - Effective January 1, 1998, the Company increased its all-points
coverage to 28 states with the addition of the state of Michigan.
Revenue per hundred weight for the first six months of 1998 was up
2.3% from levels experienced in the first six months of 1997. Factors
contributing to the increase in revenue per hundred weight were:
- - A general rate increase of approximately 5.5% effective January
1, 1998. General rate increases initially affect approximately 45% of
the Company's customers. The remaining customers' rates are
determined by contracts and guarantees and are negotiated throughout
the year.
- - A fuel surcharge was in effect during the first six months of
1997, but not in effect for the majority of 1998. The Company
initiated a fuel surcharge beginning September 6, 1996 to help recover
the increased costs of fuel. This surcharge is tied to the Department
of Energy's National Diesel Fuel Index and ranged from 0.7% to 1.3%
for LTL shipments as of June 30, 1997. The surcharge is designed to
suspend at the time this national index moves below $1.15 per gallon.
Effective January 7, 1998, the fuel surcharge was suspended and
remains suspended as of June 30, 1998.
- - The percentage of the Company's total revenue that was derived
from truckload shipments (greater than 10,000 pounds) declined to 5.7%
during the six months ended June 30, 1998 as compared to 5.8% during
the six months ended June 30, 1998.
Even though inventory adjustments in the softening consumer goods
sector of the economy appeared to have reduced demand for less-than-
truckload services during the second quarter of 1998, management
expects that growth in operating revenue is sustainable in the near
term. The Company's expansions of service territory during 1998 and
1997 were less aggressive than those initiated in prior years, and the
primary focus for growth in operating revenue in the near term will be
further penetration of existing markets. As a result, any near-term
percentage growth in operating revenue will likely be less than that
experienced in recent years. The foregoing statement concerning the
sustainability of revenue growth is subject to a number of factors,
including LTL industry capacity, increased tonnage and general
economic conditions.
Operating Expenses
Operating expenses as a percentage of operating revenue were 94.7% for
the six months ended June 30, 1998 and 1997. Operating expenses as a
percentage of operating revenue increased to 93.6% in the three months
ended June 30, 1998 from 92.9% in the three months ended June 30,
1997. The following categories of expenses declined as a percentage
of revenue for the first six months of 1998 as compared to the same
time period during 1997:
- - Operating supplies and expenses as a percentage of operating
revenue decreased to 8.4% in the six months ended June 30, 1998 from
9.0% in the six months ended June 30, 1997. This improvement was due
to reduced fuel costs resulting from lower fuel prices and the
increased use of purchased transportation. This improvement in fuel
costs was partially offset by increased costs of maintaining equipment
and facilities. In the near term, management expects this gradual
upward trend in maintenance costs to continue as the Company's fleet
ages.
- - Depreciation and amortization as a percentage of operating
revenue improved to 5.8% in the six months ended June 30, 1998 from
6.3% in the six months ended June 30, 1997. This improvement was
largely due to the increased usage of purchased transportation and
operating lease financing of revenue equipment.
- - Insurance as a percentage of operating revenue decreased to 3.0%
in the six months ended June 30, 1998 from 3.3% in the six months
ended June 30, 1997. This improvement was largely due to improved
experience involving vehicle accidents and cargo claims. Management
does not expect this downward trend to continue. Rather, it is
expected that insurance costs as a percentage of operating revenue
will stabilize or gradually increase during 1998.
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 61.4% in the six months ended June 30, 1998 from 60.3% in
the six months ended June 30, 1997. This increase was largely the
result of increased costs in the areas of workmen's compensation and
health care. After benefiting from relatively low claims in these
areas during the first six months of 1997, the level of claims
returned to a level more typically experienced by the Company.
Management expects that during the remainder of 1998, these expenses
will remain at current levels. Comparing the first six months of 1998
to the same period of 1997, salaries and wages as a percentage of
operating revenue remained relatively flat despite a general wage
increase of 3.5% in March 1998. During the remainder of 1998,
management anticipates that ongoing educational programs and changes
in operations will result in productivity gains in the form of
improved pickup and delivery density, increased line haul load factor
and more direct line haul schedules. However, these gains cannot be
assured and are subject to a variety of factors which may or may not
be within the control of management.
<PAGE>
- - Rents and purchased transportation as a percentage of operating
revenue increased to 5.8% in the six months ended June 30, 1998 from
5.7% in the six months ended June 30, 1997. This increase was a
result of the increased use of operating lease financing and the
utilization of purchased transportation in selected line haul lines in
order to improve asset utilization and decrease overall costs of
operations. Management expects rents and purchased transportation as
a percentage of operating revenue to remain at current levels.
Other
Interest expense as a percentage of operating revenue decreased to
1.7% in the six months ended June 30, 1998, compared to 2.0% in the
six months ended June 30, 1997. This improvement is primarily the
result of lower interest rates and of reducing total debt to
$221,450,000 as of June 30, 1998 from $230,945,000 as of June 30,
1997.
The quarter and year to date results for 1998 were favorably impacted
by $822,000 before taxes as a result of the sale of a surplus
property.
The effective tax rate of the Company was 40.5% for the six months
ended June 30, 1998, up from 39.2% for the same time period of 1997.
This increase was due to increased federal tax rates on higher levels
of income, as well as higher state tax rates.
Net income for the six months ended June 30, 1998, was $10,830,000, up
28.3%, from $8,444,000 for the six months ended June 30, 1997. Net
income for the three months ended June 30, 1998, was $7,658,000, up
9.6%, from $6,986,000 for the three months ended June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Capital requirements during the six months ended June 30, 1998
consisted primarily of $36,260,000 in investing activities. The
Company invested $38,223,000 in capital expenditures during the six
months ended June 30, 1998 comprised of $4,862,000 in additional
revenue equipment, $20,116,000 in new Customer Center facilities or
the expansion of existing facilities and $13,245,000 in other
equipment. Management expects capital expenditures for the full year
of 1998 will be approximately $100,000,000. However, the amount of
capital expenditures required in 1998 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, 1998, the Company had commitments
for land, Customer Centers, revenue and other equipment of
approximately $53,794,000. These commitments were mostly for the
completion of projects in process at June 30, 1998.
The Company provided for its capital resource requirements in the six
months ended June 30, 1998 predominantly with cash from operations.
Cash from operations totaled $39,892,000 in the six months ended June
30, 1998 compared to $33,690,000 provided by operations in the six
months ended June 30, 1997. Net financing activities provided an
additional $211,000 of cash flow in the six months ended June 30,
1998. Two primary sources of credit financing were available to the
Company: 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 $160,000,000
provided by NationsBank of Texas, N.A. (agent), Chase Bank of
Texas, N.A., Wachovia Bank of Georgia, N.A., ABN-AMRO Bank N.V. and
The First National Bank of Chicago. At June 30, 1998, $65,000,000
was outstanding on the revolving line of credit, leaving
$95,000,000 available for borrowing. The Company also had
$10,000,000 available under its short-term, unsecured revolving
$10,000,000 line of credit with NationsBank of Texas, N.A. In
addition, the Company maintains a $10,000,000 line of credit with
NationsBank of Texas, N.A. to obtain letters of credit required for
its self-insurance program. At June 30, 1998, the Company had
obtained letters of credit totaling $3,976,000 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
$140,000,000 in medium to long-term unsecured notes at an interest
rate calculated at issuance. At June 30, 1998, the Company had
$129,250,000 outstanding under this facility.
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, 1998, and to fund current operating and
capital needs. However, if additional financing is required,
management believes it will be available.
<PAGE>
The Company uses off-balance sheet financing in the form of operating
leases primarily in the following areas; land and structures, revenue
equipment and other equipment. At June 30, 1998, future rental
commitments on operating leases were $97,735,000. The Company prefers
to utilize operating leases for these areas and plans to use them in
the future when such financing is available and suitable.
Future rental commitments on operating leases are as follows:
<TABLE>
Land and Revenue Other
Total Structures Equipment Equipment
------------------------------------------
<S> <C> <C> <C> <C>
1998 $15,457 $ 2,783 $ 4,917 $ 7,757
1999 25,240 3,842 9,833 11,565
2000 22,549 2,472 9,833 10,244
2001 14,365 1,833 9,057 3,475
2002 10,537 1,036 9,303 198
Thereafter 9,587 1,981 7,606 ---
------------------------------------------
Total $97,735 $13,947 $ 50,549 $ 33,239
------------------------------------------
</TABLE>
YEAR 2000 ISSUES
The Company has assessed the impact of the Year 2000 issues on its
computer software systems and applications, and determined that
although many of its applications are already compliant the Company
will have to modify or replace other applications. The Company
expects to have all applications fully compliant by the end of 1998.
The Company also has initiated discussions with its significant
customers and suppliers to determine the extent to which the Company's
interface systems would be vulnerable to those third parties' failure
to remediate their own Year 2000 issues. There is no assurance that
the systems of other companies on which the Company's systems rely
will be timely converted and would not have an adverse effect on the
Company's systems. Expenditures related to the Company's Year 2000
initiatives have not been and are not expected to be material to the
Company's results of operations or financial position.
ENVIRONMENTAL
At June 30, 1998, the Company had no outstanding inquiries with any
state or federal environmental agency.
<PAGE>
INDEX
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets--June 30, 1998 and December
31, 1997
Condensed consolidated statements of income-Three months ended
June 30, 1998 and 1997; Six months ended June 30, 1998 and 1997
Condensed consolidated statements of cash flows--Six months ended
June 30, 1998 and 1997
Notes to condensed consolidated financial statements--June 30,
1998
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(10) Fifth Amendment to Amended and Restated Credit Agreement among
NationsBank of Texas, N.A., as Agent, the Registrant and its
Subsidiary dated May 15, 1998.
Amended and Restated Appointed Non-Employee Director
Stock Option Plan
Amended and Restated Elected Non-Employee Director
Stock Option Plan
(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, 1998.
<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 20, 1998 /s/Frank Conner
Frank Conner
Executive Vice President
Accounting & Finance
and Chief Financial Officer
<PAGE>
FIFTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "Fifth Amendment"), dated as of May 15, 1998, 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 are parties to that certain
Amended and Restated Credit Agreement, dated as of October 20,
1994, as amended by that certain First Amendment to Amended and
Restated Credit Agreement, dated as of May 31, 1995, that certain
Second Amendment to Amended and Restated Credit Agreement, dated as
of March 26, 1996, that certain Third Amendment to Amended and
Restated Credit Agreement, dated as of May 31, 1996, and that
Fourth Amendment to Amended and Restated Credit Agreement, dated as
of March 31, 1997 (said Credit Agreement, as amended, 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 amend the Credit
Agreement to (i) remove Credit Lyonnais New York Branch ("Credit
Lyonnais") as a Lender, (ii) decrease the Commitment, and
(iii) extend the Maturity Date.
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 "$175,000,000" set forth in the
introductory paragraph of the Credit Agreement is hereby
amended to be "$160,000,000".
(b) The definition of "Commitment" set forth in
Article I of the Credit Agreement is hereby amended to read as
follows:
"'Commitment' means $160,000,000, as reduced
from time to time pursuant to Section 2.04 hereof."
<PAGE>
(c) The definition of "Maturity Date" set forth in
Article I of the Credit Agreement is hereby amended to read as
follows:
"'Maturity Date' means April 1, 2003, or such
earlier date the Obligation becomes due and payable
(whether by acceleration, prepayment in full or
otherwise) or such later date as extended pursuant to
Section 2.12."
(d) The Specified Percentage of each Lender is hereby
amended to be the percentage beside each such Lender's name on
the signature pages 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;
(c) each Company has full power and authority to execute
and deliver this Fifth Amendment, and this Fifth Amendment and
the Credit Agreement, as amended hereby, 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), other than the Board of Directors of the
Companies is required for the execution, delivery or
performance by each Company of this Fifth Amendment.
3. CONDITIONS OF EFFECTIVENESS. This Fifth Amendment shall
be effective as of May 15, 1998, subject to the following:
(a) Agent shall have received counterparts of this Fifth
Amendment executed by each Lender;
(b) Agent shall have received counterparts of this Fifth
Amendment executed by each Company;
<PAGE>
(c) Agent shall have received certified copies of
resolutions of each Company authorizing execution, delivery
and performance of this Fifth Amendment; and
(d) Credit Lyonnais shall have received payment in full
of all amounts due and owing to it under the Credit Agreement;
and
(e) Agent shall have received, in form and substance
satisfactory to Agent and its counsel, such other documents,
certificates and instruments as Agent shall require.
4. CREDIT LYONNAIS. Upon satisfaction of the conditions set
forth in Section 3 of this Fifth Amendment, Credit Lyonnais shall
(a) not be a Lender under the Credit Agreement and shall no longer
have any rights or obligations with respect thereunder, except for
those which expressly survive termination of the Credit Agreement
or termination of any commitment thereunder, and (b) mark its Note
"PAID IN FULL" and return its Note to the Companies.
5. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this Fifth 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.
6. 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 Fifth 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).
7. EXECUTION IN COUNTERPARTS. This Fifth 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.
8. GOVERNING LAW: BINDING EFFECT. This Fifth 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.
9. HEADINGS. Section headings in this Fifth Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Fifth Amendment for any other purpose.
<PAGE>
10. JOINT AND SEVERAL OBLIGATIONS. The Companies acknowledge
and agree that their obligations and duties under the Credit
Agreement and the other Loan Papers are joint and several in all
instances.
11. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY
THIS FIFTH 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.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Fifth Amendment as the date first above written.
AMERICAN FREIGHTWAYS CORPORATION
By: /s/Frank Conner
Name: Frank Conner
Title:Executive Vice President
AMERICAN FREIGHTWAYS, INC.
By: /s/Frank Conner
Name: Frank Conner
Title:Executive Vice President
NATIONSBANK OF TEXAS, N.A.
as Agent and as a Lender
SPECIFIED PERCENTAGE:
31.250%
By: /s/Dan Killian
Name: Dan Killian
Title: Vice President
CHASE BANK
OF TEXAS, NATIONAL ASSOCIATION
(formerly Texas Commerce Bank
National Association
SPECIFIED PERCENTAGE:
21.875%
By: /s/Ana Moreira
Name: Ana Moreira
Title: Vice President
<PAGE>
WACHOVIA BANK OF GEORGIA, N.A.
SPECIFIED PERCENTAGE:
15.625%
By: /s/Kenneth Washington
Name: Kenneth Washington
Title: Vice President
ABN-AMRO
BANK N.V.
SPECIFIED PERCENTAGE:
15.625%
By: /s/David J. Thomas
Name: David J. Thomas
Title: Vice President
By: /s/Gerald F. Mackin
Name: Gerald F. Mackin
Title: Vice President
THE FIRST
NATIONAL BANK OF CHICAGO
SPECIFIED PERCENTAGE:
15.625%
By: /s/Michael J. Johnson
Name: Michael J. Johnson
Title: Authorized Agent
ACKNOWLEDGED AND AGREED
(For purposes of Section 4 of
this Fifth Amendment):
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/Alain Papiasse
Name: Alain Papiasse
Title: Executive Vice President
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION
AMENDED AND RESTATED
APPOINTED NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
SECTION 1
1. This 1997 Non-Employee Director Stock Option Plan (the
"Plan") as last amended and restated in July, 1998 is intended to
attract and retain the services of a non-employee director
("Director") of American Freightways Corporation (the "Company"),
for the benefit of the Company and its shareholders and to provide
additional incentive for such persons to continue to work for the
best interests of the Company and its shareholders. This Plan is
intended exclusively for the benefit of persons who are appointed
by the Board (defined below) to fill an existing vacancy on such
Board. The effective date of the Plan, prior to its amendment and
restatement, was May 20, 1997.
2. ADMINISTRATION. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board shall
have the power to construe the Plan, to determine all questions
arising thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem
desirable.
The interpretation and construction by the Board of any
provisions of the Plan or of any option granted under it shall be
final. No member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any
option granted under it.
3. ELIGIBILITY. Each person who shall have been appointed
by the Board to fill an then-existing vacancy shall automatically
be granted options to purchase 2,000 shares of the Company's common
stock (subject to further adjustment as provided herein) as of the
date of such appointment and on each succeeding first day in
February, provided, that such automatic option grants shall be made
only if the recipient director (i) is not otherwise an employee of
the Company or any subsidiary on the date of grant, (ii) is a
member of the Board of Directors on the date such option is
granted. Effective February 1, 1998, grants of options under this
Plan shall be for 6,000 shares of the Company's common stock.
The dates on which options are granted hereunder are referred
to herein as the "Grant Date."
All options granted to any Directors under this Section 1
shall vest at the rate of 33.3% per year beginning on the first
anniversary of the Grant Date, except as otherwise provided in
Section 2.
No person may receive in a single year grants of options under
this Plan and grants of options under the Company's Elected Non-
Employee Director Stock Option Plan.
4. SHARES OF STOCK SUBJECT TO THE PLAN. The shares that may
be issued under the Plan shall be authorized and unissued or
reacquired shares of the Company's common stock (the "Common
Stock"). The aggregate number of shares which may be issued under
the Plan shall not
<PAGE>
exceed 22,000 shares of Common Stock, unless an
adjustment is required in accordance with Section 3.
5. AMENDMENT OR TERMINATION OF THE PLAN. The Board of
Directors may, insofar as permitted by law, from time to time,
suspend or terminate the Plan or revise or amend it in any respect
whatsoever, except that no such amendment shall alter or impair or
diminish any rights or obligations under any option theretofore
granted under the Plan without the consent of the person to whom
such option was granted. In addition no such amendment shall be
effective without shareholder approval if such approval is required
in order to assure the Plan's continued qualification under Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as
amended. The Plan's provisions regarding the formula for
determining the amount, exercise price, and timing of options to be
granted under the Plan shall in no event be amended more than once
every six months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended.
6. EXPIRATION OF PLAN. Options may be granted under the
Plan until February 1, 1999. Notwithstanding the foregoing, each
option granted under the Plan shall remain in effect until such
option has been satisfied by the issuance of shares or terminated
in accordance with its terms and the terms of the Plan.
7. NONASSIGNABILITY. No option shall be assignable or
transferable by the grantee except by will or by the laws of
descent and distribution. Except as provided in Section 2, during
the lifetime of the optionee, the option shall be exercisable only
by him or her, and no other person shall acquire any rights
therein.
8. WITHHOLDING TAXES. Whenever shares of Common Stock are
to be issued under the Plan, the Company shall, at its option,
require the optionee to remit to the Company an amount sufficient
to satisfy federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such
shares.
9. DEFINITION OF "FAIR MARKET VALUE". For the purposes of
this Plan, the term "fair market value," when used in reference to
the date of grant of an option shall be the mean:
If the Shares of the Company are listed on a national
securities exchange (including the New York, American or NASDAQ
National Market System) in the United States on the date any Option
is granted, the fair market value per Share shall be deemed to be
the average of the high and low sale prices per share of such
Shares of the Company on such national securities exchange in the
United States on such date, as published by the Wall Street Journal
or other reliable publication, but if the Shares of the Company are
not traded on such date or such national securities exchange is not
open for business on such date, the fair market value per Share
shall be the average of such high and low sale prices on the last
preceding date on which such exchange shall have been open for
business and the Shares of the Company were traded. If the Shares
of the Company are listed on more than one
<PAGE>
national securities exchange in the United States on the date any such
Option is granted, the Committee shall determine, in its discretion, which
national securities exchange shall be used for the purpose of
determining the fair market value per Share.
If at any date any Option is granted a public market exists
for the Shares of the Company but such Shares are not listed on a
national securities exchange in the United States, the fair market
value per Share shall be deemed to be the mean between the closing
bid and asked quotations in the over-the-counter market for such
Shares of the Company in the United States on the date such Option
is granted. If there are no bid and asked quotations for such
Shares on such date, the fair market value per Share shall be
deemed to be the mean between the closing bid and asked quotations
in the over-the-counter market in the United States for such Shares
of the Company on the closest date preceding the date such Option
is granted, for which such quotations are available.
SECTION 2
STOCK OPTIONS
1. AWARD OF STOCK OPTIONS. Awards of stock options shall be
made under the Plan under all the terms and conditions contained
herein. Each option granted under the Plan shall be evidenced by
an option agreement duly executed on behalf of the Company and by
the recipient, which option agreements shall comply with and be
subject to the terms and conditions of the Plan. Any option
agreement may contain such other terms, provisions and conditions
not inconsistent with the Plan as may be determined by the Board.
2. TERM OF OPTIONS AND EFFECT OF TERMINATION.
Notwithstanding any other provision of the Plan, no option granted
under the Plan shall be exercisable after the expiration of ten
years from the date of its grant.
In the event that any outstanding option under the Plan
expires by reason of lapse of time or otherwise is terminated for
any reason, the shares of Common Stock subject to any such option
which have not been issued pursuant to the exercise of the option
shall again become available in the pool of shares of Common Stock
for which options may be granted under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS. Options granted
pursuant to the Plan shall be evidenced by agreements in such form
as the Board shall from time to time determine, which agreements
shall comply with the following terms and conditions.
A. Number of Shares. Each option agreement shall state the
number of shares to which the option pertains.
<PAGE>
B. Option Price. Each option agreement shall state the
option price per share (or the method by which such price shall be
computed), which shall be equal to 100% of the Fair Market Value of
a share of the Common Stock on the date such option is granted.
C. Medium and Time of Payment. The option price shall be
payable upon the exercise of an option in the legal tender of the
United States. Upon receipt of payment, the Company shall deliver
to the optionee (or person entitled to exercise the option) a
certificate or certificates for the shares of Common Stock to which
the option pertains.
D. Exercise of Options. Except as otherwise specifically
provided herein, options granted under the Plan shall vest and
become exercisable in 33.3% increments per year, beginning on the
first anniversary of the Grant Date of the Option.
To the extent that an option has become exercisable and
subject to the restrictions and limitations set forth in this Plan
and any option agreement, it may be exercised in whole or such
lesser amount as may be authorized by the option agreement. If
exercised in part, any vested, unexercised portion of an option
shall continue to be held by the optionee and may thereafter be
exercised as provided herein.
E. Termination of Director. If an optionee ceases to be a
director for any reason other than (a) his death or disability or
(b) his decision not to stand for reelection as director at the
expiration of his term, any option held by such person may be
exercised at any time within 90 days after the date on which such
person ceased to be a director, but only to the extent the option
was vested and exercisable at such date.
If an optionee declines to stand for reelection as director at
the expiration of his term, or if an optionee becomes disabled
prior to the expiration of his term, any vested or unvested options
held by such person as of the date of term expiration or
disability, as the case may be, shall continue to be subject to
this agreement for vesting, exercise and expiration purposes.
If an optionee dies prior to the expiration of his term as
director (or dies after declining to stand for reelection or after
becoming disabled while serving pursuant to the preceding
paragraph), any unvested option held by such person shall
immediately become fully vested and exercisable on the date of
death, and any option held by such director, whether vesting on or
before the date of his death, may be exercised at any time by such
person's estate within one year after the date of death, unless
earlier terminated by lapse of time as provided in Subsection 2 of
Section 2.
F. Death or Disability of Optionee. Any such option
granted hereunder may be exercised by the optionee's guardian in
the case of a disabled optionee, or by the executors or
administrators of the optionee's estate or by any person or persons
who shall have acquired the option directly from the optionee by
his will or the applicable law of descent and distribution.
<PAGE>
SECTION 3
RECAPITALIZATIONS AND REORGANIZATIONS
The number of shares of Common Stock covered by the Plan, the
number of shares and price per share of each outstanding option,
and the number of shares subject to each grant provided for in
Section 1 hereof shall be proportionately adjusted for any increase
or decrease in the number of issued and outstanding shares of
Common Stock resulting from a subdivision or consolidation of
shares or the payment of a stock dividend or any other increase or
decrease in the number of issued and outstanding shares of Common
Stock effected without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any
merger or consolidation, each outstanding option shall pertain to
and apply to the securities to which a holder of the same number of
shares of Common Stock that are subject to that option would have
been entitled. A dissolution or liquidation of the Company, or a
merger or consolidation in which the Company is not the surviving
corporation, shall cause each outstanding option to terminate,
unless the agreement of merger or consolidation shall otherwise
provide; provided that, in the event such dissolution, liquidation,
merger or consolidation will cause outstanding options to
terminate, optionee shall have the right immediately prior to such
dissolution, liquidation, merger or consolidation to exercise his
option in whole or in part without regard to any limitations on the
exercisability of such option other than the expiration date of the
option.
To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by the
Board, whose determination in that respect shall be final, binding
and conclusive.
SECTION 4
MISCELLANEOUS PROVISIONS
1. RIGHTS AS A SHAREHOLDER. An optionee or a transferee of
an option as such shall have no rights as a shareholder with
respect to any shares covered by an option until the date of the
receipt of payment (including any amounts required by the Company
pursuant to Subsection 8 of Section 1) by the Company.
2. PURCHASE FOR INVESTMENT. Unless the shares of Common
Stock to be issued upon exercise of an option granted under the
Plan have been effectively registered under the Securities Act of
1933, as amended (the "Securities Act"), the Company shall be under
no obligation to issue any shares of Common Stock covered by any
option unless the person who exercises such option, in whole or in
part, shall give a written representation and undertaking to the
Company which is satisfactory in
<PAGE>
form and scope to counsel to the Company and upon which, in the opinion
of such counsel, the Company may reasonably rely, that he is acquiring
the shares of Common Stock issued to him pursuant to such exercise of
the option for his own account as an investment and not with a view to,
or for sale in connection with, the distribution of any such shares of
Common Stock, and that he will make no transfer of the same except in
compliance with any rules and regulations in force at the time of
such transfer under the Securities Act, or any other applicable
law, and that if shares of Common Stock are issued without such
registration, a legend to this effect may be endorsed upon the
securities so issued.
3. OTHER PROVISIONS. The option agreements authorized under
the Plan shall contain such other provisions, including, without
limitation, restrictions upon the exercise of the option or
restrictions required by any applicable securities laws, as the
Board shall deem advisable.
4. APPLICATION OF FUNDS. The proceeds received by the
Company from the sale of Common Stock pursuant to the exercise of
options will be used for general corporate purposes.
5. NO OBLIGATION TO EXERCISE OPTION. The granting of an
option shall impose no obligation upon the optionee to exercise
such option.
(The remainder of this page left blank intentionally)
<PAGE>
I, Will Garrison, Secretary of American Freightways
Corporation, certify that the foregoing is a true and correct copy
of the American Freightways Corporation Amended and Restated
Appointed Non-Employee Director Stock Option Plan as adopted by the
Board of Directors of the corporation on July 15, 1998.
/s/Will Garrison
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION
AMENDED AND RESTATED
ELECTED NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
SECTION 1
1. This 1995 Non-Employee Director Stock Option Plan (the
"Plan") as last amended and restated in July, 1998 is intended to
attract and retain the services of a non-employee director
("Director") of American Freightways Corporation (the
"Company"), for the benefit of the Company and its shareholders
and to provide additional incentive for such persons to continue
to work for the best interests of the Company and its
shareholders.
2. ADMINISTRATION. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board shall
have the power to construe the Plan, to determine all questions
arising thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem
desirable.
The interpretation and construction by the Board of any
provisions of the Plan or of any option granted under it shall be
final. No member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any
option granted under it.
3. ELIGIBILITY. Each person who shall have been elected a
director of the Company at its annual meeting of stockholders
shall automatically be granted options to purchase 6,000 shares
of the Company's common stock (subject to further adjustment as
provided herein) on the date such person is initially elected to
the Board (but not on subsequent election dates) and on each
succeeding first day in February (beginning February 1, 1998),
provided, that such automatic option grants shall be made only if
the recipient director (i) is not otherwise an employee of the
Company or any subsidiary on the date of grant, (ii) is a member
of the Board of Directors on the date such option is granted.
The dates on which options are granted hereunder are
referred to herein as the "Grant Date." No person may receive
more than one option grant in any calendar year under the Plan.
All options granted to any Directors under this Section 1
shall vest at the rate of 33.3% per year beginning on the first
anniversary of the Grant Date, except as otherwise provided in
Section 2.
4. SHARES OF STOCK SUBJECT TO THE PLAN. The shares that
may be issued under the Plan shall be authorized and unissued or
reacquired shares of the Company's common stock (the "Common
Stock"). The aggregate number of shares which may be issued
under the Plan shall not exceed 150,000 shares of Common Stock,
unless an adjustment is required in accordance with Section 3.
5. AMENDMENT OR TERMINATION OF THE PLAN. The Board of
Directors may, insofar as permitted by law, from time to time,
suspend or terminate the Plan or revise or amend it in
<PAGE>
any respect whatsoever, except that no such amendment shall alter
or impair or diminish any rights or obligations under any option
theretofore granted under the Plan without the consent of the
person to whom such option was granted. In addition no such
amendment shall be effective without shareholder approval if such
approval is required in order to assure the Plan's continued
qualification under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended. The Plan's provisions
regarding the formula for determining the amount, exercise price,
and timing of options to be granted under the Plan shall in no
event be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code of 1986, as
amended.
6. EXPIRATION OF PLAN. Options may be granted under the
Plan until February 1, 2003. Notwithstanding the foregoing, each
option granted under the Plan shall remain in effect until such
option has been satisfied by the issuance of shares or terminated
in accordance with its terms and the terms of the Plan.
7. NONASSIGNABILITY. No option shall be assignable or
transferable by the grantee except by will or by the laws of
descent and distribution. Except as provided in Section 2, during
the lifetime of the optionee, the option shall be exercisable
only by him or her, and no other person shall acquire any rights
therein.
8. WITHHOLDING TAXES. Whenever shares of Common Stock are
to be issued under the Plan, the Company shall, at its option,
require the optionee to remit to the Company an amount sufficient
to satisfy federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such
shares.
9. DEFINITION OF "FAIR MARKET VALUE". For the purposes of
this Plan, the term "fair market value," when used in reference
to the date of grant of an option shall be the mean:
If the Shares of the Company are listed on a national
securities exchange (including the New York, American or NASDAQ
National Market System) in the United States on the date any
Option is granted, the fair market value per Share shall be
deemed to be the average of the high and low sale prices per
share of such Shares of the Company on such national securities
exchange in the United States on such date, as published by the
Wall Street Journal or other reliable publication, but if the
Shares of the Company are not traded on such date or such
national securities exchange is not open for business on such
date, the fair market value per Share shall be the average of
such high and low sale prices on the last preceding date on which
such exchange shall have been open for business and the Shares of
the Company were traded. If the Shares of the Company are listed
on more than one national securities exchange in the United
States on the date any such Option is granted, the Committee
shall determine, in its discretion, which national securities
exchange shall be used for the purpose of determining the fair
market value per Share.
<PAGE>
If at any date any Option is granted a public market exists
for the Shares of the Company but such Shares are not listed on a
national securities exchange in the United States, the fair
market value per Share shall be deemed to be the mean between the
closing bid and asked quotations in the over-the-counter market
for such Shares of the Company in the United States on the date
such Option is granted. If there are no bid and asked quotations
for such Shares on such date, the fair market value per Share
shall be deemed to be the mean between the closing bid and asked
quotations in the over-the-counter market in the United States
for such Shares of the Company on the closest date preceding the
date such Option is granted, for which such quotations are
available.
SECTION 2
STOCK OPTIONS
1. AWARD OF STOCK OPTIONS. Awards of stock options shall
be made under the Plan under all the terms and conditions
contained herein. Each option granted under the Plan shall be
evidenced by an option agreement duly executed on behalf of the
Company and by the recipient, which option agreements shall
comply with and be subject to the terms and conditions of the
Plan. Any option agreement may contain such other terms,
provisions and conditions not inconsistent with the Plan as may
be determined by the Board.
2. TERM OF OPTIONS AND EFFECT OF TERMINATION.
Notwithstanding any other provision of the Plan, no option
granted under the Plan shall be exercisable after the expiration
of ten years from the date of its grant.
In the event that any outstanding option under the Plan
expires by reason of lapse of time or otherwise is terminated for
any reason, the shares of Common Stock subject to any such option
which have not been issued pursuant to the exercise of the option
shall again become available in the pool of shares of Common
Stock for which options may be granted under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS. Options granted
pursuant to the Plan shall be evidenced by agreements in such
form as the Board shall from time to time determine, which
agreements shall comply with the following terms and conditions.
A. Number of Shares. Each option agreement shall state
the number of shares to which the option pertains.
B. Option Price. Each option agreement shall state the
option price per share (or the method by which such price shall
be computed), which shall be equal to 100% of the Fair Market
Value of a share of the Common Stock on the date such option is
granted.
<PAGE>
C. Medium and Time of Payment. The option price shall be
payable upon the exercise of an option in the legal tender of the
United States. Upon receipt of payment, the Company shall
deliver to the optionee (or person entitled to exercise the
option) a certificate or certificates for the shares of Common
Stock to which the option pertains.
D. Exercise of Options. Except as otherwise specifically
provided herein, options granted under the Plan shall vest and
become exercisable in 33.3% increments per year, beginning on the
first anniversary of the Grant Date of the Option.
To the extent that an option has become exercisable and
subject to the restrictions and limitations set forth in this
Plan and any option agreement, it may be exercised in whole or
such lesser amount as may be authorized by the option agreement.
If exercised in part, any vested, unexercised portion of an
option shall continue to be held by the optionee and may
thereafter be exercised as provided herein.
E. Termination of Director. If an optionee ceases to be a
director for any reason other than (a) his death or disability or
(b) his decision not to stand for reelection as director at the
expiration of his term, any option held by such person may be
exercised at any time within 90 days after the date on which such
person ceased to be a director, but only to the extent the option
was vested and exercisable at such date.
If an optionee declines to stand for reelection as director
at the expiration of his term, or if an optionee becomes disabled
prior to the expiration of his term, any vested or unvested
options held by such person as of the date of term expiration or
disability, as the case may be, shall continue to be subject to
this agreement for vesting, exercise and expiration purposes.
If an optionee dies prior to the expiration of his term as
director (or dies after declining to stand for reelection or
after becoming disabled while serving pursuant to the preceding
paragraph), any unvested option held by such person shall
immediately become fully vested and exercisable on the date of
death, and any option held by such director, whether vesting on
or before the date of his death, may be exercised at any time by
such person's estate within one year after the date of death,
unless earlier terminated by lapse of time as provided in
Subsection 2 of Section 2.
F. Death or Disability of Optionee. Any such option
granted hereunder may be exercised by the optionee's guardian in
the case of a disabled optionee, or by the executors or
administrators of the optionee's estate or by any person or
persons who shall have acquired the option directly from the
optionee by his will or the applicable law of descent and
distribution.
<PAGE>
SECTION 3
RECAPITALIZATIONS AND REORGANIZATIONS
The number of shares of Common Stock covered by the Plan,
the number of shares and price per share of each outstanding
option, and the number of shares subject to each grant provided
for in Section 1 hereof shall be proportionately adjusted for any
increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any
other increase or decrease in the number of issued and
outstanding shares of Common Stock effected without receipt of
consideration by the Company.
If the Company shall be the surviving corporation in any
merger or consolidation, each outstanding option shall pertain to
and apply to the securities to which a holder of the same number
of shares of Common Stock that are subject to that option would
have been entitled. A dissolution or liquidation of the Company,
or a merger or consolidation in which the Company is not the
surviving corporation, shall cause each outstanding option to
terminate, unless the agreement of merger or consolidation shall
otherwise provide; provided that, in the event such dissolution,
liquidation, merger or consolidation will cause outstanding
options to terminate, optionee shall have the right immediately
prior to such dissolution, liquidation, merger or consolidation
to exercise his option in whole or in part without regard to any
limitations on the exercisability of such option other than the
expiration date of the option.
To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by
the Board, whose determination in that respect shall be final,
binding and conclusive.
SECTION 4
MISCELLANEOUS PROVISIONS
1. RIGHTS AS A SHAREHOLDER. An optionee or a transferee
of an option as such shall have no rights as a shareholder with
respect to any shares covered by an option until the date of the
receipt of payment (including any amounts required by the Company
pursuant to Subsection 8 of Section 1) by the Company.
2. PURCHASE FOR INVESTMENT. Unless the shares of Common
Stock to be issued upon exercise of an option granted under the
Plan have been effectively registered under the Securities Act of
1933, as amended (the "Securities Act"), the Company shall be
under no obligation to issue any shares of Common Stock covered
by any option unless the person who exercises such option, in
whole or in part, shall give a written representation and
undertaking to the Company which is satisfactory in form and
scope to counsel to the Company and upon which, in the opinion of
such counsel, the Company may reasonably rely, that he is
acquiring the shares of Common Stock issued to him pursuant
<PAGE>
to such exercise of the option for his own account as an investment
and not with a view to, or for sale in connection with, the
distribution of any such shares of Common Stock, and that he will
make no transfer of the same except in compliance with any rules
and regulations in force at the time of such transfer under the
Securities Act, or any other applicable law, and that if shares
of Common Stock are issued without such registration, a legend to
this effect may be endorsed upon the securities so issued.
3. OTHER PROVISIONS. The option agreements authorized
under the Plan shall contain such other provisions, including,
without limitation, restrictions upon the exercise of the option
or restrictions required by any applicable securities laws, as
the Board shall deem advisable.
4. APPLICATION OF FUNDS. The proceeds received by the
Company from the sale of Common Stock pursuant to the exercise of
options will be used for general corporate purposes.
5. NO OBLIGATION TO EXERCISE OPTION. The granting of an
option shall impose no obligation upon the optionee to exercise
such option.
(The remainder of this page left blank intentionally)
<PAGE>
I, Will Garrison, Secretary of American Freightways
Corporation, certify that the foregoing is a true and correct
copy of the American Freightways Corporation Amended and Restated
Elected Non-Employee Director Stock Option Plan as adopted by the
Board of Directors of the corporation on July 15, 1998.
/s/Will Garrison
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
June 30, 1998 quarterly consolidated financal 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,598
<SECURITIES> 0
<RECEIVABLES> 89,974
<ALLOWANCES> 1,911
<INVENTORY> 3,849
<CURRENT-ASSETS> 128,106
<PP&E> 735,653
<DEPRECIATION> 257,896
<TOTAL-ASSETS> 607,975
<CURRENT-LIABILITIES> 94,384
<BONDS> 209,920
0
0
<COMMON> 316
<OTHER-SE> 238,612
<TOTAL-LIABILITY-AND-EQUITY> 607,975
<SALES> 0
<TOTAL-REVENUES> 477,051
<CGS> 0
<TOTAL-COSTS> 451,859
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 8,013
<INCOME-PRETAX> 18,201
<INCOME-TAX> 7,371
<INCOME-CONTINUING> 10,830
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,830
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
<FN>
<F1>Provision for Doubtful accounts included in costs and expenses applicable
to revenues.
</FN>
</TABLE>
