<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, 1999
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, 1999:
31,930,933.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
<CAPTION>
JUNE 30, December 31,
1999 1998
--------- ---------
(UNAUDITED) (Note)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 6,251 $ 3,274
Trade receivables, less allowance
for doubtful accounts
(1999-$2,385; 1998-$1,937) 120,112 94,464
Operating supplies and inventories 4,796 4,139
Prepaid expenses 8,970 11,318
Deferred income taxes 26,191 19,089
Income taxes receivable 3,238 2,763
--------- ---------
Total current assets 169,558 135,047
Property and equipment 818,756 777,705
Accumulated depreciation and
amortization (295,049) (272,960)
--------- ---------
523,707 504,745
Other assets 2,129 2,269
--------- ---------
$ 695,394 $ 642,061
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 14,428 $ 16,766
Accrued expenses 98,362 70,809
Current portion of long-term debt 11,772 19,679
--------- ---------
Total current liabilities 124,562 107,254
Long-term debt, less current portion
(Note B) 222,060 206,115
Deferred income taxes 70,419 72,678
Shareholders' equity
Common stock, par value $.01 per
share--authorized 250,000 shares;
issued and outstanding 31,931
in 1999 and 31,695 in 1998 319 317
Additional paid-in capital 108,493 106,053
Retained earnings 169,666 149,769
Treasury stock, at cost, 15 shares in
1999 and 1998 (125) (125)
--------- ---------
278,353 256,014
--------- ---------
$ 695,394 $ 642,061
========= =========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1998,
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>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
-------------------- --------------------
<S> <C> <C> <C> <C>
OPERATING REVENUE $ 291,173 $ 246,402 $ 556,577 $ 477,051
OPERATING EXPENSES AND COSTS
Salaries, wages and benefits 175,497 149,547 337,941 292,977
Operating supplies and expenses 22,027 20,163 42,271 40,180
Operating taxes and licenses 11,115 10,446 21,926 20,441
Insurance 9,351 7,376 18,650 14,517
Communications and utilities 4,863 4,756 9,239 8,711
Depreciation and amortization 14,301 13,772 29,811 27,581
Rents and purchased
transportation 17,120 14,416 34,265 27,435
Other 12,126 10,039 22,875 20,017
--------- --------- --------- ---------
266,400 230,515 516,978 451,859
--------- --------- --------- ---------
OPERATING INCOME 24,773 15,887 39,599 25,192
OTHER INCOME (EXPENSE)
Interest expense (3,802) (3,925) (7,488) (8,013)
Interest income 101 65 184 129
Gain on disposal of assets 969 820 1,120 841
Other, net 13 24 25 52
--------- --------- --------- ---------
(2,719) (3,016) (6,159 (6,991)
INCOME BEFORE INCOME TAXES 22,054 12,871 33,440 18,201
--------- --------- --------- ---------
FEDERAL AND STATE INCOME TAXES
Current 13,328 4,156 22,905 5,383
Deferred (credit) (4,396) 1,057 (9,362) 1,988
--------- --------- --------- ---------
8,932 5,213 13,543 7,371
--------- --------- --------- ---------
NET INCOME $ 13,122 $ 7,658 $ 19,897 $ 10,830
========= ========= ========= =========
PER SHARE (NOTE D)
Net income-basic $ 0.41 $ 0.24 $ 0.63 $ 0.34
Net income-assuming dilution $ 0.40 $ 0.24 $ 0.61 $ 0.34
========= ========= ========= =========
AVERAGE SHARES OUTSTANDING (NOTE D)
Basic 31,860 31,612 31,799 31,590
Assuming dilution 32,643 31,752 32,436 31,688
========= ========= ========= =========
</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>
<CAPTION>
Six Months Ended
June 30,
1999 1998
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 40,664 $ 39,892
INVESTING ACTIVITIES
Proceeds from sales of assets 1,630 1,963
Capital expenditures (49,418) (38,223)
-------- --------
Net cash used by investing activities (47,788) (36,260)
FINANCING ACTIVITIES
Principal payments on long-term debt (27,962) (15,665)
Proceeds from notes payable and
long-term borrowings 36,000 15,208
Proceeds from issuance of common stock 2,063 668
-------- --------
Net cash provided by financing activities 10,101 211
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 2,977 $ 3,843
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1999
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, 1999, are not
necessarily indicative of the results that may be expected for the
year ending December 31, 1999. 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, 1998.
NOTE B - LONG-TERM DEBT
As of June 30, 1999, the Company has outstanding borrowings of
$89,000,000 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, 1999, the amount
available for borrowing under the line of credit was $71,000,000.
In addition to this credit facility, the Company has obtained
letters of credit totaling $4,095,000 to provide collateral on its
self-insurance plan.
As of June 30, 1999, the Company has outstanding borrowings of
$123,250,000 under an unsecured and 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 $15,000,000 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
$68,951,000 at June 30, 1999.
NOTE D - EARNINGS PER SHARE
Net income for purposes of basic earnings per share and earnings
per share--assuming dilution was $13,122,000 and $7,658,000 for the
three month periods ended June 30, 1999 and 1998, respectively.
For the six month periods ended June 30, 1999 and 1998, net income
for purposes of basic earnings per share and earnings per share--
assuming dilution was $19,897,000 and $10,830,000, respectively. A
reconciliation of average shares outstanding for these periods is
presented below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
--------------- ---------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Average shares outstanding-basic 31,860 31,612 31,799 31,590
Effect of dilutive stock options 783 140 637 98
Average shares outstanding-
assuming dilution 32,643 31,752 32,436 31,688
</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
revenue:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
1999 1998 1999 1998
------------- --------------
<S> <C> <C> <C> <C>
Operating revenue 100.0% 100.0% 100.0% 100.0%
Operating expenses and costs:
Salaries, wages and benefits 60.3% 60.7% 60.7% 61.4%
Operating supplies and expenses 7.6% 8.2% 7.6% 8.4%
Operating taxes and licenses 3.8% 4.2% 3.9% 4.3%
Insurance 3.2% 3.0% 3.4% 3.0%
Communications and utilities 1.7% 1.9% 1.7% 1.8%
Depreciation and amortization 4.9% 5.6% 5.4% 5.8%
Rents and purchased
transportation 5.9% 5.9% 6.2% 5.8%
Other 4.1% 4.1% 4.0% 4.2%
------------------------------
Total operating expenses
and costs 91.5% 93.6% 92.9% 94.7%
------------------------------
Operating income 8.5% 6.4% 7.1% 5.3%
Interest expense 1.3% 1.6% 1.3% 1.7%
Other income, net 0.4% 0.4% 0.2% 0.2%
------------------------------
Income before income taxes 7.6% 5.2% 6.0% 3.8%
Income taxes 3.1% 2.1% 2.4% 1.5%
------------------------------
Net income 4.5% 3.1% 3.6% 2.3%
==============================
</TABLE>
RESULTS OF OPERATIONS
Operating Revenue
- -----------------
Operating revenue for the six months ended June 30, 1999 was
$556,577,000, up 16.7%, compared to $477,051,000 for the six months
ended June 30, 1998. Operating revenue for the three months ended
June 30, 1999 was $291,173,000, up 18.2%, compared to $246,402,000
for the three months ended June 30, 1998. The growth in operating
revenue was primarily the result of increased tonnage from new and
existing customers and increased revenue per hundred weight.
Tonnage handled by the Company during the six and three months
ended June 30, 1999, increased 10.9% and 12.2%, respectively, over
the same time periods of 1998. This increase in tonnage was mainly
a result of the following:
- - On April 19, 1999, the Company expanded its all-points
coverage to the states of New Jersey and Pennsylvania with the
opening of eleven new customer centers.
- - During 1997, 1998 and the first quarter of 1999, the Company's
geographic expansion slowed, with an emphasis instead placed on
improving the shipment density within the existing service
territory. The Company revamped its freight flow and handling
systems in order to reduce transit times. During the fourth
quarter of 1996, the Company introduced its improved regional
service with dramatically reduced transit times. During January
1999, the Company introduced its new interregional service product,
which resulted in reduced transit times for most previously 3 or 4
day service points. The focus on improved service standards has
allowed the Company to successfully add market penetration within
its service territory resulting in additional tonnage.
- - Freight volumes handled with marketing partners in Alaska,
Canada, Guam, Hawaii, Mexico and Puerto Rico continued to increase
at a rapid pace. On June 14, 1999, the Company expanded its
service through marketing partnerships to Central America, South
America and the Caribbean Islands. The initial marketing
partnership commenced in 1996 with service to Canada and Mexico.
Puerto Rico was added in 1997, with service to Alaska, Guam, and
Hawaii added in 1998.
<PAGE>
Revenue per hundred weight for the six months ended June 30, 1999
was up 5.2% from levels experienced in the first six months of
1998. The factors which most impacted revenue per hundred weight
were:
- - A general rate increase of approximately 5.5% to 5.9%
effective November 1, 1998. The increase applied to the Company's
interstate and intrastate common carrier freight rates published in
its 5000 series tariff. The Company derives approximately 50% of
its revenue from the 5000 tariff. The remaining revenue is derived
from contracts and guarantees, which are negotiated throughout the
year.
- - During the six months ended June 30, 1999, 13.3% of the total
tonnage was derived from truckload shipments, an increase from
11.4% during the six months ended June 30, 1998. Rates on
truckload tonnage are generally lower than less than truckload
rates.
Management expects that growth in operating revenue is sustainable
in the near term. The major sources of growth in operating revenue
in the near term should be the further penetration of existing
markets, including the most recent expansion areas of Michigan, New
Jersey and Pennsylvania. The Company's success in realizing future
growth will be partially dependent upon the continued strength of
the U.S. economy and the LTL pricing environment.
Operating Expenses
- ------------------
Operating expenses as a percentage of operating revenue improved to
92.9% for the six months ended June 30, 1999 from 94.7% in the six
months ended June 30, 1998. Operating expenses as a percentage of
operating revenue improved to 91.5% in the three months ended June
30, 1999 from 93.6% in the three months ended June 30, 1998. This
overall improvement was primarily attributable to:
- - Salaries, wages and benefits as a percentage of operating
revenue improved to 60.7% in the six months ended June 30, 1999
from 61.4% in the six months ended June 30, 1998. This improvement
resulted from ongoing educational programs and changes in
operations which have led to productivity gains in the form of
improved pickup and delivery density, increased line haul load
factor and more direct line haul schedules. This improvement was
partially offset by increased costs in the areas of workmen's
compensation and health care.
- - Operating supplies and expenses as a percentage of operating
revenue improved to 7.6% in the six months ended June 30, 1999 from
8.4% in the six months ended June 30, 1998. This improvement was
due to reduced fuel costs resulting from lower fuel prices and the
increased use of purchased transportation. Although the diesel
fuel prices for the first half of 1999 have been lower than those
of the first half of 1998, prices at the end of June 1999 were
slightly higher than those at the end of June 1998. Diesel fuel
prices declined during the last half of 1998, therefore higher fuel
costs relative to 1998 levels are believed likely. The costs of
maintaining equipment and facilities were relatively constant.
- - Operating taxes and licenses as a percentage of operating
revenue improved to 3.9% in the six months ended June 30, 1999 from
4.3% in the six months ended June 30, 1998. The primary
contributor to the improvement was the increased utilization of
purchased transportation.
- - Depreciation and amortization as a percentage of operating
revenue improved to 5.4% in the six months ended June 30, 1999 from
5.8% in the six months ended June 30, 1998. This improvement was
largely due to increased usage of purchased transportation and
operating lease financing of revenue equipment.
These improvements in operating expenses as a percentage of
operating revenue were partially offset by increases in the
following areas:
- - Insurance as a percentage of operating revenue increased to
3.4% in the six months ended June 30, 1999 from 3.0% in the six
months ended June 30, 1998. The increase was primarily a result of
the Company's increased costs of accidents, particularly in the
area of liability insurance.
- - Rents and purchased transportation as a percentage of
operating revenue increased to 6.2% in the six months ended June
30, 1999 from 5.8% in the six months ended June 30, 1998. This
increase was primarily a result of increased utilization of
purchased transportation and the increased usage of operating lease
financing. These increases were partially offset by decreased
utilization of owner operators in pick up and delivery operations
beginning in the third quarter of 1998.
Other
- -----
Interest expense as a percentage of operating revenue decreased to
1.3% in the six months ended June 30, 1999, compared to 1.7% in the
six months ended June 30, 1998. This improvement is primarily the
result of lower interest rates and lower average debt balances
outstanding relative to the higher revenue levels.
The effective tax rate of the Company was 40.5% for the six months
ended June 30, 1999 and 1998. Net income for the six months ended
June 30, 1999, was $19,897,000, up 83.7%, from $10,830,000 for the
six months ended June 30, 1998. Net income for the three months
ended June 30, 1999, was $13,122,000, up 71.4%, from $7,658,000 for
the three months ended June 30, 1998.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Capital requirements during the six months ended June 30, 1999
consisted primarily of $47,788,000 in investing activities. The
Company invested $49,418,000 in capital expenditures during the six
months ended June 30, 1999 comprised of $12,399,000 in additional
revenue equipment, $27,615,000 in new customer center facilities or
the expansion of existing facilities and $9,404,000 in other
equipment. Management expects capital expenditures for the full
year of 1999 will be approximately $100,000,000, consisting
primarily of anticipated investments in new and existing customer
center facilities. However, the actual amount of capital
expenditures required in 1999 will be dependent on: 1) the growth
rate of the Company, 2) site selection and construction progress on
numerous customer center projects and 3) economic benefits of
operating lease financing versus ownership. At June 30, 1999 the
Company had commitments for land, customer centers, revenue and
other equipment of approximately $68,951,000.
The Company provided for its capital resource requirements in the
six months ended June 30, 1999 primarily with cash from operations.
Cash from operations totaled $40,664,000 in the six months ended
June 30, 1999 compared to $39,892,000 provided by operations in the
six months ended June 30, 1998. Net financing activities provided
an additional $10,101,000 of cash flow in the six months ended June
30, 1999. 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 Bank of America (agent), Chase Bank of
Texas, N.A., Wachovia Bank, N.A., ABN-AMRO Bank N.V. and Bank One.
At June 30, 1999, $89,000,000 was outstanding on the revolving line
of credit, leaving $71,000,000 available for borrowing. The
Company also had $15,000,000 available under its short-term,
unsecured revolving $15,000,000 line of credit with Bank of
America. This line of credit is also used to obtain letters of
credit for its self-insurance program. At June 30, 1999 the
Company had obtained letters of credit totaling $4,095,000 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, 1999, the Company had
$123,250,000 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, 1999, 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 the following areas; land and
structures, revenue equipment and other equipment. At June 30,
1999, future rental commitments on operating leases were
$124,674,000. 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>
<CAPTION>
Land and Revenue Other
(In thousands) Total Structures Equipment Equipment
--------- --------- --------- ---------
<C> <C> <C> <C> <C>
1999 $ 20,302 $ 3,831 $ 8,015 $ 8,456
2000 33,489 5,577 16,030 11,882
2001 23,720 3,864 15,254 4,602
2002 20,152 3,063 15,501 1,588
2003 13,716 2,420 11,296 ---
Thereafter 13,295 6,772 6,523 ---
--------- --------- --------- ---------
Total $ 124,674 $ 25,527 $ 72,619 $ 26,528
========= ========= ========= =========
</TABLE>
<PAGE>
YEAR 2000 ISSUES
The Company recognizes the Year 2000 problem and has developed a
Board of Director sponsored Project Plan that identifies all date
related issues relating to the Company's Information Technology
(IT) applications, end user supported applications, IT
infrastructure, embedded devices and business partners. At June
30, 1999, all mission critical application modifications and
infrastructure upgrades were completed. Testing and production
implementation had been completed at June 30, 1999. The Company's
mission critical systems written in-house are already Year 2000
ready. Year 2000 ready upgrades have been installed for all
purchased software. The costs incurred specifically to address
Year 2000 readiness have not been and are not expected to become
material to the Company because many of the systems 1) did not
require significant modifications to make them Year 2000 ready, 2)
were replaced for other business reasons or 3) were already year
2000 ready.
The Company has initiated discussions with its significant
customers and suppliers to determine the extent to which the
Company would be vulnerable to those third parties' failure to
remediate their own Year 2000 issues. The Company is in the
process of receiving written assurances from its significant
customers and suppliers that they will be Year 2000 ready, that
their systems will be timely converted and that they will not have
a material adverse affect on the Company. It is not possible at
this time to quantify the amount of business that might be lost or
the costs that could be incurred by the Company as a result of the
Company's significant customers' and suppliers' failure to
remediate their Year 2000 issues.
The Company will establish, where needed, contingency plans based
on our testing experience and responses from significant customers
and suppliers. While the Company believes its efforts to address
the Year 2000 issue will be successful in avoiding any material
adverse effect on the Company's operations, it recognizes that
failure to resolve Year 2000 issues on a timely basis could
significantly limit its ability to process its daily business
transactions for a period of time, especially if such failure is
coupled with third party or infrastructure failures. Similarly,
the Company could be significantly affected by the failure of one
or more significant business partners or components of the
infrastructure to conduct their respective operations after 1999.
Adverse effects could include, but are not limited to, loss of
communication links with customer centers, inability to process
transactions or engage in similar normal business activities.
The foregoing statements regarding the Company's state of
readiness, costs of conversion, risks and contingency plans for
Year 2000 are based on management's current estimates and
evaluations using available information. There can be no
assurances that management's estimates and evaluations will prove
to be accurate, and actual results could differ materially from
those currently anticipated. Factors which might cause material
changes include, but are not limited to, the availability of Year
2000 personnel, the readiness of third parties and the Company's
ability to respond to unforeseen Year 2000 complications.
MARKET RISK
Market risks relating to the Company's operations result primarily
from changes in interest rates. The Company does not use financial
instruments for trading purposes and is not a party to any
derivatives. The following table provides information about the
Company's financial instruments that are sensitive to changes in
interest rates. The table presents the Company's debt obligations,
principal cash flows, related weighted-average interest rates by
expected maturity dates and fair values.
<PAGE>
INTEREST RATE SENSITIVITY
PRINCIPAL AMOUNT BY EXPECTED MATURITY
AVERAGE INTEREST RATE
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) There- Fair Value
1999 2000 2001 2002 2003 after Total 6/30/99
- ------------------------------------------------------------------------------
Liabilities
Long-Term Debt, Including Current Portion
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate $9,117 $13,029 $14,735 $12,681 $12,620 $82,650 $144,832 $147,828
Avg. Interest
Rate 7.72% 7.76% 7.72% 7.75% 7.78% 8.03%
Variable
Rate $ - $ - $ - $ - $89,000 $ - $ 89,000 $ 89,000
Avg. Interest
Rate 5.15% 5.75% 5.80% 5.83% 5.85%
</TABLE>
ENVIRONMENTAL
At June 30, 1999, the Company had no outstanding inquiries with any
state or federal environmental agency.
FORWARD-LOOKING STATEMENTS
The Management's Discussion and Analysis Section of this report
contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-
looking statements rely on a number of assumptions concerning
future events, and are subject to a number of uncertainties and
other factors, many of which are outside of AF's control, that
could cause actual results to differ materially from such
statements. These include, but are not limited to: general
economic and industry conditions and demand for goods, particularly
such competition on pricing, revenues, and margins; the acceptance
of service offerings that offer higher margins than traditional
service offerings, costs of fuel and equipment and interest costs.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
Market Risk under Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations is incorporated
herein by reference.
<PAGE>
INDEX
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (unaudited)
- -------
Condensed consolidated balance sheets--June 30, 1999 and
December 31, 1998
Condensed consolidated statements of income-Three months ended
June 30, 1999 and 1998; Six months ended June 30, 1999 and 1998
Condensed consolidated statements of cash flows--Six months
ended June 30, 1999 and 1998
Notes to condensed consolidated financial statements--June 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
- -------
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
- -------
(a) Exhibits:
--------
(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, 1999.
<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: August 4, 1999 /s/Frank Conner
-------------- --------------------------------
Frank Conner
Executive Vice President-
Accounting & Finance
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
June 30, 1999 quarterly 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 6,251
<SECURITIES> 0
<RECEIVABLES> 122,497
<ALLOWANCES> 2,385
<INVENTORY> 4,796
<CURRENT-ASSETS> 169,558
<PP&E> 818,756
<DEPRECIATION> 295,049
<TOTAL-ASSETS> 695,394
<CURRENT-LIABILITIES> 124,562
<BONDS> 222,060
0
0
<COMMON> 319
<OTHER-SE> 278,034
<TOTAL-LIABILITY-AND-EQUITY> 695,394
<SALES> 0
<TOTAL-REVENUES> 556,577
<CGS> 0
<TOTAL-COSTS> 516,978
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 7,488
<INCOME-PRETAX> 33,440
<INCOME-TAX> 13,543
<INCOME-CONTINUING> 19,897
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,897
<EPS-BASIC> .63
<EPS-DILUTED> .61
<FN>
<F1>Provision for Doubtful accounts included in costs and expenses applicable
to revenues.
</FN>
</TABLE>
