<PAGE>
THIS DOCUMENT IS A COPY OF THE 10Q FILED ON NOV. 12, 1996 PURSUANT TO A RULE
201 TEMPORARY HARDSHIP EXEMPTION.
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 28, 1996, OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
___________ TO _______________
Commission File Number 0-19791
USFREIGHTWAYS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3790696
(State of Incorporation) (IRS Employer
Identification No.)
9700 Higgins Road, Rosemont, Illinois 60018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
including area code: (847) 696-0200
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. Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of November 11, 1996, 22,545,210
shares of common stock were outstanding.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements.
USFreightways Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands)
Sept. 28, December 30,
1996 1995
- --------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 2,189 $ 1,707
Accounts receivable, net 171,174 118,107
Other 42,875 38,797
----------------- -------------------
Total current assets 216,238 158,611
----------------- -------------------
Net property and equipment 392,147 338,846
Net intangible assets 80,215 69,918
Other assets 9,759 10,819
----------------- -------------------
Total assets $ 698,359 $ 578,194
----------------- -------------------
Liabilities and Stockholders' Equity
Current liabilities:
Current bank debt $ 983 $ 333
Accounts payable 42,107 36,209
Other current liabilities 115,754 91,942
----------------- -------------------
Total current liabilities 158,844 128,484
----------------- -------------------
Long-term liabilities:
Long-term bank debt 89,111 37,333
Notes payable 100,000 100,000
Other long-term liabilities 88,042 79,225
----------------- -------------------
Total long-term liabilities 277,153 216,558
----------------- -------------------
Common stockholders' equity 262,362 233,152
----------------- -------------------
Total liabilities and $ 698,359 $ 578,194
stockholders' equity ----------------- -------------------
<PAGE>
USFreightways Corporation
Consolidated Statements of Income
Unaudited (Dollars in thousands, except per-share amounts)
Three months ended
-------------------------------------
Sept. 28, Sept. 30,
1996 1995
- --------------------------------------------------------------------------------
Operating revenue $ 343,203 $ 289,964
Operating expenses:
Salaries, wages and benefits 216,932 186,579
Purchased transportation 12,234 11,133
Operating expenses and supplies 44,434 35,927
Operating taxes and licenses 14,025 12,322
Insurance and claims 5,573 3,821
Communications and utilities 3,790 3,412
Depreciation and revenue 16,777 13,224
equipment leases
Building and office equipment rents 4,046 3,357
Amortization of intangible assets 644 583
Other operating expenses 2,220 2,280
------------------ ------------------
Total operating expenses 320,675 272,638
------------------ ------------------
Income from operations 22,528 17,326
------------------ ------------------
Non-operating income (expense):
Interest expense (3,322) (2,347)
Interest incocome 155 164
Other, net (196) 188
------------------ ------------------
Total non-operating expense (3,363) (1,995)
------------------ ------------------
Income before income taxes 19,165 15,331
Income tax expense (8,141) (6,592)
------------------ ------------------
Net income $ 11,024 $ 8,739
------------------ ------------------
Average shares outstanding 22,655,243 22,043,727
Earnings per common share:
Net income $ 0.49 $ 0.40
------------------ ------------------
-------------------------------------
<PAGE>
Nine months ended
-----------------------------------------
Sept. 28, Sept. 30,
1996 1995
- --------------------------------------------------------------------------------
Operating revenue $ 988,997 $ 856,080
Operating expenses:
Salaries, wages and benefits 630,513 546,207
Purchased transportation 35,863 33,163
Operating expenses and supplies 133,592 107,655
Operating taxes and licenses 41,932 36,234
Insurance and claims 17,010 13,749
Communications and utilities 11,475 9,937
Depreciation and revenue 48,099 37,332
equipment leases
Building and office equipment rents 11,554 9,962
Amortization of intangible assets 1,821 2,001
Other operating expenses 6,967 6,615
------------------ --------------------
Total operating expenses 938,826 802,855
------------------ --------------------
Income from operations 50,171 53,225
------------------ --------------------
Non-operating income (expense):
Interest expense (9,072) (6,491)
Interest income 488 543
Other, net (516) (537)
------------------ -------------------
Total non-operating expense (9,100) (6,485)
------------------ -------------------
Income before income taxes 41,071 46,740
Income tax expense (17,561) (20,098)
------------------ -------------------
Net income $ 23,510 $ 26,642
------------------ -------------------
Average shares outstanding 22,311,770 22,143,964
Earnings per common share:
Net income $ 1.05 $ 1.20
------------------ -------------------
<PAGE>
USFreightways Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
Nine months ended
--------------------------------------
Sept. 28, Sept. 30,
1996 1995
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $ 23,510 $ 26,642
Adjustments to net income:
Depreciation and amortization 47,179 36,950
Other items affecting cash
from operating activities (16,917) 3,982
----------------- ------------------
Net cash provided by operating activities 53,772 67,574
----------------- ------------------
Cash flows from investing activities:
Capital expenditures, net of
proceeds on sales (70,711) (80,536)
Acquisition of Transus and Interamerican (31,265) -
----------------- ------------------
Net cash provided by investing activities (101,976) (80,536)
Cash flows from financing activities:
Dividends paid (6,149) (6,130)
Net (purchases)/sales of treasury stock 2,407 (674)
Proceeds from long-term debt 52,650 21,000
Payments on long-term debt (222) (250)
----------------- ------------------
Net cash provided by
financing activities 48,686 13,946
----------------- ------------------
Net increase in cash 482 984
----------------- ------------------
Cash at beginning of period 1,707 2,055
----------------- ------------------
Cash at end of period $ 2,189 $ 3,039
----------------- ------------------
The financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. The statements are unaudited but, in the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
Company's results of operations are affected by the seasonal aspects
of the regional LTL trucking business. Therefore, operating results
for the three months and nine months ended September 28, 1996 are not
necessarily indicative of the results that may be expected for the
year ending December 28, 1996. For further information, refer to
consolidated financial statements and footnotes thereto included in
the registrant's annual report on Form 10-K for the year ended
December 30, 1995.
<PAGE>
USFreightways Corporation
Revenue and Operating Ratios
Unaudited (Dollars in
thousands)
Three months ended
Sept. 28, 1996
and Sept. 30, 1995
----------------------------------
Company (Region) Revenue Operating
Ratio (a)
- --------------------------------------------------------------------------------
Holland (Midwest) 96 $ 153,725 90.6%
95 131,280 91.9
Red Star (Northeast) 96 48,571 101.6
95 50,778 102.2
Reddaway (West Coast, 96 46,383 92.2
Northwest)
95 43,395 90.6
Bestway (Southwest) 96 28,416 88.9
95 27,184 90.9
Dugan (Plains, South) 96 38,543 96.1
95 19,304 93.6
Logistics Operations 96 22,969 94.7
95 16,798 94.8
<PAGE>
Nine months ended
Sept. 28, 1996
and Sept. 30, 1995
----------------------------------
Company (Region) Revenue Operating
Ratio (a)
- --------------------------------------------------------------------------------
Holland (Midwest) 96 $ 440,800 91.4%
95 397,250 91.4
Red Star (Northeast) 96 147,961 102.8
95 149,580 100.0
Reddaway (West Coast, 96 132,506 94.6
95 121,666 92.6
Bestway (Southwest) 96 84,321 89.4
95 80,297 90.3
Dugan (Plains, South) 96 111,755 97.8
95 57,099 92.5
Logistics Operations 96 62,073 97.3
95 46,852 95.4
(a) Operating ratio is direct operating costs as a percentage of revenue.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
USFreightways Corporation (the "Company") reported net income for the
thirteen weeks ended September 28, 1996 of 49 cents per share compared
to 40 cents for the third quarter of 1995 which ended on September
30th. Net income for the 1996 quarter was $11,024,000 compared to
$8,739,000 for the same period of last year, an increase of 26%.
Revenue in the 1996 quarter increased by 18.4% to $343,203,000 from
$289,964,000 for the same period of the 1995 year. The current year's
revenue includes approximately $21,000,000 attributable to the
acquisition of the Transus general commodities business and the
Interamerican Group. The regional trucking group increased Less Than
Truckload (LTL) revenue by 16.1% based on increased LTL shipments of
15.2% and an LTL tonnage increase of 17.4%. Revenue for the logistics
group increased in the current year's quarter by 37% primarily as a
result of the acquisition of Interamerican and additional contracts in
the Logix group.
Revenue for the nine months ended September 28, 1996 amounted to
$988,997,000, an increase of 15.5% over the same period of the
previous year. Net income for the nine month period ended in 1996
amounted to $23,510,000, equivalent to $1.05 per share compared to
$1.20 for the 1995 nine month period.
The Company is pleased to report a significant increase in net income
for the current year's quarter, after two quarters of reduced net
income when compared to the same quarters of the previous year. Net
income for the first half of 1996 was adversely impacted by severe
industry competitive pricing and a somewhat sluggish economy.
Collectively, the operating ratios of the regional trucking group
improved from 93.7% in the 1995 quarter to 93.1% in the current year's
quarter. USF Holland, the Company's largest regional trucking
subsidiary, had an outstanding quarter reducing its operating ratio
from 91.9% for the 1995 quarter to 90.6% on an increase in revenue of
17.1%. USF Bestway improved its operating ratio for the fourth
consecutive quarter. The ratio for the current year's quarter of 88.9%
as well as the year-to-date 89.4% is a tribute to its management and
associates. The operating ratios for USF Reddaway and USF Dugan
improved significantly compared to the first and second quarter of the
current year, but were higher than the same quarter of the 1995
calendar year, primarily as a result of continued price cutting by a
major competitor in Reddaway's territory and because of the
acquisition of the Transus business by Dugan.
The Company's logistics business, including USF Distribution,
increased revenue by 37% while maintaining an operating ratio in the
current year's quarter consistent with that in the 1995 quarter. Logix
acquired Interamerican effective July 1, 1996. Interamerican provides
warehousing, transportation, distribution and other logistics services
for their customers using proprietary leading edge technology. The
Company's truckload subsidiary, Comet, continued to show satisfactory
progress increasing revenue during the current quarter, and although
it recorded a small loss for the quarter, it is currently operating on
a profitable basis.
<PAGE>
The improvement in the operating results at USF Red Star reported in
the first and second quarter continued in the third quarter of the
current year. The operating ratio in the current year has been reduced
from 104.6% in the first quarter to 102.3% in the second quarter to
101.6% in the third quarter. Results of operations for the third
quarter of the current year resulted in a reduced loss compared to the
same quarter of the 1995 calendar year despite a 4.3% reduction in
revenue. In addition to making a significant reduction in operating
costs, management at Red Star has successfully improved yield by
increasing revenue per shipment from $90.18 in the 1995 quarter to
$94.17 in the current year's quarter. This improvement in yield
together with a lower cost per shipment because of strict cost control
has resulted in the improved operating results for the quarter and a
reduction in the operating ratio to 101.6% in the current year
compared to 102.2% in 1995. The Company expects a restructuring of Red
Star, to be completed in the fourth quarter of the current calendar
year. The final stages of the restructuring will require some terminal
consolidation and changes in Red Star's linehaul configuration. When
the restructuring is completed, the Company expects to take a one time
charge of approximately 10 cents per share which the Company
anticipates will occur in the last quarter of the current year. The
management at Red Star is to be complimented for the significant
improvement in its on-time service performance and its operating
results.
All subsidiaries' operating income has been impacted by the increase
in fuel prices during the current year's quarter; however, fuel
surcharges were implemented in the last month of the quarter and will
remain in effect until fuel prices return to more normal levels. These
surcharges, which will vary as the price of diesel fuel changes,
should offset any future increases in fuel prices.
The results for the current year's quarter benefited from a stronger
economy, compared to the first and second quarter of the current year,
and an improved pricing environment. These factors contributed to an
increase in revenue per LTL shipment in the Company's regional
trucking operations of 1% and this, together with the Company's
continued emphasis on reducing its costs, resulted in improved
profitability.
Capital expenditures for the nine months ended September 28, 1996
approximated $101,000,000 which included $27,000,000 for the
acquisition of the general commodities business of Transus. For the
nine month period ended September 30, 1995, total capital expenditures
were approximately $83,000,000.
A dividend of 9 1/3 cents per share was paid on October 4, 1996 to
shareholders of record on September 20, 1996.
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
There are no pending material legal proceedings, other than ordinary
litigation incident to the Company's business, which the Company is a
party to or which any of its property is subject. During the third
quarter of 1996, no material litigation or governmental proceeding was
instituted or pending against the Company arising from any alleged
violation of the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA) or other environmental regulations.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
1. Exhibit 27-Financial Data Schedule.
(b) Current Reports on Form 8-K were filed:
1. No current reports on Form 8-K were filed during
the quarter.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. Dated the 11th day of November, 1996.
USFREIGHTWAYS CORPORATION
By: /s/ Christopher L. Ellis
Christopher L. Ellis
Senior Vice President, Finance and
Chief Financial Officer
By: /s/ Robert S. Owen
Robert S. Owen
Vice President and Controller and
Principal Accounting Officer
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<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Dec-28-1996
<PERIOD-START> Dec-31-1995
<PERIOD-END> Sep-28-1996
<CASH> 2,189
<SECURITIES> 0
<RECEIVABLES> 171,174
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 216,238
<PP&E> 392,147
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<CURRENT-LIABILITIES> 158,844
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0
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<OTHER-SE> 262,362
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<INCOME-TAX> 17,561
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