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 OCTOBER 2, 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 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
Not applicable
(Former name or former address, if changed since the 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. 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 October 26, 1999, 26,481,431 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)
<TABLE>
<CAPTION>
October 2, December 31,
1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and deposits $ 6,283 $ 5,548
Accounts receivable, net 284,654 218,942
Other 61,581 55,359
----------------- -------------------
Total current assets 352,518 279,849
----------------- -------------------
Net property and equipment 622,043 544,282
Net intangible assets 173,883 140,201
Other assets 12,591 10,341
----------------- -------------------
Total assets $ 1,161,035 $ 974,673
----------------- -------------------
Liabilities and Stockholders' Equity
Current liabilities:
Current bank debt $ 16,240 $ 10,660
Notes payable 100,000 -
Accounts payable 83,043 78,757
Other current liabilities 188,337 139,460
----------------- ------------------
Total current liabilities 387,620 228,877
----------------- ------------------
Long-term liabilities:
Long-term bank debt 3,394 51,096
Notes payable 100,000 100,000
Other long-term liabilities 140,159 135,566
----------------- ------------------
Total long-term liabilities 243,553 286,662
----------------- ------------------
Common stockholders' equity 529,862 459,134
----------------- ------------------
Total liabilities and stockholders' equity $ 1,161,035 $ 974,673
----------------- ------------------
</TABLE>
<PAGE>
USFreightways Corporation
Consolidated Statements of Income
Unaudited (Dollars in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------------------------- ----------------------------
October 2, October 3, October 2, October 3,
1999 1998 1999 1998
- ----------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
Operating revenue
LTL Trucking $ 448,710 $ 396,918 $ 1,296,228 $ 1,158,782
TL Trucking 12,338 3,468 33,203 3,468
Logistics 53,410 33,122 143,127 92,696
Freight Forwarding 57,488 35,841 161,473 103,768
----------------- ---------------- ------------ ------------
Total operating revenue $ 571,946 $ 469,349 $ 1,634,031 $ 1,358,714
Operating expenses:
LTL Trucking 401,249 361,901 1,174,686 1,065,337
TL Trucking 11,267 3,110 30,576 3,110
Logistics 48,605 31,077 131,081 86,846
Freight Forwarding 55,177 34,634 156,175 101,077
Corporate and other 2,344 3,776 8,191 9,322
----------------- ---------------- ------------ ------------
Total operating expenses 518,642 434,498 1,500,709 1,265,692
----------------- ---------------- ------------ ------------
Income from operations 53,304 34,851 133,322 93,022
----------------- ---------------- ------------ ------------
Non-operating income (expense):
Interest expense (3,706) (2,109) (10,001) (6,243)
Interest income 372 191 965 634
Other, net - 125 (341) (102)
---------------- --------------- ------------ -----------
Total non-operating expense (3,334) (1,793) (9,377) (5,711)
---------------- --------------- ------------ -----------
Net income before income taxes 49,970 33,058 123,945 87,311
Income tax expense 20,247 13,554 50,443 36,034
----------------- --------------- ------------ -----------
Net income $ 29,723 $ 19,504 $ 73,502 $ 51,277
----------------- --------------- ------------ -----------
Average shares outstanding - basic 26,462,497 26,244,706 26,393,085 26,187,788
Average shares outstanding - diluted 27,810,822 26,413,506 27,397,204 26,467,601
Basic earnings per common share: $ 1.12 $ 0.74 $ 2.78 $ 1.96
Diluted earnings per common share: $ 1.07 $ 0.74 $ 2.68 $ 1.94
----------------- ------------------ ------------ -----------
</TABLE>
<PAGE>
USFreightways Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
<TABLE>
<CAPTION>
Nine months ended
----------------------------
October 2, October 3,
1999 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 73,502 $ 51,277
Adjustments to net income:
Depreciation and amortization 70,161 59,846
Other items affecting cash (10,856) 4,258
from operating activities
-------------- -------------
Net cash provided by operating activities 132,807 115,381
-------------- -------------
Cash flows from investing activities:
Capital expenditures (140,134) (119,715)
Proceeds on sales 3,864 5,424
Acquisitions (49,377) (7,625)
-------------- -------------
Net cash used in investing activities (185,647) (121,916)
-------------- -------------
Cash flows from financing activities:
Dividends paid (7,378) (7,321)
Proceeds from sale of Notes 98,452 -
Proceeds from sale of treasury stock 4,623 4,662
Proceeds from long-term bank debt 30,206 20,000
Payments on long-term bank debt (77,908) (14,274)
Net change in short-term bank debt 5,580 4,569
-------------- -------------
Net cash provided by (used in) financing activities 53,575 7,636
-------------- -------------
Net increase/(decrease) in cash and deposits 735 1,101
-------------- -------------
Cash and deposits at beginning of period 5,548 6,471
-------------- -------------
Cash and deposits at end of period $ 6,283 $ 7,572
-------------- -------------
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except per share amounts)
(Unaudited)
1. General
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 ended
October 2, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999. 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 31, 1998.
2. Earnings per share
Basic earnings per share are calculated on income available to common
stockholders divided by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share are calculated using earnings
available to each share of common stock outstanding during the period and to
each share that would have been outstanding assuming the issuance of common
shares for all dilutive potential common shares outstanding during the reporting
period. Unexercised stock options, calculated under the treasury stock method,
is the only reconciling item between the Company's basic and diluted weighted
earnings per share. The number of options included in the denominator, used to
calculate diluted earnings per share are 1,348,325 and 168,800 for the third
quarters of 1999 and 1998 respectively and 1,004,119 and 279,813 for year to
date 1999 and 1998 respectively.
3. Acquisitions
On March 2nd, USF Logisitics, the Company's logistics business unit
acquired (for cash) all of the ownership interests of Processors Unlimited
Company, Ltd. (Processors) a provider of reverse logistics services to the
grocery and drug industries. Processors has annualized revenue of approximately
$46 million and employs over 1,000 individuals at 48 locations throughout Canada
and the United States.
On April 12th, USF Red Star, one of the Company's regional LTL trucking
companies, completed an asset purchase transaction (for cash)with CBL Trucking,
a Mid-Atlantic and New England LTL Carrier.
During the nine months, USF Worldwide, the Company's freight forwarding
business unit, acquired (for cash) the businesses of Scan Trans, Inc.(its former
agent in San Francisco, CA), Pace Transportation, Ltd. (its former agent in
Baltimore, MD), and Airgo Freight, Inc. (its former agent in Seattle, WA). USF
Worldwide acquired (for cash) Best Ways Air Cargo Inc. (a Puerto Rican air
freight forwarder). USF Worldwide also acquired (for cash) the assets of
CaroTrans' Puerto Rican NVOCC business unit (a provider of less-than-container
load and full container load ocean services) and Gulf International Freight (a
Houston based air freight forwarder).
On August 2, Glen Moore Transport, the Company's truckload carrier,
acquired (for cash) Underwood Trucking, Inc. an Indiana based truckload carrier.
Underwood provides truckload services primarily in the central states.
On July 31, USF Distribution Services, a logistics subsidiary of the
Company, acquired (for cash) Special Dispactch of Dallas, Inc. Special Dispatch
offers overnight distribution and consolidation services to north central and
western Texas.
4. Long-Term Debt
On May 5, 1999, the Company completed a $100 million Guaranteed Note
offering due May 1, 2009. The Guaranteed Notes bear interest at 6 1/2% payable
semi-annually on May 1 and November 1. The Guaranteed Notes are unsecured and
rank equally with all of the Company's other unsecured senior indebtedness.
The proceeds (after deducting the underwriting discount) from the sale of
the Guaranteed Notes was approximately $98.5 million. The proceeds were used to
reduce the unsecured lines of credit with the Company's various banks. Until the
net proceeds were applied for specific purposes, the Company was investing them
in marketable securities.
<PAGE>
4. Long-Term Debt (continued)
The Guaranteed Notes are fully and unconditionally guaranteed, on a joint
and several basis, on an unsecured senior basis, by all of the Company's direct
and indirect domestic subsidiaries (the "Subsidiary Guarantors"). The Company is
a holding company and during the period presented substantially all of the
assets were the stock of the Subsidiary Guarantors, and substantially all of the
operations were conducted by the Subsidiary Guarantors. Accordingly, the
aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors
were substantially equivalent to the assets, liabilities, earnings and equity of
the Company on a consolidated basis. Management of the Company believes that
separate financial statements of, and other disclosures with respect to, the
Subsidiary Guarantors are not meaningful or material to investors.
5. Subsequent events
On October 18, the Company announced the start up of USF eLogistics, a new
business unit capable of fulfilling the logistics needs of the growing online
business to consumer marketplace.
On October 18, the Company's freight forwarding subsidiary, USF Worldwide,
announced that as a result of GeoLogistics, a domestic and international freight
forwarder competitor, exiting the domestic market USF Worldwide hired former
GeoLogistics professionals and opened a new office in Tulsa OK and increased the
capacity of operations in Kansas City, MO, Milwaukee, WI, Indianapolis, IN Salt
Lake City, UT, Minneapolis, MN and Baltimore, MD.
On October 20, the Company's freight forwarding subsidiary, USF Worldwide,
announced the formation of USF Asia Group, a joint venture with Asia Challenge
Ltd. Peter T. C. Chow, a shareholder of Asia Challenge Ltd., will be the
President and CEO of USF Asia Group. USF Asia Group is headquartered in Hong
Kong and has four other locations in Asia. USF Asia Group will provide
transportation solutions for the Asian market.
<TABLE>
<CAPTION>
6. Segment Reporting Three Months Ended Nine Months Ended
October 2, October 3, October 2, October 3,
1999 1998 1999 1998
- ------------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Revenue
LTL Group:
USF Holland $ 231,620 $ 202,259 $ 678,400 $ 595,906
USF Reddaway 63,768 57,147 180,039 161,851
USF Red Star 66,610 55,264 182,245 159,528
USF Dugan 49,035 47,032 145,738 138,029
USF Bestway 37,677 35,216 109,806 103,468
- ------------------------------------------------------------------------------- ------------------------------
Sub total LTL Group 448,710 396,918 1,296,228 1,158,782
Truckload - Glen Moore 12,338 3,468 33,203 3,468
Logistics subsidiaries 53,410 33,122 143,127 92,696
Freight forwarding 57,488 35,841 161,473 103,768
Corporate and other - - - -
- ------------------------------------------------------------------------------- ------------------------------
Total Revenue $ 571,946 $ 469,349 $ 1,634,031 $ 1,358,714
Income From Operations
LTL Group:
USF Holland $ 29,792 $ 21,972 $ 78,400 $ 59,301
USF Reddaway 8,268 6,042 19,047 14,047
USF Red Star 2,781 1,199 4,991 2,498
USF Dugan 2,338 1,906 6,339 5,434
USF Bestway 4,282 3,898 12,765 12,165
- ------------------------------------------------------------------------------- ------------------------------
Sub total LTL Group 47,461 35,017 121,542 93,445
Truckload - Glen Moore 1,071 358 2,627 358
Logistics subsidiaries 4,805 2,045 12,046 5,850
Freight forwarding 2,311 1,207 5,298 2,691
Corporate and other (620) (2,712) (3,441) (6,243)
Amortization of intangibles (1,724) (1,064) (4,750) (3,079)
- ------------------------------------------------------------------------------- ------------------------------
Total Income from Operations $ 53,304 $ 34,851 $ 133,322 $ 93,022
- ------------------------------------------------------------------------------- ------------------------------
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.
Results of Operations
USFreightways Corporation ("the Company") reported net income for the
thirteen weeks ended October 2, 1999 of $29.7 million, a 52% increase over the
$19.5 million which was reported for the thirteen weeks which ended October 3,
1998. There were 63 working days in the current year's quarter (excluding July
4th and Labor Day) compared to 64 for the same quarter of last year, which
included only the Labor Day holiday.
Net income per share for the current year's quarter was equivalent to $1.07
diluted earnings per share, a 45% increase compared to the 74 cents diluted
earnings per share for the same quarter of 1998.
Revenue for the 1999 quarter increased by 21.9% to $571.9 million from
$469.3 million for the third quarter of 1998. Golden Eagle and Processors which
were acquired since the third quarter of 1998, contributed revenue of
$28.4 million in the current year's quarter.
Less-than-truckload (LTL) revenue for the current quarter at the regional
trucking subsidiaries, on equivalent working days, increased 14.6% over the 1998
second quarter, LTL shipments increased 10.8% and LTL tonnage increased 11.5%.
LTL revenue per shipment increased from $105.86 to $109.47 and the weight per
shipment increased from 1,137.0 pounds to 1,143.9 pounds. In late July, Preston
Trucking ceased operations. The Company estimates that its USF Holland and USF
Red Star subsidiaries obtained approximately $10 million in revenue during the
quarter as a result of this closure. Year to date revenue increased by 12.0% to
$1,189.3 million from $1,061.9 million last year.
Operating income in the current year's quarter, for regional trucking
increased 35.5% to $47.5 million compared to $35.0 million for the same period
of 1998. Each of the regional subsidiaries operating ratios improved. Led by USF
Holland, USF Bestway and USF Reddaway, the operating ratio for the LTL group
improved to 89.4 from 91.2 last year, the second time in the Company's history
the regional trucking group has operated below a 90.0 operating ratio during a
quarter. Improvements in the quarter's costs occurred in labor, workers'
compensation, terminal rents and other operating expenses. While fuel prices are
up over the same quarter last year, the regional trucking companies have
implemented fuel surcharges that have offset these higher costs. Year to date
operating income increased by 30.1% to $121.5 million from $93.4 million last
year.
Glen Moore Trucking, the Company's truckload carrier that was acquired on
August 31, 1998, contributed revenue of $12.3 million and operated at 91.3 for
the current quarter compared to revenue of $3.5 million and an operating ratio
of 89.7 in last year's quarter. Higher labor and fuel costs in the current
quarter, compared to last year's quarter, contributed to the higher operating
ratio.
Revenue in the logistics group increased by 61.2% to $53.4 million in the
current quarter from $33.1 million in the prior year. Processors, acquired on
March 2, contributed revenue of $11.8 million while other existing logistics'
contracts increased revenue by $3.8 million over the prior year's quarter. USF
Distribution Services increased revenue by $4.6 million of which its Moore & Son
acquisition (Oct. 15, 1998) contributed $1.6 million, the new Dallas center
contributed $1.3 million while other distribution centers increased revenue by
$1.7 million. Year to date revenue for the logistics group increased by 54.4%
to $143.1 million from $92.7 million last year.
Earnings in the logistics group increased 135% over the prior year's
quarter to $4.8 million from $2.0 million due to earnings from Processors, Moore
& Son, Special Dispatch and higher profits from existing customers' business.
Year to date earnings increased by 105.9% to $12.0 million from $5.8 million
last year.
<PAGE>
Revenue in the Freight Forwarding group increased 60.4% to $57.5 million
from $35.8 million in the prior year's quarter due in large part to $16.5
million in revenue contributed from the group's recent Golden Eagle acquisition
(Nov. 12, 1998). Year to date revenue increased by 55.6% to $161.5 million from
$103.8 million last year. The group's profits improved by 91.5% to $2.3 million
from $1.2 million the prior year's quarter. Year to date profits improved by
96.9% to $5.3 million from $2.7 million last year.
During the third quarter, USF Worldwide, the Company's freight forwarding
business unit, acquired (for cash) Best Ways Air Cargo, the assets of Gulf
International Freight and the assets of Caro-Trans' NVOCC Puerto Rican
unit.These acquisitions contributed approximately $1.9 million in revenue during
the quarter.
On August 2, Glen Moore Transport, the Company's truckload carrier,
acquired (for cash) Underwood Trucking, Inc. an Indiana based truckoad carrier.
Underwood provides truckload services primarily in the central states and
contributed approximately $0.8 million in revenue during the quarter.
On July 31, USF Distribution Services acquired (for cash) Special Dispactch
of Dallas, Inc. Special Dispatch offers overnight distribution and consolidation
services to north central and western Texas. Special Dispatch contributed
approximately $1.3 million in revenue during the quarter.
Liquidity and Capital Resources
Cash flows from operating activities contributed $132.8 million during the
nine months compared to $115.4 million during the same period last year.
Net capital expenditures for the 1999 nine months amounted to approximately
$186 million including $84.8 million for revenue equipment, $36.8 million for
terminal facilities, $49.4 million for the acquisitions of Processors, CBL, six
freight forwarding companies, one truckload company, one distribution center and
the balance for other capital items. Last year for the same period, net capital
expenditures amounted to approximately $121.9 million, including $67.3 million
for revenue equipment, $36.6 million for terminal facilities and the balance for
other capital items and two acquisitions - a truckload carrier (Glen Moore) and
a small LTL acquisition in the Northeast - Vallerie's Transportation Services,
Inc.
On May 5, 1999, the Company completed a $100 million offering of Guaranteed
Notes due May 1, 2009 with a coupon rate of 6.50% and at a spread of 140 basis
points above the 10-year Treasury notes.
Net proceeds from the sale were used to reduce the unsecured lines of
credit that the Company had with various banks. Until any remaining net proceeds
were applied for specific purposes, the Company invested them in marketable
securities. At October 2, 1999, the Company had applied all remaining net
proceeds and had no deposits in marketable securities.
A dividend of 9 1/3 cents per share equivalent to $2.5 million was paid on
October 8, 1999 to shareholders of record on September 24, 1999.
Market Risk
The Company is exposed to the impact of interest rate changes. The
Company's exposure to changes in interest rates is limited to borrowings under a
line of credit agreement which has variable interest rates tied to the LIBOR
rate. The weighted average annual interest rates on borrowings under this credit
agreement were approximately 5.3% in the first nine months of 1999. In addition,
the Company has $100 million of unsecured notes with a 6 5/8% fixed annual
interest rate and $100 million of unsecured notes with a 6 1/2% fixed annual
interest rate at October 2, 1999. The Company estimates that the carrying value
of the notes approximated its market value at October 2, 1999. The Company has
no hedging instruments. From time to time, the Company invests excess cash in
overnight money market accounts.
<PAGE>
Year 2000
The Company has been and continues to address the universal situation
commonly referred to as the "Year 2000 Problem". The "Year 2000 Problem" is
related to the inability of certain computer systems, software and embedded
technologies to properly recognize and process date-related information
surrounding the Year 2000.
In 1996, the Company initiated a comprehensive review of its computerized
Information Technology (IT) and non-information technology systems to identify
systems that could be affected by the Year 2000 problems and has implemented a
plan to resolve the identified issues. The Year 2000 issues were analyzed by
identifying and assessing all systems, software and embedded technologies and
business partners, with internal business critical systems, given a higher
priority. The Company defines a system as business critical if a failure would
cause a significant service disruption or could cause a material adverse effect
on the Company's operations or financial results. As of October 2, 1999, the
Company has completed remediation and testing of its business critical systems
and believes its own computerized information technology systems are ready for
the Year 2000. The business critical systems have been unit tested by IT staff
members and many have been evaluated using a detailed Year 2000 test plan.
Further testing and verification on the systems will continue throughout the
remainder of 1999. The Company has established an internal Year 2000 audit team
to audit the process and results of the Year 2000 efforts of the Company's
subsidiaries. The Company has expended approximately $1.6 million as of October
2, 1999 to ensure Year 2000 compliance. The total cost to ensure Year 2000
compliance is estimated to be approximately $2 million. The cost estimate is
based on the Company's structure and those subsidiaries it owns at the present
time. The acquisition of any additional operating entity may significantly
impact the total cost as it has been estimated.
The Company has been contacting business partners whose Year 2000
non-compliance could adversely affect the Company's operations, employees, or
customers. As a provider of transportation and logistics services, the Company's
operations are dependent on telecommunication, financial and utility services
provided by a number of entities. The Company is unaware of any of these
entities or of any significant supplier not being Year 2000 compliant. In spite
of this, the Company believes the most likely worst case scenario would be the
failure of a material business partner to be Year 2000 compliant. Contingency
plans have been formulated to allow the Company to continue to operate smoothly
in the event of this occurrence. Certain contingency plans, if required to be
brought into effect, may result in additional labor costs to be incurred which
might have an impact on the Company's operating costs.
The Company's assessment of its Year 2000 issues involves some assumptions.
These assumptions revolved primarily around the Year 2000 representation from
third parties with which the Company has business relationships, and where the
Company has not been able to independently verify these representations.
Forward Looking Statement
This release contains forward-looking statements, which are subject to certain
risks, and uncertainties that could cause actual results to differ materially.
These risks and uncertainties are detailed from time to time in reports filed by
the Company with the Securities and Exchange Commission including forms 8K, 10Q
and 10K.
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a party to a number of proceedings brought under the
Comprehensive Environmental Response, Compensation and Liability Act,
("CERCLA"). The Company has been made a party to these proceedings as
an alleged generator of waste disposed of at hazardous waste disposal
sites. In each case, the Government alleges that the parties are
jointly and severally liable for the cleanup costs. Although joint and
several liability is alleged, these proceedings are frequently
resolved on the basis of the quantity of waste disposed of at the site
by the generator. The Company's potential liability varies greatly
from site to site. For some sites the potential liability is de
minimis and for others the costs of cleanup have not yet been
determined. While it is not feasible to predict or determine the
outcome of these proceedings or similar proceedings brought by state
agencies or private litigants, in the opinion of management, the
ultimate recovery or liability, if any, resulting from such
litigation, individually or in the aggregate, will not materially
adversely affect the Company's financial condition or results of
operations and, to the Company's best knowledge, such liability, if
any, will represent less than 1% of its revenues.
Steven Mark Whitworth v. TNT Bestway Transportation, Inc. f/k/a .TNT
Bestway Inc. and William Orr, Case No. 96-3935-A, 14th Judicial
District Court, Dallas County, Texas.
On April 19, 1996, Steven Mark Whitworth ("Plaintiff") a former
employee of USF Bestway Inc., a subsidiary of the Company ("USF
Bestway"), brought suit against USF Bestway and one of its employees,
alleging claims of fraud and promissory estoppel arising from
Plaintiff's previous employment as a driver with USF Bestway. On or
about October 2, 1996, Plaintiff amended his petition and added
claims of wrongful discharge and conspiracy to wrongfully discharge.
On October 7, 1996, Plaintiff moved for summary judgment, claiming
that he was entitled to a judgment of $3,500,000 in actual damages and
$1,750,000 in attorney fees based on (i) the USF Bestway's alleged
untimely responses to Plaintiff's requests for admissions and (ii) the
USF Bestway's alleged failure to comply with the requirements of Texas
law concerning the signature of pleadings by counsel in connection
with the responses to Plaintiff's requests for admissions. Following a
hearing on November 1, 1996, the trial court granted Plaintiff's
motion for summary judgment and entered judgment in favor of Plaintiff
and against USF Bestway, for $3,500,000 in actual damages
$1,750,000 in attorneys' fees together with court costs and interest.
On November 27, 1996, USF Bestway moved for reconsideration of the
judgment and for a new trial. At a January 7, 1997 hearing on this
motion, the trial court denied the motion for reconsideration and for
new trial, but ruled that the responses to the Plaintiff's requests
for admissions were timely. USF Bestway has posted a superedeas bond
to prevent enforcement of the judgment pending appeal and perfected
its appeal to the Dallas Court of Appeals, Fifth District, Texas.
On June 10, 1999, the Court of Appeals, Fifth District Texas, issued
an opinion reversing the trial court's grant of summary judgment in
favor of the plaintiff, and remanding the case back to the trial court
for a new trial on the merits.
Also, the Company is involved in other litigation arising in the
ordinary course of business, primarily involving claims for bodily
injuries and property damage. In the opinion of management, the
ultimate recovery or liability, if any, resulting from such
litigation, individually or in the aggregate, will not materially
adversely affect the Company's financial condition or results of
operations.
<PAGE>
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
quarter.
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 27th day of
October, 1999.
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
Controller and Principal
Accounting Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27 FINANCIAL DATA SCHEDULE (FDS)
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> OCT-02-1999
<CASH> 6,283
<SECURITIES> 0
<RECEIVABLES> 284,654
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 352,518
<PP&E> 622,043
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,161,035
<CURRENT-LIABILITIES> 387,620
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 529,862
<TOTAL-LIABILITY-AND-EQUITY> 1,161,035
<SALES> 0
<TOTAL-REVENUES> 1,634,031
<CGS> 0
<TOTAL-COSTS> 1,500,709
<OTHER-EXPENSES> (624)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,001
<INCOME-PRETAX> 123,945
<INCOME-TAX> 50,443
<INCOME-CONTINUING> 73,502
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,502
<EPS-BASIC> 2.78
<EPS-DILUTED> 2.68
</TABLE>
