<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year December 31, 1995
[ ] 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 0-19969
ARKANSAS BEST CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 71-0673405
- ---------------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3801 Old Greenwood Road, Fort Smith, Arkansas 72903
- ---------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 501-785-6000
------------
Securities registered pursuant to Section 12(b) of the Act:
None
----------------
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
- -------------------------------------- -----------------------
Common Stock, $.01 Par Value Nasdaq Stock Market/NMS
$2.875 Series A Cumulative Convertible
Exchangeable Preferred Stock,
$.01 Par Value Nasdaq Stock Market/NMS
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 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].
<PAGE>
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 21, 1996, was $144,442,000.
The number of shares of Common Stock, $.01 par value, outstanding as of
March 21, 1996, was 19,515,758.
Documents incorporated by reference:
Portions of the proxy statement for the Arkansas Best Corporation annual
shareholders' meeting to be held May 9, 1996 are incorporated by reference
into Part III.
<PAGE>
ARKANSAS BEST CORPORATION
FORM 10-K
TABLE OF CONTENTS
ITEM PAGE
NUMBER NUMBER
PART I
Item 1. Business 3
Item 2. Properties 23
Item 3. Legal Proceedings 24
Item 4. Submission of Matters to a Vote of Security Holders 24
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 25
Item 6. Selected Financial Data 26
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 29
Item 8. Financial Statements and Supplementary Data 39
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 39
PART III
Item 10. Directors and Executive Officers of the Registrant 40
Item 11. Executive Compensation 40
Item 12. Security Ownership of Certain Beneficial
Owners and Management 40
Item 13. Certain Relationships and Related Transactions 40
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 41
<PAGE>
PART I.
ITEM 1. BUSINESS
(a) General Development of Business
Corporate Profile
Arkansas Best Corporation (the "Company") is a diversified holding company
located in Fort Smith, Arkansas. The Company is engaged through its motor
carrier subsidiaries in less-than-truckload ("LTL") and truckload shipments
of general commodities, through its freight forwarding and logistics
subsidiaries in intermodal marketing and freight logistics services and
through its 46%-owned subsidiary, Treadco, Inc. ("Treadco") in truck tire
retreading and new truck tire sales.
Historical Background
In 1988, the Company was acquired in a leveraged buyout
by a corporation organized by Kelso & Company, L.P. ("Kelso").
In 1992, the Company completed an initial public offering of Common Stock par
value $.01 (the "Common Stock") by the Company. The Company also repurchased
substantially all the remaining shares of Common Stock beneficially owned by
Kelso, thus ending Kelso's investment in the Company.
In 1993, the Company completed a public offering of 1,495,000 shares of
preferred stock ("Preferred Stock").
(b) Financial Information about Industry Segments
The response to this portion of Item 1 is included in "Note M - Business
Segment Data" of the notes to the Company's consolidated financial statements
for the year ended December 31, 1995, which is submitted as a separate
section of this report.
(c) Narrative Description of Business
The Company
Acquisition
On July 14, 1995, ABC Acquisition Corporation (the "Purchaser"), a wholly
owned subsidiary of the Company, commenced a tender offer (the "Offer") to
purchase all outstanding shares of common stock of WorldWay Corporation
("WorldWay"), at a purchase price of $11 per share (the "Acquisition").
Pursuant to the Offer, on August 11, 1995, the Purchaser accepted for payment
shares of WorldWay validly tendered, representing approximately 91% of the
shares outstanding. On October 12, 1995, the remaining shares of WorldWay's
common stock were converted into the right to receive $11 per share in cash.
Principal subsidiaries of WorldWay included Carolina Freight Carriers Corp.
("Carolina Freight") and Red Arrow Freight Lines, Inc. ("Red Arrow"), which
were merged into ABF on September 24, 1995, Cardinal Freight Carriers, Inc.
("Cardinal"), G.I. Trucking Company ("G.I. Trucking"), CaroTrans
International, Inc. ("CaroTrans"), The Complete Logistics Company ("Complete
Logistics"), Innovative Logistics Incorporated ("ILI") and Carolina Breakdown
Service, Inc. ("Carolina Breakdown").
<PAGE>
Employees
At December 31, 1995, the Company had a total of 18,459 employees of which
65% are members of a labor union.
Less-Than-Truckload Motor Carrier Operations
General
The Company's LTL motor carrier operations are conducted through ABF Freight
System, Inc. ("ABF"), ABF Freight System (B.C.), Ltd. ("ABF-BC"), ABF Freight
System Canada, Ltd. ("ABF-Canada"), ABF Cartage, Inc. ("Cartage"), and Land-
Marine Cargo, Inc. ("Land-Marine")(collectively the "ABF System") and G.I.
Trucking Company.
LTL carriers differ substantially from full truckload carriers by offering
service to shippers which is tailored to the need to transport a wide variety
of large and small shipments to geographically dispersed destinations.
Generally, full truckload companies operate from the shipper's dock to the
receiver's facility and require very little fixed investment beyond the cost
of the trucks. LTL carriers pick up small shipments throughout the vicinity
of a local terminal with local trucks and consolidate them at each terminal
according to destination for transportation by intercity units to their
destination cities or to breakbulk (rehandling) terminals, where shipments
from various locations can be reconsolidated for transportation to distant
destinations, other breakbulk terminals or local terminals. In most cases, a
single driver's trip will consist of a day's run to the terminal or relay
point which is appropriately located on the route, where the trailer
containing the shipments will be transferred to continue towards its
destination. Once delivered to a local terminal, a shipment is delivered to
the customer by local trucks operating from such terminal. In some cases,
when a sufficient number of different shipments at one origin terminal are
going to a common destination, they can be combined to make a full
trailerload. A trailer then is dispatched to that destination without having
to rehandle the freight.
Competition, Pricing and Industry Factors
The trucking industry is highly competitive. The Company's LTL motor carrier
subsidiaries actively compete for freight business with other national,
regional and local motor carriers and, to a lesser extent, with private
carriage, freight forwarders, railroads and airlines. Competition is based
primarily on personal relationships, price and service. In general, most of
the principal motor carriers use similar tariffs to rate interstate
shipments. Competition for freight revenue, however, has resulted in
discounting which effectively reduces prices paid by shippers. In an effort
to maintain and improve its market share, the Company's LTL motor carrier
subsidiaries offer and negotiate various discounts.
The trucking industry, including the Company's LTL motor carrier
subsidiaries, is affected directly by the state of the overall economy. In
addition, seasonal fluctuations also affect tonnage to be transported.
Freight shipments, operating costs and earnings also are affected adversely
by inclement weather conditions.
ABF Freight System, Inc.
The largest subsidiary of the Company, ABF currently accounts for
approximately 69% of the Company's consolidated revenues and 94% of LTL
<PAGE>
operations revenue. ABF has grown to become the fourth largest LTL motor
carrier in the United States from the forty-eighth largest in 1965, based on
revenues for 1995 as reported to the U.S. Department of Transportation
("D.O.T."). ABF provides direct service to over 98.5% of the cities in the
United States having a population of 25,000 or more. The ABF System provides
interstate and intrastate direct service to more than 38,500 points through
343 terminals in all 50 states, Canada and Puerto Rico. Through an alliance
and relationships with trucking companies in Mexico, ABF provides motor
carrier services to customers in that country as well. ABF was incorporated
in Delaware in 1982 and is the successor to Arkansas Motor Freight, a
business originally organized in 1935.
ABF concentrates on long-haul transportation of general commodities freight,
involving primarily LTL shipments. General commodities include all freight
except hazardous waste, dangerous explosives, commodities of exceptionally
high value, commodities in bulk and those requiring special equipment. ABF's
general commodities shipments differ from shipments of bulk raw materials
which are commonly transported by railroad, pipeline and water carrier.
General commodities transported by ABF include, among other things, food,
textiles, apparel, furniture, appliances, chemicals, non-bulk petroleum
products, rubber, plastics, metal and metal products, wood, glass, automotive
parts, machinery and miscellaneous manufactured products. During the year
ended December 31, 1995, no single customer accounted for more than 3% of
ABF's revenues, and the ten largest customers accounted for less than 8% of
ABF's revenues.
International Markets
ABF-Canada and ABF-BC's Canadian operations are comprised of 14 terminals in
the provinces of Alberta, British Columbia, Manitoba, New Brunswick,
Newfoundland, Nova Scotia, Prince Edward Island, Ontario, and Quebec. In
addition, ABF maintains a national account sales office in Montreal. Also
available is simplified rating to and from Canada, similar to the zip-rating
program which ABF uses in the United States.
Through an alliance with one of Mexico's largest LTL specialists, ABF
provides motor carrier services to that country as well. This service gives
ABF customers a practically seamless operation featuring single-billing
including all freight charges, through-cargo claims liability and tracing,
diskette rating, voice-response rate quotes and shipment status, hazardous
materials service, and payment in either U.S. dollars or in Mexico pesos.
This service is offered to and from all points serviced through ABF tariffs
to and from specified points in Mexico. ABF has expanded its Mexico sales
and customer support staffs and maintains ABF sales offices in Mexico City,
Monterrey and Guadalajara.
Worldwide, ABF's international services offers less-than-containerload
service to 161 countries through 301 ports. In addition, ABF offers full-
containerload service to Europe, the United Kingdom and Ireland, Scandinavia,
the Baltic Region, South Africa, the Far East, Southeast Asia, Australia, New
Zealand, Ecuador, Peru, Chile, Brazil, Argentina, Uruguay and Paraguay.
Specialized Services
ABF has special programs for customers with unique needs. Once ABF agrees to
meet a customer's need, it becomes a requirement. ABF delivers quality by
conforming to requirements.
<PAGE>
Through an alliance with Burnham Service Corporation, ABF's TurnKey service
provides customers a seamless, one-source transportation system featuring
door-to-door/through-the-door deliveries plus personalized unpack and set-up
services. ABF picks up the products from the shipper and delivers them to a
Burnham center nearest the consignee's address. From that point, Burnham
contacts the customer and arranges the most suitable delivery time. TurnKey
has one-call access, single-carrier liability, through-rates and one-source
invoicing. It uses the most sophisticated state-of-the-art satellite
communications, bar-coding technology, and computer linkage between ABF and
the customer for on-going up-to-the-minute status checks on shipments. The
service is available from any point served by the ABF system to any point in
the contiguous 48 states.
"TimeKeeper" is another in ABF's line of specialized services. TimeKeeper
provides the customer with a money-back guaranteed, expedited service in
those instances when a shipment absolutely must be delivered by a certain
day. TimeKeeper is a premium service that provides an option to air freight,
at rates that are lower than most air freight rates and other expedited
options.
ABF's "On-the-Date" Program (ON) was developed to meet the needs of its Just
In Time customers. Shipments will be delivered ON the ABF advertised due
date, not prior to the due date or after the due date. Under the "By-the-
Date" Program (BY) shipments will be delivered BY the ABF advertised due
date, not after the due date. ABF's "Between the Date" Program (BE) was
developed to meet the needs of customers who have delivery windows.
Shipments will be delivered between specific dates consistent with ABF
advertised transit times. Participating customers' delivery receipts display
special "ON", "BY" or "BE" flags indicating the delivery requirements.
ABF developed its Special Handling Program to meet the needs of customers
with unusual pickup, delivery or freight-handling requirements. Specific
handling requirements are stored in Q-Net, ABF's online communications
network, and are accessible by all terminals involved in the handling of a
shipment. Participating customers' delivery receipts display a special
"HANDL" flag.
<PAGE>
Statistical Information
The following table sets forth certain statistical information regarding
ABF's operations (including inter-company operations) for the five years
ended December 31, 1995.
<TABLE>
ABF Freight System, Inc.
<CAPTION>
Year Ended December 31
1995 1994 1993 1992 1991
(Unaudited)
<S> <C> <C> <C> <C> <C>
Operating ratio 100.6% 96.4% 95.8% 94.9% 96.3%
Average length of haul (miles) 1,202 1,214 1,198 1,201 1,192
Employees (1) 14,728 11,876 10,719 10,545 10,184
Miles per gallon 6.32 6.32 6.12 5.87 5.65
Fuel cost per mile (2) $.084 $.085 $.094 $.110 $.116
Terminals (at end of period)(3) 334 322 323 317 320
Tractors
Road Tractors 2,060 1,498 1,385 1,385 1,385
City Tractors 2,928 2,483 2,469 2,474 2,368
Trailers
Road Trailers -- doubles 20,377 12,734 12,263 11,718 11,405
Road Trailers -- long 449 230 231 251 274
City Trailers 2,202 1,364 1,395 1,365 1,187
Less-than-Truckload (4)
Revenue (000's) $894,790 $797,393 $772,872 $748,470 $697,602
Percent of total revenue 89.0% 88.3% 88.3% 88.8% 89.1%
Tonnage (000's) 2,877 2,677 2,620 2,542 2,384
Percentage of total tonnage 77.5% 76.8% 76.5% 77.2% 78.5%
Shipments (000's) 5,465 4,935 4,948 4,899 4,793
Revenue per hundredweight $15.55 $14.89 $14.75 $14.72 $14.63
Average weight per shipment
(pounds) 1,053 1,085 1,059 1,038 995
Truckload
Revenue (000's) $110,530 $105,798 $102,635 $ 94,242 $ 85,013
Tonnage (000's) 836 809 807 752 654
Shipments (000's) 102 98 96 89 78
Revenue per hundredweight $6.61 $6.54 $6.36 $6.27 $6.50
Average weight per shipment
(pounds) 16,393 16,502 16,776 16,858 16,707
<FN>
<F1>
(1) At end of period for salaried employees and mid-December for hourly
employees.
<F2>
(2) Excludes fuel tax per mile of $.069, $.067, $.071, $.073 and $.075 for 1991
through 1995, respectively.
<F3>
(3) Does not include terminals of ABF-BC, ABF Canada, Land Marine and Cartage.
<F4>
(4) Defined by the ICC as shipments weighing less than 10,000 pounds.
</FN>
</TABLE>
<PAGE>
Quality Improvement Process
In 1984, ABF began implementing a Quality Improvement Process to focus on the
specific requirements of customers and to develop measurement systems that
determine the degree of success or failure in conforming to those
requirements. Non-conforming results trigger a structured approach to problem
solving, error identification and classification. The Quality Improvement
Process requires that all levels of employees be educated in the process
itself and trained in their respective job responsibilities so that the focus
on customer requirements drives job performance. In that vein, ABF maintains
permanent educational facilities in strategic locations to teach the Quality
Improvement Process to sales personnel, branch managers and operations
personnel in classroom environments. ABF believes that the Quality
Improvement Process has enhanced performance in a number of areas.
Revenue Equipment
ABF's equipment replacement policy generally provides for replacing intercity
tractors every three years, intracity tractors every five to seven years, and
trailers (which have a depreciable life of seven years) on an as needed basis
(generally seven years or more), resulting in a relatively new and efficient
tractor fleet and minimizing maintenance expenses. ABF presently intends to
continue its tractor and trailer replacement policy. However, due to the
acquisition of WorldWay, ABF will not have to replace any revenue equipment
during 1996. As a result of the acquisition, ABF has excess revenue
equipment which will be sold during 1996.
ABF has a comprehensive preventive maintenance program for its tractors and
trailers to minimize equipment downtime and prolong equipment life. Repairs
and maintenance are performed regularly at ABF's facilities and at
independent contract maintenance facilities.
ABF's computerized maintenance program tracks equipment activity and provides
automatic notification of the maintenance needs of each tractor, trailer and
converter gear. The program keeps records of preventive maintenance
schedules and governmental inspection requirements for each piece of
equipment and routes the unit to the nearest ABF maintenance facility where
the service can be performed.
<PAGE>
As of December 31, 1995, ABF owned or operated the following revenue
equipment, which, excluding operating leases, had an aggregate net book value
of approximately $124.9 million:
<TABLE>
<CAPTION>
Total No. Units by Model Year
of Units `96 `95 `94 `93 `92 `91 `90 Pre-'90
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Intercity Tractors (1) 2,060 12 1,092 441 498 13 - 2 2
Intercity Trailers 449 - - - - - - 25 424
Intercity Trailers-Doubles (2) 20,377 - 802 500 955 918 1,984 1,119 14,099
Intracity Tractors (3) 2,928 119 478 217 323 335 385 476 595
Intracity Trailers 2,202 - - - - - - 25 2,177
Pickup/Delivery Trucks 92 - - 14 - 17 2 7 52
Converters (used to connect
two 28-foot trailers) 4,843 - 100 273 91 - 303 156 3,920
<FN>
<F1>
(1) Includes 1,668 tractors being leased under operating lease.
<F2>
(2) Includes 921 trailers being leased under operating lease and 3,126 trailers
being leased under capitalized lease.
<F3>
(3) Includes 1,070 tractors being leased under capitalized lease.
</FN>
</TABLE>
In 1995, under its equipment replacement program, ABF acquired 490 intercity
tractors, 390 intracity tractors and 800 trailers. Internally generated
funds, borrowings under the credit agreement and leases have been sufficient
to finance these additions.
Data Processing
The Company, through a wholly owned subsidiary, is able to provide timely
information, such as the status of all shipments in the system at any given
point in time, that assists operating personnel and aids marketing efforts of
ABF. ABF continues to develop its on-line Freight Management System (FMS)
aimed at perfecting both service to customers and internal cost controls.
To improve service, ABF makes information readily accessible to its customers
through various electronic pricing, billing and tracing services, referred to
by ABF as the "Q-Family" of services. The ABF Q-Family offers a complete
package of computer-supported information services. Q-Stat provides a
monthly statistical report of a customer's shipping activity with ABF. Q-
Bill offers most of the functions of a traffic department in a PC software
package. Q-Bill provides for bill-of-lading preparation, automatic rating
with an ABF tariff or competitor tariff, case label production and summary
manifesting. Q-EDI is ABF's computer-to-computer electronic data interchange
(EDI) system. The following standard transactions are presently supported:(i)
shipment status information for shipment tracking and performance monitoring;
(ii) freight bills for payment and auditing, and (iii) bill-of-lading
information for carrier billing and rating. Q-Info is a PC-based shipment
status information system designed to aid ABF customers in the performance of
their daily traffic-related functions. Q-Info provides customized shipment
status reports, up-to-the-minute tracing information and freight bill copies.
<PAGE>
Q-Line is a nationwide hotline which can be reached 24-hours a day, seven
days a week, from any touch-tone telephone. It is a voice response system
which allows "conversation" with the ABF computer for tracing, rates, loss
and damage claims, and transit time information. ABF originated diskette
rating and, in management's opinion, continues to set the industry standard.
Q-Rate provides North American rating on diskette. In addition to supporting
the ABF tariffs, information regarding coverage, transit times, and mileage
is provided. ABF Q-Fax is the newest member to the Q-Family. Q-Fax provides
tracking and tracing information to shippers without the computer
sophistication to utilize Q-Info or Q-EDI. Customized reports showing
shipment activity are faxed directly from ABF's mainframe computer to the
customer's facsimile machine.
ABF has in place several programs which continually assess various functions
deemed critical to service and/or costs, and include the Delivery Backlog
Report, Manning Strategy Model, Outbound Backlog Report, Tardy Spots Report,
and Inbound Break Analysis. They are generated only when exceptions are
detected, which gives ABF automatic controls. When exceptions occur, these
controls allow management to react quickly and decisively, preventing
exceptions from becoming problems without having to sift through reams of
data.
ABF's customer database management system, AIMS (Account Information
Management System) provides a centralized management tool for maintaining
customer information. For example, a file of customer receiving requirements
is maintained in AIMS. AIMS can be accessed on-line by all ABF general office
departments and terminals.
The service bureau is staffed with 214 data processing specialists. The
Company believes that its allocation of resources to data processing has
assisted ABF in providing the type of quality services required by a
sophisticated shippers.
Employees
At December 31, 1995, ABF employed 14,728 persons. Employee compensation and
related costs are the largest components of LTL motor carrier operating
expenses. In 1995, such costs amounted to 71.6% of LTL operations revenues.
ABF is a signatory with the Teamsters to the National Master Freight
Agreement (the "National Agreement") which became effective April 1, 1994,
and expires March 31, 1998. Under the National Agreement, employee wages and
benefits increased an average of 2.7% and 3.3% annually during 1994 and 1995,
respectively, and will increase an average of 3.8% on April 1, 1996 and 3.9%
on April 1, 1997. Under the terms of the National Agreement, ABF is required
to contribute to various multiemployer pension plans maintained for the
benefit of its employees who are members of the Teamsters. Amendments to the
Employee Retirement Income Security Act of 1974 ("ERISA") pursuant to the
Multiemployer Pension Plan Amendments Act of 1980 (the "MPPA Act")
substantially expanded the potential liabilities of employers who participate
in such plans. Under ERISA, as amended by the MPPA Act, an employer who
contributes to a multiemployer pension plan and the members of such
employer's controlled group are jointly and severally liable for their
proportionate share of the plan's unfunded liabilities in the event the
employer ceases to have an obligation to contribute to the plan or
substantially reduces its contributions to the plan (i.e., in the event of
plan termination or withdrawal by the Company from the multiemployer plans).
Although the Company has no current information regarding its potential
liability under ERISA in the event it wholly or partially ceases to have an
obligation to contribute or substantially reduces its contributions to the
<PAGE>
multiemployer plans to which it currently contributes, management believes
that such liability would be material. The Company has no intention of
ceasing to contribute or of substantially reducing its contributions to such
multiemployer plans. ABF is also a party to several smaller union contracts.
Approximately 81% of ABF's employees are unionized, of whom approximately 1%
are members of unions other than the Teamsters.
Four of the five largest LTL carriers are unionized and generally pay
comparable wages. Non-union companies typically pay employees less than
union companies.
Since December 1989, the D.O.T. has required ABF and other domestic motor
carriers to implement drug testing programs for their truck drivers. In 1991,
ABF implemented a random testing program to cover its entire driver work
force. ABF performs testing as required by the federal government at an
average rate of 50% annually of its driver work force. Statistics for 1995
indicate that ABF has administered 4,520 random, biennial re-certification
and post-accident tests to its employees, with a pass rate of 99.3%
Beginning January 1, 1995, the D.O.T. required the implementation of alcohol
testing in conjunction with the existing drug testing program. As required by
the D.O.T., in 1995 ABF tested its drivers for alcohol use at an average rate
of 25% annually. The ABF drivers' pass rate for random and post-accident
alcohol testing in 1995 was 99.8%.
Due to its national reputation and its high pay scale, ABF has not
historically experienced any significant difficulty in attracting or
retaining qualified drivers.
Insurance and Safety
Generally, claims exposure in the motor carrier industry consists of cargo
loss and damage, auto liability, property damage and bodily injury and
workers' compensation. The Company's motor carrier subsidiaries are
effectively self-insured for the first $100,000 of each cargo loss, $300,000
of each workers' compensation loss and $200,000 of each general and auto
liability loss, plus an aggregate of $750,000 of auto liability losses
between $200,000 and $500,000. The Company maintains insurance contracts
covering the excess of such losses in amounts it believes are adequate.
While insurance for motor carriers has become increasingly more expensive and
more difficult to obtain, it remains essential to the continuing operations
of a motor carrier. The Company has been able to obtain adequate coverage
and is not aware of problems in the foreseeable future which would
significantly impair its ability to obtain adequate coverage at comparable
rates.
ABF also believes that it has one of the best safety records in the trucking
industry, based in part on having received first, second or third place
safety awards from the American Trucking Associations ("ATA") every year for
the past 25 years. ABF was awarded the ATA's President's Trophy in 1993, 1989
and 1984. The President's Trophy is awarded to the company with the most
outstanding safety program. Of the ABF general commodities shipments handled
during the year ended December 31, 1995, more than 99% were free of any cargo
claim, and of those having cargo claims, 88% were settled within 30 days of
the claim date. The following table shows accidents and claims results for
the last five years:
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Linehaul miles (000) per DOT
linehaul accident (1) 1,951 2,201 1,868 1,962 1,816
Selected categories of insurance
expense as a percent of revenue:
Cargo loss and damage claims 1.20% 1.14% 1.00% 0.94% 1.03%
Public liability .79 0.82 0.86 1.08 0.98
Workers' Compensation 1.92 1.87 1.79 1.83 2.00
----- ----- ----- ----- -----
Total 3.91% 3.83% 3.65% 3.85% 4.01%
===== ===== ===== ===== =====
<FN>
<F1>
(1) An accident, as defined by the DOT, involves personal injury with treatment
sought immediately away from the scene of the accident or disabling damage
that requires a vehicle to be towed from the scene of the accident.
</FN>
</TABLE>
G.I. Trucking Company
Headquartered in La Mirada, California, G.I. Trucking is a non-union regional
LTL motor carrier. G.I. Trucking provides transportation services and
coverage throughout 13 Western states and the Western Canadian provinces of
Alberta and British Columbia, as well as service to Hawaii and Alaska. One-
to three-day regional service is provided through 52 service centers.
Transcontinental service is facilitated through a partnership with two other
regional carriers providing service through six major hub terminals located
throughout the Midwest and East Coast. Customer service is enhanced through
EDI communications between partners, allowing for single pro tracing,
invoicing and a full range of other EDI and information management services.
G.I. Trucking's Hawaiian container operation, located in La Mirada, provides
excellent transit times to the Islands. Service to points in Alaska and
Western Canada is provided through the company's new facility in Seattle,
Washington.
G.I. Trucking's linehaul structure utilizes company solo drivers, company
sleeper teams, contract power and one-way carriers, providing total
flexibility in maintaining superior service and lane balance.
Employees
At December 31, 1995, G.I. Trucking had a total of 806 employees.
Truckload Operations
Cardinal Freight Carriers, Inc.
Cardinal is an irregular route carrier providing dry van and flatbed service
throughout the eastern two-thirds of the United States and Canada.
Headquartered in Concord, North Carolina, Cardinal operates via a central
dispatch system utilizing a state-of-the-art computer system. Cardinal has
<PAGE>
grown from 14 company-owned power units in 1981 to more than 600 tractors in
the van division and over 100 tractors in the flatbed division. The trailer
fleet consists of 1,169 53-foot vans and 117 48-foot and 45-foot aluminum
flatbeds. The fleet is one of the most modern in the industry, averaging
just under two years old.
Cardinal's services, both van and flatbed, can be labeled as interregional.
Cardinal's system averages 530 miles per trip, providing next day, on-time
service that patterns today's manufacturing and distribution system of closer
proximity to their customer base. With the flexibility for both long-haul
and short-haul, Cardinal offers one-thousand-mile plus service, along with
regional length of haul, including intrastate service in 11 states. Cardinal
has a facility network consisting of 6 locations to perform timely preventive
maintenance to better ensure safety in the community and equipment
reliability.
Cardinal operates in a competitive and highly service-sensitive market and
therefore, is committed to providing its customers with premier quality
service. Cardinal's customers have defined a premier quality service as on-
time, claim-free pickups and deliveries, accurately invoiced, and thorough
communications, along with information support technology.
During 1995, Cardinal's largest customer accounted for 14% of Cardinal's
revenues and the ten largest customers accounted for 45% of Cardinal's
revenue.
Forwarding Operations
General
The Company's forwarding operations are conducted through Clipper Exxpress
Company ("Clipper"), Agricultural Express of America, Inc. ("AXXA"), Agile
Freight System, Inc. ("Agile"),(collectively known as the "Clipper Group")
and CaroTrans International, Inc. ("CaroTrans").
The Clipper Group
The Clipper Group is a non-asset, non-labor intensive, knowledge-based
provider of transportation and logistics services. Through the three closely
integrated operating companies, the Clipper Group provides a full range of
transportation services. Clipper is the largest consolidator and forwarder
of LTL shipments and one of the largest intermodal marketing companies
("IMC") in the United States. AXXA provides high quality temperature-
controlled intermodal service to fruit and produce brokers, growers, shippers
and receivers and supermarket chains, primarily from the West to the Midwest,
Canada, and the eastern United States. Agile provides "near air freight"
truckload service in tightly focused lanes and also provides some line-haul
transportation for Clipper's LTL consolidation service.
Clipper Exxpress Company
Clipper, founded in 1938, is the largest of the three Clipper Group
companies. Clipper accounted for approximately 62% of the Company's
forwarding operations revenues during the fourth quarter of 1995. Clipper
provides contract freight management and LTL freight forwarding services to
its customers.
<PAGE>
Clipper's executive offices are located in Lemont, Illinois ( a suburb of
Chicago) and its 38 branch offices are dispersed throughout the United
States. At December 31, 1995, Clipper employed 189 persons (comprised of 53
sales representatives, 68 administrative personnel and 68 operations
personnel).
Contract Freight Management. Through its contract freight management
business unit, Clipper provides logistics and transportation services,
including intermodal and truck brokerage, warehousing, consolidation,
transloading, repacking, and other ancillary services.
As an IMC, Clipper arranges for loads to be picked up by a drayage company,
tenders them to a railroad, and then arranges for a drayage company to
deliver the shipment on the other end of the move. Clipper's role in this
process is to select the most cost-effective means to provide quality
service, and to expedite movement of the loads at various interface points to
ensure seamless door-to-door transportation.
Clipper's substantial volume of consistently high margin traffic is extremely
attractive to its railroad partners. As a result, Clipper has been able to
enter into contracts with major railroads and stack train operations that
contain very competitive rates.
LTL Freight Forwarding. Clipper is one of the nation's oldest and largest
LTL freight forwarders. Its collection and distribution network consists of
38 geographically dispersed locations throughout the United States.
Selection of markets depends on size (lane density), availability of quality
rail service and truck line-haul service, length of haul and competitor
profile. Traffic moving between its ten most significant market pairs
generates approximately 37% of Clipper's LTL revenue. Virtually all of
Clipper's LTL revenue is derived from long-haul, metro area to metro area
transportation.
Clipper's specific strategy for the LTL forwarding business is to provide
expedited LTL transportation service only between major markets within the
United States. It has chosen not to serve the regional markets or where
freight volume is limited. In addition, Clipper concentrates its sales and
marketing efforts in the close-in metro areas in the major cities that it
serves. This strategy helps reduce Clipper's pickup and delivery costs and
assures that LTL freight picked up by Clipper's agent is available for
outbound loading on the same day. Additionally, this strategy allows Clipper
to quickly build sufficient lane density to ship directly to destination
terminals. With the effective use of reliable rail service and trucks with
two driver teams, Clipper can provide customers a significant improvement in
transit time.
Rather than hiring its own employees and owning transportation equipment,
Clipper uses independent agents to pick up, sort, and consolidate LTL
shipments into truckload shipments. A truckload carrier or premium service
intermodal train will then linehaul the consolidated truckload to a
destination terminal where another agent will deconsolidate the line-haul
trailer and deliver its contents to the ultimate consignees.
Although pickup and delivery and terminal handling is performed by agents,
Clipper has an operations and customer service staff located at or near the
agent's terminal to monitor service levels and provide an interface between
customers and agents.
<PAGE>
Because Clipper enters new markets without a large financial commitment and
with only a few company employees, it is able to constantly explore new ideas
without significant risk and to quickly take advantage of new opportunities.
The Clipper Group serves a diverse base of more than one thousand shippers
with which it strives to establish long-term relationships. These efforts
have had positive results as evidenced by the fact that many of Clipper's
customers have been doing business with Clipper for more than 15 years.
Clipper's customers are a diverse group, with no concentration in any
particular industry. During the year ended December 31, 1995, no single
customer accounted for more than 7% of Clipper's revenues, and the ten
largest customers accounted for less than 18% of Clipper's revenues.
Advanced information systems. Clipper has recently invested significant
resources into its information systems. This new MIS system enables Clipper
to coordinate and track the performance of different phases of each movement.
It will also enable Clipper to provide EDI linkages with its customers and
suppliers in the near future. Clipper was the first IMC to achieve mainframe-
to-mainframe EDI linkage with Conrail.
Agricultural Express of America, Inc. (D/B/A Clipper Controlled Logistics)
AXXA owns 436 temperature-controlled trailers that it deploys in the seasonal
fruit and vegetable markets. These markets are carefully selected in order
to take advantage of various seasonally high rates which peak at different
times of the year. By focusing on the spot market for produce transport,
AXXA is able to generate on average, a higher revenue per load compared to
standard temperature-controlled carriers that pursue more stable year round
temperature-controlled freight.
AXXA has also achieved lower cost than these competitors because it utilizes
railroads for the line-haul segment of the shipment. AXXA and Clipper are
closely integrated, with Clipper relying on AXXA equipment to move its
westbound freight, particularly during the winter months. AXXA counts on
Clipper to reload its equipment promptly to harvest areas, especially during
the peak produce season.
Because a large percentage of produce is usually harvested during certain
short periods of time, dependable equipment availability is one of the most
important factors that shippers consider. In addition, companies in this
niche have difficulty achieving high utilization of their fleets due to the
cyclical nature of the business, the geographical shifting of loading points
as different crops mature and the challenge of finding backhauls to harvest
areas. Consequently, the supply of specialized temperature-controlled
equipment can be rather limited during harvest season, often resulting in
severe equipment shortages. Thus, customers are willing to pay high rates
during the peak months of June and July to secure the necessary equipment.
AXXA has a distinct competitive advantage because it is able to generate a
higher rate of equipment utilization by obtaining backhauls through Clipper's
38-office network.
AXXA's reputation for integrity, combined with its strong financial
condition, has earned it the highest rating from both the Blue Book and the
Red Book, the two primary produce industry rating journals for the produce-
hauling markets. These ratings are compiled from survey feedback given by
the trade to the two rating agencies, and are evidence of the shipper's level
of confidence of AXXA.
<PAGE>
Agile Freight System, Inc. (D/B/A Clipper Highways Services)
Agile is a non-asset intensive, premium service, long-haul truckload carrier
that utilizes two-person driver teams provided primarily by owner-operators.
Agile operates in tightly focused long-haul lanes that originate or terminate
near a Clipper market. Much of Agile's value to the Clipper Group is that it
can be relied upon if other carriers are not available to move full
truckloads of consolidated LTL shipments by Clipper.
CaroTrans International, Inc.
CaroTrans is a neutral, non-vessel operating common carrier ("NVOCC")
providing import and export, door-to-door and door-to-port service to more
than 140 countries with 225 ports of discharge. Headquarted in Cherryville,
North Carolina, CaroTrans is considered one of the largest NVOCC's in the
world offering more destinations by a "master loader" than any other NVOCC.
One of CaroTrans' strengths is its North American office and receiving
network. Through sales offices in Los Angeles, Houston, New Orleans,
Atlanta, Erie, Cincinnati, Boston, New York, Baltimore, Norfolk, Charleston,
Charlotte, Jacksonville, Orlando, Miami, Toronto, Mexico City, Guadalajara
and Monterrey, CaroTrans serves thousands of shippers, receivers and freight
forwarders. CaroTrans truly covers the continent with experienced,
knowledgeable international personnel.
CaroTrans offers 23 ocean bills of lading via North American receiving
stations located in San Francisco, Los Angeles, Houston, Mexico City,
Guadalajara, Monterrey, New Orleans, Chicago, St. Louis, Miami, Jacksonville,
Savannah, Atlanta, Charleston, Charlotte, Norfolk, Baltimore, Cleveland,
Philadelphia, New York, Boston, Toronto and Montreal. The ability to offer
such a large number of bills of lading reduces the shipper's cost, since the
inland transport is shorter and closer to the actual point/port where ocean
containers are loaded.
In addition to being one of the largest less-than-containerload carriers in
the world, CaroTrans also offers a full containerload service which is
coordinated, quoted and booked through the Cherryville headquarters.
CaroTrans also provides its customers with E-Sea Sail, a state-of-the-art
software package designed for international shipping. This revolutionary
system allows the customer to obtain quick rate quotations, verify sailing
schedules, obtain a copy of a booking and generate copies of ocean bills of
lading. It is anticipated that in the near future, overseas offices and
agents will have direct access to E-Sea Sail to electronically extract
documents.
Overseas, CaroTrans is recognized as a leader in international shipping
between North America and many worldwide destinations. CaroTrans maintains
offices in Rotterdam, Holland; London and Liverpool, United Kingdom;
Singapore and San Juan. These strategically located offices direct the
operations and sales activities of the carefully selected agents within its
geographic region.
<PAGE>
Logistics Operations
The Complete Logistics Company
The Complete Logistics Company is a logistics organization dedicated to
providing supply chain management to its customers, including such services
as equipment leasing, logistics modeling, communications networks, warehouse
management, consolidation and cross-dock facilities, computerized routing,
and experienced drivers, dock workers, supervisors, and clerical staff. All
services are controlled through an integrated computer system which allows
Complete Logistics to administer all services provided in a seamless manner.
As an asset-based, third-party, single-source logistics company, Complete
Logistics has the capability to manage and coordinate a customer's logistics
resources to meet their competitive requirements. Complete Logistics listens
carefully to a customer's needs and then offers a range of customized options
designed to give the customers control over their costs and performance.
Once a customer has selected the services they want, Complete Logistics works
closely with them to guarantee the smoothest possible transition. Ongoing
success is ensured by maintaining constant communication and a close working
partnership with the customer.
Innovative Logistics Incorporated
Innovative Logistics Incorporated is a management-based third party logistics
service provider. ILI offers freight bill audit/payment and reporting,
logistics modeling, inventory warehouse/in-transit control systems, and
dynamic shipment rating and dispatch systems.
In addition, ILI provides transportation management services, EDI/systems
management, and warehouse management services. As a licensed property broker
and non-vessel operating common carrier, Innovative Logistics offers
nationwide truckload and intermodal services and international full container
services to its clients.
ILI supports its clients by performing logistics management services. ILI
will identify and contract with qualified carriers and warehouse providers,
manage their utilization and provide integrated logistics information
systems.
ILI's mission is to (1) provide innovative and value-added services for
clients who wish to outsource their transportation and warehousing
operations, (2) establish long-term partnering relationships with clients to
provide cost-effective and efficient services in a quality manner, and (3)
work seamlessly with clients to the extent Innovative is viewed as another
operating department within the client's organization.
Integrated Distribution, Inc.
Integrated Distribution is a logistics company that manages the flow of goods
and related information. Integrated Distribution's services include
truckload and large LTL transportation, customized handling, freight
consolidation, contract and public warehousing, and logistics.
<PAGE>
Transportation services are aimed at pickup and delivery of truckload and
large LTL shipments. Integrated's trucks are equipped with satellite
tracking and communications so that a customer always knows the location of
their product. An in-house licensed brokerage service supplements the
carrier operations.
Through its customized handling of a customer's product, Integrated
Distribution adds value by cross-docking, building store-ready displays,
making final assemblies, applying bar code and price labels, and packaging.
Integrated Distribution offers freight consolidation for membership clubs,
grocery chains and distributors, and mass merchandisers. Integrated's
program offers scheduled deliveries of LTL shipments with the economy of
truckload rates.
Integrated Distribution locates warehouses in major distribution cities and
supports EDI, bar codes, and RFID.
Logistics services include development and implementation of the optimal
solution for a customer's distribution requirements using owned or
subcontracted assets.
Tire Operations
Treadco, Inc.
Treadco is the nation's largest independent tire retreader for the trucking
industry and the second largest commercial truck tire dealer. Treadco's
revenues currently account for approximately 10% of the Company's
consolidated revenues and are divided approximately 54% and 46% between
retread sales and new tire sales, respectively. In 1995, Treadco sold
approximately 633,000 retreaded truck tires and approximately 394,000 new
tires.
After opening sales facilities in Fulton, Kentucky and Ft. Pierce, Florida
during the first quarter of 1996, Treadco has a total of 51 locations
positioned across the South, Southwest, lower Midwest and West. Treadco
retreads truck tires at 28 production facilities located in Arizona,
Arkansas, Florida, Georgia, Louisiana, Missouri, Nevada, Ohio, Oklahoma and
Texas. The remaining 23 locations are sales facilities located in the states
listed above as well as California, Kansas, Kentucky, Mississippi and
Tennessee.
Retreading truck tires is significantly less expensive than buying new truck
tires (about one-third of the cost) and retreaded tires generally last as
long as new tires used in similar applications. Moreover, most tire casings
can be retreaded one or two times. Treadco's average retail charge for
retreading a customer's casing is approximately $85, compared to an average
retail selling price of approximately $235 for a new tire. Treadco also
sells retreads including casings not supplied by the customer for
approximately $167 per tire. Since tire expenses are a significant operating
cost for the trucking industry, many truck fleet operators develop
comprehensive periodic tire replacement and retread management programs. On
<PAGE>
its weekly sales routes, Treadco picks up a fleet's casings and returns them
the following week, thus providing a continuous supply of both retreads and
new tires as needed. In order to fully service its customers, Treadco also
sells new truck tires manufactured by Bridgestone, Michelin, General, Dunlop,
Kumho, and other manufacturers. According to Bridgestone and Dunlop, Treadco
is their largest domestic truck tire dealer, and according to Michelin,
Treadco is one of its largest domestic truck tire dealers.
Precure Retread Process
In August 1995, Bandag, Treadco's tread rubber supplier and franchiser of the
retreading process used by substantially all of Treadco's locations,
announced that certain franchise agreements would not be renewed upon
expiration in 1996. Bandag subsequently advised Treadco that unless Treadco
uses the Bandag process exclusively, Bandag would not renew any of Treadco's
franchise agreements when they expire.
In October 1995, Treadco announced it had reached an agreement with Oliver
Rubber Company to be a supplier of equipment and related materials for
Treadco's truck tire precure retreading business. The agreement provides
that Oliver will supply Treadco with retreading equipment and related
materials for the eight production facilities whose Bandag franchises expire
in 1996 and any other Treadco facilities which cease being a Bandag
franchise.
Under the Oliver license agreements, Treadco will purchase from Oliver
precured tread rubber and bonding cushion gum and PNEUFLEX tread rubber
(collectively "Rubber Products"). Treadco's obligation to purchase Rubber
Products from Oliver is subject to (i) Oliver's continuing to produce Rubber
Products of no less quality and durability than it presently produces, and
(ii) Oliver's overall pricing program for Treadco.
Treadco converted its Little Rock (AR), Pine Bluff (AR), West Memphis (AR)
and Phoenix (AZ) Bandag franchises to Oliver licensed facilities during the
first quarter, 1996. Based on Treadco's current plans, all remaining Bandag
franchises will convert to the Oliver process by the end of the third
quarter, 1996.
Mold Cure Retread Process
On February 1, 1996, Treadco gained Bridgestone certification to produce and
sell the ONCOR remanufactured tires at its St. Louis (MO) production
facility. This is the first plant in the United States using Bridgestone's
"ONCOR Tread Renewal System". However, the Bridgestone mold cure process has
been used for many years outside the United States, predominately in Japan.
Sales and Marketing
Treadco's sales and marketing strategy is based on its service strengths,
network of production and sales facilities and strong regional reputation. In
addition to excellent service, Treadco offers broad geographical coverage
across the South, Southwest and the lower Midwest. This coverage is important
for customers because they are able to establish uniform pricing, utilize
national account billing processes of the major new tire suppliers, and
generally reduce the risk of price fluctuations when service is needed.
<PAGE>
None of Treadco's customers for retreads and new tires, including ABF or
other affiliates, represented more than 2% of Treadco's revenues for 1995.
ABF accounted for approximately $2.6 million of Treadco's revenues in 1995
(1.8%), and has not accounted for more than 3% of Treadco's revenues in any
of the last ten years. Treadco's customers are primarily mid-sized companies
that maintain their own in-house trucking operations and rely on Treadco's
expertise in servicing their tire management programs. Treadco markets its
products through sales personnel located at each of its 28 production
facilities and, in addition, through 23 sales locations. These sales
locations are supplied with retreads by nearby Treadco production facilities.
Treadco locates its production facilities and sales locations in close
proximity to interstate highways and operates mobile service trucks to
provide ready accessibility and convenience to its customers, particularly
fleet owners.
Ownership
As of December 31, 1995, the Company's percentage ownership of Treadco was
45.7%, while retaining control of Treadco by reason of its stock ownership,
board representation and provision of management services. As a result,
Treadco is consolidated with the Company for financial reporting purposes,
with the ownership interest of the other stockholders reflected as a minority
interest.
Employees
At December 31, 1995, Treadco employed 746 full-time employees. Eleven
employees at one Treadco facility are represented by a union. Treadco's
management believes it enjoys a good relationship with its employees.
Carolina Breakdown Service, Inc.
Carolina Breakdown Service, Inc., ("CBS") is a third-party vehicle
maintenance logistics company operating from a Cherryville, North Carolina
base, with service capabilities in 48 contiguous states, Central and Eastern
Canada. The CBS nationwide operation provides any and all necessary scheduled
and unscheduled vehicle repairs and driver assistance to all classes and
types of trucks, trailers, and combination units 24 hours a day, 7 days a
week. In-house maintenance expertise and regimentation also allows for the
additional business as a technical assistance provider to the OEM community,
and through the use of strategic outsourcing via a qualified vendor network
of over 53,000 nationwide, the operation handles over 79 service and
technical calls a day from its client base of 492 trucking and OEM accounts.
Carolina Breakdown Service, Inc., was incorporated in 1993 but derives its
professional training from over four decades of experience having serviced
equipment for Carolina Freight.
Environmental and Other Government Regulations
The Company is subject to federal, state and local environmental laws and
regulations relating to, among other things, contingency planning for spills
of petroleum products, and its disposal of waste oil. Additionally, the
Company is subject to significant regulations dealing with underground fuel
storage tanks. ABF stores some of its fuel for its trucks and tractors in
<PAGE>
approximately 188 underground tanks located in 34 states. The Company
believes that it is in substantial compliance with all such environmental
laws and regulations and is not aware of any leaks from such tanks that could
reasonably be expected to have a material adverse effect on the Company's
competitive position, operations or financial condition.
The Company has in place policies and methods designed to conform with these
regulations. The Company estimates that capital expenditures for upgrading
underground tank systems and costs associated with cleaning activities for
1996 will not be material.
The Company has received notices from the EPA and others that it has been
identified as a potentially responsible party ("PRP") under the Comprehensive
Environmental Response Compensation and Liability Act or other federal or
state environmental statutes at several hazardous waste sites. After
investigating the Company's or its subsidiaries' involvement in waste
disposal or waste generation at such sites, the Company has either agreed to
de minimis settlements (aggregating approximately $250,000 over the last five
years), or believes its obligations with respect to such sites would involve
immaterial monetary liability, although there can be no assurances in this
regard.
The Company remains responsible for certain environmental claims that arose
with respect to its ownership of Riverside Furniture Corporation
("Riverside") prior to its sale in 1989. Riverside was notified in 1988 that
it has been identified as a PRP for hazardous wastes shipped to two separate
sites in Arkansas. To date, the Company, as a part of a PRP group, has paid
approximately $50,000 on Riverside's behalf related to one site, with
additional assessments expected related to that site. Riverside was
dismissed as a PRP from the second site in March 1993. Management currently
believes that resolution of its remaining site is unlikely to have a material
adverse effect on the Company, although there can be no assurance in this
regard.
Treadco is affected by a number of governmental regulations relating to the
development, production and sale of retreaded and new tires, the raw
materials used to manufacture such products (including petroleum, styrene and
butadiene), and to environmental, tax and safety matters. In addition, the
retreading process creates rubber particulate, or "dust," which requires
gathering and disposal, and Treadco disposes of used and nonretreadable tire
casings, both of which require compliance with environmental and disposal
laws. In some situations, Treadco could be liable for disposal problems,
even if the situation resulted from previous conduct of Treadco that was
lawful at the time or from improper conduct of, or conditions caused by,
persons engaged by Treadco to dispose of particulate and discarded casings.
Such cleanup costs or costs associated with compliance with environmental
laws applicable to the tire retreading process could be substantial and have
a material adverse effect on Treadco's financial condition. Treadco believes
that it is in substantial compliance with all laws applicable to such
operations, however, and is not aware of any situation or condition that
could reasonably be expected to have a material adverse effect on Treadco's
financial condition.
<PAGE>
As of December 31, 1995, the Company has accrued approximately $1,700,000 to
provide for environmental-related liabilities. The Company's environmental
accrual is based on management's best estimate of the actual liability. The
Company's estimate is founded on management's experience in dealing with
similar environmental matters and on actual testing performed at some sites.
Management believes that the accrual is adequate to cover environmental
liabilities based on the present environmental regulations.
ITEM 2. PROPERTIES
The Company owns its executive offices in Fort Smith, Arkansas.
LTL Motor Carrier Operations Segment
The ABF System currently operates out of 343 terminal facilities of which it
owns 95, leases 61 from an affiliate and leases the remainder from non-
affiliates. ABF's principal terminal facilities are as follows:
Owned:
Sacramento, California
Ellenwood, Georgia
South Chicago, Illinois
Asheville, North Carolina
Dayton, Ohio
Carlisle, Pennsylvania
Dallas, Texas
Leased from affiliate, Transport Realty:
North Little Rock, Arkansas
Pico Rivera, California
Denver, Colorado
Springfield, Illinois
Albuquerque, New Mexico
Leased from non-affiliated third party:
Portland, Oregon
Salt Lake City, Utah
G.I. Trucking currently operates out of 52 service centers of which it owns
13 facilities and leases the remainder from agents or non-affiliates.
Tire Operations Segment
Treadco currently operates from 51 locations. Treadco owns 17 production and
4 sales facilities and leases the remainder from non-affiliates.
ITEM 3. LEGAL PROCEEDINGS
Various legal actions, the majority of which arise in the normal course of
business, are pending. None of these legal actions is expected to have a
material adverse effect on the Company's financial condition. The Company
maintains liability insurance against most risks arising out of the normal
course of its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders during the fourth quarter
ended December 31, 1995.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market and Dividend Information
The Company's Common Stock trades on The Nasdaq Stock Market under the symbol
"ABFS". The following table sets forth the high and low recorded last sale
prices of the Common Stock during the periods indicated as reported by Nasdaq
and the cash dividends declared:
<TABLE>
<CAPTION>
Cash
High Low Dividend
<S> <C> <C> <C>
1995
First quarter $13.000 $10.500 $.01
Second quarter 11.500 7.938 .01
Third quarter 13.875 8.500 .01
Fourth quarter 11.875 6.625 .01
1994
First quarter $15.750 $12.625 $.01
Second quarter 13.375 10.125 .01
Third quarter 14.375 11.375 .01
Fourth quarter 14.125 10.250 .01
</TABLE>
At February 14, 1996, there were 19,515,758 shares of the Company's stock
outstanding which were held by 835 shareholders of record and through
approximately 5,500 nominee or street name accounts with brokers.
The declaration and payment of, and the timing, amount and form of future
dividends on the Common Stock will be determined based on the Company's
results of operations, financial condition, cash requirements, certain
corporate law requirements and other factors deemed relevant by the board of
directors.
The Company's credit agreement limits the total amount of "restricted
payments" that the Company may make, including dividends on its capital
stock, to $6.5 million in any one calendar year. The annual dividend
requirements on the Company's preferred stock issued February 3, 1993
(approximately $4.3 million) and dividends paid on the Common Stock at the
quarterly rate of $.01 per share (approximately $0.8 million based on the
current number of issued and outstanding shares) would aggregate dividends of
approximately $5.1 million on an annual basis.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
Selected Financial Data - Five-Year Summary
<CAPTION>
Arkansas Best Corporation
Year Ended December 31
1995 1994 1993 1992 1991
($ in thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Operating revenues $1,437,279 $1,098,421 $1,009,918 $959,949 $884,498
Operating income (loss) (23,459) 48,115 51,369 57,255 43,123
Gain on sale of subsidiary stock - - - - 14,141
Minority interest in subsidiary 1,297 3,523 3,140 2,825 690
Other expenses, net 5,185 968 731 1,496 6,638
Interest expense 17,046 6,985 7,248 17,285 34,421
Income (loss) before income taxes,
extraordinary item and
cumulative effect of
accounting change (46,987) 36,639 40,250 35,649 15,515
Provisions for income taxes (14,195) 17,932 19,278 16,894 7,763
Income (loss) before extraordinary
item and cumulative effect
of accounting change (32,792) 18,707 20,972 18,755 7,752
Extraordinary item (1) - - (661) (15,975) (515)
Cumulative effect on prior
years of change in revenue
recognition method (2) - - - (3,363) -
Net income (loss) (32,792) 18,707 20,311 (583) 7,237
Income (loss) per common share
before extraordinary item and
cumulative effect of
accounting change (1.90) .74 .89 .99 .61
Net income (loss) per common share (1.90) .74 .85 (.03) .57
Cash dividends paid per common share (3) .04 .04 .04 .02 -
Pro Forma Data (4):
Income (loss) before extraordinary item $ (32,792) $ 18,707 $ 20,972 $ 18,755 $ 8,253
Income (loss) before extraordinary
item per common share (1.90) .74 .89 .99 .65
Net income (loss) (32,792) 18,707 20,311 2,780 7,738
Net income (loss) per common share (1.90) .74 .85 .15 .61
<PAGE>
<CAPTION>
Selected Financial Data - Five-Year Summary (Continued)
Arkansas Best Corporation
Year Ended December 31
1995 1994 1993 1992 1991
($ in thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
(as of the end of the period):
Total assets $985,837 $569,045 $447,733 $428,345 $447,098
Current portion of long-term debt 26,634 65,161 15,239 28,348 34,995
Long-term debt
(including capital
leases and excluding
current portion) 399,144 59,295 43,731 107,075 210,987
Other Data
Capital expenditures (5) $ 74,808 $ 64,098 $ 33,160 $ 26,596 $ 19,369
Depreciation and amortization 46,627 28,087 28,266 34,473 39,755
Goodwill amortization 5,135 3,527 3,064 3,034 3,024
Other amortization 1,044 501 319 755 2,290
<FN>
<F1>
(1) For 1993, represents an extraordinary charge of $661,000 (net of tax of
$413,000) from the loss on extinguishment of debt. For 1992, represents
an extraordinary charge of $15,975,000 (net of tax of $9,700,000) from
the loss on extinguishment of debt in May 1992. For 1991, represents an
extraordinary charge of $515,000 (net of tax of $320,000) from the loss
on extinguishment of debt relating to the Treadco common stock offering
in September 1991.
<F2>
(2) Represents a charge of $3,363,000 (net of tax of $2,100,000) to reflect
the cumulative effect on prior years of the change in method of
accounting for the recognition of revenue as required under the
Financial Accounting Standards Board's Emerging Issues Task Force Ruling
91-9 ("EITF 91-9").
<F3>
(3) No cash dividends were paid by the Company from 1991 until the third
quarter of 1992.
<F4>
(4) Assumes the change in accounting method for recognition of revenue as
required under EITF 91-9 occurred January 1, 1991.
<F5>
(5) Net of equipment trade-ins. Does not include revenue equipment placed in
service under operating leases, which amounted to $24.6 million in 1995,
$24.8 million in 1993, $25.5 million in 1992, $15 million in 1991, and
$5 million in 1990. There were no operating leases for revenue
equipment entered into for 1994. See "Management's Discussion and
Analysis-Liquidity and Capital Resources."
<F6>
(6) 1995 selected financial data is not comparative to the prior years'
information due to the WorldWay Acquisition effective August 12, 1995.
In conjunction with the WorldWay Acquisition, assets with a fair value
of $309 million were acquired and liabilities of approximately $235
million were assumed. Approximately $134 million in revenues for the
period from August 12, 1995 to December 31, 1995, are included in the
1995 consolidated statement of operations generated by subsidiaries
acquired as part of the WorldWay Acquisition.
</FN>
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Arkansas Best Corporation (the "Company") is a diversified holding company
engaged through its subsidiaries primarily in less-than-truckload ("LTL")
and truckload motor carrier operations, logistics and freight forwarding
operations and truck tire retreading and new tire sales. Principal
subsidiaries owned are ABF Freight System, Inc. ("ABF"), Treadco, Inc.
("Treadco"), and, effective September 30, 1994 Clipper Exxpress Company
("Clipper"). Also, effective August 12, 1995, pursuant to its acquisition
of WorldWay Corporation ("WorldWay"), the Company owns Cardinal Freight
Carriers, Inc. ("Cardinal"), G.I. Trucking Company ("G.I. Trucking"),
CaroTrans International, Inc. ("CaroTrans"), The Complete Logistics Company
("Complete Logistics") and Innovative Logistics Incorporated ("ILI"). (See
discussion below.)
The Company in 1991 reduced its ownership in Treadco, through an initial
public offering of Treadco common stock, to approximately 46%, while
retaining control of Treadco by reason of its stock ownership, board
representation and provision of management services. As a result, Treadco
is consolidated with the Company for financial reporting purposes, with the
ownership interests of the other stockholders reflected as minority
interest.
On September 30, 1994, the Company consummated the purchase of all
outstanding stock of the Clipper Group. Assets of approximately $26.2
million were acquired and liabilities of approximately $14.7 million were
assumed. The Company's total purchase price was $60.9 million.
The Clipper acquisition has been accounted for under the purchase method,
effective September 30, 1994. The purchase price has been allocated to
assets and liabilities based on their estimated fair values as of the date of
acquisition. Approximately $49.4 million of goodwill was recorded as a result
of the purchase allocation and is being amortized over a 30-year period.
On July 14, 1995, ABC Acquisition Corporation (the "Purchaser"), a wholly
owned subsidiary of the Company, commenced a tender offer (the "Offer") to
purchase all outstanding shares of common stock of WorldWay Corporation at a
purchase price of $11 per share (the "Acquisition"). Pursuant to the Offer,
on August 11, 1995, the Purchaser accepted for payment shares of WorldWay
validly tendered, representing approximately 91% of the shares outstanding.
On October 12, 1995, the remaining shares of WorldWay's common stock were
converted into the right to receive $11 per share in cash.
For financial statement purposes, the WorldWay Acquisition has been accounted
for under the purchase method effective August 12, 1995. Consequently, the
accompanying financial statements include the results of operations for
WorldWay and its subsidiaries from August 12, 1995 through December 31, 1995.
The allocation of the purchase cost in the accompanying financial statements
is preliminary and subject to change. Final values may differ from those set
forth in these financial statements, but differences are not expected to be
material. Assets with a fair value of approximately $309 million were
acquired and liabilities with a fair value of approximately $235 million were
assumed. The Company's total purchase price was $76 million. Approximately
$2 million of goodwill was recorded as a result of the purchase allocation
and is being amortized over a 30-year period.
<PAGE>
Segment Data
The following tables reflect information prepared on a business segment
basis, which includes reclassification of certain expenses and costs between
the Company and its subsidiaries and elimination of the effects of
intercompany transactions. Operating profit on a business segment basis
differs from operating income as reported in the Company's Consolidated
Financial Statements. Other income and other expenses (which include
amortization expense), except for interest expense and minority interest,
which appear below the operating income line in the Company's Statement of
Operations, have been allocated to individual segments for the purpose of
calculating operating profit on a segment basis.
The segment information for prior periods has been restated to reflect the
Company's current reported business segments. In the current and future
periods, information that was previously reported in the service and other
business segment will be reported in the logistics operations segment.
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
OPERATING REVENUES
LTL motor carrier operations $1,088,416 $ 918,663 $ 893,504
Forwarding operations 140,691 31,468 -
Truckload motor carrier
operations 27,992 - -
Logistics operations 31,699 7,514 2,890
Tire operations 145,127 138,665 111,585
Other 3,354 2,111 1,939
---------- ---------- ---------
$1,437,279 $1,098,421 $1,009,918
========== ========== ==========
OPERATING EXPENSES AND COSTS
LTL MOTOR CARRIER OPERATIONS
Salaries and wages $ 779,453 $ 613,187 $ 594,213
Supplies and expenses 120,439 96,210 99,146
Operating taxes and licenses 45,906 35,928 35,152
Insurance 24,122 18,237 16,835
Communications and utilities 26,776 22,639 23,680
Depreciation and amortization 37,822 24,302 25,714
Rents and purchased
transportation 76,823 67,550 53,192
Other 8,219 4,298 3,779
Other non-operating (net) 1,771 690 148
---------- ---------- ---------
1,121,331 883,041 851,859
FORWARDING OPERATIONS
Cost of services 117,455 26,817 -
Selling, administrative
and general 18,711 3,542 -
Other non-operating (net) 1,705 414 -
---------- ---------- ---------
137,871 30,773 -
<PAGE>
TRUCKLOAD MOTOR CARRIER OPERATIONS
Salaries and wages 9,746 - -
Supplies and expenses 4,530 - -
Operating taxes and licenses 2,571 - -
Insurance 980 - -
Communications and utilities 420 - -
Depreciation and amortization 1,249 - -
Rents and purchased
transportation 5,348 - -
Other 108 - -
Other non-operating (net) 9 - -
---------- ---------- ----------
24,961 - -
LOGISTICS OPERATIONS
Cost of services 30,588 7,100 2,915
Selling, administrative
and general 3,711 1,388 821
Other non-operating (net) 11 (6) (12)
---------- ---------- ----------
34,310 8,482 3,724
TIRE OPERATIONS
Cost of sales 108,686 100,909 79,718
Selling, administrative
and general 31,642 26,206 21,522
Other non-operating (net) 375 471 159
---------- ---------- ---------
140,703 127,586 101,399
SERVICE AND OTHER 6,747 1,392 2,298
---------- ---------- ---------
$1,465,923 $1,051,274 $ 959,280
========== ========== =========
OPERATING PROFIT (LOSS)
LTL motor carrier operations $ (32,915) $ 35,622 $ 41,645
Forwarding operations 2,820 695 -
Truckload motor carrier
operations 3,031 - -
Logistics operations (2,611) (968) (834)
Tire operations 4,424 11,079 10,186
Other (3,393) 719 (359)
---------- ---------- ----------
TOTAL OPERATING PROFIT (LOSS) (28,644) 47,147 50,638
INTEREST EXPENSE 17,046 6,985 7,248
MINORITY INTEREST 1,297 3,523 3,140
---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEM $ (46,987) $ 36,639 $ 40,250
========== ========== ==========
</TABLE>
<PAGE>
The following table sets forth for the periods indicated a summary of the
Company's operations as a percentage of revenues presented on a business
segment basis as shown in the table on the preceding page. The basis of
presentation for business segment data differs from the basis of
presentation for data the Company provides to the D.O.T.
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
<S> <C> <C> <C>
LTL MOTOR CARRIER OPERATIONS
Salaries and wages 71.6% 66.7% 66.5%
Supplies and expenses 11.1 10.5 11.1
Operating taxes and licenses 4.2 3.9 3.9
Insurance 2.2 2.0 1.9
Communications and utilities 2.5 2.5 2.7
Depreciation and amortization 3.5 2.6 2.9
Rents and purchased transportation 7.1 7.4 5.9
Other 0.7 0.4 0.4
Other non-operating (net) 0.1 0.1 -
----- ----- -----
Total LTL Motor Carrier Operations 103.0% 96.1% 95.3%
===== ===== =====
FORWARDING OPERATIONS
Cost of services 83.5% 85.2% -
Selling, administrative and general 13.3 11.3 -
Other non-operating (net) 1.2 1.3 -
----- ----- -----
Total Forwarding Operations 98.0% 97.8% -
===== ===== =====
TRUCKLOAD MOTOR CARRIER OPERATIONS
Salaries and wages 34.8% - -
Supplies and expenses 16.2 - -
Operating taxes and licenses 9.2 - -
Insurance 3.5 - -
Communications and utilities 1.5 - -
Depreciation and amortization 4.5 - -
Rents and purchased transportation 19.1 - -
Other 0.4 - -
----- ----- -----
Total Truckload Operations 89.2% - -
===== ===== =====
LOGISTICS OPERATIONS
Cost of sales 96.5% 94.5% 100.9%
Selling, administrative and general 11.7 18.5 28.4
Other non-operating (net) - (0.1) (0.4)
----- ----- -----
Total Logistics Operations 108.2% 112.9% 128.9%
===== ===== =====
TIRE OPERATIONS
Cost of sales 74.9% 72.8% 71.5%
Selling, administrative and general 21.8 18.9 19.3
Other non-operating (net) 0.3 0.3 0.1
----- ----- -----
Total Tire Operations 97.0% 92.0% 90.9%
===== ===== =====
<PAGE>
OPERATING PROFIT
LTL motor carrier operations (3.0)% 3.9% 4.7%
Forwarding operations 2.0 2.2 -
Truckload motor carrier operations 10.8 - -
Logistics operations (8.2) (12.9) (28.9)
Tire operations 3.0 8.0 9.1
</TABLE>
Results of Operations
1995 as Compared to 1994
Consolidated revenues of the Company for 1995 were $1.4 billion compared to
$1.1 billion for 1994. The Company had an operating loss of $28.6 million
for 1995 compared to operating profit of $47.1 million for 1994. For 1995,
the Company had a net loss of $32.8 million, or a loss of $1.90 per common
share, compared to net income of $18.7 million, or $.74 per common share for
1994. Revenues for 1995 increased due to the Acquisition of WorldWay and the
Acquisition adversely impacted operating results for the same period. For
the period from August 12 to September 30, 1995, WorldWay incurred a
consolidated after-tax net loss of $13.6 million and a pre-tax loss from
operations of $20.4 million. The WorldWay loss is attributable to Carolina
Freight and Red Arrow which as of September 24, 1995 were merged into ABF.
Consolidated revenues and income for 1994 were adversely affected by the 24-
day labor strike by the Teamsters' union employees of ABF in April 1994.
Earnings per common share for 1995 and 1994 give consideration to preferred
stock dividends of $4.3 million. Average common shares outstanding for 1995
were 19.5 million shares compared to 19.4 million shares for 1994.
Outstanding shares for 1995 and 1994 do not assume conversion of preferred
stock to common shares, because conversion would be anti-dilutive for these
periods.
Less-Than-Truckload Motor Carrier Operations Segment. The Company's LTL
motor carrier operations are conducted primarily through ABF and effective
August 12, 1995 through G.I. Trucking.
Comparisons for 1995 were affected by the Acquisition of WorldWay in August
1995 and by the ABF Teamsters' employees strike in April 1994 (see discussion
above). Therefore, comparisons of the results of operations for the LTL
motor carrier operations segment are not meaningful and are not presented. As
a result of the Acquisition of WorldWay, LTL motor carrier operations segment
includes the results of Carolina Freight and Red Arrow for the period from
August 12, 1995 to their merger into ABF on September 24, 1995.
Revenues from the LTL motor carrier operations segment for 1995 were $1.1
billion, with an operating loss of $32.9 million. Earnings at ABF were
negatively affected by a slowing economy and increased pricing pressure which
resulted in tonnage levels below Company expectations for 1995.
ABF retained less revenue from the merger of Carolina Freight and Red Arrow
than was originally estimated, resulting in over-staffing and excess
equipment. This shortfall in revenue was compounded by weakened shipper
demand and continued price competition during the fourth quarter. The over-
staffing resulted in increased salaries and wages expense while depreciation
expense was higher because of the excess revenue equipment.
<PAGE>
Effective with the merger, ABF inherited Carolina Freight's regional
distribution terminal operations, which reconfigured the way freight flowed
through ABF's terminal system. This reconfiguration created many operating
inefficiencies in ABF's system. Labor dollars as a percent of revenue
increased, empty miles increased and weight per trailer decreased, which all
had an adverse impact on expenses.
ABF has implemented a combination of cost cutting and revenue raising
measures to stem its operating losses. ABF has closed a number of regional
distribution terminal operations which it inherited when Carolina Freight and
Red Arrow were merged into ABF. These closings will realign ABF to its
normal terminal system configuration. ABF implemented a 5.8% freight rate
increase on January 1, 1996 and is in process of selling excess real estate
and revenue equipment resulting from the Carolina Freight and Red Arrow
merger.
Salaries, wages and benefits increased 3.3% annually effective April 1, 1995,
pursuant to ABF's collective bargaining agreement with its Teamsters'
employees and will increase 3.8% annually effective April 1, 1996.
Forwarding Operations Segment. Effective September 30, 1994, with the
purchase of the Clipper Group, the Company began reporting a new business
segment, forwarding operations. The Company's forwarding operations are
conducted primarily through the Clipper Group, effective September 30, 1994,
and CaroTrans, effective August 12, 1995.
Comparisons for 1995 were affected by the Acquisition of WorldWay in August
1995 and by the acquisition of the Clipper Group in September 1994.
Therefore, comparisons of the results of operations for the forwarding
operations segment are not meaningful and are not presented.
For 1995, the forwarding operations segment had revenues of $140.7 million
with an operating profit of $2.8 million. Forwarding operations were
adversely affected during 1995 by soft economic conditions.
Truckload Motor Carrier Operations Segment. Effective August 12, 1995, with
the Acquisition of WorldWay, the Company began reporting a new business
segment, truckload motor carrier operations. The Company's truckload motor
carrier operations are conducted through Cardinal.
From August 12, 1995 to December 31, 1995, Cardinal had revenues of $28.0
million with an operating profit of $3.0 million. Cardinal's operations were
adversely affected during 1995 by soft economic conditions.
Logistics Operations Segment. Effective August 12, 1995, with the Acquisition
of WorldWay, the Company began reporting a new business segment, logistics
operations. The Company's logistics operations are conducted through
Integrated Distribution, Inc. and effective August 12, 1995, through Complete
Logistics and ILI.
For 1995, the logistics operations segment had operating revenues of $31.7
million with an operating loss of $2.6 million.
Tire Operations Segment. Treadco's revenues for 1995 increased 4.7% to
$145.1 million from $138.7 million for 1994. For 1995, "same store" sales
increased 2.4% and "new store" sales accounted for 2.7% of the increase from
1994. Same store sales include both production locations and satellite sales
locations that have been in existence for the all of 1995 and 1994. Although
a softer economy during the quarter slowed demand for both new replacement
<PAGE>
and retreaded truck tires, same store sales were higher primarily as a result
of an increase in market share in the areas served. Treadco has seen
increased competition as Bandag Incorporated ("Bandag") has granted
additional franchises in some locations currently being served by Treadco.
Revenues from retreading for 1995 increased 1.6% to $76.4 million from $75.2
million for 1994. Revenues from new tire sales increased 8.3% to $68.7
million for 1995 from $63.5 million for 1994.
Tire operations segment operating expenses as a percent of revenues were
97.0% for 1995 compared to 92.0% for 1994. Cost of sales for the tire
operations segment as a percent of revenues increased to 74.9% for 1995 from
72.8% for 1994. Bandag, Treadco's tread rubber supplier, implemented three
price increases, totaling 9.6%, during 1994 and the beginning of 1995 which
Treadco has been unsuccessful, so far, in fully passing along to our
customers. Selling, administrative and general expenses for the tire
operations segment increased to 21.8% for 1995 from 18.9% for 1994. The
increase resulted primarily from an increase in bad debt expense, costs
associated with employee medical benefits and data processing costs
associated with the installation of a production and inventory control
system.
In August 1995, Bandag, Treadco's tread rubber supplier and franchiser of the
retreading process used by substantially all of Treadco's locations,
announced that certain franchise agreements would not be renewed upon
expiration in 1996. Bandag subsequently advised Treadco that unless Treadco
uses the Bandag process exclusively, Bandag would not renew any of Treadco's
franchise agreements when they expire.
In October 1995, Treadco announced it had reached an agreement for the Oliver
Rubber Company ("Oliver") to be a supplier of equipment and related materials
for Treadco's truck tire precure retreading business. The agreement provides
that Oliver will supply Treadco with retreading equipment and related
materials for the eight production facilities whose Bandag franchises expire
in 1996 and any other Treadco facilities which cease being a Bandag
franchised location.
Treadco has converted its Little Rock (AR), Pine Bluff (AR), West Memphis
(AR) and Phoenix (AZ) Bandag franchises to Oliver licensed facilities. Based
on Treadco's current plans, all remaining Bandag franchises will convert to
the Oliver process by the end of the third quarter, 1996.
While the equipment removal and replacement is expected to cause temporary
disruptions to Treadco's operations, it is not expected to have a significant
impact on Treadco's ability to meet its customers' needs. However, Treadco's
management believes its national account relationships have been and will
continue to be negatively impacted as a result of Bandag's actions and the
conversion from Bandag to Oliver. Also as a result of the conversion,
Treadco continues to be targeted by other dealers in soliciting customers,
causing margins to be under intense competitive pressure. Although the
conversion will have a negative impact on the results of operations during
the next 12 months, Treadco's management believes the Oliver process produces
retreads of equal or better quality and durability than the Bandag process.
After the transition period, Treadco's management believes Treadco will be in
a better position to control its costs and deliver true value to its
customers, while having unrestricted opportunities to expand into new
markets.
<PAGE>
Interest. Interest expense was $17.0 million for 1995 compared to $7.0
million for 1994 primarily due to a higher level of outstanding debt. The
increase in long-term debt consisted primarily of debt incurred in the
acquisition of WorldWay and debt incurred for working capital requirements
during the fourth quarter of 1995. Also, the Company incurred additional debt
in the latter part of 1994 in the acquisition of the Clipper Group and a term
loan used to finance construction of the Company's corporate office building
which was completed in 1995.
Income Taxes. The difference between the effective tax rate for 1995 and the
federal statutory rate resulted primarily from state income taxes,
amortization of goodwill, minority interest, and other nondeductible expenses
(see Note G to the consolidated financial statements).
At December 31, 1995, the Company had deferred tax assets of $45.6 million,
net of a valuation allowance of $1.2 million, and deferred tax liabilities of
$62.0 million. The Company believes that the benefits of the deferred tax
assets of $45.6 million will be realized through the reduction of future
taxable income.
Management has considered appropriate factors in assessing the probability of
realizing these deferred tax assets. These factors include the deferred tax
liabilities of $62.0 million and the presence of significant taxable income
in 1993 and 1994 and the extended carryforward period for net operating
losses included in deferred tax assets. The valuation allowance has been
provided for the benefits of net operating loss carryovers in certain states
where operations were affected by the merger of Carolina Freight into ABF.
Management intends to evaluate the realizability of deferred tax assets on a
quarterly basis by assessing the need for any additional valuation allowance.
1994 as Compared to 1993
Consolidated revenues of the Company for 1994 were $1.1 billion compared to
$1.0 billion for 1993. Operating profit for the Company was $47.1 million
for 1994 compared to operating profit of $50.6 million for 1993. Net income
for 1994 was $18.7 million, or $.74 per common share (after giving
consideration to preferred stock dividends of $4.3 million), compared to net
income of $20.3 million, or $.85 per common share for 1993 (after giving
consideration to preferred stock dividends of $3.9 million). The net income
of $18.7 million, or $.74 per common share, also compares to income before
extraordinary item of $21.0 million, or $.89 per common share for 1993.
During 1993, the Company recorded an extraordinary loss of $661,000 (net of
income tax benefit of $413,000), or $.04 per common share for the net loss on
extinguishments of debt. Net income for 1993 was reduced by $828,000, or $.04
per common share (assuming full dilution), to reflect the retroactive
increase in the corporate federal tax rate under the Revenue Reconciliation
Act of 1993. Average common shares outstanding for 1994 were 19.4 million
shares compared to 19.2 million shares for 1993. Outstanding shares for 1994
and 1993 do not assume conversion of preferred stock to common shares,
because conversion would be anti-dilutive for these periods.
Consolidated revenues and income for 1994 were adversely affected by the 24-
day labor strike by the Teamsters' Union employees of ABF in April. As a
result of the strike, the Company incurred a consolidated net loss of $12.7
million during the month of April 1994, which had the effect of reducing
earnings per common share by $.62 for the year.
<PAGE>
Motor Carrier Operations Segment. ABF's labor agreement with the
International Brotherhood of Teamsters ("IBT") expired on March 31, 1994. On
April 6, 1994, ABF's employees and 20 other carriers went on strike. On
April 29, 1994, TMI and the IBT reached a tentative agreement on a new four-
year contract. ABF Teamsters employees began returning to work at 12:01 a.m.
on April 30, 1994. During the strike, the non-union employees of the Company
were given an across-the-board pay reduction instead of having lay-offs. The
40% reduction in pay for the non-union employees during the strike amounted
to approximately $3.3 million.
Revenue and income for 1994 were negatively affected by the strike. Under
the new labor contract which was effective retroactive to April 6, 1994,
salaries, wages and benefits for full-time employees will increase 2.7%
annually during the first year of the contract. The increase will be offset
in part by the option to use casual workers on the dock after 40 hours of
work is provided to all regular employees, a freeze on some casual workers'
pay for the life of the contract and a reduction in new hire step rates. The
new contract allows ABF to use intermodal or rail service for up to 28% of
the line-haul operations. An increased use of rail will result in higher
rent expense and may reduce over-the-road and labor costs.
Even after the negative impact of the strike, revenues from motor carrier
operations still increased 2.8% to $918.7 million in 1994 from $893.5 million
in 1993. Total tonnage increased 1.7%, consisting of a 2.2% increase in LTL
tonnage and a 0.2% increase in truckload tonnage. The 4.5% rate increase
effective January 1, 1994 was partially discounted by rate competition during
1994. For 1994, ABF's revenue per hundredweight reflected a 0.9% increase
compared to the average for 1993. Effective January 1, 1995, ABF implemented
a general freight rate increase of 4% which is expected to result in a 3 to
3.5% initial impact on revenues. The diminished effect is the result of
pricing that is on a contract basis which can only be increased when the
contract is renewed.
Forwarding Operations Segment.
Effective October 1, 1994, with the purchase of the Clipper Group, the
Company began reporting a new business segment, forwarding operations. The
Company's consolidated financial statements for the year ended December 31,
1994 include only three months of financial information for the forwarding
operations segment and therefore, comparisons of results of operations are
not presented.
Tire Operations Segment. Treadco's revenues for 1994 increased 24.3% to
$138.7 million from $111.6 million for 1993. For 1994, "same store" sales
increased 9.6% and "new store" sales accounted for 14.7% of the total
increase from the nine months ended September 30, 1993. "Same store" sales
include both production locations and satellite sales locations that have
been in existence for all of 1994 and 1993. "Same store" sales increased
primarily as a result of a higher demand for both new replacement and
retreaded truck tires during the period and an increase in market share in
the areas served. "New store" sales resulted primarily from the addition of
four production and one sales facility through the August 1993 acquisition of
Trans-World Tire Corporation in Florida. Revenues from retreading for 1994
increased 21.5% to $75.2 million from $61.9 million for 1993. Revenues from
new tire sales increased 27.7% to $63.5 million for 1994 from $49.7 million
for 1993.
<PAGE>
In order to explore alternatives to the Bandag process in some new
geographical markets, Treadco opened a precure production facility in Las
Vegas, Nevada, in the second quarter of 1995, which purchases its tread
rubber from Hercules Tire and Rubber Co. Treadco has the option of purchasing
tread rubber and supplies from other companies for the Las Vegas facility.
The Company opened an additional retreading facility in the second half of
1995. This production facility is a mold cure retread facility. The facility
uses tread rubber compounds provided by Bridgestone/Firestone, Inc. and
Bridgestone/Firestone, Inc. provides technical support. The process produces
quality retreads with the Bridgestone-Treadco name molded into the tread.
Tire operations segment operating expenses as a percent of revenues were
92.0% for 1994 compared to 90.9% for 1993. Cost of sales for the tire
operations segment as a percent of revenues increased to 72.8% for 1994 from
71.5% for 1993, resulting in part from integrating the August 1993
acquisition of five Florida facilities into Treadco. Although the
integration is progressing as planned, the cost of sales as a percent of
revenues are higher at the Florida locations than at other Treadco
facilities. Also, effective October 1, 1994, Bandag, Inc. announced a 4%
price increase on tread rubber, which has been difficult to pass on to
Treadco's customers. Selling, administrative and general expenses for the
tire operations segment decreased to 18.9% for 1994 from 19.3% for 1993. The
decrease resulted primarily from the increase in sales and the fact that a
portion of selling, administrative and general expenses are fixed costs.
Interest. Interest expense was $7.0 million for 1994 compared to $7.2
million during 1993. Lower average interest rates under the Company's
borrowing arrangements and the utilization of operating leases resulted in
the decrease in interest expense offset in part by higher long-term debt
outstanding. The increase in long-term debt consisted primarily of debt
incurred in the acquisition of the Clipper Group and a term loan used to
finance construction of the Company's corporate office building.
Income Taxes. The difference between the effective tax rate for 1994 and the
federal statutory rate resulted primarily from state income taxes,
amortization of goodwill, minority interest, and other nondeductible expenses
(see Note G to the consolidated financial statements).
Liquidity and Capital Resources
The ratio of current assets to current liabilities was 1.06:1 at December 31,
1995 compared to 0.83:1 at December 31, 1994. Net cash used by operating
activities for 1995 was $66.2 million compared to net cash provided of $48.8
million in 1994. The decrease is due primarily to the net loss from
operations, increase in receivables and reductions in assumed WorldWay
accounts payable and accrued expenses.
On August 10, 1995 the Company entered into a $350 million credit agreement
(the "Credit Agreement") with Societe Generale, Southwest Agency as Managing
and Administrative Agent and NationsBank of Texas, N.A., as Documentation
Agent, and with 15 other participating banks. The Credit Agreement includes
a $75 million term loan and provides for up to $275 million of revolving
credit loans (including letters of credit).
Term Loan and Revolving Credit advances bear interest at one of the following
rates, at the Company's option: (a) Prime Rate advance or (b) Eurodollar
Rate advance. A Prime Rate advance bears an interest rate equal to the
lesser of (i) the Adjusted Prime Rate plus the Applicable Margin and (ii) the
maximum nonusurious interest rate under applicable law. The Adjusted Prime
<PAGE>
Rate is equal to the greater of the prime rate offered by Societe Generale
or the Federal Funds Rate plus 1/2%. The Applicable Margin is determined as
a function of the ratio of the Company's consolidated indebtedness to its
consolidated earnings before interest, taxes, depreciation and amortization.
Eurodollar Rate advances shall bear an interest rate per annum equal to the
lesser of (i) the Eurodollar Rate offered by Societe Generale plus the
Applicable Margin and (ii) the maximum nonusurious interest rate under
applicable law. The Company has paid and will continue to pay certain
customary fees for such commitments and advances. At December 31, 1995, the
average interest rate on the Credit Agreement was 7.6%. The Company pays a
commitment fee at a rate per annum equal to the Applicable Margin on the
unused amount of the Company's revolving credit commitment.
There were $203 million of Revolver Advances, $75 million of Term Advances
and approximately $64.1 million of letters of credit outstanding at
December 31, 1995. Outstanding revolving credit advances may not exceed a
borrowing base calculated using the Company's revenue equipment, the Treadco
common stock owned by the Company, and eligible receivables.
The Term Advances are payable in varying installments commencing in November
1996.
The Credit Agreement replaced a $150 million credit agreement with Societe
Generale and a receivable purchase agreement with Renaissance Funding Corp.
and Societe Generale which allowed ABF to sell to Renaissance Funding Corp.
an interest in up to $55 million in a pool of receivables.
The Credit Agreement contains various covenants which limit, among other
things, indebtedness, distributions, asset sales, restricted payments,
investments, loans and advances, as well as requiring the Company to meet
certain financial tests. As of December 31, 1995, the Company was not in
compliance with certain covenants relating to financial tests. On
February 21, 1996, the Company obtained an amendment to the credit agreement
which revised the agreement so that the Company is now in compliance with all
covenants. Under the amended credit agreement, the Company has pledged
substantially all revenue equipment and real property not already pledged
under other debt obligations or capital leases.
The amendment also revised the maturity schedule of the term loan agreement
to revise the loans to be paid off in graduated principal installments
through August 1998. The current portion of long-term debt and the five year
maturity schedule reflected in the consolidated financial statements have
been revised to reflect the amended repayment schedule. The amendment also
requires that net proceeds received from certain asset sales be applied
against the term loan balance.
Also, on February 21, 1996, the Company obtained an additional credit
agreement which provides for borrowings of up to $30 million. This agreement
bears interest at either an adjusted prime rate plus 2% or a maximum rate as
defined in the agreement in the case of prime rate advances, or the
Eurodollar rate plus 3% or a maximum rate as defined in the agreement in the
care of Eurodollar rate advances. The maturity date of this agreement is
March 31, 1997. This agreement contains covenants that are substantially the
same as the covenants contained in the primary credit agreement.
The Company assumed the Subordinated Debentures of WorldWay which were issued
in April 1986. The debentures bear interest at 6.25% per annum, payable semi-
annually, on a par value of $50,000,000. The debentures are payable April 15,
2011. The Company may redeem the debentures at a price of 101.25% declining
<PAGE>
to 100% at April 15, 1996. The Company is required to redeem through a
mandatory sinking fund commencing before April 15, in each of the years from
1997 to 2010, an amount in cash sufficient to redeem $2,500,000 annually of
the aggregate principal amount of the debentures issued.
The Company entered into a ten-year, $20 million general office term loan
agreement dated as of April 25, 1994 with NationsBank of Texas, N.A., as
agent, and Societe Generale Southwest Agency. The proceeds from the
agreement were used to finance the construction of the Company's new
corporate office building which was completed in February 1995. Amounts
borrowed under the agreement bear interest at 8.07% quarterly, with
installments of $500,000 plus interest due through July 2004.
TREADCO is a party to a revolving credit facility with Societe Generale (the
"TREADCO Credit Agreement") providing for borrowings of up to the lesser of
$20 million or the applicable borrowing base. Borrowings under the TREADCO
Credit Agreement are collateralized by accounts receivable and inventory.
Borrowings under the agreement bear interest, at TREADCO's option, at 3/4%
above the bank's LIBOR rate, or at the higher of the bank's prime rate or the
"federal funds rate" plus 1/2%. At December 31, 1995, the interest rate was
7.1%. At December 31, 1995, TREADCO had $10 million outstanding under the
Revolving Credit Agreement. The TREADCO credit agreement is payable in
September 1998. TREADCO pays a commitment fee of 3/8% on the unused amount
under the TREADCO Credit Agreement.
The TREADCO Credit Agreement contains various covenants which limit, among
other things, dividends, disposition of receivables, indebtedness and
investments, as well as requiring TREADCO to meet certain financial tests
which have been met.
The Company is a party to an interest rate cap arrangement to reduce the
impact of increases in interest rates on its floating-rate long-term debt.
The Company will be reimbursed for the difference in interest rates if the
LIBOR rate exceeds a fixed rate of 9 3/4% applied to notional amounts, as
defined in the contract, ranging from $40 million as of December 31, 1995 to
$2.5 million as of October 1999. As of December 31, 1995 and 1994, the LIBOR
rate was 5.5% and 6.5%, respectively; therefore, no amounts were due to the
Company under this arrangement. In the event that amounts are due under this
agreement in the future, the payments to be received would be recognized as a
reduction of interest expense (the accrual accounting method). Fees totaling
$385,000 were paid in 1994 to enter into this arrangement. These fees are
included in other assets and are being amortized to interest expense over the
life of the contract.
<PAGE>
The following table sets forth the Company's historical capital expenditures
(net of equipment trade-ins) for the periods indicated below:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
($ millions)
<S> <C> <C> <C>
LTL motor carrier operations $ 75.0 $44.2 $48.6
Forwarding operations 0.4 - -
Truckload motor carrier operations 2.1 - -
Logistics operations 5.3 - -
Tire operations 4.5 4.3 6.1
Service and other 12.1 15.6 3.3
------ ------ ------
99.4 64.1 58.0
Less: Operating leases (24.6) - (24.8)
------ ------ ------
Total $ 74.8 $64.1 $33.2
====== ====== ======
</TABLE>
The amounts presented in the table under operating leases reflect the
estimated purchase price of the equipment had the Company purchased the
equipment versus financing through operating lease transactions.
In 1996, the Company anticipates spending approximately $33 million in total
capital expenditures net of proceeds from equipment sales. Of the $33
million, Treadco is budgeted for $13 million of expenditures for retreading
equipment and facilities. ABF is budgeted for approximately $18.3 million
to be used primarily for terminal facilities and Cardinal has $1.7 million
budgeted for revenue equipment purchases.
Management believes, based upon the Company's current levels of operations
and anticipated growth, the Company's cash, capital resources, borrowings
available under the Credit Agreement and the Treadco Credit Agreement and
cash flow from operations will be sufficient to finance current and future
operations and meet all present and future debt service requirements.
Seasonality
The LTL and truckload motor carrier segment is affected by seasonal
fluctuations, which affect tonnage to be transported. Freight shipments,
operating costs and earnings are also affected adversely by inclement
weather conditions. The third calendar quarter of each year usually has the
highest tonnage levels while the first quarter has the lowest. Forwarding
operations are similar to the LTL and truckload segments with revenues being
weaker in the first quarter and stronger during the months of September and
October. Treadco's operations are somewhat seasonal with the last six months
of the calendar year generally having the highest levels of sales.
Environmental Matters
ABF stores some fuel for its tractors and trucks in approximately 188
underground tanks located in 34 states. Maintenance of such tanks is
regulated at the federal and, in some cases, state levels. ABF believes that
it is in substantial compliance with all such regulations. ABF is not aware
<PAGE>
of any leaks from such tanks that could reasonably be expected to have a
material adverse effect on the Company. Environmental regulations have been
adopted by the United State Environmental Protection Agency ("EPA") that will
require ABF to upgrade its underground tank systems by December 1998. ABF
currently estimates that such upgrades, which are currently in process, will
not have a material adverse effect on the Company.
The Company has received notices from the EPA and others that it has been
identified as a potentially responsible party ("PRP") under the Comprehensive
Environmental Response Compensation and Liability Act or other federal or
state environmental statutes at several hazardous waste sites. After
investigating the Company's or its subsidiaries' involvement in waste
disposal or waste generation at such sites, the Company has either agreed to
de minimis settlements (aggregating approximately $250,000 over the last five
years), or believes its obligations with respect to such sites would involve
immaterial monetary liability, although there can be no assurances in this
regard.
As of December 31, 1995, the Company has accrued approximately $1,700,000 to
provide for environmental-related liabilities. The Company's environmental
accrual is based on management's best estimate of the actual liability. The
Company's estimate is founded on management's experience in dealing with
similar environmental matters and on actual testing performed at some sites.
Management believes that the accrual is adequate to cover environmental
liabilities based on the present environmental regulations.
New Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the
assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company will adopt
Statement 121 in the first quarter of 1996 and, based on current
circumstances, does not believe the effect of adoption will be material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response of this item is submitted in a separate section of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
<PAGE>
PART III.
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors," "Directors of the Company,"
"Board of Directors and Committees," "Executive Officers of the Company" and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the
Company's proxy statement for the annual meeting of stockholders to be held
on May 9, 1996, set forth certain information with respect to the directors,
nominees for election as directors and executive officers of the Company and
are incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The sections entitled "Executive Compensation," "Aggregated Options/SAR
Exercises in Last Fiscal Year and Fiscal Year-End Options/SAR Values,"
"Options/SAR Grants Table," "Executive Compensation and Development Committee
Interlocks and Insider Participation," "Retirement and Savings Plan,"
"Termination of Employment Agreements" and the paragraph concerning directors
compensation in the section entitled "Board of Directors and Committees" in
the Company's proxy statement for the annual meeting of stockholders to be
held on May 9, 1996, set forth certain information with respect to
compensation of management of the Company and are incorporated herein by
reference, provided however, the information contained in the sections
entitled "Report on Executive Compensation by the Executive Compensation and
Development Committee and Stock Option Committee" and "Stock Performance
Graph" are not incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Principal Shareholders and Management Ownership" in the
Company's proxy statement for the annual meeting of stockholders to be held
on May 9, 1996, sets forth certain information with respect to the ownership
of the Company's voting securities and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Certain Transactions and Relationships" in the
Company's proxy statement for the annual meeting of stockholders to be held
on May 9, 1996, sets forth certain information with respect to relations of
and transactions by management of the Company and is incorporated herein by
reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements
The response to this portion of Item 14 is submitted as a
separate section of this report.
(a)(2) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a
separate section of this report.
(a)(3) Exhibits
The exhibits filed with this report are listed in the
Exhibit Index which is submitted as a separate section
of this report.
(b) Reports on Form 8-K
Form 8-K/A No. 1 dated October 13, 1995
Item 7. Financial Statements and Exhibits -- Financial
statements of WorldWay Corporation and pro forma financial
information to be filed under cover of Form 8-K/A on
October 25, 1995.
Form 8-K/A No. 1 dated October 25, 1995
Item 7. Financial Statements and Exhibits -- Audited
financial statements of WorldWay Corporation for the years
then ended December 31, 1994 and 1993. Unaudited financial
statements of WorldWay Corporation for the twenty-four weeks
ended June 17, 1995 and June 18, 1994. Pro forma condensed
consolidated statements of operations for the year ended
December 31, 1994 and the six months ended June 30, 1995 and
the pro forma condensed consolidated balance sheet as of
June 30, 1995.
Form 8-K dated February 28, 1996
Item 5. On February 21, 1996, Arkansas Best Corporation's
(the "Company") existing Credit Agreement with Societe
Generale, Southwest Agency as Managing Agent and
Administrative Agent, Nations of Texas, N.A., as
Documentation Agent, and certain other banks was amended and
restated. Also, on February 21, 1996, the Company entered
into a $30,000,000 Credit Agreement with Societe Generale
Southwest Agency as Agent and certain other banks.
(c) Exhibits
See Item 14(a)(3) above.
(d) Financial Statements Schedules
The response to this portion of Item 14 is submitted as a
separate section of this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ARKANSAS BEST CORPORATION
By: /s/Donald L. Neal
--------------------------------
Donald L. Neal
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/William A. Marquard Chairman of the Board, Director 3/24/96
- ---------------------------- -------
William A. Marquard
/s/Robert A. Young, III Director, Chief Executive Officer 3/28/96
- ---------------------------- and President (Principal -------
Robert A. Young, III Executive Officer)
/s/Donald L. Neal Senior Vice President - Chief 3/28/96
- ---------------------------- Financial Officer (Principal -------
Donald L. Neal Financial and Accounting Officer)
/s/Frank Edelstein Director 3/27/96
- ---------------------------- -------
Frank Edelstein
/s/Arthur J. Fritz Director 3/25/96
- ---------------------------- -------
Arthur J. Fritz
/s/John H. Morris Director 3/25/96
- ---------------------------- -------
John H. Morris
/s/Alan J. Zakon Director 3/27/96
- ---------------------------- -------
Alan J. Zakon
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) and (2), (c) and (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1995
ARKANSAS BEST CORPORATION
FORT SMITH, ARKANSAS
<PAGE>
FORM 10-K -- ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
ARKANSAS BEST CORPORATION
The following consolidated financial statements of Arkansas Best Corporation
are included in Item 8:
Consolidated Balance Sheets -- December 31, 1995 and 1994
Consolidated Statements of Operations -- Years ended December 31, 1995,
1994 and 1993
Consolidated Statements of Shareholders' Equity -- Years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows -- Years ended December 31, 1995,
1994 and 1993
The following consolidated financial statement schedule of Arkansas Best
Corporation is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been
omitted.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Directors
Arkansas Best Corporation
We have audited the accompanying consolidated balance sheets of Arkansas Best
Corporation as of December 31, 1995 and 1994, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1995. Our audits also included
the financial statement schedule listed in the Index at Item 14(a). These
financial statements and the schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Arkansas Best Corporation at December 31, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
ERNST & YOUNG LLP
Little Rock, Arkansas
February 21, 1996
<PAGE>
<TABLE>
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31
1995 1994
($ thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 16,945 $ 3,458
Receivables
Trade, less allowances for
doubtful accounts (1995 --$19,403,000;
1994 -- $2,825,000) 186,273 127,206
Other 18,923 8,938
Inventories -- Notes D and E 36,850 32,463
Prepaid expenses 13,927 13,734
Deferred income taxes 32,080 -
Federal and state income taxes 17,489 -
-------- --------
TOTAL CURRENT ASSETS 322,487 185,799
PROPERTY, PLANT AND EQUIPMENT --
(Notes C and E)
Land and structures 228,706 110,424
Revenue equipment 285,045 200,250
Manufacturing equipment 8,289 7,467
Service, office and other equipment 65,474 40,516
Leasehold improvements 10,631 9,421
Construction in progress 44 13,939
-------- --------
598,189 382,017
Less allowances for depreciation
and amortization (190,906) (166,436)
-------- --------
407,283 215,581
OTHER ASSETS
Assets held for sale (Notes B and E) 39,937 -
Nonoperating property (Note E) 17,173 2,026
Pension asset (Note K) 32,380 5,331
Goodwill, less amortization (1995 --
$24,027,000; 1994 -- $19,794,000) --
Notes B and C 145,478 151,960
Other 21,099 8,348
-------- --------
256,067 167,665
-------- --------
$985,837 $ 569,045
======== ========
<PAGE>
<CAPTION>
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31
1995 1994
($ thousands)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft $ - $ 5,989
Bank drafts payable 12,999 10,779
Trade accounts payable 74,998 49,368
Accrued expenses -- Note F 188,708 82,157
Federal and state income taxes -- Note G - 5,786
Deferred income taxes - Note G - 4,159
Current portion of long-term debt -- Note E 26,634 65,161
-------- --------
TOTAL CURRENT LIABILITIES 303,339 223,399
LONG-TERM DEBT, less current portion -- Note E 399,144 59,295
OTHER LIABILITIES 18,665 5,915
DEFERRED INCOME TAXES -- Note G 48,560 28,842
MINORITY INTEREST -- Note B 38,265 34,989
SHAREHOLDERS' EQUITY -- Notes A, H and P
Preferred stock, $.01 par value,
authorized 10,000,000 shares; issued
and outstanding 1,495,000 shares 15 15
Common stock, $.01 par value, authorized
70,000,000 shares; issued and outstanding
1995: 19,519,061 shares; 1994:
19,513,708 shares 195 195
Additional paid-in capital 207,807 207,636
Predecessor basis adjustment -- Note H (15,371) (15,371)
Retained earnings (deficit) (14,782) 24,130
-------- --------
TOTAL SHAREHOLDERS' EQUITY 177,864 216,605
COMMITMENTS AND CONTINGENCIES --
(Notes I, J, K and P)
-------- --------
$985,837 $569,045
======== ========
<FN>
<F1>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Year Ended December 31
1995 1994 1993
($ thousands, except per share data)
<S> <C> <C> <C>
OPERATING REVENUES -- Note B
Less than truckload motor
carrier operations $1,088,416 $ 918,663 $ 893,504
Truckload motor carrier
operations 27,992 - -
Forwarding operations 140,691 31,468 -
Logistics operations 31,699 7,514 2,890
Tire operations 145,127 138,665 111,585
Service and other 3,354 2,111 1,939
--------- --------- ---------
1,437,279 1,098,421 1,009,918
OPERATING EXPENSES AND
COSTS -- Notes B and L
Less than truckload
carrier operations 1,119,560 882,351 851,711
Truckload motor carrier
operations 24,952 - -
Forwarding operations 136,166 30,359 -
Logistics operations 34,299 8,488 3,736
Tire operations 140,328 127,115 101,240
Service and other 5,433 1,993 1,862
--------- --------- ---------
1,460,738 1,050,306 958,549
--------- --------- ---------
OPERATING INCOME (LOSS) (23,459) 48,115 51,369
OTHER INCOME (EXPENSE)
Gains on asset sales 3,194 2,168 2,509
Interest (17,046) (6,985) (7,248)
Minority interest in
subsidiary -- Note A (1,297) (3,523) (3,140)
Other, net (8,379) (3,136) (3,240)
--------- --------- ---------
(23,528) (11,476) (11,119)
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY
ITEM (46,987) 36,639 40,250
FEDERAL AND STATE INCOME
TAXES (CREDIT) --
Note G
Current (5,200) 14,743 21,386
Deferred (8,995) 3,189 (2,108)
--------- --------- ---------
(14,195) 17,932 19,278
<PAGE>
<CAPTION>
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
Year Ended December 31
1995 1994 1993
($ thousands, except per share data)
<S> <C> <C> <C>
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM $ (32,792) $ 18,707 $ 20,972
EXTRAORDINARY ITEM -- Note H
Loss on extinguishments
of debt - - (661)
--------- --------- ---------
NET INCOME (LOSS) $ (32,792) $ 18,707 $ 20,311
========= ========= =========
PER COMMON SHARE --
Notes C and H
Income before extraordinary
item $ (1.90) $ .74 $ .89
Extraordinary item - - (.04)
--------- --------- ---------
Net income (loss) $ (1.90) $ .74 $ .85
========= ========= =========
CASH DIVIDENDS PAID PER
COMMON SHARE $ .04 $ .04 $ .04
========= ========= =========
AVERAGE COMMON SHARES
OUTSTANDING -- Note C 19,520,756 19,351,796 19,193,582
========== ========== ==========
<FN>
<F1>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Additional Stock Payable Predecessor Retained
Preferred Common Paid-In to Employee Basis Earnings
Stock Stock Capital Benefit Plans Adjustment (Deficit)
($ thousands)
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1993 $ - $ 191 $ 133,279 $ 701 $(15,371) $(5,149)
Net income - - - - - 20,311
Issuance of common stock to
employee benefit plans --
Note K - 1 1,299 (701) - -
Stock payable to employee
benefit plans - - - 205 - -
Issuance of preferred
stock -- Note H 15 - 71,879 - - -
Dividends paid - - - - - (4,670)
--- ---- -------- ------ -------- -------
Balances at December 31, 1993 15 192 206,457 205 (15,371) 10,492
Net income 18,707
Issuance of common stock to
employee benefit plans - - 205 (205) - -
Stock options exercised - - 36 - - -
Acquisition of Traveller
Group -- Note B - 3 938 - - -
Dividends paid - - - - - (5,069)
--- ----- -------- ------ -------- -------
Balances at December 31, 1994 15 195 207,636 - (15,371) 24,130
Net loss (32,792)
Stock options exercised - - 171 - -
Dividends paid - - - - - (5,079)
Adjustment to recognize
minimum pension liability
-- Note K - - - - - (1,041)
--- ----- --------- ------- -------- --------
Balances at December 31, 1995 $15 $ 195 $ 207,807 $ - $(15,371) $(14,782)
=== ===== ======== ======= ======== ========
<FN>
<F1>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(32,792) $ 18,707 $ 20,311
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Loss on extinguishments of debt - - 661
Depreciation and amortization 46,627 28,087 28,266
Amortization of intangibles 5,135 3,527 3,064
Other amortization 1,044 501 319
Contribution of stock to
employee benefit plans - - 804
Provision for losses on
accounts receivable 4,185 2,070 1,902
Provision for deferred
income taxes (8,995) 3,189 (2,108)
Gain on asset sales (3,194) (2,168) (2,509)
Loss on write-down of
intangible assets 2,076 - -
Minority interest in subsidiary 1,297 3,773 3,390
Changes in operating
assets and liabilities,
net of acquisitions:
Receivables (23,795) (15,312) (14,152)
Inventories and
prepaid expenses 3,529 (6,428) (5,985)
Other assets (13,827) (1,566) 1,822
Trade accounts payable, bank
drafts payable, taxes
payable, accrued expenses
and other liabilities (47,514) 14,373 (193)
-------- -------- --------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (66,224) 48,753 35,592
INVESTING ACTIVITIES
Purchases of property,
plant and equipment,
less capitalized leases (49,690) (47,298) (13,692)
Proceeds from asset sales 15,748 7,841 10,839
Acquisition of WorldWay
Corporation, net of cash
acquired -- Note B (81,482) - -
Acquisition of the Clipper
Group, net of cash acquired --
Note B (84) (49,556) -
Acquisition of Trans-World
Tire Corp. - - (2,500)
-------- -------- --------
NET CASH USED BY
INVESTING ACTIVITIES (115,508) (89,013) (5,353)
<PAGE>
<CAPTION>
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Year Ended December 31
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
FINANCING ACTIVITIES
Deferred financing costs
and expenses incurred in
borrowing activities $ (4,578) $ (147) $ (47)
Proceeds from receivables
purchase agreement - 56,000 -
Payments under receivables
purchase agreement (40,000) (16,000) -
Borrowings under revolving
credit and term loan facilities 313,275 54,000 35,000
Principal payments under revolving
credit and term loan facilities (30,275) (39,000) (98,000)
Net proceeds from the
issuance of common stock 171 37 -
Net proceeds from the
issuance of preferred stock - - 71,894
Principal payments on other
long-term debt and capital leases (31,844) (18,616) (33,203)
Dividends paid to minority
shareholders of subsidiary (462) (438) (432)
Dividends paid (5,079) (5,069) (4,133)
Net increase (decrease) in
bank overdraft (5,989) 5,989 -
-------- -------- --------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 195,219 36,756 (28,921)
-------- -------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 13,487 (3,504) 1,318
Cash and cash equivalents
at beginning of year 3,458 6,962 5,644
-------- -------- --------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 16,945 $ 3,458 $ 6,962
======== ======== ========
<FN>
<F1>
See notes to consolidated financial statements.
</FN>
<PAGE>
ARKANSAS BEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Arkansas Best Corporation (the "Company") is a diversified holding company
engaged through its subsidiaries primarily in motor carrier, freight
forwarding operations and truck tire retreading and sales (see Note M).
Principal subsidiaries are ABF Freight System, Inc., ("ABF"), Treadco, Inc.
("TREADCO"), and Clipper Exxpress Company and related companies (the "Clipper
Group") and, effective August 12, 1995, WorldWay Corporation ("WorldWay")
(see Note B). The principal subsidiaries of WorldWay include Carolina
Freight Carriers Corp., which was merged into ABF on September 25, 1995,
Cardinal Freight Carriers, Inc. ("Cardinal"), G.I. Trucking Company ("G.I.
Trucking"), CaroTrans International, Inc. ("CaroTrans"), The Complete
Logistics Company ("Complete Logistics") and Innovative Logistics
Incorporated ("Innovative Logistics").
As of December 31, 1995, the Company's percentage ownership of TREADCO was
46%. The Company's consolidated financial statements reflect full
consolidation of the accounts of TREADCO, with the ownership interests of the
other stockholders reflected as minority interest, because the Company
controls TREADCO through stock ownership, board representation and management
services provided under a transition services agreement.
Summarized condensed financial information for TREADCO is as follows:
</TABLE>
<TABLE>
<CAPTION>
December 31
1995 1994
($ thousands)
<S> <C> <C>
Current assets $ 61,615 $ 58,187
Property, plant and equipment, net 16,339 15,723
Other assets 15,081 15,673
-------- --------
Total assets $ 93,035 $ 89,583
======== ========
Current liabilities $ 16,737 $ 20,822
Long-term debt and other 10,280 4,323
Stockholders' equity 66,018 64,438
-------- --------
Total liabilities and stockholders' equity $ 93,035 $ 89,583
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
Sales $ 147,906 $ 140,678 $ 113,277
Operating expenses and costs 143,382 129,625 103,671
Interest expense 510 270 195
Other (income) expense (88) 9 (252)
Income taxes 1,711 4,265 3,832
-------- -------- --------
Net income $ 2,391 $ 6,509 $ 5,831
======== ======== ========
</TABLE>
NOTE B - ACQUISITIONS
On July 14, 1995, ABC Acquisition Corporation (the "Purchaser"), a wholly
owned subsidiary of the Company, commenced a tender offer (the "Offer") to
purchase all outstanding shares of common stock of WorldWay Corporation
("WorldWay"), at a purchase price of $11 per share (the "Acquisition").
Pursuant to the Offer, on August 11, 1995, the Purchaser accepted for
payment shares of WorldWay validly tendered, representing approximately 91%
of the shares outstanding. On October 12, 1995, the remaining shares of
WorldWay's common stock were converted into the right to receive $11 per
share in cash.
For financial statement purposes, the Worldway Acquisition has been
accounted for under the purchase method effective August 12, 1995.
Consequently, the accompanying financial statements include the results of
operations for WorldWay and its subsidiaries from August 12, 1995 through
December 31, 1995. The allocation of the purchase cost in the accompanying
financial statements is preliminary and subject to change. Final values may
differ from those set forth in these financial statements, but differences
are not expected to be material. Assets with a fair value of approximately
$309 million were acquired and liabilities with a fair value of
approximately $235 million were assumed. The Company's total purchase price
was $76 million. Approximately $2 million of goodwill was recorded as a
result of the purchase allocation and is being amortized over a 30-year
period.
On September 30, 1994, the Company consummated the purchase of all
outstanding stock of the Clipper Group pursuant to a stock purchase agreement
entered into on August 18, 1994. Assets of approximately $26.2 million were
acquired and liabilities of approximately $14.7 million were assumed. The
Company's total purchase price was $60.9 million.
The Clipper acquisition has been accounted for under the purchase method,
effective September 30, 1994, with operations of Clipper included for the
three-month period ended December 31, 1994. The purchase price has been
allocated to assets and liabilities based on their estimated fair values as
of the date of acquisition. Approximately $49.4 million of goodwill was
recorded as a result of the purchase allocation and is being amortized over a
30-year period.
<PAGE>
On October 12, 1994, the Company issued 310,191 shares of common stock for
all of the outstanding stock of Traveller Enterprises and subsidiaries and
Commercial Warehouse Company, collectively (the "Traveller Group"). The
acquisition of the Traveller Group has been accounted for as a pooling of
interests. The Traveller Group's operations are not material to the
Company's consolidated financial statements for any period; therefore,
financial statements for periods prior to the merger have not been restated,
and the financial statements include operations of the Traveller Group from
the date of the combination.
Pro forma unaudited information (as if the Clipper Group and Traveller Group
acquisitions were completed at the beginning of 1993 and the WorldWay
acquisition was completed at the beginning of 1994) for 1995, 1994 and 1993
is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
(thousands, except per share data)
<S> <C> <C> <C>
Operating revenues $1,921,432 $2,144,994 $1,149,627
Operating expenses 2,007,421 2,059,351 1,094,340
---------- ---------- ----------
(85,989) 85,643 55,287
Interest expense, net 24,769 21,451 10,602
Minority interest
in subsidiary 1,297 3,523 3,140
Other expense, net 24,069 8,687 2,331
Provision for income taxes
(credit) (46,879) 24,960 18,874
----------- ---------- ---------
Income (loss) before
extraordinary item $ (89,245) $ 27,022 $ 20,340
=========== ========= ==========
Earnings (loss) per common share
before extraordinary item $ (4.79) $ 1.16 $ .84
=========== ========== ==========
Average common shares outstanding 19,544 19,662 19,504
=========== ========== ==========
</TABLE>
The above pro forma unaudited information does not purport to be indicative
of the results which actually would have occurred had the acquisitions been
made at the beginning of the respective periods.
NOTE C - ACCOUNTING POLICIES
Consolidation: The consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany accounts and
transactions are eliminated in consolidation.
Cash and Cash Equivalents: Short term investments which have a maturity of
ninety days or less when purchased are considered cash equivalents.
<PAGE>
Concentration of Credit Risk: The Company's services are provided primarily
to customers throughout the United States and Canada, with additional
customers in foreign countries served by CaroTrans International, Inc. The
Company performs ongoing credit evaluations of its customers and generally
does not require collateral. Historically, credit losses have been within
management's expectations.
Inventories: Inventories, which consist primarily of new tires and retread
tires and supplies used in Treadco's business, are stated at the lower of
cost (first-in, first-out basis) or market.
Property, Plant and Equipment: Purchases of property, plant and equipment are
recorded at cost. For financial reporting purposes, such property is
depreciated principally by the straight-line method, using the following
lives: structures -- 15 to 30 years; revenue equipment -- 3 to 7 years,
manufacturing equipment -- 5 to 8 years; other equipment -- 3 to 10 years;
and leasehold improvements -- 4 to 10 years. For tax reporting purposes,
accelerated depreciation or cost recovery methods are used. Gains and losses
on asset sales are reflected in the year of disposal. Trade-in allowances in
excess of the book value of revenue equipment traded are accounted for by
adjusting the cost of assets acquired. Tires purchased with revenue
equipment are capitalized as a part of the cost of such equipment, with
replacement tires being expensed when placed in service.
Assets Held for Sale: Assets held for sale represents primarily non-
operating freight terminals and other properties, a portion of which were
acquired as a result of the WorldWay acquisition (Note B), which are carried
at the lower of net book value or estimated net realizable value. Also
included in assets held for sale are properties of the Company which are
being replaced by WorldWay facilities. The Company recorded a writedown of
$2.1 million to net realizable value for the Company properties being
replaced. Assets held for sale includes $4.9 million in goodwill that was
specifically identifiable to certain properties being sold.
Goodwill: Excess cost over fair value of net assets acquired (goodwill) is
amortized on a straight-line basis over 15 to 40 years. The carrying value of
goodwill will be reviewed if the facts and circumstances suggest that it may
be impaired. If this review indicates that goodwill will not be recoverable,
as determined based on the undiscounted cash flows over the remaining
amortization period, the Company's carrying value of the goodwill would be
reduced.
Income Taxes: Deferred income taxes are accounted for under the liability
method. Deferred income taxes relate principally to asset and liability
basis differences arising from a 1988 purchase transaction, to the timing of
the depreciation and cost recovery deductions previously described and to
temporary differences in the recognition of certain revenues and expenses of
carrier operations.
Revenue Recognition: Motor carrier revenue is recognized based on relative
transit time in each reporting period with expenses recognized as incurred.
Revenue for other segments is recognized generally at the point when goods or
services are provided to the customers.
Earnings (Loss) Per Share: The calculation of earnings (loss) per share is
based on the weighted average number of common and common equivalent shares
outstanding during the applicable period. The calculation reduces income
available to common shareholders by preferred stock dividends paid or accrued
during the period.
<PAGE>
Compensation to Employees: Stock-based compensation to employees is accounted
for based on the intrinsic value method under Accounting Principles Board
Opinion No. 25 "Accounting for Stock Issued to Employees." The Company plans
to continue to use this method.
Accounting for Sales of Stock by Subsidiaries: It is the Company's policy to
recognize gains and losses on sales of subsidiary stock when incurred.
Claims Liabilities: The Company is self-insured up to certain limits for
workers' compensation, cargo loss and damage and certain property damage and
liability claims. Provision has been made for the estimated liabilities for
such claims as incurred.
Environmental Matters: The Company expenses environmental expenditures
related to existing conditions resulting from past or current operations and
from which no current or future benefit is discernible. Expenditures which
extend the life of the related property or mitigate or prevent future
environmental contamination are capitalized. The Company determines its
liability on a site by site basis with actual testing at some sites, and
records a liability at the time when it is probable and can be reasonably
estimated. The estimated liability of the Company is not discounted or
reduced for possible recoveries from insurance carriers. (See Note J)
Derivative Financial Instruments: The Company enters into interest-rate swap
agreements and interest-rate cap agreements that are designed to modify the
interest characteristic of outstanding debt or limit exposure to increasing
interest rates. The differential to be paid or received as interest rates
change is accrued and recognized as an adjustment of interest expense related
to the debt (the accrual accounting method). The related amount payable to or
receivable from counterparties is included in accrued liabilities or other
receivables.
Reclassifications: Certain reclassifications have been made to the prior
year financial statements to conform to the current year's presentation.
Recent Accounting Pronouncement: The Company plans to adopt Statement of
Financial Accounting Standards No. 121 (SFAS No. 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
effective January 1, 1996. Under SFAS No. 121, impairment losses are
recognized when information indicates the carrying amount of long-lived
assets, identifiable intangibles and goodwill related to those assets will
not be recovered through future operations or sale. Impairment losses for
assets to be held or used in operations will be based on the excess of the
carrying amount of the asset over the asset's fair value. Assets held for
disposal will be carried at the lower of carrying amount or fair value less
cost to sell. SFAS No. 121 will be applied prospectively from the date of
adoption and, based on current circumstances, management does not believe the
effect of adoption will be material.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
<PAGE>
NOTE D - INVENTORIES
<TABLE>
<CAPTION>
December 31
1995 1994
($ thousands)
<S> <C> <C>
Finished goods $ 25,579 $ 22,764
Materials 7,621 7,487
Repair parts, supplies and other 3,650 2,212
-------- --------
$ 36,850 $ 32,463
======== ========
</TABLE>
NOTE E - LONG-TERM DEBT AND CREDIT AGREEMENTS
<TABLE>
<CAPTION>
December 31
1995 1994
($ thousands)
<S> <C> <C>
Revolving Credit and Term Loan Facility (1) $ 278,000 $ -
Receivables Purchase Agreement (1) - 40,000
Subordinated Debentures (2) 47,016 -
General Office Agreement (3) 17,000 19,000
Treadco Credit Agreement (4) 10,000 3,000
Capitalized lease obligations (5) 68,303 51,060
Other 5,459 11,396
-------- --------
425,778 124,456
Less current portion 26,634 65,161
-------- --------
$ 399,144 $ 59,295
======== ========
</TABLE>
(1) On August 10, 1995 the Company entered into a $350 million credit
agreement (the "Credit Agreement") with Societe Generale, Southwest Agency as
Managing and Administrative Agent and NationsBank of Texas, N.A., as
Documentation Agent, and with 15 other participating banks. The Credit
Agreement includes a $75 million term loan and provides for up to $275
million of revolving credit loans (including letters of credit).
Term Loan and Revolving Credit advances bear interest at one of the following
rates, at the Company's option: (a) Prime Rate advance or (b) Eurodollar
Rate advance. A Prime Rate advance bears an interest rate equal to the
lesser of (i) the Adjusted Prime Rate plus the Applicable Margin and (ii) the
maximum nonusurious interest rate under applicable law. The Adjusted Prime
Rate is equal to the greater of the prime rate offered by Societe Generale
or the Federal Funds Rate plus 1/2%. The Applicable Margin is determined as
a function of the ratio of the Company's consolidated indebtedness to its
consolidated earnings before interest, taxes, depreciation and amortization.
Eurodollar Rate advances shall bear an interest rate per annum equal to the
lesser of (i) the Eurodollar Rate offered by Societe Generale plus the
Applicable Margin and (ii) the maximum nonusurious interest rate under
applicable law. The Company has paid and will continue to pay certain
customary fees for such commitments and advances. At December 31, 1995, the
average interest rate on the Credit Agreement was 7.6%.
<PAGE>
There were $203 million of Revolver Advances, $75 million of Term Advances
and approximately $64.1 million of letters of credit outstanding at
December 31, 1995. The Revolver Advances are payable on August 11, 1998.
Outstanding revolving credit advances may not exceed a borrowing base
calculated using the Company's revenue equipment, the Treadco common stock
owned by the Company, and eligible receivables.
The Term Advances are payable in varying installments commencing in November
1996.
The Credit Agreement replaced a $150 million credit agreement with Societe
Generale and a receivable purchase agreement with Renaissance Funding Corp.
and Societe Generale which allowed ABF to sell to Renaissance Funding Corp.
an interest in up to $55 million in a pool of receivables.
The Credit Agreement contains various covenants which limit, among other
things, indebtedness, distributions, asset sales, restricted payments,
investments, loans and advances, as well as requiring the Company to meet
certain financial tests. As of December 31, 1995, the Company was not in
compliance with certain covenants relating to financial tests. On
February 21, 1996, the Company obtained an amendment to the credit agreement
which revised the agreement so that the Company is now in compliance with all
covenants. Under the amended credit agreement, the Company has pledged
substantially all revenue equipment and real property not already pledged
under other debt obligations or capital leases.
The amendment also revised the maturity schedule of the term loan agreement
to revise the loans to be paid off in graduated principal installments
through August 1998. The current portion of long-term debt and the five year
maturity schedule reflected in the consolidated financial statements have
been revised to reflect the amended repayment schedule. The amendment also
requires that net proceeds received from certain asset sales be applied
against the term loan balance.
Also, on February 21, 1996, the Company obtained an additional credit
agreement which provides for borrowings of up to $30 million. This agreement
bears interest at either an adjusted prime rate plus 2% or a maximum rate as
defined in the agreement in the case of prime rate advances, or the
Eurodollar rate plus 3% or a maximum rate as defined in the agreement in the
care of Eurodollar rate advances. The maturity date of this agreement is
March 31, 1997. This agreement contains covenants that are substantially the
same as the covenants contained in the primary credit agreement.
(2) The Subordinated Debentures were issued in April 1986 by WorldWay. The
debentures bear interest at 6.25% per annum, payable semi-annually, on a par
value of $50,000,000. The debentures are payable April 15, 2011. The Company
may redeem the debentures at a price of 101.25% declining to 100% at
April 15, 1996. The Company is required to redeem through a mandatory
sinking fund commencing before April 15, in each of the years from 1997 to
2010, an amount in cash sufficient to redeem $2,500,000 of the aggregate
principal amount of the debentures issued.
(3) The Company entered into a ten-year, $20 million general office term
loan agreement dated as of April 25, 1994 with NationsBank of Texas, N.A., as
agent, and Societe Generale Southwest Agency. The proceeds from the
agreement were used to finance the construction of the Company's new
corporate office building which was completed in February 1995. Amounts
borrowed under the agreement bear interest at 8.07% quarterly, with
installments of $500,000 plus interest due through July 2004.
<PAGE>
(4) TREADCO is a party to a revolving credit facility with Societe Generale
(the "TREADCO Credit Agreement") providing for borrowings of up to the lesser
of $20 million or the applicable borrowing base. Borrowings under the
TREADCO Credit Agreement are collateralized by accounts receivable and
inventory. Borrowings under the agreement bear interest, at TREADCO's
option, at 3/4% above the bank's LIBOR rate, or at the higher of the bank's
prime rate or the "federal funds rate" plus 1/2%. At December 31, 1995, the
interest rate was 7.1%. At December 31, 1995, TREADCO had $10 million
outstanding under the Revolving Credit Agreement. The TREADCO credit
agreement is payable in September 1998. TREADCO pays a commitment fee of
3/8% on the unused amount under the TREADCO Credit Agreement.
The TREADCO Credit Agreement contains various covenants which limit, among
other things, dividends, disposition of receivables, indebtedness and
investments, as well as requiring TREADCO to meet certain financial tests
which have been met.
(5) Includes approximately $57,730,000 relative to leases of carrier revenue
equipment with an aggregate net book value of approximately $57,451,000 at
December 31, 1995. These leases have a weighted average interest rate of
approximately 6.9%. Also includes approximately $10,573,000 relative to
leases of computer equipment, various terminals, and a data processing
building expansion, financed by Industrial Revenue Bond Issues, with a
weighted average interest rate of approximately 7.6%. The net book value of
the related assets was approximately $27,772,000 at December 31, 1995.
Annual maturities on long-term debt, excluding capitalized lease obligations
(see Note I), in 1996 through 2000 aggregate approximately $9,646,000;
$42,795,000; $250,733,000; $5,035,000; and $5,014,000, respectively.
Interest paid, net of interest capitalized, was $21,986,000 in 1995,
$6,656,000 in 1994, and $7,226,000 in 1993. Interest capitalized totaled
$230,000 and $582,000 in 1995 and 1994, respectively.
The Company is a party to an interest rate cap arrangement to reduce the
impact of increases in interest rates on its floating-rate long-term debt.
The Company will be reimbursed for the difference in interest rates if the
LIBOR rate exceeds a fixed rate of 9 3/4% applied to notional amounts, as
defined in the contract, ranging from $40 million as of December 31, 1995 to
$2.5 million as of October 1999. As of December 31, 1995 and 1994, the LIBOR
rate was 5.5% and 6.5%, respectively; therefore, no amounts were due to the
Company under this arrangement. In the event that amounts are due under this
agreement in the future, the payments to be received would be recognized as a
reduction of interest expense (the accrual accounting method). Fees totaling
$385,000 were paid in 1994 to enter into this arrangement. These fees are
included in other assets and are being amortized to interest expense over the
life of the contract.
A subsidiary of the Company is party to an interest rate exchange agreement
with Citibank, with a notional amount of $3,260,000 as of December 31, 1995,
that is used to convert the variable interest rate on bonds to a fixed rate
of interest. The terms of the agreement require the Company to pay 11.45%
interest and receive the Citibank base rate, calculated on the notional
amount. The differential to be paid or received as interest rates change is
accrued and recognized as an adjustment of interest expense (the accrual
accounting method). The related amount payable to or receivable from
counterparties is included in accrued expenses or other receivables. The fair
values of the swap agreements are not recognized in the financial statements.
The agreement expired in January 1996.
<PAGE>
NOTE F - ACCRUED EXPENSES
<TABLE>
<CAPTION>
December 31
1995 1994
($ thousands)
<S> <C> <C>
Accrued salaries, wages and incentive plans $ 17,232 $ 12,397
Accrued vacation pay 32,905 22,114
Accrued interest 2,972 1,964
Taxes other than income 10,475 4,946
Loss, injury, damage and workers'
compensation claims reserves 101,917 35,348
Pension costs 11,628 1,312
Other 11,579 4,076
-------- --------
$ 188,708 $ 82,157
======== ========
</TABLE>
NOTE G - FEDERAL AND STATE INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets are as
follows:
<TABLE>
<CAPTION>
December 31
1995 1994
($ thousands)
<S> <C> <C>
Deferred tax liabilities:
Depreciation and basis differences
for property, plant and equipment $ 52,834 $ 22,332
Revenue recognition 837 4,610
Basis difference on asset and stock sale 3,190 3,113
Prepaid expenses 3,050 5,019
Equity in earnings of TREADCO 2,087 1,254
-------- --------
Total deferred tax liabilities 61,998 36,328
Deferred tax assets:
Accrued expenses 25,619 2,743
Uniform capitalization of inventories 204 162
Postretirement benefits
other than pensions 1,151 241
Net operating loss carryovers 13,985 -
Alternative minimum tax credit carryovers 4,900 -
Other 832 181
-------- --------
Total deferred tax assets 46,691 3,327
Valuation allowance for
deferred tax assets (1,173) -
-------- --------
Net deferred tax assets 45,518 3,327
-------- --------
Net deferred tax liabilities $ 16,480 $ 33,001
======== ========
</TABLE>
<PAGE>
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
December 31
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
Current (credit):
Federal $ (5,200) $ 12,595 $ 18,263
State - 2,148 3,123
-------- -------- --------
Total current (credit) (5,200) 14,743 21,386
Deferred (credit):
Federal (6,751) 2,670 (1,786)
State (2,244) 519 (322)
-------- -------- --------
Total deferred (credit) (8,995) 3,189 (2,108)
-------- -------- --------
Total income tax expense
(credit) $ (14,195) $ 17,932 $ 19,278
======== ======== ========
</TABLE>
A reconciliation between the effective income tax rate, as computed on income
before extraordinary item, and the statutory federal income tax rate is
presented in the following table:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
Income tax (benefit) at the
statutory federal rate of 35% $ (16,445) $ 12,824 $ 14,088
Federal income tax effects of:
State income taxes 788 (933) (981)
Amortization of nondeductible
goodwill 1,680 1,031 1,058
Other nondeductible expenses 1,407 969 490
Minority interest 454 1,233 1,099
Undistributed earnings
of TREADCO 77 210 189
Rate difference for TREADCO (41) (108) (98)
Retroactive tax rate change
effect on deferred taxes - - 677
Other 130 39 (45)
-------- -------- --------
Federal income taxes (benefit) (11,950) 15,265 16,477
State income taxes (benefit) (2,245) 2,667 2,801
-------- -------- --------
$ (14,195) $ 17,932 $ 19,278
======== ======== ========
Effective tax rate (31.06)% 48.9% 47.9%
======== ======== ========
</TABLE>
<PAGE>
Income taxes paid were $9,900,000 in 1995, $12,368,000 in 1994, and
$20,740,000 in 1993.
In August 1993, the Revenue Reconciliation Act of 1993 was enacted, which
required a retroactive increase in the corporate federal tax rate. This
resulted in an increase in the tax expense and a corresponding decrease in
net income of $828,000.
As of December 31, 1995, the Company has federal net operating loss and state
operating loss carryovers of approximately $32,000,000 and $72,000,000,
respectively. The federal net operating loss carryovers expire beginning in
2010. State net operating loss carryovers expire generally in five to seven
years. The Company has alternative minimum tax credits of approximately
$4,900,000 at December 31, 1995 which carry over indefinitely.
For financial reporting purposes, a valuation allowance of approximately
$1,173,000 has been established for certain state net operating loss
carryovers for which realization is uncertain.
NOTE H - SHAREHOLDERS' EQUITY
Preferred Stock. On February 19, 1993, the Company completed a public
offering of 1,495,000 shares of Preferred Stock at $50 per share. The
preferred stock is convertible at the option of the holder into Common Stock
at the rate of 2.5397 shares of Common Stock for each share of Preferred
Stock. Annual dividends are $2.875 and are cumulative. The Preferred Stock
is exchangeable, in whole or in part, at the option of the Company on any
dividend payment date beginning February 15, 1995, for the Company's 5 3/4%
Convertible Subordinated Debentures due February 15, 2018, at a rate of $50
principal amount of debentures for each share of Preferred Stock. The
Preferred Stock is redeemable at any time on or after February 15, 1996, in
whole or in part, at the Company's option, initially at a redemption price of
$52.0125 per share and thereafter at redemption prices declining to $50 per
share on or after February 15, 2003, plus unpaid dividends to the redemption
date. Holders of Preferred Stock have no voting rights unless dividends are
in arrears six quarters or more, at which time they have the right to elect
two directors of the Company until all dividends have been paid. Dividends of
$4,298,000 were paid during 1995 and 1994.
A portion of the proceeds of the preferred stock offering were used to repay
a $50 million term loan. In connection with the payment of the term loan, a
loss on extinguishment of debt of $167,000 net of income tax benefit of
$103,000 was incurred.
Stock Options. On March 13, 1992, the Company adopted a stock option plan
which provides 1,000,000 shares of Common Stock for the granting of options
to directors and key employees of the Company, which was amended in 1995 to
provide an additional 1,000,000 shares. In January 1996, 1,079,000 options
were granted.
In May 1993, the Company adopted a disinterested directors stockholder plan,
which provides 225,000 shares of common stock for the granting of options to
directors who administer the Company's stock option plan and are not
permitted to receive stock option grants under such plan. These options are
exercisable at the date they are granted. This plan was terminated in May
1994. The options previously granted under this plan will continue in effect
according to their terms.
<PAGE>
Option transactions are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Options outstanding at the
beginning of the year 628,900 589,100
Options granted 75,500 54,700
Options canceled - (11,460)
Options exercised (15,700) (3,440)
------- -------
Options outstanding as of December 31 688,700 628,900
======= =======
Option price range as of December 31 $9.50 to $13.88
===============
Options exercisable at December 31, 1995 338,540
=======
</TABLE>
Shareholders' Rights Plan. Each issued and outstanding share of Common Stock
has associated with it one Common Stock purchase right to purchase a share of
Common Stock from the Company at a price of $60.00. Such rights are not
exerciseable until certain events occur as detailed in the rights agreement.
Due to the extent of management shareholders of a predecessor company
continuing their ownership interest in the Company subsequent to a 1988
acquisition, the equity interest of these management shareholders was valued
at the predecessor basis rather than at fair market value. Accordingly, the
new basis of reporting for the Company's net assets using fair market values
at the date of the acquisition was reduced by $15,371,000 to reflect the
carryover basis of the management shareholders.
NOTE I - LEASES AND COMMITMENTS
Rental expense amounted to approximately $84,751,000 in 1995, $72,802,000 in
1994, and $58,369,000 in 1993. These amounts include $27,297,000, $31,686,000
and $17,843,000, respectively, for month-to-month rentals of revenue
equipment.
<PAGE>
The future minimum rental commitments, net of future minimum rentals to be
received under noncancellable subleases, as of December 31, 1995 for all
noncancellable operating leases are as follows:
<TABLE>
<CAPTION>
Terminals Equipment
and Retread and
Period Total Plants Other
($ thousands)
<S> <C> <C> <C>
1996 $ 35,959 $ 11,672 $ 24,287
1997 27,851 7,965 19,886
1998 17,190 5,479 11,711
1999 9,634 3,607 6,027
2000 6,202 2,040 4,162
Thereafter 10,430 7,890 2,540
-------- -------- --------
$ 107,266 $ 38,653 $ 68,613
======== ======== ========
</TABLE>
Certain of the leases are renewable for substantially the same rentals for
varying periods. Future minimum rentals to be received under noncancellable
subleases totaled approximately $3,446,000 at December 31, 1995.
The future minimum payments under capitalized leases at December 31, 1995,
consisted of the following ($ thousands):
<TABLE>
<S> <C>
1996 $ 21,188
1997 13,509
1998 15,355
1999 12,788
2000 8,903
Thereafter 9,402
--------
Total minimum lease payments 81,145
Amounts representing interest 12,842
--------
Present value of net minimum lease
included in long-term debt - Note E $ 68,303
========
</TABLE>
Assets held under capitalized leases are included in property, plant and
equipment as follows:
<TABLE>
<CAPTION>
December 31
1995 1994
($ thousands)
<S> <C> <C>
Revenue equipment $ 80,232 $ 80,318
Land and structures 30,138 4,726
-------- --------
110,370 85,044
Less accumulated amortization 25,147 32,291
-------- --------
$ 85,223 $ 52,753
======== ========
</TABLE>
<PAGE>
The revenue equipment leases have remaining terms from one to seven years and
contain renewal or fixed price purchase options. The lease agreements
require the lessee to pay property taxes, maintenance and operating expenses.
Lease amortization is included in depreciation expense.
Capital lease obligations of $25,118,000, $15,793,000, and $17,885,000 were
incurred for the years ended December 31, 1995, 1994 and 1993, respectively.
NOTE J - LEGAL PROCEEDINGS AND ENVIRONMENTAL MATTERS AND OTHER EVENTS
In August 1990, a lawsuit was filed in the United States District Court for
the Southern District of New York, by Riverside Holdings, Inc., Riverside
Furniture Corporation ("Riverside") and MR Realty Associates, L.P.
("Plaintiffs") against the Company and a subsidiary. Plaintiffs have
asserted state law, Employee Retirement Income Security Act of 1974 and
securities claims against the Company in connection with the Company's sale
of Riverside in April 1989. Plaintiffs are seeking approximately $4 million
in actual damages and $10 million in punitive damages. The Company is
vigorously contesting the lawsuit. After consultation with legal counsel,
the Company has concluded that resolution of the foregoing lawsuit is not
expected to have a material adverse effect on the Company's financial
condition.
In November, 1995 Daily Transport Canada, Inc. ("Daily"), a Toronto-based LTL
carrier, and related companies served a Request for Arbitration against ABF,
as successor to Carolina Freight Carriers Corporation ("CFCC"), for its lost
profits claimed to be in the amount of $15,000,000 resulting from the alleged
breach of a contract between CFCC and Daily. Daily claims that ABF breached
an agreement for Daily to handle, through the year 2003, all CFCC freight
movements in Ontario and Quebec, Canada. ABF has filed a federal court
action in North Carolina seeking to stay arbitration of the alleged agreement
on the grounds that the agreement is not valid and contesting Daily's
calculation of damages. ABF is vigorously defending the arbitration.
Based on information currently available, the Company does not believe that
the outcome of this matter will have a material adverse effect on the
Company's financial condition or results of operations
Various other legal actions, the majority of which arise in the normal course
of business, are pending. None of these other legal actions is expected to
have a material adverse effect on the Company's financial condition. The
Company maintains liability insurance against risks arising out of the normal
course of its business, subject to certain self-insured retention limits.
ABF stores some fuel for its tractors and trucks in approximately 188
underground tanks located in 34 states. Maintenance of such tanks is
regulated at the federal and, in some cases, state levels. ABF believes that
it is in substantial compliance with all such regulations. ABF is not aware
of any leaks from such tanks that could reasonably be expected to have a
material adverse effect on the Company. Environmental regulations have been
adopted by the United State Environmental Protection Agency ("EPA") that will
require ABF to upgrade its underground tank systems by December 1998. ABF
currently estimates that such upgrades, which are currently in process, will
not have a material adverse effect on the Company.
The Company has received notices from the EPA and others that it has been
identified as a potentially responsible party ("PRP") under the Comprehensive
Environmental Response Compensation and Liability Act or other federal or
state environmental statutes at several hazardous waste sites. After
investigating the Company's or its subsidiaries' involvement in waste
<PAGE>
disposal or waste generation at such sites, the Company has either agreed to
de minimis settlements (aggregating approximately $250,000 over the last five
years), or believes its obligations with respect to such sites would involve
immaterial monetary liability, although there can be no assurances in this
regard.
As of December 31, 1995, the Company has accrued approximately $1,700,000 to
provide for environmental-related liabilities. The Company's environmental
accrual is based on management's best estimate of the actual liability. The
Company's estimate is founded on management's experience in dealing with
similar environmental matters and on actual testing performed at some sites.
Management believes that the accrual is adequate to cover environmental
liabilities based on the present environmental regulations.
In August 1995, Bandag Incorporated ("Bandag"), TREADCO's tread rubber
supplier and franchiser of the retreading process used by substantially all
of TREADCO's locations, announced that certain franchise agreements would not
be renewed upon expiration in 1996. Bandag subsequently advised TREADCO that
unless TREADCO uses the Bandag process exclusively, Bandag will not renew any
of TREADCO's franchise agreements when they expire.
In October 1995, TREADCO announced it had reached an agreement for Oliver
Rubber Company ("Oliver") to be a supplier of equipment and related materials
for TREADCO's truck tire precure retreading business. The agreement provides
that Oliver will supply TREADCO with retreading equipment and related
materials for the eight production facilities whose Bandag franchises expire
in 1996 and any other TREADCO facilities which cease being a Bandag
franchised location. Also in October TREADCO sent Bandag notice of
termination of certain of its franchise agreements.
Under the franchise agreements, Bandag has the right to purchase retread
equipment supplied to TREADCO by Bandag at its fair market value at locations
that cease being a Bandag franchise, and Bandag has exercised this option at
the locations where franchises were terminated. TREADCO is installing
equipment provided by Oliver immediately upon the removal of the equipment
supplied by Bandag. The Company plans to have all locations converted to the
Oliver process by the end of the third quarter of 1996. Management of TREADCO
does not believe that the carrying value of the Bandag supplied equipment at
December 31, 1995 exceeds the fair market value of the equipment. Also,
TREADCO has accrued the cost of equipment removed at December 31, 1995,
estimated at $840,000.
NOTE K - EMPLOYEE BENEFIT PLANS
The Company and its subsidiaries have noncontributory defined benefit pension
plans covering substantially all noncontractual employees. Benefits are
based on years of service and employee compensation. Contributions are made
based upon at least the minimum amounts required to be funded under
provisions of the Employee Retirement Income Security Act of 1974, with the
maximum amounts not to exceed the maximum amount deductible under the
Internal Revenue Code. The plans' assets are held in bank-administered trust
funds and are primarily invested in government and equity securities.
Additionally, the Company participates in several multiemployer plans, which
provide defined benefits to the Company's union employees. In the event of
insolvency or reorganization, plan terminations or withdrawal by the Company
from the multiemployer plans, the Company may be liable for a portion of the
plan's unfunded vested benefits, the amount of which, if any, has not been
determined. The merger of Carolina Freight into ABF was not considered a
withdrawal.
<PAGE>
A summary of the components of net periodic pension costs for the defined
benefit plans for the periods indicated and the total contributions charged
to pension expense for the multiemployer plans follows:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
Defined Benefit Plans
Service cost - benefits
earned during the year $ 5,075 $ 4,492 $ 4,225
Interest cost on projected
benefit obligations 8,095 5,249 5,675
Actual return on plan assets
(gain) loss (25,632) 220 (6,656)
Net amortization and deferral 17,906 (5,379) 1,542
-------- -------- --------
Net pension cost of defined
benefit plans 5,444 4,582 4,786
Multiemployer Plans 51,951 40,833 37,846
-------- -------- --------
Total pension expense $ 57,395 $ 45,415 $ 42,632
======== ======== ========
</TABLE>
Assumptions used in determining net periodic pension cost for the defined
benefit plans were:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Weighted average discount rate 7.80% to 8.73% 7.24% 8.49%
Annual compensation increases 3.00% 3.00% 5.00%
Expected long-term rates of
return on assets 8.00% to 9.00% 9.00% 9.25%
</TABLE>
<PAGE>
The following sets forth the funded status and amounts recognized in the
consolidated balance sheets for the Company's defined benefit pension plans
at December 31:
<TABLE>
<CAPTION>
1995 1994
Plans for Which Plans for Which
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
($ thousands)
<S> <C> <C> <C>
Actuarial present value
of benefit obligations:
Vested benefit obligation $(104,914) $ (21,058) $(50,826)
========= ========= ========
Accumulated benefit
obligation $(113,604) $ (22,211) $(57,630)
========= ========= ========
Projected benefit obligation $(138,787) $ (23,091) $(72,469)
Plan assets at fair value 150,182 17,107 67,403
--------- --------- --------
Projected benefit obligation
(in excess of) or less than
plan assets 11,395 (5,984) (5,066)
Unrecognized net loss 13,852 2,911 9,159
Prior service benefit not yet
recognized in net periodic
pension cost 672 37 206
Unrecognized net asset at
January 1, 1987, net of
amortization (63) (1) (68)
Adjustment required to
recognize minimum liability - (2,067) (212)
--------- --------- --------
Net pension asset (liability) $ 25,856 $ (5,104) $ 4,019
========= ========= ========
</TABLE>
The net pension asset recorded as of December 31, 1995 reflects the impact of
a curtailment gain of approximately $15.0 million which was recorded as part
of the purchase allocation in conjunction with the WorldWay acquisition.
At December 31, 1995, the net pension asset is reflected in the accompanying
financial statements as an accrued expense of $11,628,000 and a noncurrent
asset of $32,380,000 included in other assets. At December 31, 1994, the net
pension asset is reflected in the accompanying financial statements as an
accrued expense of $1,312,000 and a noncurrent asset of $5,331,000 included
in other assets.
The Company recognized an additional minimum liability of $1,041,000 as a
charge to equity due to one plan's accumulated benefit obligation exceeding
the fair value of plan assets.
<PAGE>
The following assumptions were used in determining the pension obligation:
<TABLE>
<CAPTION>
December 31
1995 1994
<S> <C> <C>
Weighted average discount rate 7.10% 8.73%
Annual compensation increases 3.00% 3.00%
Expected long-term rates of return on assets 7.50% to 9.00% 9.00%
</TABLE>
The Company has deferred compensation agreements with certain executives for
which liabilities aggregating $1,479,000 and $1,309,000 as of December 31,
1995 and 1994, respectively, have been recorded.
The Company also has a supplemental benefit plan for the purpose of
supplementing benefits under the Company's retirement plans. The plan will
pay sums in addition to amounts payable under the retirement plans to
eligible participants. Participation in the plan is limited to employees of
the Company who are participants in the Company's retirement plans and who
are also either participants in the Company's executive incentive plans or
are designated as participants in the plan by the Company's Board of
Directors. As of December 31, 1995, the Company has a liability of
$2,349,000 for future costs under this plan with $1,534,000 reflected in the
accompanying consolidated financial statements as an accrued expense and
$815,000 included in other liabilities. At December 31, 1994, the Company
had a liability of $2,005,000 for future costs under this plan.
An additional benefit plan provides certain death and retirement benefits for
certain officers and directors of WorldWay and its former subsidiaries. The
Company has a liability of $3,711,000 for future costs under this plan
reflected as other liabilities in the accompanying consolidated financial
statements. Worldway has insurance policies on the participant's lives in
amounts which are generally sufficient to fund benefits under the plan.
The Company has various defined contribution plans which cover substantially
all of its employees. Prior to October, 1995, participation was limited to
those employees not covered by a collective bargaining agreement. In October,
1995, the Company amended its plans to allow participation by collective
bargaining employees. The plans permit participants to defer a portion of
their salary up to a maximum ranging by plan from 8% to 15% as provided in
Section 401(k) of the Internal Revenue Code. The Company matches the
participant contributions up to a specified limit ranging from 1% to 4% in
1995. The matching contributions may be made in cash or Company stock. The
plans also allow for discretionary Company contributions determined annually.
The Company's expense for the defined contribution plans totaled $1,412,000
for 1995, $955,000 for 1994, and $875,000 for 1993.
TREADCO has an employee stock ownership plan (the "TREADCO ESOP") and a
related trust (the "TREADCO Trust") covering substantially all employees of
TREADCO. The cost of the TREADCO ESOP is borne by TREADCO through annual
contributions to the TREADCO Trust in amounts determined by TREADCO's Board
of Directors. Contributions may be paid in cash or in shares of TREADCO
Common Stock. Participants become 100% vested after five years of service
from January 1, 1990. Distribution of balances normally would be made in
TREADCO's Common Stock. Charges to operations for contributions to the
TREADCO ESOP totaled $250,000 for 1995, 1994, and 1993. The stock
contributions to the ESOP and investment plans do not have a material effect
on earnings per share.
<PAGE>
The Company sponsors plans that provide postretirement medical benefits, life
insurance and accident and vision care to full-time officers of the Company.
The plans are noncontributory, with the Company paying up to 80% of covered
charges incurred by participants of the plan.
The following table represents the amounts recognized in the Company's
consolidated balance sheets:
<TABLE>
<CAPTION>
December 31
1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (2,926) $ (1,268)
Fully eligible active plan participants (417) (400)
Other active plan participants (1,419) (1,036)
-------- --------
(4,762) (2,704)
Unrecognized net gain (83) (315)
Unrecognized transition obligation 2,287 2,421
-------- --------
Accrued postretirement benefit cost $ (2,558) $ (598)
======== ========
</TABLE>
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost $ 51 $ 59 $ 53
Interest cost 282 212 223
Amortization of transition
obligation over 20 years 135 135 134
-------- -------- --------
Net periodic postretirement
benefit cost $ 468 $ 406 $ 410
======== ======== ========
</TABLE>
The weighted-average annual assumed rate of increase in the per capita cost
of covered benefits (in health care cost trend) is 9.5 to 11.0% for 1996
(10.5% for 1995) and is assumed to decrease gradually to 4.5% in years 2007
and later.
The health care cost trend rate assumption has a significant effect on the
amounts reported. For example, increasing the assumed health care cost trend
rates by 1% in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1995, by $543,000 and the aggregate of
the service and interest cost components of net periodic postretirement
benefit cost for 1995 by $43,000.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.10% at December 31, 1995 and 8.73% at
December 31, 1994.
<PAGE>
Additionally, the Company's union employees are provided postretirement
health care benefits through defined benefit multiemployer plans. The cost
of such benefits cannot be readily separated between retirees and active
employees. The aggregate contribution to the multiemployer health and
welfare benefit plans totaled approximately $63,500,000, $48,300,000, and
$45,400,000 for the years ended December 31, 1995, 1994, and 1993,
respectively.
In October 1995, the Company adopted a performance award program, subject to
shareholder approval. Upon award, the units will be valued equal to the
closing price per share of the Company's common stock on the date awarded.
The vesting provisions and the return on equity target will be set upon
award.
<PAGE>
NOTE L - OPERATING EXPENSES AND COSTS
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
LESS-THAN-TRUCKLOAD
MOTOR CARRIER OPERATIONS
Salaries and wages $ 779,453 $ 613,187 $ 594,213
Supplies and expenses 120,439 96,210 99,146
Operating taxes and licenses 45,906 35,928 35,152
Insurance 24,122 18,237 16,835
Communications and utilities 26,776 22,639 23,680
Depreciation and amortization 37,822 24,302 25,714
Rents and purchased
transportation 76,823 67,550 53,192
Other 8,219 4,298 3,779
---------- ---------- ---------
1,119,560 882,351 851,711
TRUCKLOAD MOTOR CARRIER
OPERATIONS
Salaries and wages 9,746 - -
Supplies and expenses 4,530 - -
Operating taxes and licenses 2,571 - -
Insurance 980 - -
Communications and utilities 420 - -
Depreciation and amortization 1,249 - -
Rents and purchased
transportation 5,348 - -
Other 108 - -
---------- --------- ---------
24,952 - -
FORWARDING OPERATIONS
Cost of services 117,455 26,817 -
Selling, administrative
and general 18,711 3,542 -
---------- ---------- ----------
136,166 30,359 -
LOGISTICS OPERATIONS
Cost of services 30,588 7,100 2,915
Selling, administrative,
and general 3,711 1,388 821
---------- ---------- ----------
34,299 8,488 3,736
TIRE OPERATIONS
Cost of sales 108,686 100,909 79,718
Selling, administrative
and general 31,642 26,206 21,522
---------- ---------- ---------
140,328 127,115 101,240
SERVICE AND OTHER 5,433 1,993 1,862
---------- ---------- ---------
$1,460,738 $1,050,306 $ 958,549
========== ========== ==========
</TABLE>
<PAGE>
NOTE M - BUSINESS SEGMENT DATA
The Company operates in five defined business segments: 1) LTL operations,
which includes ABF and G.I. Trucking; 2) Forwarding operations, including
the Clipper Group and CaroTrans; 3) Truckload operations, which includes
Cardinal; 4) Logistics, which includes the Company's three logistics
subsidiaries, and 5) Tire operations, which includes the operation of
TREADCO. The segment information for prior periods has been restated to
reflect the Company's current reported business segments.
Intersegment sales are not significant. Operating profit is total revenue
less operating expenses, excluding interest. Identifiable assets by
business segment include both assets directly identified with those
operations and an allocable share of jointly used assets. General corporate
assets consist primarily of cash and other investments.
The following information reflects selected business segment data
(information relative to revenues is reflected in the consolidated
statements of operations):
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
($ thousands)
<S> <C> <C> <C>
OPERATING PROFIT (LOSS)
Less than truckload motor
carrier operations $ (32,915) $ 35,622 $ 41,645
Truckload motor carrier
operations 3,031 - -
Forwarding operations 2,821 695 -
Logistics operations (2,611) (968) (834)
Tire operations 4,424 11,079 10,186
Other (3,393) 719 (359)
--------- -------- --------
TOTAL OPERATING PROFIT (LOSS) (28,644) 47,147 50,638
Interest expense 17,046 6,985 7,248
Minority interest 1,297 3,523 3,140
-------- -------- --------
INCOME (LOSS)BEFORE
INCOME TAXES AND
EXTRAORDINARY ITEMS $ (46,987) $ 36,639 $ 40,250
======== ======== ========
IDENTIFIABLE ASSETS
Less than truckload motor
carrier operations $ 675,412 $ 374,128 $ 331,507
Truckload motor carrier
operations 31,365 - -
Forwarding operations 75,754 73,816 -
Logistics operations 25,062 7,120 1,313
Tire operations 94,658 89,231 80,377
Other 36,014 5,487 8,695
-------- -------- --------
938,265 549,782 421,892
General corporate assets 47,572 19,263 25,841
-------- -------- --------
TOTAL ASSETS $ 985,837 $ 569,045 $ 447,733
======== ======== ========
<PAGE>
DEPRECIATION AND AMORTIZATION
EXPENSE
Less than truckload motor
carrier operations 40,045 $ 26,630 $ 28,043
Truckload motor carrier 1,249 - -
Forwarding operations 2,779 609 -
Logistics operations 2,598 501 195
Tire operations 4,082 3,444 2,614
Other 2,053 931 797
-------- -------- --------
$ 52,806 $ 32,115 $ 31,649
======== ======== ========
CAPITAL EXPENDITURES
Less than truckload motor
carrier operations $ 61,250 $ 58,110 $ 26,530
Truckload motor carrier
operations 2,127 - -
Forwarding operations 426 19 -
Logistics operations 5,532 116 491
Tire operations 5,429 5,684 6,137
Other 44 169 1
-------- -------- --------
$ 74,808 $ 64,098 $ 33,159
======== ======== ========
</TABLE>
NOTE N - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and Cash Equivalents. The carrying amount reported in the balance sheet
for cash and cash equivalents approximates its fair value.
Long- and Short-term Debt. The carrying amounts of the Company's borrowings
under its revolving credit agreements and the receivables purchase agreement
approximate their fair values, since the interest rate under these agreements
is variable. Also, the carrying amount of long-term debt was estimated to
approximate their fair values.
The carrying amounts and fair value of the Company's financial instruments at
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
($ thousands)
<S> <C> <C>
Cash and cash equivalents $ 16,945 $ 16,945
Short-term debt 6,719 6,776
Long-term debt 350,756 348,560
</TABLE>
<PAGE>
NOTE O - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The tables below present unaudited quarterly financial information for 1995
and 1994:
<TABLE>
<CAPTION>
1995
Three Months Ended
March 31 June 30 September 30 December 31
($ thousands, except per share amount)
<S> <C> <C> <C> <C>
Operating revenues $311,207 $ 312,094 $398,551 $ 415,427
Operating expenses
and costs 297,853 304,890 412,691 445,304
-------- -------- --------- --------
Operating income (loss) 13,354 7,204 (14,140) (29,877)
Other expense - net 3,596 2,919 6,632 10,381
Income taxes (credit) 4,616 2,602 (7,643) ( 13,770)
-------- -------- -------- --------
Net income (loss) $ 5,142 $ 1,683 $(13,129) $ (26,488)
======== ======== ========= ========
Net income (loss)
per share $ .21 $ .03 $ (.73) $ (1.41)
======== ======== ========= ========
Average shares out-
standing - Note H 19,566,404 19,515,132 19,549,160 19,529,408
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1994
Three Months Ended
March 31 June 30 September 30 December 31
($ thousands, except per share amount)
<S> <C> <C> <C> <C>
Operating revenues $264,981 $ 210,760 $294,251 $ 328,429
Operating expenses
and costs 252,363 212,331 274,753 310,859
-------- -------- --------- --------
Operating income (loss) 12,618 (1,571) 19,498 17,570
Other expense - net 2,382 2,483 2,767 3,844
Income taxes (credit) 4,661 (646) 7,530 6,387
-------- -------- -------- --------
Net income (loss) $ 5,575 $ (3,408) $ 9,201 $ 7,339
======== ======== ======== ========
Net income (loss)
per share $ .23 $ (.23) $ .42 $ .32
======== ======== ======== ========
Average shares out-
standing - Note H 19,339,389 19,200,077 19,306,326 19,491,560
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
ARKANSAS BEST CORPORATION
Column A Column B Column C Column D Column E Column F
Additions
(1) (2)
Balance at Charged to Charged to
beginning costs and other accounts Deductions - Balance at
Description of period expenses describe describe end of period
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995:
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 2,825 $ 4,185 $ 1,414(A) $ 9,838(B) $ 19,403
20,817(C)
============ ============ =========== ============= ===========
Year Ended December 31, 1994:
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 2,200 $ 2,935 $ 962(A) $ 3,272(B) $ 2,825
============ ============ =========== ============ ============
Year Ended December 31, 1993:
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 1,850 $ 1,902 $ 909(A) $ 2,461(B) $ 2,200
============ ============ =========== ============ ============
<FN>
<F1>
Note A - Recoveries of amounts previously written off.
<F2>
Note B - Uncollectible accounts written off.
<F3>
Note C - The allowance for doubtful accounts of WorldWay as of date of
acquisition.
</FN>
</TABLE>
<PAGE>
FORM 10-K -- ITEM 14(c)
EXHIBIT INDEX
ARKANSAS BEST CORPORATION
The following exhibits are filed with this report or are incorporated by
reference to previously filed material.
Exhibit
No.
3.1 Restated Certificate of Incorporation of the Company (previously
filed as Exhibit 3.1 to the Company's Registration Statement on
Form S-1 under the Securities Act of 1933 filed with the Commission
on March 17, 1992, Commission File No. 33-46483, and incorporated
herein by reference).
3.2 Amended and Restated Bylaws of the Company (previously filed as
Exhibit 3.2 to the Company's Registration Statement on Form S-1
under the Securities Act of 1933 filed with the Commission on
March 17, 1992, Commission File No. 33-46483, and incorporated
herein by reference).
4.1 Form of Indenture, between the Company and Harris Trust and Savings
Bank, with respect to $2.875 Series A Cumulative Convertible
Exchangeable Preferred Stock (previously filed as Exhibit 4.4 to
Amendment No. 2 to the Company's Registration Statement on Form S-1
under the Securities Act of 1933 filed with the Commission on
January 26, 1993, Commission File No. 33-56184, and incorporated
herein by reference).
4.2 Indenture between Carolina Freight Corporation and First Union
National Bank, Trustee with respect to 6 1/4% Convertible
Subordinated Debentures Due 2011 (previously filed as Exhibit 4-A
to the Carolina Freight Corporation's Registration Statement on
Form S-3 filed with the Commission on April 11, 1986, Commission
File No. 33-4742, and incorporated herein by reference).
10.1 Stock Option Plan (previously filed as Exhibit 10.3 to the
Company's Registration Statement on Form S-1 under the Securities
Act of 1933 filed with the Commission on March 17, 1992, Commission
File No. 33-46483, and incorporated herein by reference).
10.2 The Company's Supplemental Benefit Plan (previously filed as
Exhibit 10.6 to the Company's Registration Statement on Form S-1
under the Securities Act of 1933 filed with the Commission on
March 17, 1992, Commission File No. 33-46483, and incorporated
herein by reference).
10.3 $346,971,321 Amended and Restated Credit Agreement dated as of
February 21, 1996 among the Company as the Borrower, Societe
Generale, Southwest Agency as Managing Agent and Administrative
Agent, NationsBank of Texas, N.A. as Documentation Agent and the
Banks named herein as the Banks (previously filed as Exhibit 99.1
to the Company's Current Report on Form 8-K, filed with the
Commission on February 28, 1996, Commission File No. 0-19969, and
incorporated herein by reference).
<PAGE>
10.4 $30,000,000 Credit Agreement dated as of February 21, 1996 among
Arkansas Best Corporation as the Borrower, Societe Generale,
Southwest Agency as Agent, and the Banks named herein as the Banks
(previously filed as Exhibit 99.2 to the Company's Current Report
on Form 8-K, filed with the Commission on February 28, 1996,
Commission File No. 0-19969, and incorporated herein by reference).
10.5 National Master Freight Agreement with the International
Brotherhood of Teamsters dated as of April 1, 1994.
10.6 Arkansas Best Corporation Performance Award Unit Program effective
January 1, 1996
11 Statement Re: Computation of Earnings per Share
21 List of Subsidiary Corporations
23 Consent of Independent Auditors
27 Financial Data Schedule
<PAGE>
NATIONAL
MASTER
FREIGHT AGREEMENT
Covering
OVER-THE-ROAD
and
LOCAL CARTAGE
EMPLOYEES OF PRIVATE,
COMMON, CONTRACT AND
LOCAL CARTAGE CARRIERS
For the Period of
APRIL 1, 1994
through
MARCH 31, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. PARTIES TO THE AGREEMENT 2
Section 1. Employers Covered 2
Section 2. Unions Covered 2
Section 3. Transfer of Company Title or Interest 2
ARTICLE 2. SCOPE OF AGREEMENT 4
Section 1. Master Agreement 4
Section 2. Supplements to Master Agreement 4
Section 3. Non-covered Units 5
Card Check 5
Additions to Operations: Over-The-Road and Local
Cartage Supplemental Agreements 6
Section 4. Single Bargaining Unit 6
Section 5. Riders 7
ARTICLE 3. RECOGNITION, UNION SHOP AND CHECKOFF 7
Section 1. Recognition 7
Union Shop 8
Hiring 9
State Law 9
Agency Shop 9
Savings Clause 10
Employer Recommendation 10
Future Law 11
No Violation of Law 11
Section 2. Probationary and Casual Employees 11
(a) Probationary Employees 11
(b) Casual Employees 12
Section 3. Checkoff 15
Section 4. Work Assignments 17
Section 5 17
Section 6. Electronic Funds Transfer 17
ARTICLE 4. STEWARDS 17
ARTICLE 5 19
Section 1. Seniority Rights 19
Section 2. Mergers of Companies-General 19
Active Seniority List 20
i
<PAGE>
Layoff Seniority List 20
Temporary Authority 21
Purchase of Rights 21
Exclusive Cartage Operations 22
Committee Authority 23
Section 3. Intent of Parties 23
Section 4. Equipment Purchases 23
Highest Rates Prevail 23
Cutting Seniority Board 24
Posting Seniority List 24
Section 5. Work Opportunity 24
Section 6. Dock Operations 25
ARTICLE 6 26
Section 1. Maintenance of Standards 26
Local Standards 27
Individual Employer Standards 27
General 28
Section 2. Extra Contract Agreements 28
Section 3. Workweek Reduction 29
Section 4. New Equipment 29
ARTICLE 7. LOCAL AND AREA GRIEVANCE MACHINERY 30
Section 1 30
Section 2. Grievant's Bill of Rights 30
Section 3 32
Section 4 32
ARTICLE 8. NATIONAL GRIEVANCE PROCEDURE 32
Section 1 32
Section 2 34
Section 3 Work Stoppages 36
Section 4 37
Section 5 41
Section 6. Change of Operations 42
Change of Operations Committee 42
Change of Operations Committee Procedure 43
Moving Expenses 44
Change of Operations Seniority 45
Closing, Partial Closing of Terminals-Transfer of Work.. 45
Closing of Terminals-Elimination of Work 47
ii
<PAGE>
Layoff 48
Opening of Terminals 48
Definition of Terms 49
Qualifications 49
Intent of Parties 49
Section 7 50
ARTICLE 9. PROTECTION OF RIGHTS 50
Section 1. Picket Lines: Sympathetic Action 50
Section 2. Struck Goods 50
Section 3 51
Section 4 51
ARTICLE 10. LOSS OR DAMAGE 52
Section 1 52
Section 2 52
ARTICLE 11. BONDS AND INSURANCE 53
ARTICLE 12. UNIFORMS 53
ARTICLE 13. PASSENGERS 54
ARTICLE 14. COMPENSATION CLAIMS 54
Section 1. Compensation Claims 54
Section 2. Modified Work 55
Section 3 60
ARTICLE 15. MILITARY CLAUSE 60
ARTICLE 16. EQUIPMENT AND SAFETY 61
Preamble 61
Section 1. Safe Equipment 61
Section 2. Dangerous Conditions 62
Section 3. Accident Reports 62
Section 4. Equipment Reports 62
Section 5. Qualifications on Equipment 63
Section 6. Equipment Requirements 63
Section 7. National Safety and Health Committee 69
Section 8. Hazardous Materials Program 69
Section 9. Union Liability 70
Section 10. Government Required Safety & Health Reports 70
iii
<PAGE>
ARTICLE 17. PAY PERIOD 70
ARTICLE 18. OTHER SERVICES 71
ARTICLE 19. POSTING 71
Section 1. Posting of Agreement 71
Section 2. Union Bulletin Boards 71
ARTICLE 20. UNION AND EMPLOYER COOPERATION 71
Section 1. Fair Days Work for Fair Days Pay 71
Section 2. Joint Industry Development Committee 72
Section 3 73
ARTICLE 21. UNION ACTIVITIES 74
ARTICLE 22. OWNER-OPERATORS 74
ARTICLE 23. SEPARATION OF EMPLOYMENT 84
ARTICLE 24. INSPECTION PRIVILEGES AND EMPLOYER IDENTIFICATION 85
ARTICLE 25. SEPARABILITY AND SAVINGS CLAUSE 85
ARTICLE 26. TIME SHEETS, TIME CLOCKS, AND VIDEO CAMERAS 86
Section 1. Time Sheets and Time Clocks 86
Section 2. Use of Video Cameras for Discipline and Discharge 86
ARTICLE 27. EMERGENCY REOPENING 87
ARTICLE 28. SYMPATHETIC ACTION 87
ARTICLE 29. SUBSTITUTE SERVICE 88
Section 1. Piggyback Operations 88
Section 2. Maintenance of Records 89
Section 3. Intermodal Service 90
Section 4. National Intermodal Committee 93
ARTICLE 30. JURISDICTIONAL DISPUTES 94
ARTICLE 31. MULTI-EMPLOYER, MULTI-UNION UNIT 94
iv
<PAGE>
ARTICLE 32. SUBCONTRACTING 95
Section 1. Work Preservation 95
Section 2. Diversion of Work - Parent or Subsidiary Companies 95
Section 3. Subcontracting 95
Section 4. Expansion of Operations 96
Section 5 98
Section 6 98
ARTICLE 33. COST-OF-LIVING (COLA) 98
ARTICLE 34. GARNISHMENTS 100
ARTICLE 35 100
Section 1. Employee's Bail 100
Section 2. Suspension or Revocation of License 100
Section 3. Alcohol and Drug Use 101
PREAMBLE 101
NMFA UNIFORM TESTING PROCEDURE 102
Section 4 115
ARTICLE 36. NEW ENTRY (NEW HIRE) RATES 116
Section 1. New Entry Rates 116
Section 2. New Entry Rates (Effective October 1, 1994) 116
ARTICLE 37. NON-DISCRIMINATION 117
ARTICLE 38 117
Section 1. Sick Leave 117
Section 2. Jury Duty 118
Section 3. Family and Medical Leave Act 118
ARTICLE 39. DURATION 120
APPENDIX A - WAGE REDUCTION-JOB SECURITY PLAN GUIDELINES 124
v
<PAGE>
NATIONAL MASTER FREIGHT AGREEMENT
COVERING OVER-THE-ROAD AND LOCAL
CARTAGE EMPLOYEES OF PRIVATE,
COMMON, CONTRACT AND LOCAL
CARTAGE CARRIERS :
for the period of
April 1, 1994 through March 31, 1998
covering:
operations in, between and over all of the states, territories and
possessions of the United States, and operations into and out of all
contiguous territory.
The _____________________________________ (Company or Association)
hereinafter referred to as the "EMPLOYER" and the TEAMSTERS NATIONAL FREIGHT
INDUSTRY NEGOTIATING COMMITTEE representing Local Unions affiliated with the
INTERNATIONAL BROTHERHOOD OF TEAMSTERS, and Local Union No. which Local Union
is an affiliate of the INTERNATIONAL BROTHERHOOD OF TEAMSTERS, agree to be
bound by the terms and conditions of this Agreement.
1
<PAGE>
ARTICLE 1.
PARTIES TO THE AGREEMENT
Section 1. Employers Covered
The Employer consists of Associations, members of Associations who have given
authorization to the Associations to represent them in the negotiation and/or
execution of this Agreement and Supplemental Agreements, and individual
Employers who become signator to this Agreement and Supplemental Agreements
as hereinafter set forth. The signator Associations enter into this
Agreement and Supplemental Agreements as hereinafter set forth. The signator
Associations represent that they are duly authorized to enter into this
Agreement and Supplemental Agreements on behalf of their members under and as
limited by their authorizations as submitted prior to negotiations.
Section 2. Unions Covered
The Union consists of any Local Union which may become a party to this
Agreement and any Supplemental Agreement as hereinafter set forth. Such
Local Unions are hereinafter designated as "Local Union." In addition to such
Local Unions, the Teamsters National Freight Industry Negotiating Committee
representing Local Unions affiliated with the International Brotherhood of
Teamsters, hereinafter referred to as the "National Union Committee," is also
a party to this Agreement and the agreements supplemental hereto.
Section 3. Transfer of Company Title or Interest
The Employer's obligations under this Agreement including Supplements shall
be binding upon its successors, administrators, executors and assigns. The
Employer agrees that the obligations of this Agreement shall be included in
the agreement of sale, transfer or assignment of the business. In the event
an entire active or inactive operation, or a portion thereof, or rights only,
are sold, leased, transferred or taken over by sale, transfer, lease,
assignment, receivership or bankruptcy proceedings, such operation or use of
rights shall continue to be subject to the terms and conditions of this
Agreement for the life thereof. Transactions covered by this
2
<PAGE>
Article 1, Section 3
provision include stock sales or exchanges, mergers, consolidations, spin-
offs or any other method by which a business is transferred.
It is understood by this Section that the signator Employer shall not sell,
lease or transfer such run or runs or rights to a third party to evade this
Agreement. In the event the Employer fails to require the purchaser,
transferee, or lessee to assume the obligations of this Agreement, as set
forth above, the Employer (including partners thereof) shall be liable to the
Local Union (s) and to the employees covered for all damages sustained as a
result of such failure to require the assumption of the terms of this
Agreement until its expiration date, but shall not be liable after the
purchaser, the transferee or lessee has agreed to assume the obligations of
this Agreement. The obligations set forth above shall not apply in the event
of the sale, lease or transfer of a portion of the rights comprising less
than all of the signator Employer's rights to a nonsignator company unless
the purpose is to evade this Agreement. Corporate reorganizations by a
signatory Employer, occurring during the term of this Agreement, shall not
relieve the signatory Employer or the re-organized Employer of the
obligations of this Agreement during its term.
When a signator to this Agreement purchases rights from another signator, the
provisions of Article 5 shall apply. The applicable layoff provisions of
this Agreement shall apply.
The Employer shall give notice of the existence of this Agreement to any
purchaser, transferee, lessee, assignee, or other entity involved in the
sale, merger, consolidation, acquisition, transfer, spin-off, lease or other
transaction by which the operation covered by this Agreement or any part
thereof, including rights only, may be transferred. Such notice shall be in
writing, with a copy to the Local Union, at the time the seller, transferor
or lessor makes the purchase and sale negotiation known to the public or
executes a contract or transaction as herein described, whichever first
occurs. The Local Union shall also be advised of the exact nature of the
transaction, not including financial details.
The term rights shall include routes and runs.
3
<PAGE>
Article 2, Section 1
ARTICLE 2.
SCOPE OF AGREEMENT
Section 1. Master Agreement
The execution of this National Master Freight Agreement on the part of the
Employer shall apply to all operations of the Employer which are covered by
this Agreement and shall have application to the work performed within the
classifications defined and set forth in the Agreements supplemental hereto.
Section 2. Supplements to Master Agreement
(a) There are several segments of the trucking industry covered by this
Agreement and for this reason Supplemental Agreements are provided for each
of the specific types of work performed by the various classifications of
employees controlled by this Master Agreement.
All such Supplemental Agreements are subject to and controlled by the terms
of this Master Agreement and are sometimes referred to herein as
"Supplemental Agreements."
All such Supplemental Agreements are to be clearly limited to the specific
classifications of work as enumerated or described in each individual
Supplement.
(b) The parties shall establish four (4) Conference Area Iron and Steel
and/or Truckload Supplements to the National Master Freight Agreement.
The Employer and the Local Union, parties to this Agreement, may enter into
an agreement whereby road drivers working under an Over-The-Road Supplemental
Agreement have the opportunity to perform work covered by and subject to the
above Conference Area Supplements, under conditions agreed upon. Such
Supplement shall be submitted to the appropriate Conference Joint Area
Committee.
(c) The jurisdiction covered by the National Master Freight Agreement
and its various Supplements thereto includes, without limitation, stuffing,
stripping, loading and discharging of cargo or containers. This does not
include loading or discharging of cargo
4
<PAGE>
Article 2, Section 2
or containers to or from vessels except in those instances where such work is
presently being performed. Existing practices, rules and understandings,
between the Employer and the Union, with respect to this work shall continue
except to the extent modified by mutual agreement.
Section 3. Non-covered Units
This Agreement shall not be applicable to those operations of the Employer
where the employees are covered by a collective bargaining agreement with a
Union not signatory to this Agreement, or to those employees who have not
designated a signatory Union as their collective bargaining agent.
Card Check
(a) When a majority of the eligible employees performing work covered
by an Agreement designated by the National Negotiating Committee to be
Supplemental to the National Master Freight Agreement execute a card
authorizing a signatory Local Union to represent them as their collective
bargaining agent at the terminal location, then, such employees shall
automatically be covered by this Agreement and the applicable Supplemental
Agreements. If an Employer refuses to recognize the Union as above set forth
and the matter is submitted to the National Labor Relations Board or any
mutually agreed upon process for determination, and such determination
results in certification or recognition of the Union, all benefits of this
Agreement and applicable Supplements shall be retroactive to the date of
demand for recognition. In such cases the parties may by mutual agreement
negotiate wages and conditions, subject to Conference Joint Area Committee
approval.
The parties agree that a constructive bargaining relationship is essential to
efficient operations and sound employee relations. The parties recognize
that organizational campaigns occur in bargaining relationships and that both
parties are free to accurately state their respective positions concerning
the organization of certain groups of employees. However, the parties also
recognize that campaigns must be waged on the facts only. Accordingly, the
parties will not engage in any personal attacks against Union or Company
representatives or attacks against the Union or Company as an institution
during the course of any such campaign.
5
<PAGE>
Article 2, Section 3
Additions to Operations: Over-The-Road and Local Cartage Supplemental
Agreements
(b) Notwithstanding the foregoing paragraph, the provisions of the
National Master Freight Agreement and the applicable Over-The-Road and Local
Cartage Supplemental Agreements shall be applied without evidence of union
representation of the employees involved, to all subsequent additions to, and
extensions of, current operations which adjoin and are controlled and
utilized as a part of such current operation, and newly established terminals
and consolidations of terminals which are controlled and utilized as a part
of such current operation.
If an Employer refuses to recognize the Union as above set forth and the
matter is submitted to the National Labor Relations Board or any mutually
agreed-upon process for determination, and such determination results in
certification or recognition of the Union, all benefits of this Agreement and
applicable Supplements shall be retroactive to the date of demand for
recognition.
The provisions of Article 32 - Subcontracting, shall apply to this paragraph.
Extensions or additions to current operations, etc., which adjoin and are
controlled and utilized as part of such current operation shall be subject to
the jurisdiction of the appropriate Change Of Operations Committee for the
purpose of determining whether the provisions of Article 8, Section 6 -
Change of Operations, apply and, if so, to what extent.
Section 4. Single Bargaining Unit
The employees, Unions, Employers and Associations covered under this Master
Agreement and the various Supplements thereto shall constitute one (1)
bargaining unit and contract. It is understood that the printing of this
Master Agreement and the aforesaid Supplements in separate Agreements is for
convenience only and is not intended to create separate bargaining units.
This National Master Freight Agreement applies to city and road operations,
and other classifications of employment authorized by the signatory Employers
to be represented by Employer Associations or Employers, where applicable,
participating in national collective bargaining. The common problems and
interest, with respect to basic terms and conditions of employment, have
resulted in the cre-
6
<PAGE>
Article 2, Section 4
ation of the National Master Freight Agreement and the respective
Supplemental Agreements. Accordingly, the Associations and Employers,
parties to this Agreement, acknowledge that they constitute a single national
multi-employer collective bargaining unit, composed of the Associations named
hereinafter and those Employers authorizing such associations to represent
then for the purpose of collective bargaining, and solely to the extent of
such authorization, and such other individual employers which have, or may,
become parties to this Agreement.
Section 5. Riders
Upon the effective date of this Agreement, all existing or previously adopted
Riders which provide less than the wages, hours, and working conditions
specifically established by this Agreement and Supplemental Agreements shall
become null and void. Thereafter, the specific provisions of this Agreement
and applicable Supplemental Agreements shall apply without being subject to
variance by Riders. This Section shall not be applied or interpreted to
eliminate operational, dispatch, or working rules not specifically set forth
in this Agreement and Supplemental Agreements.
ARTICLE 3.
RECOGNITION, UNION SHOP AND
CHECKOFF
Section 1. Recognition
(a) The Employer recognizes and acknowledges that the Teamsters
National Freight Industry Negotiating Committee and Local Unions affiliated
with the International Brotherhood of Teamsters are the exclusive
representatives of all employees in the classifications of work covered by
this National Master Freight Agreement, and those Supplements thereto
approved by the Joint National Negotiating Committees for the purpose of
collective bargaining as provided by the National Labor Relations Act.
Subject to Article 2, Section 3 - Non-covered Units, this provision shall
apply to all present and subsequently acquired over-the-road and local
cartage operations and terminals of the Employer.
7
<PAGE>
Article 3, Section 1
This provision shall not apply to wholly-owned and wholly independently
operated subsidiaries which are not under contract with local IBT unions.
"Wholly independently operated" means, among other things, that there shall
be no interchange of freight, equipment or personnel, or common use, in whole
or in part, of equipment, terminals, property, personnel or rights.
Union Shop
(b) All present employees who are members of the Local Union on the
effective date of this subsection or on the date of execution of this
Agreement, whichever is the later, shall remain members of the Local Union in
good standing as a condition of employment. "Member in good standing" means
that an employee has paid his/her union dues and fees. All present employees
who are not members of the Local Union and all employees who are hired
hereafter shall become and remain members in good standing of the Local Union
as a condition of employment on and after the thirty-first (31st) calendar
day following the beginning of their employment or on and after the thirty-
first (31st) calendar day following the effective date of this subsection or
the date of this Agreement, whichever is the later. An employee who has
failed to acquire, or thereafter maintain, membership in the Union as herein
provided, shall be terminated seventy-two (72) hours after his/her Employer
has received written notice from an authorized representative of the Local
Union, certifying that membership has been, and is continuing to be, offered
to such employee on the same basis as all other members and, further, that
the employee has had notice and opportunity to make all dues or initiation
fee payments. This provision shall be made and become effective as of such
time as it may be made and become effective under the provisions of the
National Labor Relations Act, but not retroactively.
For purposes of this Article, "present employees" and "employees who are
hired hereafter" shall include "casual employees" as defined in Article 3,
Section 2 of this Agreement. Such "casual employees" will be required to
join the Union prior to their employment on or after the thirty-first (31st)
calendar day following their first (1st) day of employment for any Employer
signatory to this Agreement.
8
<PAGE>
Article 3, Section 1
Hiring
(c) When the Employer needs additional employees, it shall give the
Local Union equal opportunity with all other sources to provide suitable
applicants, but the Employer shall not be required to hire those referred by
the Local Union. Violations of this subsection shall be subject to the
Grievance Committee.
Any employment examination for applicants must test skills or physical
abilities necessary for performance of the work in the job classification in
which the applicant will be employed. Violations of this subsection shall be
subject to the Grievance Committee.
State Law
(d) No provision of this Article shall apply in any state to the extent
that it may be prohibited by state law. If under applicable state law
additional requirements must be met before any such provisions may become
effective, such additional requirements shall be first met.
Agency Shop
(e) If any agency shop clause is permissible in any state where the
provisions of this Article relating to the Union Shop cannot apply, the
following Agency Clause shall prevail:
(1) Membership in the Local Union is not compulsory. Employees have
the right to join, not join, maintain, or drop their membership in the Local
Union, as they see fit. Neither party shall exert any pressure on, or
discriminate against, an employee as regards such matters.
(2) Membership in the Local Union is separate, apart and distinct from
the assumption by one of his/her equal obligation to the extent that he/she
receives equal benefits. The Local Union is required under this Agreement to
represent all of the employees in the bargaining unit fairly and equally
without regard to whether or not an employee is a member of the Local Union.
The terms of this Agreement have been made for all employees in the
bargaining unit and not only for members in the Local Union, and this
Agreement has been executed by the Employer after it has satisfied itself
that the Local Union is the choice of a majority of the employees in the
9
<PAGE>
Article 3, Section 1
bargaining unit. Accordingly, it is fair that each employee in the
bargaining unit pay his/her own way and assume his/her fair share of the
obligations along with the grant of equal benefits contained in this
Agreement.
(3) In accordance with the policy set forth under subparagraphs (1) and
(2) of this Section, all employees shall, as a condition of continued
employment, pay to the Local Union, the employee's exclusive collective
bargaining representative, an amount of money equal to that paid by other
employees in the bargaining unit who are members of the Local Union, which
shall be limited to an amount of money equal to the Local Union's regular and
usual initiation fees, and its regular and usual dues. For present
employees, such payments shall commence thirty-one (31) days following the
effective date or on the date of execution of this Agreement, whichever is
the later, and for new employees, the payment shall start thirty-one (31)
days following the date of employment.
Savings Clause
(f) If any provision of this Article is invalid under the law of any
state wherein this Agreement is executed, such provision shall be modified to
comply with the requirements of state law or shall be renegotiated for the
purpose of adequate replacement. If such negotiations shall not result in
mutually satisfactory agreement, either party shall be permitted all legal or
economic recourse.
Employer Recommendation
(g) In those instances where subsection (b) hereof may not be validly
applied, the Employer agrees to recommend to all employees that they become
members of the Local Union and maintain such membership during the life of
this Agreement, to refer new employees to the Local Union representative, and
to recommend to delinquent members that they pay their dues since they are
receiving the benefits of this Agreement.
Business agents shall be permitted to attend new employee orientations in
right-to-work states. The sole purpose of the business agent's attendance is
to encourage employees to join the Union.
10
<PAGE>
Article 3, Section 1
Future Law
(h) To the extent such amendment may become permissible under
applicable federal and state law during the life of this Agreement as a
result of legislative, administrative or judicial determination, all of the
provisions of this Article shall be automatically amended to embody the
greater Union security provisions contained in the 1947-1949 Central States
Area Over-The-Road Motor Freight Agreement, or to apply or become effective
in situations not now permitted by law.
No Violation of Law
(i) Nothing contained in this Section shall be construed so as to
require the Employer to violate any applicable law.
Section 2. Probationary and Casual Employees
(a) Probationary Employees
(1) A probationary employee shall work under the provisions of this
Agreement, but shall be employed on a trial basis as provided for in each
Supplement.
(2) During the probationary period, the employee may be terminated
without further recourse; provided, however, that the Employer may not
terminate the employee for the purpose of evading this Agreement or
discriminating against Union members. A probationary employee who is
terminated by the Employer during the probationary period and is then worked
again at any time during the next full twelve (12) months at any of that
Employer's locations within the jurisdiction of the Local Union covering the
terminal where he/she first worked, except in those jurisdictions where the
Local Union maintains a hiring hall or referral system, shall be added to the
regular seniority list with a seniority date as of the date that person is
subsequently worked. The rules contained in subsection (a) (2) are subject
to provisions in the Supplements to the contrary.
(3) Probationary employees shall be paid at the new hire rate of pay
during the probationary period; however, if the employee is terminated by the
Employer during such period, he/she shall be com-
11
<PAGE>
Article 3, Section 2
pensated at the full contract rate of pay for all hours worked retroactive to
the first (1st) day worked in such period.
(4) The Union and the Employer may agree to extend the probationary
period for no more than thirty (30) days, but the probationary employee must
agree to such extension in writing-
(b) Casual Employees
(1) A casual employee is an individual who is not on the regular
seniority list and who is not serving a probationary period. A casual may be
either a replacement casual or a supplemental casual as hereinafter provided.
Casuals shall not have seniority status. Casuals shall not be discriminated
against for future employment.
(2) a. Replacement casuals may be utilized by an Employer to replace
regular employees when such regular employees are off due to illness,
vacation or other absence, except when an absence of a regular employee
continues beyond three (3) consecutive months, a replacement casual shall not
thereafter be used to fill such absence, unless the Employer and the Local
Union mutually agree to the continued use of a replacement casual.
b. Where the Company is using casuals as vacation replacements for regular
employees, and the Area Supplemental Agreement does not provide a method to
add regular employees based on the use of casuals to replace vacation
absence, the vacation schedules shall be broken into yearly quarters
beginning January lst, and subsequent vacation quarters shall begin on April
1st, July 1st, and October lst thereafter.
Starting with the quarter beginning April, 1991, and continuing each quarter
thereafter, the Employer shall add one (1) additional employee to the regular
seniority list for each sixty-five (65) vacation replacement days worked by a
casual during each vacation quarter.
The application of this formula shall not result in pyramiding.
New employees shall be placed on the respective seniority lists on the first
(lst) day of the following quarter unless there are employees in layoff
status, in which case such new employees shall be placed on the respective
seniority list at the time the laid-off employees are recalled from layoff
status.
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Article 3, Section 2
Employees shall first be added to the regular seniority list from the
preferential list, if applicable. Thereafter, employees to be added to the
regular seniority list shall be determined by the respective Supplement and
shall be subject to the probationary provisions of that Supplement.
In the application of this formula, employees specifically designated under
an appropriate reporting procedure to replace absence other than vacations
shall not be included as vacation replacements. It is the intent of the
parties, in the application of this formula, to add regular employees to the
seniority list to replace employees on vacation where there is regular work
opportunity for such additional employees.
The implementation of this provision may raise issues particular to a
respective Supplemental Agreement. Failure to resolve the issues, such
Supplemental Negotiating Committee may agree to waive this provision, or
submit the disputed issues to the National Grievance Committee.
(3) Supplemental casuals may be used to supplement the regular work
force as provided for in each respective Supplement. Once the number of new
employees to be added as required in the Supplement is determined, the
Employer must initiate the processing of the new probationary employees
immediately, and complete such processing as provided for in the Supplements.
(4) Unless waived in writing by any Joint Supplemental Negotiating
Committee, all Supplements shall provide for a preferential casual hiring
list and shall provide the qualifications for placement on such list.
Casuals on the preferential hiring list shall be offered available extra work
and future regular employment in seniority order by classification as among
themselves. A preferential casual employee's seniority date shall be the
date he/she becomes a regular employee; and such employee shall not be
subject to any probationary period.
Casual employees on the preferential hiring list shall have full access to
the grievance procedure.
The provisions of Article 3, Section 3, shall apply to casual employees on
the preferential hiring list who are paid on the regular payroll.
Local Unions employing an exclusive hiring hall under the terms of the
Supplemental Agreement may petition the respective Joint Area
13
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Article 3, Section 2
Supplemental Negotiating Committee for approval to waive this subparagraph
(4).
(5) Casual road employees, where permitted by Supplemental Agreement,
may only be used within the jurisdiction of their respective Conference Area
and shall gain preferential status and/or regular seniority status as
provided in the respective Supplement.
(6) Any casual employee who declines regular employment shall be
terminated without recourse and will not be used by the Employer for any
further work.
(7) The Employer agrees to give first opportunity for work as a casual
employee to qualified laid-off employees from other Employers signatory to
the NMFA. This provision shall not supersede an established order of call in
the Supplemental Agreement. The Local Union will furnish to the Employer a
list of the names, addresses, phone numbers and the jobs such employees are
qualified to perform. The employee must be able to meet the hiring standards
of the Employer. The employee must be able to report in compliance with the
Employer's established call time procedure, and be able to furnish proof of
such qualification for the work available.
Any employment examination for applicants must test skills or physical
abilities necessary for performance of the work in the job classification in
which the applicant will be employed. Violations of this subsection shall be
subject to the Grievance Committee.
(8) Fringe benefits will be paid on casuals in accordance with the
terms of the Supplemental Agreement. Minimum daily guarantees will be
governed by the respective Supplemental Agreement.
(9) A monthly list of all casual and/or probationary employees used
during that month shall be submitted to the Local Unions by the tenth (10th)
day of the following month. Such list shall show:
a. the employee's name, address, and social security number;
b. the date worked;
c. the classification of work per-formed each date, and the hours
worked; and,
d. the name, if applicable, of the employee replaced.
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Article 3, Section 2
This list shall be compiled on a daily basis and shall be available for
inspection by a Union representative and/or job shop steward.
(c) Employment Agency Fees
If employees are hired through an employment agency, the Employer is to pay
the employment agency fee. However, if the Local Union was given equal
opportunity to furnish employees under Article 3, Section (1) (c), and if the
employee is retained through the probationary period, the fee need not be
paid until the thirty-first (31st) day of employment.
Section 3. Checkoff
The Employer agrees to deduct from the pay of all employees covered by this
Agreement the dues, initiation fees and/or uniform assessments of the Local
Union having jurisdiction over such employees and agrees to remit to said
Local Union all such deductions. Where laws require written authorization by
the employee, the same is to be furnished in the form required. The Local
Union shall certify to the Employer in writing each month a list of its
members working for the Employer who have furnished to the Employer the
required authorization, together with an itemized statement of dues,
initiation fees (full or installment), or uniform assessments owed and to be
deducted for such month from the pay of such member. The Employer shall
deduct such amount within two (2) weeks following receipt of the statement of
certification of the member and remit to the Local Union in one (1) lump sum
within three (3) weeks following receipt of the statement of certification.
The Employer shall add to the list submitted by the Local Union the names and
Social Security numbers of all regular new employees hired since the last
list was submitted and delete the names of employees who are no longer
employed. Checkoff shall be on a monthly or quarterly basis at the option of
the Union. The Local Union and Employer may agree to an alternative option
to deduct Union dues bimonthly.
When an Employer actually makes a deduction for dues, initiation fees and
assessments, in accordance with the statement of certification received from
an appropriate Local Union, the Employer shall remit same no later than three
(3) weeks following receipt of the statement of certification and in the
event the Employer fails to do so, the Employer shall be assessed ten percent
(10%) liquidated
15
<PAGE>
Article 3, Section 3
damages. All monies required to be checked off shall become the property of
the entities for which it was intended at the time that such checkoff is
required to be made. All monies required to be checked off and paid over to
other entities under this Agreement shall become the property of those
entities for which it was intended at the time that such payment or checkoff
is required to be made.
Where an employee who is on checkoff is not on the payroll during the week in
which the deduction is to be made, or has no earnings or insufficient
earnings during that week, or is on leave of absence, the employee must make
arrangements with the Local Union and/or the Employer to pay such dues in
advance.
The Employer agrees to deduct from the paycheck of all employees covered by
this Agreement voluntary contributions to DRIVE. DRIVE shall notify the
Employer of the amounts designated by each contributing employee that are to
be deducted from his/her paycheck on a weekly basis for all weeks worked.
The phrase "weeks worked" excludes any week other than a week in which the
employee earned a wage. The Employer shall transmit to DRIVE National
Headquarters on a monthly basis, in one (1) check, the total amount deducted
along with the name of each employee on whose behalf a deduction is made, the
employee's social security number and the amount deducted from that
employee's paycheck. The International Brotherhood of Teamsters shall
reimburse the Employer annually for the Employer's actual cost for the
expenses incurred in administering the weekly payroll deduction plan.
The Employer will recognize authorization for deductions from wages, if in
compliance with state law, to be transmitted to Local Union or to such other
organizations as the Union may request if mutually agreed to. No such
authorization shall be recognized if in violation of state or federal law.
No deduction shall be made which is prohibited by applicable law.
In the event that an Employer has been determined to be in violation of this
Article by the decision of an appropriate grievance committee, and if such
Employer subsequently is in violation thereof after receipt of seventy-two
(72) hours' written notice of specific delinquencies, the Local Union may
strike to enforce this Article. However, such strike shall be terminated
upon the delivery there-
16
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Article 3, Section 3
of. Errors or inadvertent omissions relating to individual employees shall
not constitute a violation.
Upon written request of an employee, the Employer shall make payroll
deductions for the purchasing of U. S. Savings Bonds.
Section 4. Work Assignments
The Employers agree to respect the jurisdictional rules of the Union and
shall not direct or require their employees or persons other than the
employees in the bargaining units here involved, to perform work which is
recognized as the work of the employees in said units. This is not to
interfere with bona fide contracts with bona fide unions.
Section 5.
The term "Local Union" as used herein refers to the IBT Local Union which
represents the employees of the particular Employer for the purpose of
collective bargaining at the particular place or places of business to which
this Agreement and the Supplements thereto are applicable, unless by
agreement of the Local Union involved, or a Change of Operations Committee,
or a jurisdictional award under Article 30 herein, jurisdiction over such
employees, or any number of them, has been transferred to some other Local
Union, in which case the term Local Union as used herein shall refer to such
other Local Unions. Nothing herein contained shall be construed to alter the
multi-employer, multi-union unit or single contract status of this Agreement.
Section 6. Electronic Funds Transfer
If the Employer institutes an electronic funds transfer (EFT) system,
employees may participate.
ARTICLE 4.
STEWARDS
The Employer recognizes the right of the Local Union to designate job
stewards and alternates from the Employer's seniority list. The authority of
job stewards and alternates so designated by the Local
17
<PAGE>
Article 4
Union shall be limited to, and shall not exceed, the following duties and
activities:
(a) The investigation and presentation of grievances with his/her
Employer or the designated company representative in accordance with the
provisions of the collective bargaining agreement;
(b) The collection of dues when authorized by appropriate Local Union
action;
(c) The transmission of such messages and information, which shall
originate with and are authorized by the Local Union or its officers,
provided such message and information;
(1) have been reduced to writing; or,
(2) if not reduced to writing, are of a routine nature and do not
involve work stoppages, slowdowns, refusal to handle goods, or any other
interference with the Employer's business.
When requested by the Union or the employee, there shall be a steward present
whenever the Employer meets with the employee about grievances or discipline
or to conduct investigatory interviews. If a steward is unavailable, the
employee may designate a bargaining unit member who is available at the
terminal at the time of the meeting to represent him/her. Meetings or
interviews shall not begin until the steward or designated bargaining unit
member is present. An employee who does not want a Union steward or
available bargaining unit member present at any meeting or interview where
the employee has a right to Union representation must waive Union
representation in writing. If the Union requests a copy of the waiver, the
Employer shall promptly furnish it.
Job stewards and alternates have no authority to take strike action, or any
other action interrupting the Employer's business, except as authorized by
official action of the Local Union. The Employer recognizes these
limitations upon the authority of job stewards and their alternates, and
shall not hold the Local Union liable for any unauthorized acts. The
Employer in so recognizing such limitations shall have the authority to
impose proper discipline, including discharge, in the event the job steward
or his/her designated alternate has taken unauthorized strike action,
slowdown or work stoppage in violation of this Agreement.
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Article 4
The job steward, or his/her designated alternate, shall be permitted
reasonable time to investigate, present and process grievances on the company
property without loss of time or pay during his/her regular working hours
without interruption of the Employer's operation by calling group meetings;
and where mutually agreed to by the Local Union and the Employer, off the
property or other than during his/her regular schedule without loss of time
or pay. Such time spent in handling grievances during the job steward's or
his/her designated alternate's regular working hours shall be considered
working hours in computing daily and/or weekly overtime if within the regular
schedule of the job steward. "
The job steward, or his/her designated alternate, shall be permitted
reasonable time off without pay to attend Union meetings called by the Local
Union. The Employer shall be given twenty-four (24) hours' prior notice by
the Local Union.
ARTICLE 5.
Section 1. Seniority Rights
(a) The application of seniority which has been accrued herein shall be
established in the Supplemental Agreements.
(b) Seniority shall be broken only by discharge, voluntary quit,
retirement, or more than a five (5)-year layoff.
(c) This Section shall apply to all Supplemental Agreements.
Section 2. Mergers of Companies-General
(a) In the event the Employer is a party to a merger of lines,
seniority of the employees who are affected thereby shall be determined by
mutual agreement between the Employer and the Local Unions involved.
In the application of this Section, it is immaterial whether the transaction
is called a merger, purchase, acquisition, sale, etc. Further, it is also
immaterial whether the transaction involves merely the purchase of stock of
one (1) corporation by another, with two (2) separate corporations continuing
in existence.
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Article 5, Section 2
(b) If such merger of companies results in the combination of terminals
or over-the-road operations, a change of operation shall be submitted to the
Co-Chairmen of the National Grievance Committee for assignment to an
appropriate Change of Operations Committee established pursuant to Article 8,
Section 6. The Change of Operations Committee shall retain jurisdiction for
one (1) year after the effective date of the Committee decision and shall
have the authority to amend its decision in the event of a substantial change
in the amount of work to be performed at the terminals or over-the-road
operations which were combined.
Combining of Terminals or Operations as a Result of Merger of Companies
(c) In the application of this Section, when terminals or operations of
two (2) or more companies are combined, as referred to above, the following
general rules shall be applied by the Employer and the Local Unions, which
general rules are subject to modification pursuant to the provisions of
Section 4 of this Article:
Active Seniority list
(1) The active employee seniority rosters (excluding those employees on
letter of layoff) shall be "dovetailed" by appropriate classification (i.e.,
road or city) in the order of each employee's full continuous classification
(road or city) seniority date that the employee is currently exercising. (The
term "continuous classification seniority" as used herein is defined as that
seniority which the employee is currently exercising and has not been broken
in the manner provided in Section 1 of this Article or by voluntary changes
in domicile not directed, approved or ordered by a Change of Operations
Committee.) The active "dovetailed" seniority roster shall be utilized first
and until exhausted to provide employment at such combined terminal or
operational location.
Active Seniority List
(2) In addition, the inactive seniority rosters (employees who are on letter
of layoff) shall be similarly "dovetailed" by appropriate classification. If
additional employees are required after the active list is exhausted, they
shall be recalled from such inactive
20
<PAGE>
Article 5, Section 2
seniority roster and after recall such employees shall be "dovetailed" into
the active seniority roster with their continuous classification (road or
city) seniority dates they are currently exercising which shall then be
exercised for all purposes. Seniority rosters previously combining job
classifications shall be continued unless otherwise agreed.
Temporary Authority
(d) Where only temporary authority is granted in connection with any of
the transactions described above, then separate seniority lists shall
continue only when terminals or operations are not merged, unless otherwise
agreed. The Employer which is to survive will assume the obligations of both
collective bargaining agreements during the period of the temporary
authority.
In the event of temporary merger of operations which are contingent upon
approval by regulatory agencies or on other stated conditions, the seniority
of the involved employees shall continue to accrue with their original
Employer during the period of temporary merger, so that if there is no final
consummation of the merger, the seniority of such employees shall be
continued with their respective employers. However, if, on the failure of
final consummation and dissolution of the merger, one of the parties to the
proposed merger discontinues the operations which were subject to such
merger, the employees of such Employer shall be granted seniority rights for
all purposes with the other Employer only for the period of time they were
employed in such temporary merged operations.
Purchase of Rights
(e) If a merger, purchase, acquisition, sale, etc., constitutes merely
the acquisition of permits or rights, without the purchase or acquisition of
equipment or terminals, and/or without the consolidation of terminals or
operations, or in the event of the purchase of rights during bankruptcy
proceedings, the following shall apply:
Where the purchasing company has a terminal operation at the domicile of the
employees of the seller, the employees of the selling company shall be placed
on a master seniority list, and the purchasing company or companies shall
hire, after recall of the purchasing company's employees from layoff, such
employees as needed
21
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Article 5, Section 2
for regular employment within the first twelve (12)-calendar months after
purchase or acquisition of permits and/or rights, and they shall be
dovetailed with full seniority. If an employee refuses a bona fide offer of
regular work opportunity with any of the purchasing companies, his/her name
shall be removed from the list. No employee hired under this provision shall
be required to serve a probationary period. After the expiration of the
aforementioned twelve (12)-calendar month period, the purchaser shall have no
further obligation to the employees of the seller.
However, if the purchasing or acquiring company does not have and/or continue
a terminal or operation at the domicile of the employees of the seller,
resulting in their layoff, such Employer shall place the laid-off employees
on a master seniority list and such Employer shall, if and when additional
regular employees are required, within a twelve (12)-calendar month period
after purchase or acquisition, and providing its employees on layoff have
been recalled, offer employment to such laid-off employees at the terminal
locations or operations to which the work has been transferred. Any such
laid-off employees accepting transfer shall be dovetailed in accordance with
their terminal seniority for work purposes, including layoff, and holding
company seniority for all fringes. If an employee refuses a bona fide offer
of regular work opportunity with any of the purchasing companies, his/her
name shall be removed from the list. No employee hired under this provision
shall be required to serve a probationary period. After the expiration date
of the aforementioned twelve (12)-calendar month period, the purchaser shall
have no further obligation to the employees of the seller. The transferring
employee shall be responsible for lodging and moving expenses.
Exclusive Cartage Operations
(f) If in connection with the transactions described in these rules the
successor Employer determines to discontinue the use of a local cartage
company, the employees of that local cartage company who have worked
exclusively on the pickup and delivery service which is retained by the
successor Employer shall be given the opportunity to continue to perform such
service as an employee of such successor Employer, and shall have their
seniority "dovetailed" as described in the above rules.
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Article 5, Section 2
Committee Authority
(g) Area and/or State Committees created pursuant to Local Supplements
which have previously established rules of seniority, not contrary to the
provisions of such Supplements, and approved by the Joint Area Committee, may
continue to apply such rules if such rules are reduced to writing.
Section 3. Intent of Parties
(a) The parties acknowledge that the above rules are intended solely as
general standards and further that many factual situations will be presented
which necessitate different application, modification or amendment.
Accordingly, the parties acknowledge that questions of the application of
seniority rights may arise which require different treatment and it is
anticipated and understood that the Employers and Unions jointly involved
and/or the respective grievance committees may mutually agree to such
disposition of questions of seniority which in their judgment is appropriate
under the circumstances.
(b) In all instances, the disposition of questions involving the
application of seniority rights made by the parties pursuant to this Section
may be presented to the appropriate grievance committees provided herein
whose decisions shall be final and binding.
Section 4. Equipment Purchases
(a) The Employer shall not require as a condition of continued
employment, that an employee purchase truck, tractor and/or tractor and
trailer or other vehicular equipment, or that any employees purchase or
assume any proprietary interest or other obligation in the business, except
as referred to in Article 6, Section 2. The requirements of this provision
shall be maintained during the renegotiation of this Agreement unless either
party has terminated the Agreement in the manner provided.
Highest Rates Prevail
(b) If the minimum wage, hours and working conditions in the Company
absorbed differ from those minimums set forth in this
23
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Article 5, Section 4
Agreement and Supplements thereto, the higher of the two shall remain in
effect for the employees so absorbed.
Cutting Seniority Board
(c) The Union reserves the right to cut the road seniority board when
the average weekly earnings fall to seven hundred dollars ($700.00) or less.
This is not to be construed as imposing a limitation on earnings. After the
Union notifies the Employer to cut the board and in the event that Employer
refuses, the Union shall immediately submit the matter to the grievance
procedure. In determining whether average weekly earnings will fall to seven
hundred dollars ($700.00) or less, only the earnings of the lower twenty-five
percent (25%) of the drivers on the seniority board, counting from the bottom
up, shall be considered. The average shall be calculated for the thirty (30)-
day period preceding the Union's original request. After such calculation is
made, the average earnings of the drivers for the top seventy-five percent
(75%) of the seniority board must also average more than seven hundred
dollars ($700.00) per week, or layoff shall be made in accordance with
seniority. The above provisions shall also apply to extra board for sleeper
drivers exclusively.
Posting Seniority list
(d) The Employer shall give the Local Union a seniority list at least
every six (6) months. The Employer shall also post a seniority list at least
once every six (6) months and shall maintain a current seniority roster at
the terminal. Protest of any employee's seniority date or position on such
list must be made in writing to the Employer within thirty (30) days after
such seniority date or position first appears, and if no protests are timely
made the dates and positions posted shall be deemed correct. Any such
protest which is timely made may be submitted to the grievance procedure.
Section 5. Work Opportunity
Over-the-road employees, who are on letter of layoff, shall be given an
opportunity to transfer to permanent over-the-road employment (prior to the
employment of new hires) occurring at other over-the-road domiciles of the
Employer located within the Conference area provided they notify the Employer
in writing of their interest in a
24
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Article 5, Section 5
transfer opportunity. The offer of transfer will be made in the order of
continuous over-the-road seniority of the laid-off drivers domiciled within
the Conference area. The Employer shall be required to make additional
offers of transfer to an employee who has previously rejected a transfer
opportunity provided the employee again notifies the Employer in writing of
his/her continued interest in additional transfer opportunities. However,
the Employer will only be required to make one transfer offer in any six (6)
calendar month period. Any employee accepting such offer shall be employed
as a "new hire" and shall be placed at the bottom of the seniority board for
bidding and layoff purposes, but shall retain company seniority for fringe
benefits only. A transferring employee shall pay his/her own moving expenses
and shall, upon reporting to such new domicile, be deemed to have
relinquished his/her right to return with seniority to the domicile from
which he/she transferred.
Section 6. Dock Operations
The Rule of Forty (40) and Out shall apply to PURE DOCK WORK ONLY for the
life of the contract and shall operate as follows:
(a) The employer's obligation to each full-time regular employee
("regular employee") is to satisfy the daily and/or weekly guarantee as set
forth in a bid under the applicable Supplemental Agreement. It is understood
that a weekly guarantee under a supplement may call for four (4) or five (5)
punches depending upon whether the daily guarantee is eight (8) or ten (10)
hours.
(b) A regular employee who is assigned to or elects work on the dock
for forty (40) straight-time hours during a work week, other than through a
bid, is also subject to the Rule of Forty (40) and Out.
(c) No casual may work on the dock unless each regular employee who was on
the seniority list as of March 31, 1994, and unless each regular employee
added to the seniority list thereafter, has been offered an opportunity to
work that day at the straight time rate of pay.
(d) The Employer is not obligated to offer any overtime work on the dock to
any regular employee whose daily guarantee has been satisfied. If the
Employer does offer daily overtime to regular employees, overtime must be
offered in seniority order in accordance with the applicable Supplement.
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Article 5, Section 6
(e) Overtime offered to a regular employee after the guaranteed day
shall not count toward the weekly guarantee. Example: An employee has a five
(5) day regular workweek. At the close of the fourth (4th) day, the employee
has thirty-two (32) hours of regular time and four (4) hours of overtime.
The employee is guaranteed his/her fifth (5th) regular punch and at least
forty-four (44) hours for the week. Example: An employee has a four (4) day
regular workweek. At the close of the third (3rd) day, the employee has
thirty (30) hours of regular time and ten (10) hours of overtime. The
employee is guaranteed his/her fourth (4th) regular punch and at least fifty
(50) hours for the week.
(f) The Employer is not obligated to offer a premium day punch for pure
dock work to any regular employee after the weekly guarantee has been
satisfied. The Employer's obligation, if any, to provide premium day work
other than pure dock work is governed by the applicable Supplement. Example:
An employee has a five (5) day regular "work-week. At the close of the fifth
(5th) day, the employee has earned the weekly guarantee. The Employer is not
obligated to offer the employee a sixth (6th) or seventh (7th) day premium
punch for pure dock work.
(g) If all regular employees on the seniority list have worked at least
forty (40) hours in a given work week, and if the Employer offers premium day
work on the dock to regular employees, premium day work shall be offered on
the basis of seniority as defined in the applicable Supplement.
(h) A regular employee who has broken his/her daily or weekly guarantee
shall not be entitled to claim any work occurring outside of the employee's
regularly scheduled work week, except as may be provided by the applicable
Supplement.
ARTICLE 6
Section 1. Maintenance of Standards
The Employer agrees, subject to the following provisions, that all conditions
of employment in his/her individual operation relating to wages, hours of
work, overtime differentials and general working conditions shall be
maintained at not less than the highest stan-
26
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Article 6, Section 1
dards in effect at the time of the signing of this Agreement, and the
conditions of employment shall be improved whenever specific provisions for
improvement are made elsewhere in this Agreement.
Local Standards
(a) The Local Unions and the Employer shall, within one hundred eighty
(180) days following ratification of this Agreement, identify and reduce to
writing, and submit to the appropriate Conference Joint Area Committee, those
local standards and conditions practiced under this Article. Those local
standards and conditions previously practiced hereunder which are not so
submitted shall be deemed to have expired.
The appropriate Conference Joint Area Committee shall, not later than ninety
(90) days following ratification, adopt a procedure to consider the
disposition of the local standards and conditions submitted including the
right to appoint a subcommittee to make recommendations. The Conference
Joint Area Committee shall provide to the parties the opportunity to present
their views. The Conference Joint Area Committee shall have the sole
discretion to determine the disposition of the submitted local standards and
conditions which determination shall be final and binding. However, if
deadlocked, the matter shall be referred to the National Grievance Committee
for decision which shall be final and binding.
Individual Employer Standards
(b) Individual Employers may during the life of this Agreement file
with the appropriate Conference Joint Area Committee and request review of
those individual standards and conditions claimed or practiced under this
Article which exceed the provisions of this Agreement and Supplemental
Agreements.
The Conference Joint Area Committee shall develop a procedure to review the
filing including the right to appoint a subcommittee to make recommendations.
The Committee shall make every effort to adjust the matter. If the Committee
reaches agreement concerning the disposition of the individual standards or
conditions, the decision of the Committee shall be final and binding.
However, if deadlocked, the matter shall be referred to the National
Grievance Committee for decision which shall be final and binding.
27
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Article 6, Section 1
General
(c) It is agreed that the provisions of this Article shall not apply to
inadvertent or bona fide errors made by the Employer or the Union in applying
the terms and conditions of this Agreement. Such bona fide errors may be
corrected at any time.
No other Employer shall be bound by the voluntary acts of another Employer
when he/she may exceed the terms of this Agreement.
Any disagreement between the Local Union and the Employer with respect to
this matter shall be subject to the grievance procedure.
This provision does not give the Employer the right to impose or continue
wages, hours and working conditions less than those contained in this
Agreement.
Section 2. Extra Contract Agreements
(a) The Employer agrees not to enter into any agreement or contract
with its employees, individually or collectively, which in any way conflicts
with the terms and provisions of this Agreement. Any such agreement shall be
null and void.
(b) Consistent with past interpretations made by the National Grievance
Committee, wage reduction-job security plans or other programs which comply
with guidelines established by the Teamsters National Freight Industry
Negotiating Committee are not violative of this Section.
Current wage reduction-job security plans established prior to April 11 1994,
shall be subject to a revote of the unit employees as provided in this
Section within thirty (30) days of notice of ratification of the NMFA or as
soon as is legally permissible after having been approved by TNFINC to
conform with the guidelines established under this Section. Such current
plans shall remain in effect until the later of expiration of the plan or
until a replacement plan is approved by a unit employee vote as provided in
this Section. Failure to obtain the required unit employee vote under this
Section will result in restoration of full NMFA wages and wage related
fringes effective April 6, 1994, or when legally permissible.
Wage deduction under any Plan hereinafter adopted shall not exceed fifteen
percent (15%) of the applicable wage rates, and such Plan
28
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Article 6, Section 2
shall be adopted only if approved by seventy-five percent (75%) of the
employees voting by secret ballot (in which case all unit employees shall be
covered by such Plan).
See Wage Reduction-Job Security Plan Guidelines - Appendix A
(c) Every profit-sharing plan, whether or not it alters or amends the
economic conditions contained in this Agreement, must be agreed to by TNFINC.
Section 3. Workweek Reduction
If either the Fair Labor Standards Act or the Hours of Service Regulations
are subsequently amended so as to result in substantial penalties to either
the employees or the Employer, a written notice shall be sent by either party
requesting negotiations to amend those provisions which are affected.
Thereafter, the parties shall enter into immediate negotiations for the
purpose of arriving at a mutually satisfactory solution. In the event the
parties cannot agree on a solution within sixty (60) days, or mutually agreed
extensions thereof, after receipt of the stated written notice, either party
shall be allowed economic recourse.
Section 4. New Equipment
Where new types of equipment and/or operations for which rates of pay are not
established by this Agreement are put into use after April 1, 1994, within
operations covered by this Agreement, rates governing such operations shall
be subject to negotiations between the parties.
In the event agreement cannot be reached within sixty (60) days after date
such equipment is put into use, the matter may be submitted to the National
Grievance Committee for final disposition. Rates agreed upon or awarded
shall be effective as of the date equipment is put into use.
The above provisions shall also apply in the event the law (state or federal)
is changed to permit longer combination vehicles or aggregate weight
increases of 8,000 pounds or more in the weight limits that are currently
provided in the Surface Transportation Assistance Act of 1982.
29
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Article 6, Section 4
Employees expected to use computers will be trained to use them and will be
paid for all training time. Employees expected to use computers will be
given sufficient time to learn to use them.
ARTICLE 7.
LOCAL AND AREA GRIEVANCE MACHINERY
Section 1.
Provisions relating to local, state and area grievance machinery are set
forth in the applicable Supplements to this Agreement.
It is mutually agreed that the procedures for processing complaints
concerning matters of highway and equipment safety shall be incorporated in
the applicable Supplemental Agreement, in accordance with the guidelines
established by the National Master Freight Safety and Health Committee
provided for in Article 16.
Special Joint Area Committees shall also be created in compliance with the
provisions of Article 35, Section 3 - Alcohol and Drug Use.
The procedure set forth in the local, state and area grievance machinery and
in the national grievance procedure may be invoked only by the authorized
Union representative or the Employer representative. Authorized
representatives of the Union and/or Employer may file grievances alleging
violation of this Agreement, under local grievance procedure, or as provided
herein. Time limitations regarding the filing of grievances, if not set
forth in the respective Supplemental Agreements, must appear in the Rules of
Procedure of the various grievance committees and shall apply equally to
Employers and employees.
The Rules of Procedure of the various committees established under the
Agreement shall be subject to the review and approval of the National
Grievance Committee.
Section 2. Grievant's Bill of Rights
All employees who file grievances under this Agreement and its Supplemental
Agreements are entitled to have their cases decided fairly and promptly. In
order to satisfy these objectives and pro-
30
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Article 7, Section 2
mote confidence in the integrity of the grievance procedures, all employees
who file grievances are entitled to the following Rights:
1. Grievants and stewards shall be informed by their Local Union of
the time and place of the hearing.
2. Grievants and stewards are permitted to attend, at their own
expense, the hearing in cases in which they are involved.
3. The Employer shall provide any information relevant to a grievance
within fifteen (15) days of receipt of a written request by the Local Union,
steward or grievant.
4. All cases involving a discharge or suspension shall be recorded,
except for executive sessions. Transcriptions of these proceedings shall be
prepared in response to written requests by the Local Union at the reasonable
cost of transcription. No recording devices shall be used in any grievance
committee proceeding except as specifically authorized under the Rules of
Procedure or by mutual consent of the co-chairpersons.
5. All Employer and Union panel members for each case shall be
identified prior to the hearing. No Employer or Union representative who is
directly involved in a case may serve as a panel member except at a local
level committee where there is only one Local Union subject to the
jurisdiction of the committee.
6. A grievant or steward may request Permission to present evidence or
argument in support of the case in addition to the evidence or argument
presented by the Local Union.
7. All grievance committees shall, upon request, issue a copy of the
grievance decision or transcript pages containing the hearing proceedings and
the decision to the grievant and/or a Local Union.
8. The Local Union and the Employer may postpone a case once each, and
any further postponements must be approved by the co-chairpersons of the
grievance committee. In those areas where there are presently local
grievance committees, each party shall be entitled to one additional
postponement at the local grievance committee level only.
9. Unless mutually agreed by the Local Union and the Company, Local
Unions shall file all approved grievances with the appropriate grievance
committee or association for decision no later than
31
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Article 7, Section 2
thirty (30) days after the date the Local Union receives the grievance.
10. A copy of the grievance committee Rules of Procedure, including the
Grievant's Bill of Rights, must be provided, upon request, to the grievant
prior to the commencement of the grievance hearing.
Section 3.
All Local, State and Area Grievance Committees established under Supplemental
Agreements shall revise their Rules of Procedure to include the "Grievant's
Bill of Rights" set forth in Section 2 above and shall submit their revised
Rules of Procedure to the National Grievance Committee for approval no more
than ninety (90) days after the effective date of this Agreement. The
National Grievance Committee may revise, delete or add to the Rules of
Procedure for a Supplemental Grievance Committee in any manner necessary to
ensure conformity with the purposes and objectives of the Grievant's Bill of
Rights. The decisions of the National Grievance Committee in this regard
shall be final and binding.
Section 4.
Except in cases involving "cardinal" infractions under the applicable
Supplemental Agreement, an employee to be discharged or suspended shall be
allowed to remain on the job until the discharge or suspension is sustained
under the grievance procedure.
ARTICLE 8.
NATIONAL GRIEVANCE PROCEDURE
Section 1.
All grievances or questions of interpretations arising under this National
Master Freight Agreement or Supplemental Agreements thereto shall be
processed as set forth below. If such Supplemental Agreements provide for
arbitration of discharges, such procedure shall be continued.
(a) All factual grievances or questions of interpretation arising under
the provisions of the Supplemental Agreement (or factual
32
<PAGE>
Article 8, Section 1
grievances arising under the National Master Freight Agreement), shall be
processed in accordance with the grievance procedure of the applicable
Supplemental Agreement.
If upon the completion of the grievance procedure of the Supplemental
Agreement the matter is deadlocked, the case shall be immediately forwarded
to both the Employer and Union secretaries of the National Grievance
Committee, together with all pertinent files, evidence, records and committee
transcripts.
Any request for interpretation of the National Master Freight Agreement shall
be submitted directly to the Conference Joint Area Committee for the making
of a record on the matter, after which it shall be immediately referred to
the National Grievance Committee. Such request shall be filed with both the
Union and Employer secretaries of the National Grievance Committee with a
complete statement of the matter.
All grievances arising under the provisions of the Master Agreement (Articles
1-39) shall be filed directly with the appropriate Conference Joint Area
Committee. The Conference Joint Area Committee shall have the authority to
render a final and binding decision or direct the grievance to the
appropriate lower level committee for hearing if the grievance is not
properly claimed under the provisions of the Master Agreement. The
Conference Joint Area Committee must hear and decide such cases within ninety
(90) days of the filing of the grievance. In the event of a deadlock, the
case shall be referred to and heard by the National Grievance Committee.
Grievances arising under Article 9-Protection of Rights, Article 29-
Substitute Service and Article 32-Subcontracting shall be expeditiously
processed and maybe heard at either regularly scheduled or specially called
hearings. A grievance may be filed by any Area Conference whose members are
adversely affected by an alleged violation of Article 32, Section 4 (b)
occurring within its jurisdiction.
(b) Any matter which has been referred pursuant to Section 1 (a) above,
or any question concerning the interpretation of the provisions contained in
the National Master Freight Agreement, shall be submitted to a permanent
National Grievance Committee which shall be composed of an equal number of
employer and union representatives. The National Grievance Committee shall
meet on a regular basis, for the disposition of grievances referred to it, or
may
33
<PAGE>
Article 8, Section 1
meet at more frequent internals, upon call of the chairman of either the
Employer or Union representatives on the National Grievance Committee. The
National Grievance Committee shall adopt rules of procedure which may include
the reference of disputed matters to subcommittees for investigation and
report, with the final decision or approval, however, to be made by the
National Grievance Committee. If the National Grievance Committee resolves
the dispute by a majority vote of those present and voting, such decisions
shall be final and binding upon all parties.
Cases deadlocked by the National Grievance Committee shall be referred to an
arbitration panel, as provided in Section 2(b) below. Procedures relating to
such referrals shall be included in the Rules of Procedure of the National
Grievance Committee.
The Employer may request the co-chairmen of the National Grievance Committee
to appoint and convene a joint Employer and Union Committee which shall have
the authority to approve uniform dispatch procedures and rules which shall
apply to the individual company's over-the-road operations.
No Employer signatory to this Agreement shall be permitted to have its own
grievance procedure.
Section 2.
(a) The National Grievance Committee by majority vote may consider and
review all questions of interpretation which may arise under the provisions
contained in the National Master Freight Agreement which are submitted by
either the National Freight Director or the designated employer
representative; and shall have the authority to reverse and set aside the
majority interpretation of any area, regional, or local grievance committee
or arbitration panel established within the Supplemental Agreements if, in
its opinion, such interpretation is contrary to the provisions set forth in
the National Master Freight Agreement, in which case the decision of the
National Grievance Committee shall be final and binding. A failure by the
National Grievance Committee to reach a majority decision on a question
concerning interpretation or on a review of a decision by a lower level
grievance committee or arbitration panel shall not be considered a deadlock
and will not be referred to arbitration. In case of a failure to reach a
majority decision in review-
34
<PAGE>
Article 8, Section 2
ing the decision of a lower level grievance committee or arbitration panel,
the decision of the lower level grievance committee or arbitration panel
shall stand as final and binding.
(b) All grievances deadlocked at the Conference Joint Area Committee
and the National Grievance Committee shall be subject to arbitration and
processed as set forth below.
1. All grievances involving the provisions of the Supplemental
Agreements, including discharges or suspensions, which have been deadlocked
by the Conference Joint Area Committee, shall be automatically referred to a
Conference Arbitration Panel, whose decision shall be final and binding on
all parties.
2. The Conference Arbitration Panel shall consist of the Union and
Employer co-chairmen of the Conference Joint Area Committee, or their
designees, and an impartial arbitrator selected by the cochairmen. The
procedures for the selection of the arbitrator for the Conference Arbitration
Panel and the cost of arbitration shall be determined by the Rules of
Procedure of the Conference Joint Area Committee.
3. At the arbitration hearing before the Conference Arbitration Panel,
the Employer's case will be presented by a full-time employee of the Employer
and the Union's case by a full-time employee of the Local Union, and the
Rules of Procedure of the Conference Joint Area Committee shall apply.
4. The Conference Arbitration Panel shall issue a "bench decision" at
the conclusion of the grievance hearing, unless the Committee's Rules of
Procedure provides otherwise in discharge cases. Either party, however, may
request a clarification or further explanation of a previous decision
rendered by the Conference Arbitration Panel.
5. All grievances involving the Master Agreement (Articles 1-39),
which have been deadlocked by the National Grievance Committee, shall be
automatically referred to the National Arbitration Panel, whose decision
shall be final and binding on all parties.
6. The National Arbitration Panel shall consist of the Union and
Employer co-chairmen of the National Grievance Committee, or their designees,
and an impartial arbitrator selected by the co-chairmen. The procedures for
the selection of the arbitrator for the
35
<PAGE>
Article 8, Section 2
National Arbitration Panel and the cost of arbitration shall be determined by
the Rules of Procedure of the National Grievance Committee.
7. At the arbitration hearing before the National Arbitration Panel,
the Employer's case will be presented by a full-time employee of the Employer
and/or Employer representative on the National Grievance Committee and the
Union's case by a designee of the National Freight Director and the Rules of
Procedure of the National Grievance Committee shall apply.
8. The National Arbitration Panel shall issue a "bench decision" at
the conclusion of the grievance hearing. Either party, however, may request
a clarification or further explanation of a previous decision rendered by the
National Arbitration Panel.
9. No lawyers will be permitted to present cases at any step of the
grievance procedure.
10. The decision of any arbitration panel shall be specifically limited
to the matters submitted to it and the panel shall have no authority in any
manner to amend, alter or change any provision of the Agreement.
11. If the Employer or Union challenges in court a decision issued by
any arbitration panel provided for in this Section, the cost of the
challenge, including the court costs and attorneys' fees, shall be paid by
the losing party.
12. Where Supplements under the 1991-94 NMFA provided for arbitration
in discharge cases, the procedures for such arbitration shall be maintained
under the 1994-98 Agreement.
Section 3. Work Stoppages
(a) The parties agree that all grievances and questions of
interpretation arising from the provisions of this Agreement shall be
submitted to the grievance procedure for determination. Accordingly, no work
stoppage, slowdown, walkout or lockout shall be deemed to be permitted or
authorized by this Agreement except as provided in Section 3(b) below.
A "representation dispute" in circumstances under which the Employer is not
required to recognize the Union under this Agreement
36
<PAGE>
Article 8, Section 3
is not subject to the grievance procedure herein and the provisions
of this Article do not apply to such dispute.
(b) In the event an Employer is delinquent in its health & welfare or
pension payments in the manner required by the applicable Supplemental
Agreement, the Local Union shall have the right to take whatever action it
deems necessary until such delinquent payments are made. The Local Union
shall give the Employer a seventy-two (72)-hour, (excluding Saturdays,
Sundays, and holidays), prior written notice of the Local Union's
authorization of strike action which notice shall specify the failure to make
health & welfare or pension payments providing the basis for such strike
authorization. In no event shall the Union have the right to strike over a
dispute concerning the eligibility and/or payment of health & welfare or
pension contributions by an Employer on behalf of specific individuals, and
such disputes shall be subject to the grievance procedure.
Section 4.
(a) It is mutually agreed that the Local Union will, within two (2)
weeks of the date of the signing of this Agreement, serve upon the Employer a
written notice listing the Union's authorized representatives who will deal
with the Employer, make commitments for the Local Union generally and, in
particular, those individuals having the sole authority to act for the Local
Union in calling or instituting strikes or any stoppages of work which are
not in violation of this Agreement. The Local Union may from time to time
amend its listing of authorized representatives by certified mail. The Local
Union shall not authorize any work stoppages, slowdown, walkout, or cessation
of work in violation of this Agreement. It is further agreed that in all
cases of an unauthorized strike, slowdown, walkout, or any unauthorized
cessation of work which is in violation of this Agreement the Union shall not
be liable for damages resulting from such unauthorized acts of its members.
In the event of a work stoppage, slowdown, walkout or cessation of work, not
permitted by the provisions of Article 8, Section 3(a), alleged to be in
violation of this Agreement, the Employer shall immediately send a wire to
the appropriate Area Conference to determine if such strike, etc., is
authorized.
37
<PAGE>
Article 8, Section 4
No strike, slowdown, walkout or cessation of work alleged to be in violation
of this Agreement shall be deemed to be authorized unless notification
thereof by telegram has been received by the Employer and the Local Union
from such Area Conference. If no response is received by the Employer within
twenty-four (24) hours after request, excluding Saturdays, Sundays, and
holidays, such strike, etc., shall be deemed to be unauthorized by the Area
Conference for the purpose of this Agreement.
In the event of such unauthorized work stoppage or picket line, etc., in
violation of this Agreement, the Local Union shall immediately make every
effort to persuade the employees to commence the full performance of their
duties and shall immediately inform the employees that the work stoppage
and/or picket line is unauthorized and in violation of this Agreement. The
question of whether employees who refuse to work during such unauthorized
work stoppages, in violation of this Agreement, or who fail to cross
unauthorized picket lines at their Employer's premises, shall be considered
as participating in an unauthorized work stoppage in violation of this
Agreement may be submitted to the grievance procedure, but not the amount of
suspension herein referred to.
It is specifically understood and agreed that the Employer during the first
twenty-four (24)-hour period of such unauthorized work stoppage in violation
of this Agreement, shall have the sole and complete right of reasonable
discipline, including suspension from employment, up to and including thirty
(30) days, but short of discharge, and such employees shall not be entitled
to or have any recourse to the grievance procedure. In addition, it is
agreed between the parties that if any employee repeats any such unauthorized
strike, etc., in violation of this Agreement, during the term of this
Agreement, the Employer shall have the right to further discipline or
discharge such employee without recourse for such repetition. After the
first twenty-four (24)-hour period of an unauthorized stoppage in violation
of this Agreement, and if such stoppage continues, the Employer shall have
the sole and complete right to immediately further discipline or discharge
any employee participating in any unauthorized strike, slowdown, walkout, or
any other cessation of work in violation of this Agreement, and such
employees shall not be entitled to or have any recourse to the grievance
procedure. The suspension or discharge herein referred to shall be uniformly
applied
38
<PAGE>
Article 8, Section 4
to all employees participating in such unauthorized activity. The Employer
shall have the sole right to schedule the employee's period of suspension.
The International Brotherhood of Teamsters, the Teamsters National Freight
Industry Negotiating Committee, Area Conferences, Joint Councils and Local
Unions shall make immediate efforts to terminate any strike or stoppage of
work as aforesaid which is not authorized by such organizations, without
assuming liability therefor. For and in consideration of the agreement of
the International Brotherhood of Teamsters, Teamsters National Freight
Industry Negotiating Committee, Area Conferences, Joint Councils and Local
Unions affiliated with the International Brotherhood of Teamsters to make the
aforesaid efforts to require Local Unions and their members to comply with
the law or the provisions of this Agreement, including the provisions
limiting strikes or work stoppages, as aforesaid, the Associations and
Employers who are parties hereto agree that they will not hold the
International Brotherhood of Teamsters, the Teamsters National Freight
Industry Negotiating Committee, Area Conferences, Joint Councils and Local
Unions liable or sue them in any court or before any administrative tribunal
for undertaking such efforts to terminate unauthorized strikes or stoppages
of work as aforesaid or for undertaking such efforts to require Local Unions
and their members to comply with the law or the provisions of this Agreement,
or for taking no further steps to require them to do so. It is further
agreed that signator Associations and Employers will not hold the
International Brotherhood of Teamsters, Teamsters National Freight Industry
Negotiating Committee, Area Conferences, Joint Councils or Local Unions
liable or sue them in any court or before any administrative tribunal for
such unauthorized work stoppages alleging condonation, ratification or
assumption of liability for undertaking such efforts to terminate strikes or
stoppages of work, or requiring Local Unions and their members to comply with
the law or the provisions of this Agreement.
The provisions of this Article shall continue to apply during that period of
time between the expiration of this Agreement and the conclusion of the
negotiations or the effective date of the successor Agreement, whichever
occurs later, except as provided in Article 39. It is understood and agreed
that failure by the International Brotherhood of Teamsters, Teamsters
National Freight Industry
39
<PAGE>
Article 8, Section 4
Negotiating Committee, Area Conferences and/or Joint Councils to authorize a
strike by a Local Union shall not relieve such Local Union of liability for a
strike authorized by it and which is in violation of this Agreement.
(b) The question of whether the International Union, Teamsters National
Freight Industry Negotiating Committee, an Area Conference, Joint Council or
Local Union have met its obligation set forth in the immediately preceding
paragraphs, or the question of whether the International Union, Teamsters
National Freight Industry Negotiating Committee, an Area Conference, Joint
Council or the Local Union, separately or jointly, participated in an
unauthorized work stoppage, slowdown, walkout or cessation of work in
violation of this Agreement by calling, encouraging, assisting or aiding such
work stoppage, etc., in violation of this Agreement, or the question of
whether an authorized strike provided by Article 8, Section 3(b) is in
violation of this Agreement, or whether an Employer engaged in a lockout in
violation of this Agreement, shall be submitted to the grievance procedure at
the national level, prior to the institution of any damage suit action. When
requested, the co-chairmen of the National Grievance Committee shall
immediately appoint a subcommittee to develop a record by collecting evidence
and hearing testimony, if any, on the questions of whether the International
Union, Teamsters National Freight Industry Negotiating Committee, an Area
Conference, Joint Council or Local Union have met its obligations as
aforesaid, or of Union participation or Employer lockout in violation of this
Agreement. The record shall be immediately forwarded to the National
Grievance Committee for decision. If a decision is not rendered within
thirty (30) days after the co-chairmen have convened the National Grievance
Committee, the matter shall be considered deadlocked.
A majority decision of the National Grievance Committee on the questions
presented as aforesaid shall be final and binding on all parties. If such
majority decision is rendered in favor of one (1) or more of the Union
entities, or the Employer, in the case of lockout, no damage suit proceedings
on the issues set forth in this Article shall be instituted against such
Union entity or such Employer. If, however, the National Grievance Committee
is deadlocked on the issues referred to in this subsection 4(b), the issues
must be referred to the National Arbitration Panel for resolution prior to
either party
40
<PAGE>
Article 8, Section 4
instituting damage suit proceedings. If the National Arbitration Panel
decides that a strike was unlawful, it shall not have the authority to assess
damages. Except as provided in this subsection 4(b), agreement to utilize
this procedure shall not thereafter in any way limit or constitute a waiver
of the right of the Employer or Union to commence damage suit action.
However, the use of evidence in this procedure shall not waive the right of
the Employer or Union to use such evidence in any litigation relating to the
strike or lockout, etc., in violation of this Agreement. There shall not be
any strike, slowdown, walkout, cessation of work or lockout as a result of a
deadlock of the National Grievance Committee on the questions referred to
under this subsection 4(b) and any such activity shall be considered a
violation of this Agreement.
(c) In the event that an Employer, party to this Agreement, commences
legal proceedings against the Union after the Union's compliance with the
provisions of Article 8, Section 3(b), the Employer Associations will
cooperate in the presentation to the court of the applicable majority
grievance committee decision.
(d) Nothing herein shall prevent the Employer or Union from securing
remedies granted by law except as specifically set forth in subsection 4(b).
Section 5.
(a) In the event of strikes, work stoppages, or other activities
authorized by Article 8, Section 3(b) of this Agreement, no interpretation of
this Agreement or any Supplement thereto relating to the Employer's
obligation to make health & welfare and/or pension contributions by any
tribunal shall be binding upon the Union or affect the legality or lawfulness
of the strikes unless the Union stipulates to be bound by such
interpretation, it being the intention of the parties to resolve all
questions of interpretation by mutual agreement.
(b) It is the intention of the parties to resolve all grievances and
requests for interpretation arising under this Agreement through the
grievance procedure. However, it is understood and agreed that nothing
herein shall prevent the Employer or Union from securing remedies in those
circumstances where the application of this Agreement is contrary to law.
41
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Article 8, Section 6
Section 6. Change of Operations
Change of Operations Committee
(a) Present terminals, breaking points or domiciles shall not be
transferred, changed or modified without the approval of an appropriate
Change of Operations Committee. Such Committee shall be appointed in each of
the Conference Areas, equally composed of Employer and Union representatives.
The Change of Operations Committee shall have the authority to determine the
seniority of the employees affected and such determination shall be final and
binding.
In the event a proposed change of operations includes the establishment of
either a new or satellite terminal as a "combination" facility with a common
city driver and dock seniority roster, when such change of operations results
in the relocation or movement of city drivers and dock employees from an
existing terminal recognizing separate (split) seniority rosters for city
drivers and dock employees, the Change of Operations Committee shall have the
authority to determine the conditions under which such a combination facility
may be established, including but not limited to, the number of city drivers
and dock employees who qualify, be allowed to follow the work to the new or
satellite combination terminal, the implementation of training programs to
qualify dock employees as city drivers and the seniority right of affected
employees to either return to the "mother" terminal and/or claim additional
driving positions at the satellite terminal within reasonable time periods
following the establishment of such combination terminal, as determined by
the Committee. Existing terminals that recognize separate city driver and
dock seniority rosters (split terminals) shall not be converted to
"combination" terminals unless and until such time as a majority of those
affected employees agree to such conversion, in which case the Change of
Operations Committee shall have the authority to determine the conditions
under which such conversion shall be implemented.
Such Committee, however, shall observe the Employer's right to designate
domiciles and the operational requirements of the business. Where the Union
raises the question as to whether or not certain proposed runs of excessive
length can be made, the Employer must be prepared to submit objective
evidence including DOT certifica-
42
<PAGE>
Article 8, Section 6
tion or logs and tapes that such runs have been tested and were made within
the DOT hours of service regulations. Individual employees shall not be
redomiciled more than once during the term of this Agreement as the result of
an approved change of operations unless a merger, purchase, sale, acquisition
or consolidation of employers is involved, or unless there is proven economic
need as determined by the Change of Operations Committee based on factual
evidence presented.
Pension and health & welfare contributions paid on behalf of a redomiciled
employee shall be paid to the Funds to which the contributions were made
prior to the employee's change of domicile, and the decisions of the Change
of Operations Committee shall so specify. This Section does not apply to
employees who voluntarily transfer to new domiciles, unless such transfer is
a result of a Change of Operations Committee decision. Any dispute
concerning the appropriate fund for an Employer's contribution on behalf of a
redomiciled employee, pursuant to a Change of Operations Committee decision,
shall be referred to the National Grievance Committee. The decision of the
National Grievance Committee shall to the extent permitted by law, be final
and binding on all affected parties, including the Trust Funds.
The Change of Operations Committee shall also have jurisdiction for a period
of twelve (12) months following the opening of a new terminal to consider the
redomicile of employees who are laid off as a direct result of such opening
of a terminal. The Committee shall also have jurisdiction over the closing
of a terminal in regard to seniority, as well as to determine the conditions
under which freight may or may not be interlined into the area of a vacated
operations when necessary to retain major customers, including mandating the
use of union carriers where available. In no event will the Employer be
granted the authority to vacate a facility and interline the freight on a non-
union subsidiary of the parent company.
The above shall not apply within a twenty-five (25)-mile radius.
Change of Operations Committee Procedure
(b) The National Grievance Committee shall adopt Rules of Procedure
concerning the application and administration of this Article.
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Article 8, Section 6
The Employer shall notify all affected Local Unions of the proposed change of
operations at least twenty (20) calendar days prior to the hearing at the
Conference Joint Area Committee, and the Employer and the Local Unions
involved shall have a mutual responsibility to inform the employees subject
to redomicile prior to such hearing in accordance with the practice and
procedures agreed to in the respective Area Committee. Any exception or
waiver of the aforesaid twenty (20) day period shall be mutually agreed to
between the Employer and the Local Unions involved and approved by the
Conference Area Change of Operations Committee.
Moving Expenses
(c) Where an employee is required to transfer to another domicile in
order to follow employment as a result of a change of operations, the
Employer shall move the employee and assume the responsibility for proven
loss or damage to household goods due to such move, including insurance
against loss or damage. Should any employee possess household items of
unusual or extraordinary value which will be included in the move, such items
shall be declared and an appraised value determined prior to the move. The
Employer shall provide packing materials for the employee's household goods
when requested or at the employee's request pay all costs and expenses of
moving such household goods, including packing.
The Employer shall pay reasonable expenses to demount and remount an
employee's mobile home, if used as his/her residence and in such instance
shall pay normal expenses to move such mobile home, including the use of
other modes of transportation where required by law.
An employee shall have a maximum of one (1) year to move in accordance with
the provisions of an approved change of operations unless, prior to the
expiration of such year, he/she requests, in writing, an extension for a
reasonable period of time due to an unusual or special problem. The Employer
shall provide lodging for the employee at the point of redomicile, not to
exceed ninety (90) calendar days, and in addition, shall reimburse the
employee twenty-nine cents ($.29) per mile to transport one (1) personal
automobile to the new location.
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Article 8, Section 6
The Employer shall not be responsible for moving expenses if the employee
changes his/her residence as a result of voluntary transfer.
None of the Employer obligations set forth in this Subsection (c)Moving
Expenses shall apply to transfers of domiciles within a fifty (50)-mile
radius.
Change of Operations Seniority
(d) The Change of Operations Committee established herein shall have
the sole authority to determine questions of the application of seniority in
those situations presented to it and in connection therewith the following
general rules shall apply, subject, however, to modification as provided by
Section 6(g) below:
Closing, Partial Closing of Terminals-Transfer of Work
(1)a. When branches, terminals, divisions or operations (hereinafter
"terminal(s)") are closed or partially closed and the work of such
terminal(s) is transferred, in whole or in part, to another terminal (s) ,
the active employees (excluding those employees on letter of layoff) at the
closed or partially closed terminal(s) shall have the right to bid into a
master seniority roster (road or city) comprised of bidders from the active
seniority rosters of closed or partially closed terminal(s) in the order of
their continuous classification (road or city) seniority. Continuous
classification seniority shall be defined as that seniority which the
employee is currently exercising and has not been broken in the manner
provided by Article 5, Section 1, or by voluntary changes in domicile not
directed, approved or ordered by a Change of Operations Committee. Employees
shall bid from the combined master seniority roster into openings at the
terminal (s) into which work is being transferred. Employees so transferring
shall be "dovetailed" into the appropriate active seniority roster at the new
terminal(s) in the order of their continuous classification seniority. Such
transfers shall be permitted prior to the recall of laid-off employees at
such gaining terminal(s). If and when additional employees are required in
excess of those who formed the combined active roster at the point of
redomicile, employees on letter of layoff at that location shall be
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Article 8, Section 6
recalled. If recalled, such employees shall be "dovetailed" with their
continuous classification seniority.
In addition, the inactive seniority rosters (employees who are on letter of
layoff) at the terminal (s) from which employees are being redomiciled shall
be "dovetailed" into a master "laid off" seniority roster and such employees
shall have the same opportunities to transfer to terminal(s) within the area
of the Supplemental Agreement which are afforded to employees covered by the
provisions of subparagraph 2(b) below.
b. The following seniority bidding procedures are to be applied in all
change of operations cases that involve master pool bidding:
1. The Change of Operations Committee shall have the authority to
establish a date for purposes of determining active and inactive (on letter
of layoff or the equivalent thereof) employees at both gaining and losing
locations.
2. Affected employees at losing locations shall be allowed to bid onto
an active master pool seniority list on a dovetailed seniority basis.
3. At the time of the original bid, an employee on the active master
pool seniority list shall be afforded the opportunity to bid any available
position for which he/she is qualified at a gaining location in accordance
with his/her seniority on the master pool seniority list. In the event the
active employees at any given location elect not to bid the number of
positions being lost at that particular location, inactive employees at that
location, in accordance with their seniority, shall then be afforded the
opportunity to bid as an active employee until the number of positions being
lost at that particular location are filled. An employee who elects to
"hold" as set forth in paragraph 4 below shall not be considered as filling a
losing position. A successful bidder shall be dovetailed on the seniority
list at the location he/she bids into. The number of successful bidders from
any losing location shall not exceed, at the time of the original bid, the
number of positions lost at that location as approved by the Change of
Operations Committee.
4. An employee on the active master pool seniority list who does not
have seniority to bid the location he/she desires in the initial bid may
remain at his/her present domicile in such status as his/her
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Article. 8, Section 6
bidding seniority will allow. Should an opening occur during the window
period at the location to which he/she desired to transfer, he/she shall be
afforded transfer opportunity in line with his/her bidding seniority. A
successful bidder under this provision shall be dovetailed on the applicable
seniority list at the location into which he/she bids and his/her moving
expenses shall be paid in accordance with other transferring employees. The
transfer provisions of this Section shall apply only during the window
period.
5. An employee who elects to hold as set forth in Paragraph 4 above
may hold for only one (1) location and must designate that location at the
time of the original bid and may hold only for a position within the
classification the employee has seniority to bid. If an employee refuses to
accept an opportunity to claim a position he/she is holding for, the employee
shall have no further claim to a position that may become available during
the window period.
6. An employee who elects to hold, shall also be entitled to exercise
seniority to claim a voluntary move under the provisions of Article 5,
Section 5 herein, and in the event the employee accepts such a voluntary
move, he/she shall retain his/her hold position at his/her home domicile
during the remainder of the window period but shall forfeit any other
seniority rights at his/her home domicile. Should a position become
available at the location such employee is holding for and which the employee
has seniority to successfully claim, moving expenses set forth in Article 8,
Section 6(c) shall be computed from the employees original home domicile.
7. There shall not be less than a one hundred and twenty (120) day
window period in all change of operations involving master pool bidding;
provided, however, the Change of Operations Committee may extend the window
period beyond one hundred and twenty (120) days when the circumstances
involved justify a longer period of time.
Closing of Terminals-Elimination of Work
(2) a. When a terminal(s) is closed and the work of such terminal(s) is
eliminated, an employee who was formerly employed at another terminal shall
have the right to return to such former terminal and exercise his/her
continuous classification (road or city)
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Article 8, Section 6
seniority, provided he/she has not been away from such former terminal for
more than a five (5)-year period.
Layoff
b. When a terminal(s) is closed and the work of such terminal(s) is
eliminated, employees who are laid-off thereby shall be given first (1st)
opportunity for available regular employment at any other terminal(s) of the
Employer within the area of the Supplemental Agreement where such employee
was employed. The obligation to offer such employment shall continue for a
period of five (5) years from the date of closing. However, the Employer
shall not be required to make more than one (1) offer during this period.
Any employee accepting such offer shall pay his/her own moving expenses. If
hired, he/she shall go to the bottom of the seniority board for bidding and
layoff purposes, but shall retain company seniority for fringe benefits only.
Opening of Terminals
(3) When a new terminal(s) is opened (except as a replacement for
existing operations or a new division in a locality where there are existing
operations), the Employer shall offer to those employees, if any, affected
thereby the opportunity to transfer to regular positions in the new
terminal(s) in the order of such employee's continuous classification (road
or city) seniority date as defined herein. Upon arrival at such new
location, such employees shall be "dovetailed" with their continuous
classification (road or city) seniority date together with other employees so
transferring.
This provision is not intended to cover situations where there is replacement
of an existing operation or where a new division is opened in a locality
where there is an existing terminal. In these latter situations, those
employees laid off at the existing facilities shall have first (lst)
opportunity for employment at the new operation in accordance with their
continuous classification (road or city) seniority date, and upon arrival
shall be similarly "dovetailed" If all regular full-time positions are not
filled in this manner, then the provisions of the preceding paragraph shall
apply.
(4) When a Company which has an established Local Cartage Operation,
which has been cleared by system OTR drivers, seeks to
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Article 8, Section 6
establish a new OTR domicile there , the Company shall first file for a
Change of Operations giving transfer opportunity, with regard to the initial
complement, to OTR drivers from those system OTR domiciles that previously
serviced such Local Cartage Operation with reasonable regularity. Such
transfer opportunity shall remain in effect for any additions to the initial
complement for a period of not less than 120 calendar days, after which
further additions to such complement shall be hired at the locality where
such new OTR domicile was established.
(5) Any employee redomiciled by an approved change of operations or
voluntary transfer to another domicile shall upon reporting to such new
domicile be deemed to have relinquished his/her right to return, with
seniority, to the domicile from which he/she was transferred, except under
another approved change of operations. Employees who avail themselves of the
transfer privileges because they are on layoff at their original terminal may
exercise their seniority rights if work becomes available at their original
terminal during the five (5)-year layoff period allowed them at their
original terminal.
Definition of Terms
(e) The term "continuous classification seniority" as used in this
Agreement is defined as that seniority which the employee is currently
exercising and has not been broken in the manner provided in Article 5,
Section 1, or by voluntary changes in domicile not directed, approved or
ordered by a Change of Operations Committee.
Qualifications
(f) In all transfers referred to in this Section, the employee must be
qualified to perform the job by experience in the classification. If a
driver test is required, such test shall be given by a qualified driver-
supervisor or driver.
Intent of Parties
(g) The parties acknowledge that the above rules are intended solely as
general standards and further that many factual situations will be presented
which necessitate different application, modification or amendment.
Accordingly, the parties acknowledge that
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Article 8, Section 6
questions of the application of seniority rights may arise which require
different treatment and it is anticipated and understood that the Employers
and Unions jointly involved and/or the respective grievance committees may
mutually agree to such disposition of questions of seniority which in their
judgment is appropriate under the circumstances.
The Change of Operations Committees, as provided herein or in the
Supplemental Agreements, shall have the authority to determine the
application of seniority in those situations presented to them. In all
cases, the seniority decisions of the Joint Committees, including the Change
of Operations Committees and subcommittees established by the National Master
Freight Agreement and the respective Supplemental Agreements, shall be final
and binding.
Section 7.
All local, area and national grievance committees as constituted under this
Agreement shall have the jurisdiction and power to decide grievances which
arose under the preceding agreements and supplements thereto, applying,
however, the contract under the grievance arose.
ARTICLE 9.
PROTECTION OF RIGHTS
Section 1. Picket Lines: Sympathetic Action
It shall not be a violation of this Agreement, and it shall not be cause for
discharge, disciplinary action or permanent replacement in the event an
employee refuses to enter upon any property involved in a primary labor
dispute, or refuses to go through or work behind any primary picket line,
including the primary picket line of Unions party to this Agreement, and
including primary picket lines at the Employer's places of business.
Section 2. Struck Goods
It shall not be a violation of this Agreement and it shall not be cause for
discharge, disciplinary action or permanent replacement if any employee
refuses to perform any service which his/her Employer
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Article 9, Section 2
undertakes to perform as an ally of an Employer or person whose employees are
on strike and which service, but for such strikes, would be performed by the
employees of the Employer or person on strike.
Section 3.
Subject to Article 32 - Subcontracting, hereof, the Employer agrees that it
will not cease or refrain from handling, using, transporting, or otherwise
dealing in any of the products of any other Employer or cease doing business
with any other person, or fail in any obligation imposed by the Motor
Carriers Act or other applicable law, as a result of individual employees
exercising their rights under this Agreement or under law, but the Employer
shall, notwithstanding any other provision in this Agreement, when necessary,
continue doing such business, including pickup or delivery to or from the
Employer's terminal and to or from the premises of a shipper or consignee.
Section 4.
The layover provision of the applicable Supplemental Agreement shall apply
when the Employer knowingly dispatches a road driver to a terminal at which a
primary picket line has been posted as a result of the exhaustion of the
grievance procedure, or after proper notification of a picket line permitted
by the collective bargaining agreement, or economic strikes occurring after
the expiration of collective bargaining agreements, or to achieve a
collective bargaining agreement. In such event and upon his/her request, a
driver shall be provided first class public transportation to his/her home
terminal, plus be paid a minimum of eight (8) hours or actual time spent
while returning, whichever is greater. The Employer shall determine the mode
of transportation to be utilized.
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ARTICLE 10.
LOSS OR DAMAGE
Section 1.
In the event loss, damage or theft of freight, equipment, materials, or
supplies is incurred as a direct result of a willful gross negligent act by
an employee in the performance of assigned work, when such act knowingly may
result in such loss, damage or theft, the employee may be held responsible
for such acts and may be required to assume liability for any such loss,
damage or theft, in whole or in part. The term "willful, gross negligent
acts" is intended to describe independent actions of any employee who
knowingly violates established rules or policies that, when adhered to,
clearly prevent loss, damage or theft described herein. Employees shall not
be held responsible or required to assume liability for loss or damage or
theft unless clear proof of willful, gross negligence is shown. In no event
will an employee be held responsible for, or required to assume any liability
for any loss, damage or theft when performing assigned work in a manner as
specifically instructed by a supervisor. This Article shall not be utilized
in any manner to hold an employee liable for any loss or damage of equipment
under any conditions or for any damage to cargo as a result of a vehicular
accident.
Section 2.
Prior to an employee being charged with the responsibility and liability for
any loss, damage or theft because of willful gross negligent acts on the part
of the employee, a hearing shall be held with the Local Union, the employee
and the Employer. Employees who are found to be liable and required to make
restitution for such liability, shall not then be subject to any further
disciplinary action. Any disputes between the parties may be referred to the
grievance procedure of the applicable Area Supplemental Agreement and the
National Master Freight Agreement.
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ARTICLE 11.
BONDS AND INSURANCE
Should the Employer require any employee to give bond, cash bond shall not be
compulsory, and any premium involved shall be paid by the Employer. The
primary obligation to procure the bonds shall be on the Employer. If the
Employer cannot arrange for a bond within ninety (90) days, it must so notify
the employee in writing. Failure to so notify shall relieve the employee of
the bonding requirement. If proper notice is given, the employee shall be
allowed thirty (30) days from the date of such notice to make his/her own
bonding requirements, standard premiums only on said bond to be paid by the
Employer. A standard premium shall be that premium paid by the Employer for
bonds applicable to all other of its employees in similar classifications.
Any excess premium is to be paid by the employee. Cancellation of a bond
after once issued shall not be cause for discharge unless the bond is
cancelled for cause which occurs during working hours, or due to the employee
having given a fraudulent statement in obtaining said bond.
Every driver must maintain a valid chauffeur's license and be covered by
insurance. If an Employer cannot cover a driver under an existing fleet
policy, the Employer will promptly apply to the state assigned risk-pool to
provide any comparable coverage. During the pendency of the application and
until insurance is obtained, the driver will not be terminated, but will be
taken out of driving service. When any comparable insurance is obtained, the
employee will be responsible for paying any excess over the standard charges.
ARTICLE 12.
UNIFORMS
The Employer agrees that if any employee is required to wear any kind of
uniform as a condition of his/her continued employment, such uniform shall be
furnished and maintained by the Employer, free of charge, at the standard
required by the Employer. Said uniforms shall be made in the United States
by union vendors, if possible.
The Employer shall replace all clothing, glasses, hearing aids and/or
dentures not covered by company insurance or worker's compen-
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Article 12
sation which are destroyed or damaged in a wreck or fire with company
equipment.
The Employer has the right to establish and maintain reasonable standards for
wearing apparel and personal grooming.
ARTICLE 13.
PASSENGERS
No driver shall allow anyone, other than employees of the Employer who are on
duty, to ride on his truck except by written authorization of the Employer,
or except in cases of emergency arising out of disabled commercial equipment
or an Act of God. No more than two (2) people shall ride in the cab of a
tractor unless required by government agencies or the necessity of checking
of equipment. This shall not prohibit drivers from picking up other drivers,
helpers or others in wrecked or broken down motor equipment and transporting
them to the first (1st) available point of communication, repair, lodging or
available medical attention. Nor shall this prohibit the transportation of
other drivers from the driver's own company at a delivery point or terminal
to a restaurant for meals.
ARTICLE 14.
COMPENSATION CLAIMS
Section 1. Compensation Claims
(a) The Employer agrees to cooperate toward the prompt disposition of
employee on-the-job injury claims. The Employer shall provide worker's
compensation protection for all employees even though not required by state
law, or the equivalent thereof, if the injury arose out of or in the course
of employment.
(b) At the time an injury report is turned in, the Employer shall
provide the injured employee with an information sheet briefly outlining the
procedure for submitting a worker's compensation claim to include the name,
address and phone number of the company's worker's compensation
representative and other pertinent information relative to claim payment.
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Article 14, Section 1
(c) An employee who is injured on the job, and is sent home, or to a
hospital, or who must obtain medical attention, shall receive pay at the
applicable hourly rate for the balance of his/her regular shift on that day.
An employee who has returned to his/her regular duties after sustaining a
compensable injury who is required by the worker's compensation doctor to
receive additional medical treatment during his/her regularly scheduled
working hours shall receive his/her regular hourly rate of pay for such time.
(d) Road drivers sustaining an injury while being transported in
company-provided transportation for Company purposes at a layover terminal
shall be considered as having been injured on the job.
(e) In the event that an employee sustains an occupational illness or
injury while on a run away from his/her home terminal, the Employer shall
provide transportation by bus, train, plane, or automobile to his/her home
terminal if and when directed by a doctor.
(f) The Employer agrees to provide any employee injured locally
transportation at the time of injury, from the job to the medical facility
and return to the job, or to his/her home if required.
(g) In the event of a fatality arising in the course of employment,
while away from the home terminal, the Employer shall return the deceased to
his/her home at the point of domicile.
(h) The Employer may publish reasonable safety rules and procedures and
provide the Local Union with a copy Failure to observe such reasonable rules
and/or procedures shall subject the employee to disciplinary action in
accordance with the disciplinary procedures in the applicable Supplemental
Agreement. However, the time limitation relative to prior offenses shall be
waived to permit consideration of the employee's entire record of failure to
observe reasonable safety rules and/or procedures resulting in lost time
personal injuries. This provision does not apply to vehicular accidents.
Section 2. Modified Work
(a) The Employer may establish a modified work program designed to
provide temporary opportunity to those employees who are unable to perform
their normal work assignments due to a disabling on-the-job injury.
Recognizing that a transitional return-to-work program offering both physical
and mental therapeutic benefits will
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Article 14, Section 2
accelerate the rehabilitative process of an injured employee, modified work
programs are intended to enhance worker's compensation benefits and are not
to be utilized as a method to take advantage of an employee who has sustained
an industrial injury.
(b) Implementation of a modified work program shall be at the
Employer's option and shall be in strict compliance with applicable federal
and state worker's compensation statutes. Acceptance of modified work shall
be on a voluntary basis at the option of the injured employee. However,
refusal to accept modified work by an employee, otherwise entitled to
worker's compensation benefits, may result in a loss or reduction of such
benefits as specifically provided by the provisions of applicable federal or
state worker's compensation statutes. Employees who accept modified work
shall continue to be eligible to receive "temporary partial" worker's
compensation benefits as well as all other entitlements as provided by
applicable federal or state worker's compensation statutes.
c) At facilities where the Employer has a modified work program in
place, temporary modified assignments shall be offered in seniority order to
those regular full time employees who are temporarily disabled due to a
compensable worker's compensation injury and who have received a detailed
medical release from the attending physician clearly setting forth the
limitations under which the employee may perform such modified assignments.
Once a modified work assignment is made and another person is injured, the
second person must wait until a modified work opening occurs, regardless of
seniority. All modified work assignments must be made in strict compliance
with the physical restrictions as outlined by the attending physician. All
modified work program candidates must be released for eight (8) hours per
day, five (5) days per week. The Employer at its option, may make a modified
work offer of less than eight (8) hours per day where such work is expected
to accelerate the rehabilitative process and the attending physician
recommends that the employee works back to regular status or up to eight (8)
hours per day by progressively increasing daily hours. A copy of any release
for modified work must be given to the employee before the modified work
assignment begins.
It is understood and agreed that those employees who, consistent with
professional medical evaluations and opinion, may never be
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Article 14, Section 2
expected to receive an unrestricted medical release, shall not be eligible to
participate in a modified work program.
In the event of a dispute related to conflicting medical opinion, such
dispute shall be resolved pursuant to established worker's compensation law
and/or the method of resolving such matters as outlined in the applicable
Supplemental Agreement. In the absence of a provision in the Supplemental
Agreement, the following shall apply:
When there is a dispute between two (2) physicians concerning the release of
an employee for modified work, such two (2) physicians shall immediately
select a third (3rd) neutral physician within seven (7) days, whose opinion
shall be final and binding on the Employer, the Union and the employee. The
expense of the third (3rd) physician shall be equally divided between the
Employer and the Union. Disputes concerning the selection of the neutral
physician or back wages shall be subject to the grievance procedure.
For locations where the Employer intends to implement a modified work program
or has a modified work program in place, the Local Union shall be provided
with a copy of the current form(s) being used for employee evaluation for
release and general job descriptions. This information shall be general in
nature, not employee specific.
When a modified work assignment is made, the employee shall be provided with
the hours and days he/she is scheduled to work as well as the nature of the
work to be performed in writing. A copy of this notice shall also be
submitted to the Local Union.
(d) Modified work shall be restricted to the type of work that is not
expected to result in a re-injury and which can be performed within the
medical limitations set forth by the attending physician. In the event the
employee, in his/her judgment, is physically unable to perform the modified
work assigned, he/she shall be either reassigned modified work within his/her
physical capabilities or returned to full "temporary total" worker's
compensation benefits. In the event a third (3rd) party insurance carrier
refuses to reinstate such employee to full temporary total disability
benefits, the Employer shall be required to pay the difference between the
amount of the benefit paid by such third (3rd) party insurer and full total
temporary disability benefits. Determination of physical capabilities shall
be based on the attend-
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Article 14, Section 2
ing physician's medical evaluation. Under no conditions will the injured
employee be required to perform work at that location subject to the terms
and conditions of the National Master Freight Agreement or its Area
Supplemental Agreements. Prior to acceptance of modified work, the affected
employee shall be furnished a written job description of the type of work to
be performed.
(e) The modified workday and workweek shall be established by the
Employer within the limitations set forth by the attending physician.
However, the workday shall not exceed eight (8) hours, inclusive of coffee
breaks where applicable and exclusive of a one-half (1/2) hour meal period
and the workweek shall not exceed forty (40) hours, Monday through Friday, or
Tuesday through Saturday, unless the nature of the modified work assignment
requires a scheduled workweek to include Sunday. Whenever possible, the
Employer will schedule modified work during daylight hours, Monday through
Friday, or during the same general working hours and on the same workweek
that the employee enjoyed before he/she became injured. In the case of an
employee whose workdays and/or hours routinely varied, the Employer will
schedule the employee based on the availability of the modified assignment
being offered. Any alleged abuse of the assignment of workdays and workhours
shall be subject to the grievance procedure.
(f) Modified work time shall be considered as time worked when
necessary to satisfy vacation and sick leave eligibility requirements as set
forth in the National Master Freight Agreement and/or its applicable Area
Supplemental Agreements. In addition to earned vacation pay as set forth in.
the applicable Area Supplemental Agreements, employees accepting modified
work shall receive prorated vacation pay for modified work performed based on
the weekly average modified work pay. The only time modified work is used in
prorating vacation is when the employee did not qualify under the applicable
Supplemental Agreement.
Holiday pay shall first be paid in accordance with the provisions of the
applicable Supplemental Agreement as it relates to on-the-job injuries. Once
such contractual provisions have been satisfied, holidays will be paid at the
modified work fate which is the modified work wage plus the temporary partial
disability benefit.
Sick leave and funeral leave taken while an employee is performing modified
work will be paid at the modified work rate, which is
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Article 14, Section 2
the modified work wage plus the temporary partial disability benefit. Unused
sick leave will be paid at the applicable contract rate where the employee
performed modified work and qualified for the sick leave during the contract
year.
(g) The Employer shall continue to remit contributions to the
appropriate health & welfare and pension trusts during the entire time period
employees are performing modified work. Continuation of such contributions
beyond the period of time specified in the Supplemental Agreement for on-the-
job injury shall be required. Provisions of this Section shall not be
utilized as a reason to disqualify or remove an employee from the modified
work program.
(h) Employees accepting modified work shall receive temporary partial
benefits as determined by each respective state workers' compensation law,
plus a modified work wage when added to such temporary partial benefit, shall
equal not less than eighty-five percent (85%) of forty (40) hours' pay he/she
would otherwise be entitled to under the provisions of the applicable Area
Supplemental Agreement for the first six (6) months from the date the
modified work assignment commences. After this initial six (6)-month period,
the percentage shall increase to ninety percent (90%) for the duration of
each individual modified work assignment. The Employer shall not refuse to
assign modified work to employees based solely on such employees reaching the
ninety percent (90%) wage level. Such refusal shall be considered an abuse
of the program and shall be subject to the grievance procedure. Modified
work assignments beginning or ending within a workweek shall be paid on a
prorated basis; one (1) day equals one-fifth (1/5th).
Where an employee participates in a wage reduction-job security plan as
provided in Article 6, Section 2, the eighty-five percent (85%) and ninety
percent (90%) as specified herein shall be based on the wage provisions of
the applicable Supplemental Agreement and not the wage reduction-job security
plan; provided, however, no such employee shall receive a modified work wage
in excess of that provided in the applicable wage reduction-job security
plan.
(i) Employees accepting modified work shall not be subject to
disciplinary action provisions of the Supplemental Agreements unless such
violation involves an offense for which no prior warning notice is required
under the applicable Supplemental Agreement
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Article 14, Section 2
(Cardinal Sins). Additionally, the provisions of Article 35, Section 3(a),
shall apply.
(j) Alleged abuses of the modified work program by the Employer and any
factual grievance or request for interpretation concerning this Article shall
be submitted directly to the Conference Joint Area Committee for the making
of a record only, after which it shall be immediately referred to the
National Grievance Committee. Proven abuses may result in a determination by
the National Grievance Committee that would withdraw the benefits of this
Article from that Employer, in whole or in part, in which case affected
employees shall immediately revert to full worker's compensation benefits.
Section 3.
The Union and the Employer agree to abide by the provisions of the Americans
with Disabilities Act. The Employer shall negotiate with the Local Union
before providing a reasonable accommodation to a qualified bargaining unit
employee.
ARTICLE 15.
MILITARY CLAUSE
Employees enlisting or entering the military or naval service of the United
States shall be granted all rights and privileges provided by applicable law.
The Employer shall pay the health & welfare and pension fund contributions on
employees on leave of absence for training in the military reserves or
National Guard, but not to exceed fourteen (14) days, providing such absence
affects his/her credits or coverage for health & welfare and/or pensions.
Effective the date of ratification, the Employer shall continue to pay health
& welfare contributions for regular active employees involuntarily called to
active duty status from the military reserves or the National Guard during
periods of war or military conflict. Such contributions shall only be paid
for a maximum period of twelve (12) months.
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ARTICLE 16.
EQUIPMENT AND SAFETY
Preamble
It is agreed that all parties covered by this Agreement shall comply with all
applicable federal, state and local regulations pertaining to subjects
covered by Article 16. Failure to do so shall be subject to the grievance
procedure, in accordance with Articles 7 and 8 of the NMFA, and any other
remedies prescribed by law after the procedures contained in this Agreement
are exhausted.
Section 1. Safe Equipment
The Employer shall not require employees to take out on the streets of
highways any vehicle that is not in a safe operating condition, including,
but not limited to, equipment which is acknowledged as overweight or not
equipped with the safety appliances prescribed by law. It shall not be a
violation of this Agreement or basis for discipline where employees refuse to
operate such equipment unless such refusal is unjustified.
It shall also not be a violation of this Agreement or considered an
unjustified refusal where employees refuse to operate a vehicle when such
operation constitutes a violation of any federal rules, regulations,
standards, or orders applicable to commercial motor vehicle safety or health,
or because of the employee's reasonable apprehension of serious injury to
himself/herself or the public due to the unsafe condition of such equipment.
The unsafe conditions causing the employee's apprehension of injury must be
of such nature that a reasonable person, under the circumstances then
confronting the employee, would conclude that there is a bona fide danger of
an accident, injury, or serious impairment of health, resulting from the
unsafe condition. In order to qualify for protection under this provision,
the employee must have sought from the Employer, and have been unable to
obtain, correction of the unsafe condition.
All equipment which is refused because it is not mechanically sound or
properly equipped shall be appropriately tagged so that it cannot be used by
other employees until the maintenance department has adjusted the complaint.
After such equipment is repaired, the
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Article 16, Section 1
Employer shall place on such equipment an `OK' in a conspicuous place so the
employee can see the same.
Section 2. Dangerous Conditions
Under no circumstances will an employee be required or assigned to engage in
any activity involving dangerous conditions of work, or danger to person or
property or in violation of any applicable statute or court order, or in
violation of a government regulation relating to safety of person or
equipment.
The term "dangerous conditions of work" does not relate to the type of cargo
which is hauled or handled.
Section 3. Accident Reports
Any employee involved in any accident or cargo spill incident, involving any
hazardous or potentially polluting product, shall immediately report said
accident or spill incident and any physical injury sustained. When required
by his/her Employer, the employee, before starting his/her next shift, shall
make out an accident or incident report in writing on forms furnished by the
Employer and shall turn in all available names and addresses of witnesses to
the accident or incident. The employee shall receive a copy of the accident
or incident report that he/she submits to his/her Employer. Failure to
comply with this provision shall subject such employee to disciplinary action
by the Employer.
Section 4. Equipment Reports
Employees shall immediately, or at the end of their shift, report all defects
of equipment.
(a) Such reports shall be made on a suitable form furnished by the
Employer and shall be made in multiple copies, one (1) copy to be retained by
the employee and one (1) copy to be made available for inspection by the next
driver operating the unit. Such copy will remain in the truck. Any alleged
violation of the above shall not be cause for refusal of the equipment, but
shall be subject to the grievance procedure. The Employer shall not ask or
require any employee to take out equipment that has been reported by any
other employee as being in an unsafe operating condition until the same
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Article 16, Section 4
has been repaired or is certified by a mechanical department that no repairs
are needed and the unit is safe to drive.
(b) When the occasion arises where an employee gives written report on
forms in use by the Employer of a vehicle being in an unsafe working or
operating condition and receives no consideration from the Employer, he/she
shall take the matter up with the officers of the Union who will take the
matter up with the Employer. However, in no event shall an employee be
required to take out on the streets or highways a vehicle that is not in a
safe operating condition or in violation of any federal rules, regulations,
standards, or orders applicable to commercial motor vehicle safety as
provided in Section I of this Article.
Section 5. Qualifications on Equipment
If the Employer or government agency requests a regular employee to qualify
on equipment requiring a classified or special license, or in the event an
employee is required to qualify (recognizing seniority) on such equipment in
order to obtain a better job opportunity with his/her Employer, the Employer
shall allow such regular employee the use of the equipment so required in
order to take the examination on the employee's own time.
Costs of such license required by a government agency will be paid for by the
employee.
An employee unable to successfully pass the new DOT Commercial Driver's
License (CDL) examination will be allowed to take a leave of absence for a
period not to exceed one (1) year provided the employee makes a bona fide
effort to pass the test each time the opportunity presents itself.
Section 6. Equipment Requirements
(a) All tractors must be equipped as necessary to allow the driver to
safely enter and exit the cab, and hook and unhook the air hoses. All
equipment used as city peddle trucks, and equipment regularly assigned to
peddle runs, must have steps or other similar device to enable drivers to get
in and out of the body. All twin trailers used in LTL pick-up and delivery
operation with roll up doors purchased after April 1, 1985 shall be equipped
with a hand hold and a DOT bumper which may serve as a step.
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Article 16, Section 6
(b) The Employer shall install heaters and defrosters on all trucks and
tractors.
(c) There shall be first-line tires on the steering axle of all road
and local pick-up and delivery power units.
(d) All road equipment regularly assigned to the fleet shall be
equipped with an air-ride seat on the driver's side. Such equipment shall be
maintained in reasonable operating condition. All new air-ride seats shall
oscillate and have an adjustable lumbar support, height, backrest and seat
tilt.
(e) Tractors added to the road fleet and assigned to road operations on
a regular basis, whether newly manufactured or not newly manufactured, shall
be air conditioned. Tractors now in service which are not air conditioned
shall be retrofitted by July 1, 1985.
The Conference Joint Area Committee may, upon application of either the
Employer or the Local Union, waive the installation of such air conditioning
equipment as a result of climatic conditions or other standards established
by the Committee.
(f) When the Employer weighs a trailer, the over-the-road driver shall
be furnished the resulting weight information along with his/her driver's
orders.
(g) All company trailers shall be marked for height.
(h) No driver shall be required to drive a tractor designed with the
cab under the trailer.
(i) All road and city equipment shall have a speedometer operating with
reasonable accuracy.
(j) The following minimum measurements for fuel tank placement shall
apply to tractors added to the fleet after March 1, 1981, with the
understanding that there shall be no retrofit of equipment currently in use:
(1) front of fuel tank to rear of front tire-not less than 4 inches; (2) rear
of fuel tank to front of duals-not less than 4 inches; (3) bottom of fuel
tank to ground-provide clearance not less than 7.5 inches, measured on a flat
surface; and (4) all fuel tank measurements as stated herein include
brackets, return lines, etc. in determining clearance.
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Article 16, Section 6
Any alleged violation of the above requirements shall not be cause for
refusal of the equipment, but shall be subject to the grievance procedure as
a safety and health issue.
(k) The following shall apply to shock absorbers on tractor front axles
with the purchase of newly manufactured tractors which are placed in service
after March 1, 1981, and with the understanding that there shall be no
retrofit of equipment currently in use:
Where the manufacturer recommends and provides shock absorbers as standard
equipment with the tractor front suspension assembly, properly maintained
shocks on such new equipment shall be considered as a necessary and integral
part of that assembly. Where the manufacturer does not recommend and provide
shock absorbers as standard equipment with the tractor front suspension
assembly, shocks shall not be considered as a necessary or integral part of
that suspension system.
Any alleged violation of the above, including maintenance of existing
equipment, shall not be cause for refusal of equipment but shall be subject
to the grievance procedure as a safety and health issue.
(l)(1) The following shall apply for the minimum interior dimensions
of the sleeper berths on newly manufactured over-the-road tractors purchased
and placed in service after January 1, 1987.
a. Length - 80 inches; b. Width - 34 inches; and, c. Height - 24 inches.
It is understood that a "manufacturing tolerance of error" of one inch (1')
is permissible, provided the original specifications were in conformity with
the above recommended dimensions. It is understood that there shall be no
retrofit of equipment currently in service.
(2) Interior cab dimensions. Effective January 1, 1988, the Employer,
in placing orders for newly manufactured over-the-road tractors, shall
request of the manufacturer in writing that there will be compliance with as
many of the following October, 1985 SAE recommended practices as possible:
J941-E, J1052, Jl521, Jl522, J1517, J1516, and J1100. The carrier, upon
request, will furnish proof to the National Safety and Health Committee that
a request was made to the manufacturer for compliance with the aforementioned
SAE recommended practices.
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Article 16, Section 6
(m) The Employer and the Union recognize the need for safe and
efficient twin-trailer operations. Accordingly, the parties agree to the
following:
(1) The Employer shall make available to all drivers involved in the
twin-trailer operations training in the proper procedures for the safe
hooking and unhooking of dollies and jiff-lox. Upon request, the Company
will furnish to the Union a copy of their training program.
(2) Dollies and jiff-lox shall be counter-balanced or equipped with a
crank-down wheel to support the weight of the dolly tongue or jiff-lox. A
handle will also be provided on the tongue of the dolly or jiff-lox and shall
be maintained.
(3) A tractor equipped with a pintle hook will be made available to
drivers required to drop and hook twin trailers or triples at closed
terminals.
The Employer shall make a bona fide attempt to make a telephone available for
the driver at closed terminals during the trailer switch.
(4) Whenever possible, the Company will hook up the heaviest trailer in
front in twin-trailer operations. In those instances where it is not
possible because of an intermediate drop of less than one hundred and fifty
(150) miles or scaling of the drive axle, the driver after driving the unit
at any point on the trip, determines, at his/her sole discretion, the unit
does not handle properly, may have the Company switch the unit or authorize
the driver to switch the unit and be paid for such time.
(n) (1) There will be a moratorium on the purchase of diesel powered
forklifts.
a. On the effective date of this Agreement, there shall be no diesel
forklifts in breakbulk terminals and/or consolidation centers that employ
fifty (50) or more regular dock employees. Commencing .April 1, 1992, all
diesel forklifts shall be phased out at the rate of twenty percent (20%) per
year, systemwide, to be completed by April 17 1997.
b. Should the National Institute for Occupational Safety and Health
(NIOSH) conclude that diesel is or can be made as safe and healthy as
alternative combustible fuels, the Employers reserve the right to resume
purchasing diesel powered forklifts.
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Article 16, Section 6
(2) It shall be standard work practice that every diesel-powered
forklift shall be shut off whenever the operator leaves the seat. Under no
circumstances shall diesel-powered forklifts be allowed to idle when not
attended.
(3) Diesel-powered forklifts shall be tuned and maintained in
accordance with schedules recommended by their manufacturers. The Employer
shall provide copies of such recommendations to the Union upon request.
(4) Improperly maintained diesel-powered forklifts may produce visible
emissions after start-up. Therefore, any such diesel-powered forklift that
is found to be smoking shall be taken out of service as soon as possible
until repairs are trade and that condition corrected.
(5) The Employer agrees to cooperate with those government and/or
mutually agreed private agencies in such surveys or studies designed to
analyze the use and operation of diesel-powered forklifts and diesel-powered
forklift emissions.
(o) As of July 1, 1988, as new equipment is ordered or existing
equipment requires brake lining replacement, all brake linings shall be of
nonasbestos material where available and certifiable.
(p) Slack adjuster equipment (snubbers) used in multiple trailer
operations, whether on the trailers or on the converters, shall be maintained
in proper working order. However, it shall not be a violation of this
provision for the unit to be pulled to the next point of repair if the
snubber is inoperative.
(q) Converter dollies may be pulled on public roads by bobtail
tractors if all of the following conditions are met:
(1) Tractors used in this type of operation shall have a pintle hook
installed which has the proper weight capacity and is designed for highway
use;
(2) Neither supply nor control air lines are to be connected to the
converter dolly when being pulled by a bobtail tractor, and the tractor
protection valve shall be set in the normal bobtail position;
(3) After October 1, 1991, tractors used to pull converter dollies
bobtail must be equipped with a type of bobtail proportioning valve (BPV) in
the tractor braking system;
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Article 16, Section 6
(4) It is further agreed such configuration must comply with state and
federal law.
(r) All newly manufactured road tractors regularly assigned to the
fleet after July 1, 1991, shall be equipped with heated mirrors. However, it
shall not be a violation of this provision for the tractor to be dispatched
to the next Company point of repair if the heated mirror is inoperative.
(1) All new diesel tractors and new yard equipment shall be equipped
with vertical exhaust stacks.
(2) All road and city tractors shall be equipped with large spot
mirrors (6' minimum) on both sides of the tractor by January 1, 1995.
(3) All road tractors and switching equipment shall be equipped with an
operable light of sufficient wattage on the back of the cab.
(4) All new road and city equipment shall have operable sun visors.
(5) Seats on forklifts and sweepers shall be maintained in good repair.
(s) All newly manufactured city tractors regularly assigned to the city
pickup and delivery operation after July 1, 1991, shall be equipped with
power steering and an air-ride seat on the driver's side.
(1) All new road and yard equipment shall have power steering.
(2) All new forklifts and sweepers shall be equipped with power
steering.
(t) All hand trucks and pallet jacks shall be maintained in good
repair.
(u) All portable and mechanical dock plates shall be maintained in good
working condition.
(v) The parties will maintain a safe and healthy working environment in
sleeper operations. The parties agree to establish a committee composed of
four (4) members each to review the comfort and/or safety aspects of sleeper
berths pertaining to ride. Such committee shall meet by mutual agreement of
the Co-chairmen as to time and place. The committee shall confer with
appropriate
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Article 16, Section 6
representatives of equipment manufacturers and/or other experts on this
subject as maybe available. The intent of the committee is to identify any
problems with the comfort and/or safety aspects of sleeper berths pertaining
to ride that may exist, and through its deliberations with the manufacturers
and/or other experts, develop ways and means to correct such situations. The
committee shall report its findings and make recommendations to the National
Grievance Committee by April 1, 1995. If the parties cannot agree on
possible recommendations by April 1, 1995, the matter shall be subject to
Article 8 - National Grievance Procedure.
(1) Sleeper berths shall be equipped with individual heat and air-
conditioning controls.
(2) Bunk restraint strap/net buckles on sleeper equipment shall be
mounted on the entrance side of the sleeper berth by April 1, 1995.
(3) New sleeper equipment purchased on or after April 1, 1995, shall be
equipped with a power window on the passenger's side of the cab that is
operable from the driver's side of the cab.
Section 7. National Safety and Health Committee
The Employer and the Union shall continue the National Master Freight Safety
and Health Committee. Such Committee shall be comprised of qualified
representatives to consider safety, health and equipment issues. The
Committee shall consult among themselves and/or with appropriate government
agencies, state and federal, on matters involving all aspects of trucking
operations safety and health and issues related to equipment safety. Such
Committee shall convene on a regular basis, with an agenda to be agreed to by
the respective chairmen.
Any grievance arising under this Article shall be processed through the
Conference Joint Area level in accordance with rules and procedures agreed to
by the National Master Freight Safety and Health Committee and approved by
the National Grievance Committee.
Section 8. Hazardous Materials Program
The parties have rewritten the "Hazardous Materials' Employee
Protection/Training Program'" to be effective April 1, 1994, and is hereby
incorporated by reference in this Agreement. The Program
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Article 16, Section 8
will be printed and distributed to all members/employees in line with
regulatory guidelines. The parties further agree that as new federally
mandated changes occur, they too will become part of this Agreement. The
Guidelines contained in the printed Program are minimums, and are not
intended to prevent the Employer from providing additional training or
protection which would enhance safety and health to the employees. All
regular employees shall be paid for such training at their regular straight
time hourly rate.
Section 9. Union Liability
Nothing in this Agreement or its Supplements relating to health, safety or
training rules or standards shall create any liability or responsibility on
behalf of the Union for any job-related injury or accident to any employee or
any other person. Further, the Employer will not commence legal action
against the Union as a result of the Union's negotiation of safety standards
contained in this Agreement or failure to properly investigate or follow-up
Employer compliance with those safety standards.
Section 10. Government Required Safety & Health Reports
The Employer shall provide, upon written request by the Local Union, a copy
of any occupational incident report that is required to be filed with a
federal government agency on safety and health subjects addressed by Article
16 only. Such reports shall be free of charge for one (1) copy.
ARTICLE 17.
PAY PERIOD
The Joint Area Committee or the National Grievance Committee and the Employer
may, by mutual agreement, waive the provisions of Local Supplements dealing
with pay periods upon a satisfactory showing of necessity by the Employer.
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ARTICLE 18.
OTHER SERVICES
In the event an Employer, party to this Agreement, may require the services
of employees coming under the jurisdiction of this Agreement in a manner and
under conditions not provided for in this Agreement, then and in such
instances the Local Union and the Employer concerned may negotiate such
matters for such specific purposes, subject to the approval of the Joint Area
Committee and then ratified by the affected members.
ARTICLE 19.
POSTING
Section 1. Posting of Agreement
A copy of this Agreement shall be posted in a conspicuous place in each
garage and terminal.
Section 2. Union Bulletin Boards
The Employer agrees to provide suitable space for the union bulletin board in
each garage, terminal or place of work. Postings by the Union on such boards
are to be confined to official business of the Union.
ARTICLE 20.
UNION AND EMPLOYER COOPERATION
Section 1. Fair Day's Work for Fair Day's Pay
The parties agree at all times as fully as it may be within their power to
cooperate so as to protect the long-range interests of the employees, the
Employers signatory to this Agreement, the Union and the general public
served by the members of the trucking industry party to this Agreement.
The Union and the Employer recognize the principle of a fair day's work for a
fair day's pay; that jobs and job security of employees
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Article 20, Section I
working under this Agreement are best protected through efficient and
productive operations of the Employer and the trucking industry; and that
this principle shall be recognized in the administration of this Agreement
and its Supplements and the resolution of all grievances thereunder.
Section 2. Joint Industry Development
Committee
The parties recognize that the unionized LTL industry is losing market share
and jobs to competitors. The parties recognize that it is in the interest of
the Union and the Employers to return the LTL industry to health and to
foster its growth. Only if the industry prospers and grows will the
industry's employees, whom the Union represents, achieve true job and
economic security. Only if the industry prospers and grows will the industry
have access to the resources it needs to capitalize and be competitive.
Recognizing that returning the industry to health should be a cooperative,
long-term effort, the Teamsters National Freight Industry Negotiating
Committee ("TNFINC") and the Employer Association agree to establish a Joint
Industry Development Committee to serve as a vehicle for this effort. The
purpose of the Committee will be to perform the following tasks: address the
principles of an intermodal truckload agreement as a means of capturing new
market and creating additional city/P&D jobs; develop data to evaluate and
monitor industry and competitor productivity, costs and operations;
catalogue, compare and evaluate workrules, practices and procedures among the
various NMFA supplements and the Employer Association's companies; make joint
recommendations to the parties about any changes in the NMFA and its
supplements that the Committee believes should be considered in the next
round of negotiations for the new NMFA; solicit grants for joint activities
that benefit the industry and its bargaining unit employees, such as driver
training schools; and monitor pending legislation and executive action on the
national, state and local level that may affect the welfare of the industry
and, where appropriate, jointly recommend actions that further the interests
of the industry and its bargaining unit employees and jointly present the
views of the Joint Committee to legislative and executive bodies.
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Article 20, Section 2
The Committee shall operate as a labor-management committee within the
meaning of Section 302(c) (9) of the LMRA, as amended, established and
functioning so as to fulfill one or more of the purposes set forth in Section
6 (c) (2) of the Labor Management Cooperation Act of 1978. The Committee
shall have the full support of both the International Brotherhood of
Teamsters and the Employer Association in the Committee's efforts to identify
problems, formulate plans to solve those problems and, where appropriate,
conduct joint activities designed to implement the plans.
The Chairman of TNFINC will appoint five (5) Union representatives to the
Joint Committee. The Employer Association will appoint five (5) Employer
representatives to the Joint Committee. Appointments to the Joint Committee
will be made in a manner to assure that there are persons serving who are
familiar with the full range of operations undertaken by Employer
Association's carriers under all supplemental agreements. The Joint
Committee shall meet at least quarterly and may appoint continuing
subcommittees to carry out specific tasks. The Union and Employer
representatives to the Joint Committee will establish procedures for the
operation of this Committee.
Section 3.
The Union and the Employers will establish a Health Benefits Joint Committee
to review the provision of health benefits to employees covered by this
Agreement. This Committee is charged with the critical responsibility of
ensuring that employee health benefits are made available to employees
covered by the terms of the NMFA in a secure and cost-efficient manner.
It is anticipated that this Committee shall serve as a source of continuing
study regarding the most efficient manner of providing health benefits to
covered employees and as a source of continuing guidance, particularly in
those instances where an existing Health & Welfare Fund is not capable of
maintaining benefits within the contribution level provided under the terms
of this Agreement. To the extent covered employees might suffer a reduction
in benefits due to the inability of a Health & Welfare Fund to continue to
provide existing benefits within the contribution amount provided hereunder,
the Joint Committee shall have the responsibility of making recommendations
to the affected employees and their Local Unions
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Article 20, Section 3
concerning alternative methods, if possible, of securing comparable health
benefits.
The Union and the Employers will establish procedures for the operation of
this Committee. The Committee will make periodic reports and recommendations
to TNFINC and Employers concerning the payment for health services by the
jointly administered Health & Welfare Funds receiving contributions under the
terms of this Agreement.
ARTICLE 21.
UNION ACTIVITIES
Any employee, member of the Union, acting in any official capacity whatsoever
shall not be discriminated against for his/her acts as such officer of the
Union so long as such acts do not interfere with the conduct of the
Employer's business, nor shall there be any discrimination against any
employee because of Union membership or activities.
A Union member elected or appointed to serve as a Union official shall be
granted a leave of absence during the period of such employment, without
discrimination or loss of seniority rights, and without pay.
ARTICLE 22.
OWNER-OPERATORS
Section 1.
This Agreement governs the use of "owner-operators" (as defined below) by all
Employers signatory to this Agreement. The parties recognize that there are
two (2) distinct types of C4 owner-operators" covered by this Agreement:
employee owner-operators and nonemployee owner-operators. Generally,
employee owner-operators are drivers who work exclusively for a single
Employer on a regular basis and who perform the same type of work as the
Employer's regular employee drivers, and it is only that kind of owner-
operator that is covered by this Article. Conversely, there are owner-
operators who do hauling work on an intermittent basis (e.g., trip leas-
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Article 22, Section 1
es) for several different Employers. As such, the latter may be utilized
only to perform work which may be properly subcontracted under Article 32
(e.g., overflow loads).
Section 2.
For purposes of this Article, the term "owner-operators" means any employee
driver who performs unit work and who operates trucking equipment which
he/she owns and leases to an Employer signatory to this Agreement. The
certificate and title to the leased equipment of an owner-operator must be in
the name of the owner-operator (or the owner-operatives secured creditor) not
the Employer Further, it is understood and agreed that whenever the term
"owner-operator" is used in this Article, it means employee owner-driver
only, and nothing in this Article shall apply to any equipment leased except
when the owner is also employed as a driver. However, it is expressly
understood that in the case of equipment under permanent lease (with a
minimum thirty (30)-day cancellation clause) from a fleet owner, individuals
operating such equipment shall operate it as employees of the Employer.
Section 3.
For purposes of this Article, hired or leased equipment shall be operated by
an employee of the Employer. The performance of unit work by owner-operators
shall be governed by the provisions of this Agreement and Supplements
relating to owner-operators. The Employer expressly reserves the right to
control the manner, means and details of, and by which, the owner-operator
performs his/her services, as well as the ends to be accomplished, and shall
not permit others or delegate to others the authority to do so. All employee
owner-operators shall be treated under the provisions of this Agreement and
any applicable Supplements to this Agreement, in the same manner as other
employee drivers. Accordingly, the wages and working conditions of an
employee owner-operator (including pension and health & welfare
contributions) shall be in full accordance with those provided to other
employee drivers under this Agreement. Employee owner-operators, however,
shall have seniority under Article 5 of this Agreement only as drivers.
Consistent with their "employee" status, employee owner-operators shall be
affiliated by permanent lease with their Employer and shall operate
exclusively for that Employer and no other interest.
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Article 22, Section 4
Section 4.
Employers must use their own available equipment, together with all leased
equipment under a permanent lease (with a minimum thirty (30) days'
cancellation clause) before hiring any extra equipment. The hiring of such
extra equipment shall be subject to the provisions of Article 32
Subcontracting.
Section 5.
Separate checks shall be issued by the Employer for driver's wage and
equipment rental, except as provided in Section 6. At no time shall the
equipment check be for less than actual miles operated. Separate checks for
drivers shall not be deducted from the minimum truck rental revenue. The
driver shall turn in time directly to the Employer. All monies due the owner-
operator may be held not longer than two (2) weeks, except where the lease of
equipment agreement is terminated, and in such case, all monies due the
operator may be held no longer than forty-five (45) days from the date of
termination of the operation of the equipment.
Section 6.
Payment for equipment service shall be handled by the issuance of a check for
the full mileage operated, tonnage or percentage, less any agreed advances.
A statement of any charges by the Employer shall be issued at the same time,
but shall not be deducted in advance.
Section 7.
The owner-operator shall have complete freedom to purchase gasoline, oil,
grease, tires, tubes, etc., including repair work, at any place where
efficient service and satisfactory products can be obtained at the most
favorable prices.
Section 8.
There shall be no deduction pertaining to equipment operation for
any reason whatsoever.
Section 9.
The Employer hereby agrees to pay road or mile tax, public liabili-
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Article 22, Section 9
ty and property damage insurance, cargo insurance, bridge tolls, fees for
certificates, permits and travel orders, fines and penalties for inadequate
certificates, license fees, weight tax and wheel tax, and for loss of driving
time due to waiting at state lines. The Employer shall also pay social
security tax, unemployment insurance tax and worker's compensation insurance,
and any other federal or state (or local) payroll tax regularly paid by
Employers for and on behalf of employees in the jurisdiction where operations
are conducted, and any additional cost for international registration plan
plate (IRP) over the base plate cost. It is expressly understood that the
owner-driver shall pay the license fees in the state in which title is
registered. All tolls, no matter how computed, must be paid by the Employer,
regardless of any agreement to the contrary.
All taxes or additional charges imposed by law relating to actual truck
operation and use of highways, no matter how computed or named, shall be paid
by the Employer, excepting only vehicle licensing, as such, in the state
where title is registered.
Section 10.
There shall be no interest or handling charge on earned money
advanced prior to the regular payday.
Section 11.
(a) All Employers hiring or leasing equipment owned and driven by the
owner-operator shall file a true copy of the lease agreement covering the
owner-driven equipment with the Conference Joint Area Committees. The terms
of the lease shall cover only the equipment owned and driven by the owner-
operator and shall be in complete accord with the minimum rates and
conditions provided herein, plus the full wage rate and supplementary
allowances for drivers as embodied elsewhere in this Agreement.
(b) (1) It is recognized by the parties to this Agreement that
inordinately low equipment rental fees threaten the wage rates of employee
drivers covered by this Agreement. Accordingly, the parties have established
and set out below the appropriate minimum rental fees for equipment leased by
either employee or non-employee owner-operators, excluding owner-operators
covered by the Iron and Steel Supplements.
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Article 22, Section 11
a. Single Axle Tractor Only-Effective April 1, 1994
0 to 20,000 lbs. 36.2 cents per mile
20,001 to 25,000 lbs. 38.3 cents per mile
25,001 to 30,000 lbs. 40.5 cents per mile
30,001 lbs. and over 43.7 cents per -mile
Single axle tractors when utilized to pull double bottoms will be
paid under the tandem axle tractor rate schedule.
b. Tandem Axle tractor Only-Effective April 1, 1994
0 to 25,000 lbs. 39.7 cents per mile
25,001 to 30,000 lbs. 41.7 cents per mile
30,001 to 35,000 lbs. 44.3 cents per mile
35,001 to 40,000 lbs. 47.3 cents per mile
40,001 to 45,000 lbs. 50.5 cents per mile
45,001 lbs. and over 52.7 cents per mile
c. Single Axle Trailers and 40 to 53 Foot Tandem trailer Only.
Effective April 1, 1994: 6.25 cents per mile (with $8.00 minimum
daily guarantee).
d. Tandem Axle, 40 Foot or Over, Trailer Only
Effective April 1, 1994: 7.25 cents per mile (With $10.00 minimum daily
guarantee).
Minimum daily guarantee for trailers does not apply to Saturday, Sunday or
holidays. It applies to either the first (lst) day or last day of use, but
not both.
The above rates also apply to deadheading.
(2) Future adjustments in the compensation for owner-operator equipment
shall be based on the latest available published ICC rates for diesel fuel
prices and shall be adjusted beginning the first (1st) of the month following
notice of ratification and the first (lst) of every month thereafter in
accordance with the schedule in paragraph 4 of this Section.
78
<PAGE>
Article 22, Section 11
In the event the ICC publishes a correction in any diesel fuel price, any
changes will be made on a prospective basis only.
It is understood that where the Employer provides subsidized fuel purchase
plans to owner-operators the minimum lease rates, as determined under
paragraph 4 of this Section, will reflect the actual fuel price paid by the
owner-operator rather than the ICC diesel fuel price.
If the ICC discontinues publishing the diesel fuel price series, the parties
will meet and agree upon an alternate index. If the parties cannot agree on
a suitable replacement diesel fuel price series, the matter shall go
immediately to the National Grievance Committee for the establishment of such
a diesel fuel price series.
(3) This Article excludes owner-operators covered by the Iron and Steel
Supplemental Agreements.
The terms and conditions of Article 22, Section 9 shall apply to this
Article.
Nothing herein this Article shall apply to leased equipment not owned by the
driver. The minimum rates set forth above result from the joint
determination of the parties that such rates represent only the actual cost
of operating such equipment. The parties have not attempted to negotiate a
profit for the owner-operator. The determination of an appropriate minimum
equipment rental rate is intended only to prevent owner-operators from
leasing their equipment at a loss and thus forcing owner-operators to
undercut the wage rates in this Agreement.
The parties agree that the above rates are established for the use of normal
freight industry equipment. In the event specialized equipment is required,
the rates will be established by the Committee referred to in Article 22, or
by other procedures mutually agreeable to the parties.
(4) Following are the minimum lease rates to be paid to owner-operators
for various levels of diesel fuel prices.
79
<PAGE>
Article 22, Section 11
<TABLE>
<CAPTION>
SCHEDULE A
Single Axle Tractor
cents/mile
<S> <C> <C> <C> <C>
Diesel Fuel 0- 20,001- 25,001- 30,001-
Price per gallon 20,000 lbs. 25,000 lbs. 30,000 lbs. lbs. and over
$1.56-$1.609 37.6 39.8 42.2 45.5
$1.51-$1.559 36.9 39.0 41.4 44.6
$1.46-$1.509 36.2 38.3 40.5 43.7
$1.41-$1.459 35.4 37.5 39.7 42.8
$1.36-$1.409 34.7 36.7 38.9 41.9
$1.31-$1.359 34.0 36.0 38.0 41.0
$1.26-$1.309 33.3 35.2 37.2 40.1
$1.21-$1.259 32.6 34.4 36.4 39.2
$1.16-$1.209 31.9 33.7 35.5 38.3
$1.11-$I.159 31.2 32.9 34.7 37.4
$1.06-$1.109 30.4 32.1 33.9 36.5
$1.01-$I.059 29.7 31.4 33.0 35.6
$0.96-$1.009 29.0 30.6 32.2 34.6
$0.91-$O.959 28.3 29.8 31.4 33.7
$0.86-$O.909 27.6 29.0 30.5 32.8
$0.81-$O.859 26.9 28.3 29.7 31.9
$0.76-$O.809 26.2 27.5 28.9 31.0
$0.71-$O.759 25.4 26.7 28.0 30.1
$0.66-$O.709 24.7 26.0 27.2 29.2
$0.61-$O.659 24.0 25.2 26.4 28.3
$0.56-$O.609 23.3 24.4 25.5 27.4
for any fuel price (+ or - (+ or - (+ or - (+ or -
0.71429) 0.76923) 0.83333) 0.90909)
<FN>
<FN1>
# as reported by the ICC
</FN>
</TABLE>
80
<PAGE>
Article 22, Section 11
<TABLE>
<CAPTION>
SCHEDULE B
Tandem Axle Tractor
cents/mile
<S> <C> <C> <C> <C> <C> <C>
Diesel Fuel 0- 25,001- 30,001- 35,001- 40,000- 45,001
Price per gallon 25,000 lbs. 30,000 lbs. 35,000 lbs. 40,000 lbs. 45,000
lbs. lbs. and over
$1.56-$1.609 41.1 43.1 45.8 48.8 52.2 54.56
$1.51-$1.559 40.4 42.4 45.0 48.0 51.4 53.6
$1.46-$1.509 39.7 41.7 44.3 47.3 50.5 52.7
$1.41-$1.459 38.9 40.9 43.5 46.5 49.7 51.8
$1.36-$1.409 38.2 40.2 42.8 45.7 48.9 50.9
$1.31-$1.359 37.5 39.5 42.0 45.0 48.0 50.0
$1.26-$1.309 36.8 38.8 41.2 44.2 47.2 49.1
$1.21-$1.259 36.1 38.1 40.4 43.4 46.4 48.2
$1.16-$1.209 35.4 37.4 39.7 42.7 45.5 47.3
$1.11-$1.159 34.7 36.7 38.9 41.9 44.7 46.4
$1.06-$1.109 33.9 35.9 38.1 41.1 43.9 45.5
$1.01-$1.059 33.2 35.2 37.4 40.4 43.0 44.6
$0.96-$1.009 32.5 34.5 36.6 39.6 42.2 43.6
$0.91-$O.959 31.8 33.8 35.8 38.8 41.4 42.7
$0.86-$O.909 31.1 33.1 35.0 38.0 40.5 41.8
$0.81-$O.859 30.4 32.4 34.3 37.3 39.7 40.9
$0.76-$O.809 29.7 31.7 33.5 36.5 38.9 40.0
$0.71-$O.759 28.9 30.9 32.7 35.7 38.0 39.1
$0.66-$O.709 28.2 30.2 32.0 35.0 37.2 38.2
$0.61-$O.659 27.5 29.5 31.2 34.2 36.4 37.3
$0.56-$O.609 26.8 28.8 30.4 33.4 35.5 36.4
for any fuel price (+ or - (+ or - (+ or - (+ or -
0.71429) 0.76923) 0.83333) 0.90909)
<FN>
<FN1>
# as reported by the ICC
</FN>
</TABLE>
81
<PAGE>
Article 22, Section 11
(c) The Employer shall not, as a condition of continued employment,
require an owner-operator who is hired with tractor and trailer to separate
his/her equipment and pull Employer owned or other leased trailers. The
Employer will not reduce the equipment rental below the contract percentage
to accomplish the above purpose.
Section 12.
Driver-owner mileage scale does not include use of equipment for pick-up or
delivery at point of origin terminal or point of destination terminal, but
shall be subject to negotiations between the Local Union and the Employer.
Such negotiations shall be only for the purpose of protecting the wage rate
of the driver only as an employee. Failure to agree shall be submitted to the
grievance procedure. Owner-operator operations are to be terminal-to-
terminal, except where there are no local employees to make such deliveries
or as otherwise agreed to in this Agreement.
Section 13.
There shall be no reductions where the present basis of payment is higher
than the minimums established herein for this type of operation. Where an
owner-operator is paid on a percentage or tonnage basis and the operating
company reduces its tariff, the percentage or tonnage basis of payment shall
be automatically adjusted so that the owner-operator suffers no reduction in
equipment rental or wages, or both.
Section 14.
It is further agreed that the intent of this clause and this entire Agreement
is to assure the payment of the scale of wages as provided in this Agreement
and to prohibit the making and carrying out of any plan, scheme or device to
circumvent or defeat the payment of wage scales provided in this Agreement.
This clause is intended to prevent the continuation of or formation of
combinations or corporations or so-called lease of fleet arrangements whereby
the driver is required to and does periodically pay losses sustained by the
corporation or fleet arrangement, or is required to accept less than the
actual cost of the running of his/her equipment, thus, in fact, reducing his
scale of pay.
82
<PAGE>
Article 22, Section 15
Section 15.
It is further agreed that if the Employer requires that the owner-operator
sell his/her equipment to the Employer, directly or indirectly, the owner-
operator shall be paid the fair true value of such equipment. Copies of the
instruments of sale shall be filed with the Union and, unless objected to
within ten (10) days, shall be deemed satisfactory. If any question is
raised by the Union as to such value, the same shall be submitted to
grievance, as above set forth, for determination.
Section 16.
If an employee voluntarily agrees to purchase equipment from the Employer,
and if there is a dispute over the value of such equipment, the fair true
value of such equipment shall be determined as provided herein. However, no
employee may be required to purchase or sell equipment as a condition of
employment, nor shall the nature of any operation or business be changed to
require such result, unless such change is approved by the Teamsters National
Master Committee. No owner-operator lease shall be cancelled for the purpose
of depriving employees of employment.
Section 17.
It shall be considered a violation of this Agreement should any Employer
deduct from rental of equipment the increases provided for by the 1994
Amendments, or put into effect any means of evasion to circumvent actual
payment of increases agreed upon effective for the period starting April 1,
1994 and ending March 31, 1998.
Section 18.
All leases, agreements or arrangements between Employers and owner-operators
shall contain the following statement:
The equipment which is the subject of this lease shall be driven by an
employee of the lessee at all times that it is in the service of the lessee.
If the lessor is hired as an employee to drive such equipment, he/she shall
receive as rental compensation for the use of such equipment no less than the
minimum rental rates, allowances and conditions (or the equivalent thereof as
approved by the National
83
<PAGE>
Article 22, Section 18
Committee referred to in Section 11) established by the then current
appropriate Area Supplemental Agreement for this type of equipment and, in
addition thereto, the full wage rate and supplementary allowances for drivers
(or the equivalent thereof as approved by the National Committee referred to
in Section 11).
The lessee expressly reserves the right to control the manner, means and
details of and by which the driver of such leased equipment performs his/her
services, as well as the ends to be accomplished, and shall not permit or
delegate to others the authority to do so.
The lessor (owner-operator) shall not be required to buy or sell any
equipment (or separate his/her trailer if covered by this lease) as a
condition of employment.
To the extent that any provision of this lease may conflict with the
provisions of such appropriate Area Supplemental Agreement as it applies to
equipment driven by the owner, such provision of this lease shall be null and
void and the provisions of such Agreement shall prevail.
The Employer shall make available to the Union, upon request, all documents
and reports relating to service by owner-operators which are required to be
maintained by law.
ARTICLE 23.
SEPARATION OF EMPLOYMENT
Upon discharge, the Employer shall pay earned wages due to the employee
during the first (lst) payroll department working day following the date of
discharge. Vacation pay for which the discharged employee is qualified shall
be paid no later than the first (lst) day following final determination of
the discharge.
Upon a permanent terminal closing and/or cessation of operations, the
Employer shall pay all money due to the employee during the first (lst)
payroll department working day following the date of the terminal closing
and/or cessation of operations.
Failure to comply shall subject the Employer to pay liquidated damages in the
amount of eight (8) hours I pay for each day of delay. Upon quitting, the
Employer shall pay all money due to the employee on the next regular payday
for the week in which the resignation occurs.
84
<PAGE>
ARTICLE 24.
INSPECTION PRIVILEGES AND EMPLOYER
IDENTIFICATION
Authorized agents of the Union shall have access to the Employer's
establishment during working hours for the purpose of adjusting disputes,
investigating working conditions, collection of dues, and ascertaining that
the Agreement is being adhered to; provided, however, there is no
interruption of the firm's working schedule.
Company representatives, if not known to the employee, shall identify
themselves to employees prior to taking disciplinary action.
Safety or other company vehicles shall be identified when stopping
company equipment.
ARTICLE 25.
SEPARABILITY AND SAVINGS CLAUSE
If any article or section of this Agreement or of any Supplements thereto
should be held invalid by operation of law or by any tribunal of competent
jurisdiction, or if compliance with or enforcement of any article or section
should be restrained by such tribunal pending a final determination as to its
validity, the remainder of this Agreement and of any Supplements thereto, or
the application of such article or section to persons or circumstances other
than those as to which it has been held invalid or as to which compliance
with or enforcement of has been restrained, shall not be affected thereby.
In the event that any article or section is held invalid or enforcement of or
compliance with which has been restrained, as above set forth, the parties
affected thereby shall enter into immediate collective bargaining
negotiations after receipt of written notice of the desired amendments by
either Employer or Union for the purpose of arriving at a mutually
satisfactory replacement for such article or section during the period of
invalidity or restraint. There shall be no limitation of time for such
written notice. If the parties do not agree on a mutually satisfactory
replacement within-sixty (60) days after receipt of the stated written
notice, either party shall be permitted all legal or economic recourse in
support of its demands notwithstanding any provisions of this Agreement to
the contrary.
85
<PAGE>
ARTICLE 26.
TIME SHEET, TIME CLOCKS, AND
VIDEO CAMERAS
Section 1. Time Sheets and Time Clocks
In over-the-road or line operations, the Employer shall provide and require
the employee to keep a time sheet or trip card showing the arrival and
departure at terminal and intermediate stops and cause and duration of all
delays, time spent loading and unloading, and same shall be turned in at the
end of each trip. In local cartage operations, a daily time record shall be
maintained by the Employer at its place of business. All Employers who
employ five (5) or more people at any terminal shall have time clocks at such
terminals.
Employees shall punch their own time cards.
The Employer shall maintain sign-in and sign-out records at terminals. All
road drivers must record their arrival, departure, origin and destination.
The Employer may substitute updated time recording equipment for time cards
and time sheets. However, a paper trail shall be maintained.
The Employer may computerize the sign-in and sign-out records. However, at
all times, the Union shall have reasonable access to a paper record of the
sign-in and sign-out records.
Section 2. Use of Video Cameras for Discipline and Discharge
The Employer may not use video cameras to discipline or discharge an employee
for reasons other than theft of property or dishonesty. If the information
on the video tape is to be used to discipline or discharge an employee, the
Employer must provide the Local Union, prior to the hearing, an opportunity
to review the video tape used by the Employer to support the discipline or
discharge. Where a Supplement imposes more restrictive conditions upon use
of video cameras for discipline or discharge, such restrictions shall
prevail.
86
<PAGE>
ARTICLE 27.
EMERGENCY REOPENING
In the event of war, declaration of emergency, imposition of mandatory
economic controls, the adoption of national health care or any congressional
or federal agency action which has a significantly adverse effect on the
financial structure of the trucking industry or adverse impact on the wages,
benefits or job security of the employees, during the life of this Agreement,
either party may reopen the same upon sixty (60) days' prior written notice
and request renegotiation of the provisions of this Agreement directly
affected by such action.
Upon the failure of the parties to agree in such negotiations within the
subsequent sixty (60)-day period, thereafter, either party shall be permitted
all lawful economic recourse to support its request for revisions. If
governmental approval of revisions should become necessary, all parties will
cooperate to the utmost to attain such approval. The parties agree that the
notice provided herein shall be accepted by all parties as compliance with
the notice requirements of applicable law, so as to permit economic action at
the expiration thereof.
ARTICLE 28.
SYMPATHETIC ACTION
In the event of a labor dispute between any Employer, party to this
Agreement, and any International Brotherhood of Teamsters' Union, parties to
this or any other International Brotherhood of Teamsters' Agreement, during
the course of which dispute such Union engages in lawful economic activities
which are not in violation of this or such other Agreement, then any other
affiliate of the International Brotherhood of Teamsters, having an agreement
with such Employer shall have the right to engage in lawful economic activity
against such Employer in support of the above first-mentioned Union
notwithstanding anything to the contrary in this Agreement or the
International Brotherhood of Teamsters' Agreement between such Employer and
such other affiliate, with all of the protection provided in Article 9.
87
<PAGE>
ARTICLE 29.
SUBSTITUTE SERVICE
Section 1. Piggyback Operations
(a) An Employer shall not use piggyback over the same route where the
Employer has established relay runs or through runs except to move overflow
freight or as otherwise provided in Section 3 herein.
(b) It is recognized and agreed that there were two distinct and
separate types of rail operations in effect on April 1, 1994: (1) the use of
rail to move overflow freight; and (2) approved and/or agreed to rail
operations. Accordingly, the provisions of this Section 1 shall apply in its
entirety to the overflow rail operations. This Section 1 shall only apply to
the approved and/or agreed to rail operations to the extent it has been
historically applied prior to April 1, 1994.
If a driver is available (which includes the two (2) -hour period of time
prior to end of his/her rest period) at point of origin when a trailer leaves
the yard for the piggyback ramp, such driver's runaround compensation shall
start from the time the trailer leaves the yard. Available regular drivers
at relay points shall be protected against runarounds if a violation occurred
at the point of origin.
If the Employer does not have an over-the-road domicile at the point of
origin, the Employer shall protect against runaround the available drivers at
the first relay point over which the freight would normally move had it not
been placed on the rail. Available regular drivers at relay points shall be
protected against runaround if a violation occurred at the first relay point.
The Employer shall not reduce or fail to increase the road driver complement,
including the addition of equipment, at the point of origin for the purpose
of creating an overflow of freight to avoid the application of this Section.
(c) When an Employer utilizes piggyback operations as a substitute
service to deliver overflow loads and such substitute service is matched in
both directions (East to West and West to East or North to South and South to
North), it is understood and agreed by the parties that the Employer will be
required to add a sufficient number of employees and the necessary amount of
equipment to
88
<PAGE>
Article 29, Section 1
move trailers over the road when the volume of matched loads reaches a level
to insure efficient utilization of equipment and regular work opportunity for
the added employees.
It is the intent of the parties in this Section 1 to maximize the movement of
freight over the Employer's established relay runs, thereby minimizing the
use of substitute service.
The record keeping requirement set out in Section 2 below will provide the
Union with the basis of monitoring the use of such piggyback operation.
(d) The Employer agrees the non-employee owner-operators, birdy-back,
fishy-back and barge operations will not be used over the same routes where
the Employer has established relay runs during the term of this Agreement.
Section 2. Maintenance of Records
(a) Trailers piggybacked as a substitute service as provided in Section
1 are to be signed in and signed out on the regular dispatch sheet in road
operations, and where there are no road operations sign-in and sign-out
sheets shall be maintained at an appropriate location, including trailers
taken to and from the rail yard by city employees. These sheets will be made
available, upon request, to the drivers for a period of thirty (30) days.
The Employer shall report in writing on a monthly basis to the Local Union at
the rail origin point, or in cases where there are no drivers domiciled at
the rail origin point to the Local Union at the first driver relay point
affected, the number of trailers put on the rail at the rail origin point.
The Employer shall also report the origin, destination, trailer/load number,
trailer weight and the time the trailer/load leaves the Employer's yard for
the rail yard. The time limits set forth in the Supplemental Agreement for
filing claims based upon the monthly report shall commence to run upon the
receipt of the report by the Local Union.
(b) With regard to use of substitute service as provided in Section 1,
full and complete records of handling, dispatch and movement of such units
system-wide shall be kept by the Employer and a report, which will include
the date of all outbound rail movement, all points of origin and destination,
all trailer numbers and the name of each railroad/routing, shall be sent on a
quarterly basis to the office of the National Freight Director and the
affected Area Conference Freight Director.
89
<PAGE>
Article 29, Section 2
Where inspection of the records indicates that piggyback is being used as a
substitute for road operations, as defined in Section 1 of this Article, over
an established relay, rather than handling overflow traffic, the grievance
procedure may be invoked at the appropriate Conference Joint Area Committee
by the Area Conference Freight Director or the office of the National Freight
Director to provide a reasonable remedy for the improper usage of piggyback,
including the revocation of the use of substitute service, for repeated
violations over such relay.
(c) With regard to trailers moved on rail as an approved intermodal
operations set forth in Section 3, the Employer shall report in writing on a
monthly basis to each Local Union affected, the number of trailers put on the
rail at the rail origin points of the approved intermodal operations. The
Employer shall also report the origin, destination, trailer/load number,
trailer weight and the time the trailer/load leaves the Employer's yard for
the rail yard.
In addition, the Employer shall, on a quarterly basis, send to the office of
the National Freight Director a report containing the total intermodal rail
miles as reported on line 6 of the ICC Schedule 600 annual report and the
total miles as reported on line 7 of the ICC Schedule 600 annual report.
Section 3. Intermodal Service
(a) The parties recognize that in 199 1, Congress passed the Intermodal
Surface Transportation Efficiency Act of 1991 and declared the policy of the
United States to be one of promoting the development of a national intermodal
transportation system consisting of all forms of transportation in a unified,
interconnected manner. The parties have, therefore, entered into this
Agreement to enhance the Employer's opportunities to secure the benefits
which flow from this national policy of encouraging intermodal
transportation, including long-term stable and secure employment. At the
same time, the parties recognize the need to minimize and provide for the
impact which intermodal operations may have on certain employees covered by
this Agreement.
(b) Use of Intermodal Service
1. Subject to the conditions set forth hereinafter, an Employer may
establish a new intermodal service over the same route where the Employer has
established relay runs or through runs.
90
<PAGE>
Article 29, Section 3
Present relay or through operations may not be reduced, modified or changed
in any other manner as the result of the implementation of a new intermodal
service until such time as the proposed intermodal operation has been
approved by the National Intermodal Committee. The Employer shall submit to
the National Intermodal Committee an application for approval which shall
identify the road operation(s) the intended intermodal service will reduce
and/or eliminate; a list identifying the name and seniority date of each
driver affected by the intended intermodal service(s); and a list by domicile
of each of the road drivers' openings available.
In the event the National Intermodal Committee is unable to agree on whether
or not the Employer's proposed intermodal operations meet the criteria set
forth below, the proposed operation shall not be approved until such time as
those issues are resolved. This provision shall not be utilized as a method
to delay and/or deny a proposed intermodal operation when the criteria set
forth below have been clearly satisfied.
(a) There shall be no more than two (2) intermodal changes approved
during the term of this Agreement; and
(b) No more than ten (10) percent of the Employer's total active road
driver seniority list as of April 1, 1994 shall be affected by the intermodal
changes approved during the term of this Agreement.
In the event a proposed intermodal operation also includes the transfer of
work that is subject to the provisions of Article 8, Section 6, the National
Intermodal Committee, after approving the intermodal operation, shall refer
the transfer of work portion to the appropriate Change of Operations
Committee in accordance with the provisions of Article 8, Section 6.
2. An approved intermodal operation that provides service over
established relay and/or through operations shall include protection for all
bid drivers during each dispatch day and all extra board drivers during each
dispatch week at each of the affected domiciles.
For purposes of determining the weekly protection for extra board drivers,
the affected driver's average weekly earnings during the previous four (4)
week period in which the driver had normal earnings shall be considered the
weekly protection when violations occur.
91
<PAGE>
Article 29, Section 3
3. When transporting any shipment by intermodal service within the
Employer's terminal network, the Employer shall utilize its drivers subject
to the applicable respective area supplemental agreements to pickup such
shipments from the shipper at point of origin and/or the Employer's terminal
and deliver them to the applicable intermodal exchange point. The Employer
also shall use its drivers to deliver intermodal shipments to the consignee
or the Employer's terminal. A driver maybe required to drive through other
terminal service areas to the intermodal exchange point to pickup and deliver
intermodal shipments without penalty.
4. Total intermodal rail miles included on line 6 of the ICC Schedule
600 annual report shall not exceed 28 percent of the Employer's total miles
as reported on line 7 of the ICC Schedule 600 annual report during any
calendar year. In the event intermodal rail miles exceed this 28 percent
maximum, the Employer shall be required to remove an appropriate amount of
freight from the rail and add a corresponding number of drivers at each
affected domicile.
The National Intermodal Committee shall establish rules and guidelines that
will allow the Union the opportunity to verify and audit the Employer's ICC
rail reports. In the event the Union establishes through the grievance
procedure that an Employer has falsified the ICC reports in order to increase
the maximum amount of intermodal rail miles permitted under this Article, the
remedy for such a violation shall include a cessation of the Employer's
affected intermodal service until such time as the issue has been resolved to
the satisfaction of the Union.
In the event the ICC rail and/or line haul miles reporting requirements are
modified and/or eliminated, the parties will meet to develop a substitute
reporting procedure consistent with those of the ICC.
(c) Job Protections for Current Road Drivers
1. Rail operations that are subject to the provisions of Section 1 (b)
above shall not result in the layoff or involuntary transfer of any driver at
any affected road driver domicile.
2. During the term of this Agreement, an Employer shall be permitted
no more than two (2) Intermodal Changes whereby the Employer may reduce
and/or eliminate existing road operation(s)
92
<PAGE>
Article 29, Section 3
through the use of intermodal service. It is specifically agreed that a
total of no more than ten (10) percent of the Employer's total active road
driver seniority list as of April 1, 1994, shall be affected by the
Intermodal Changes during the term of this Agreement.
Any road driver who is adversely affected by an approved Intermodal Operation
and would thereby be subject to layoff, or who is on layoff at an affected
domicile at the time an Intermodal Operation is approved, shall be offered
work opportunity at other road driver domiciles within the Employer's system.
In the event there is more than one (1) domicile involved, the drivers
adversely affected shall be dovetailed on a master seniority list and an
opportunity to relocate shall be offered on a seniority basis. The "hold"
procedures set forth in Article 8, Section 6 of the NMFA shall be applicable.
Drivers who relocate under this provision shall be dovetailed on the
applicable seniority list at the domicile they bid into. Health & welfare
and pension contributions shall be remitted in accordance with the provisions
of Article 8, Section 6(a) and moving and lodging shall be paid in accordance
with Article 8, Section 6(c) of the NMFA.
It is understood and agreed that the intent of this provision is to provide
the maximum job security possible to those drivers affected by the use of
intermodal service. Therefore, the number of drivers on the affected
seniority lists at rail origin points at the time an intermodal change
becomes effective shall not be reduced during the term of this Agreement
other than as may be provided in subsequent changes of operations. Drivers
on the affected seniority lists at gaining domiciles at the time an
intermodal change becomes effective, shall not be permanently laid off during
the term of this Agreement.
Section 4. National Intermodal Committee
The parties shall establish a National Intermodal Committee composed of four
(4) Union representatives appointed by the Union Chairman of the National
Grievance Committee and four (4) Employer representatives appointed by the
Employer Chairman of the National Grievance Committee.
The National Intermodal Committee shall establish rules of procedure to
govern the manner in which proposed intermodal operations are to be heard,
procedures for resolving intermodal issues
93
<PAGE>
Article 29, Section 4
and procedures for establishing pre-hearing guidelines. Any grievance
concerning the application or interpretation of Article 29, Section 2 or
concerning any issues that may arise from an approved intermodal operation
provided for in this Section 3, shall be first referred to the National
Intermodal Committee. If the National Intermodal Committee is unable to
reach a decision on an interpretation or grievance, the issue will be
referred to the National Grievance Committee.
ARTICLE 30.
JURISDICTIONAL DISPUTES
In the event that any dispute should arise between any Local Unions, parties
to this Agreement or Supplements thereto, or between any Local Union, party
to this Agreement or Supplements thereto and any other Union, relating to
jurisdiction over employees or operations covered by such Agreements, the
Employer and the Local Unions agree to accept and comply with the decision or
settlement of the Unions or Union bodies which have the authority to
determine such dispute, and such disputes shall not be submitted to
arbitration under this Agreement or Supplements thereto or to legal or
administrative agency proceedings. Pending such determination, the Employer
shall not be precluded from seeking appropriate legal or administrative
relief against work stoppages or picketing in furtherance of such dispute.
ARTICLE 31.
MULTI-EMPLOYER, MULTI-UNION UNIT
The parties agree to become a part of the multi-employer, multi-union
bargaining unit established by this National Master Freight Agreement, and to
be bound by the interpretations and enforcement of this National Master
Freight Agreement and Supplements thereto.
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ARTICLE 32.
SUBCONTRACTING
Section 1. Work Preservation
For the purpose of preserving work and job opportunities for the employees
covered by this Agreement, the signatory Employer agrees that no operation,
work or services of the kind, nature or type covered by, or presently
performed by, or hereafter assigned to, the collective bargaining unit by the
signatory Employer will be subcontracted, transferred, leased, diverted,
assigned or conveyed in full or in part (hereinafter referred to as `divert'
or `subcontract'), by the Employer to any other plant, business, person, or
non-unit employees, or to any other mode of operation, unless specifically
provided and permitted in this Agreement.
In addition, the signatory Employer agrees that it will not, as hereinafter
set forth, subcontract or divert the work presently performed by, or
hereafter assigned to, its employees to non-employee owner-operators or other
business entities owned and/or controlled )y the signatory Employer, or its
parent, subsidiaries or affiliates.
Section 2. Diversion of Work - Parent or Subsidiary Companies
The parties agree that for purposes of this Article it shall be presumed that
a diversion of work in violation of this Agreement occurs when work presently
and regularly performed by, or hereafter assigned to, employees of the
signatory Employer has been lost and the lost work is being performed in the
same manner (including transportation by owner-operators and independent
contractors) by an entity owned and/or controlled by the signatory Employer,
its parent, or a subsidiary within sixty (60) days of the loss of the work.
The burden of overcoming such presumption in the grievance procedure shall be
upon the Employer.
Section 3. Subcontracting
The Employer may subcontract work when all of his/her regular employees are
working, except that in no event shall road work presently performed or runs
established during the life of this
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Article 32, Section 3
Agreement be farmed out. No dock work shall be farmed out except for
existing situations established by agreed-to past practices. Overflow loads
may be delivered pursuant to the provisions of Article 29. Loads may also be
delivered by other agreed-to methods or as presently agreed to. Other
persons performing subcontracted work which is permitted herein shall receive
no less than the equivalent of the economic terms and conditions of this
Agreement and the applicable Supplement.
The signatory Employer shall maintain records identifying persons performing
subcontracted work permitted by this Agreement. Said records shall be made
available for inspection by the Local Union(s) in the locality affected by
such subcontract work.
The normal, orderly interlining of freight for peddle on occasional basis,
where there are parallel rights, and when not for the purpose of evading this
Agreement, may be continued as has been permitted by past practice provided
it is not being done to defeat the provisions of this Agreement.
Section 4. Expansion of Operations
(a) Adjoining Over-The-Road and Local Cartage
It is understood and agreed that the provisions of the National Master
Freight Agreement shall be applied, without evidence of union representation
of the employees involved, to all subsequent additions to, and extensions of,
current over-the-road or local cartage operations which adjoin and are
controlled and utilized as part of such current operations of the signatory
Employer, or any other entity, not operated wholly independently of the
signatory Employer within the meaning of Article 3, Section 1(a). In this
regard, the parties agree that newly-established terminals and consolidations
of terminals which are controlled and utilized as part of a current operation
will be covered by the National Master Freight Agreement and applicable Over-
the-Road and Local Cartage Supplemental Agreements.
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Article 32, Section 4
(b) New Pick-Up and Delivery Adjoining
Current Operations
It shall not, however, be a violation of this Article if, during the term of
this Agreement, an Employer commences pick-up and delivery operations which
adjoin and are controlled and utilized as part of such current operations
with other than its own employees when there is insufficient business to
economically justify the establishment of its own employer-operated pick-up
and delivery service. However, the above exception shall thereafter
terminate when sufficient economic justification develops so as to warrant
the establishment and maintenance of the terminal operation by such Employer,
in which event, the Employer shall institute a pick-up and delivery operation
or continue such operations with companies which maintain wage standards
established by this Agreement in the area where the work is conducted. This
exception shall not apply in any circumstance where an Employer is presently
engaged in pick-up and delivery operations either through his/her own
terminal or through companies which maintain such wage standards.
(c) Non-Adjoining Pick-Up and Delivery
Operations
The parties further agree that with respect to all subsequently established
over-the-road and local cartage operations and terminals of the signatory
Employer which do not adjoin, but are utilized and controlled as part of,
current over-the-road and local cartage operations, the provisions of Article
2, Section 3(a) shall govern so that when a majority of the eligible
employees of the signatory Employer performing work at that location execute
a card authorizing a signatory Local Union to represent them as their
collective bargaining agent at the terminal location, then, such employees
shall automatically be covered by this Agreement and the applicable
Supplemental Agreements.
(d) Operations permitted by Article 29, and not in violation of any
other provisions of this Agreement, are not to be considered as extensions of
current operations within the meaning of Section 4.
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Article 32, Section 5
Section 5.
For the purpose of preserving work and job opportunities, the National
Grievance Committee may define the circumstances and adopt procedures by
which an Employer and a Local Union, parties to this Agreement, may in
compliance therewith enter into a Special Circumstance Agreement which does
not meet the standards provided herein.
Section 6.
Grievances arising under this Article shall be processed on an expedited
basis pursuant to the procedures contained in Article 8, Section 1(a).
ARTICLE 33.
COST-OF-LIVING (COLA)
All regular employees, subject to this Agreement, shall be covered by the
provisions of a cost-of-living allowance as set forth in this Article.
The amount of the cost-of-living allowance shall be determined as provided
below on the basis of the "Consumer Price Index for Urban Wage Earners and
Clerical Workers, CPI-W, (Revised Series Using 1982-84 Expenditure Patterns),
All Items (1982-84=100), published by the Bureau of Labor Statistics, U.S.
Department of Labor" and referred to herein as the "Index".
Cost-of-living allowances shall be effective on April 1, 1995, April 17 1996
and April 1, 1997.
The April 1, 1995, adjustment shall be calculated by the difference between
the January, 1994, Index and the January, 1995, Index.
The April 1, 1996, adjustment shall be calculated by the difference between
the January, 1995, Index and the January, 1996, Index.
The April 1, 1997, adjustment shall be calculated by the difference between
the January, 1996, Index and the January, 1997, Index.
The cost-of-living increases shall be calculated as follows:
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Article 33
For every .2 increase in the Index, there shall be a one cent ($.01) per hour
or .25 mills per mile increase in the wage rates.
However, the parties agree, that in no event, will the hourly and mileage
cost-of-living increases payable be lower than thirty cents ($.30) per hour
or .75 cents per mile on April 1, 1995; thirty-five cents ($.35) per hour or
.875 cents per mile on April 1, 1996; forty cents ($.40) per hour or 1.0 cent
per mile on April 1, 1997; and the parties further agree that the maximum
hourly and mileage cost-of-living increases payable on April 1, 1995, will be
thirty cents ($.30) per hour or .75 cents per mile; on April 1, 1996, thirty-
five cents ($.35) per hour or .875 cents per mile; and on April 1, 1997,
forty cents ($.40) per hour or 1.0 cent per mile.
For the duration of this Agreement only, all cost-of-living allowances shall
become a fixed part of the base rate for all classifications on the effective
date of each cost-of-living allowance. A decline in the Index shall not
result in a reduction of classification base rates.
In the event the appropriate Index figure is not issued before the effective
date of the cost-of-living adjustment, the cost-of-living adjustment that is
required will be made at the beginning of the first (lst) pay period after
receipt of the Index and will be made retroactive to the effective date.
In the event the Bureau of Labor Statistics should revise or correct an
applicable Index figure, any adjustment that may be required in the cost-of-
living adjustment shall be effective at the beginning of the first (lst) pay
period after receipt of the revised or corrected Index figure and no
retroactive adjustments will be made.
In the event that the Index shall be revised or discontinued and in the event
the Bureau of Labor Statistics, U.S. Department of Labor, does not issue
information which would enable the Employer and the Union to know what the
Index would have been had it not been revised or discontinued, then the
Employer and the Union will meet, negotiate, and agree upon an appropriate
substitute for the Index. Upon the failure of the parties to agree in such
negotiations within sixty (60) days, thereafter, each party shall be
permitted all lawful economic recourse to support its request. The parties
agree that the notice provision provided herein shall be accepted by all
parties as compliance with the notice requirements of applicable law, so as
to permit economic action at the expiration thereof.
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ARTICLE 34.
GARNISHMENTS
In the event of notice to an Employer of a garnishment or impending
garnishment, the Employer may take disciplinary action if the employee fails
to satisfy such garnishment within a seventy-two (72)-hour period (limited to
working days) after notice to the employee. However, the Employer may not
discharge any employee by reason of the fact that his earnings have been
subject to garnishment for any one (1) indebtedness. If the Employer is
notified of three (3) garnishments irrespective of whether satisfied by the
employee within the seventy-two (72)-hour period, the employee maybe subject
to discipline, including discharge in extreme cases. However, if the
Employer has an established practice of discipline or discharge with a fewer
number of garnishments or impending garnishments, if the employee fails to
adjust the matter within the seventy-two (72)-hour period, such past practice
shall be applicable in those cases.
ARTICLE 35.
Section 1. Employee's Bail
Employees will be bailed out of jail if accused of any offense in connection
with the faithful discharge of their duties, and any employee forced to spend
time in jail or in courts shall be compensated at his/her regular rate of
pay. In addition, he/she shall be entitled to reimbursement for his/her
meals, transportation, court costs, etc.; provided, however, that faithful
discharge of duties shall in no case include compliance with any order
involving commission of a felony. In case an employee shall be subpoenaed as
a company witness, he/she shall be reimbursed for all time lost and expenses
incurred.
Section 2. Suspension or Revocation of License
In the event an employee receives a traffic citation for a moving violation
which would contribute to a suspension or revocation or suffers a suspension
or revocation of his/her right to drive the company's equipment for any
reason, he/she must promptly notify his/her Employer in writing. Failure to
comply will subject the employee to
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Article 35, Section 2
disciplinary action up to and including discharge. If such suspension or
revocation comes as a result of his/her complying with the Employees
instruction, which results in a succession of size and weight penalties or
because he/she complied with his/her Employer's instruction to drive company
equipment which is in violation of DOT regulations relating to equipment or
because the company equipment did not have either a speedometer or a
tachometer in proper working order and if the employee has notified the
Employer of the citation for such violation as above mentioned, the Employer
shall provide employment to such employee at not less than his/her regular
earnings at the time of such suspension for the entire period thereof.
When an employee in any job classification requiring driving has his/her
operating privilege or license suspended or revoked for reasons other than
those for which the employee can be discharged by the Employer, a leave of
absence, not to exceed three (3) years, shall be granted for such time as the
employee's operating privilege or license has been suspended or revoked.
Section 3. Alcohol and Drug Use
PREAMBLE
While abuse of alcohol and drugs among our members/employees is the exception
rather than the rule, the Teamsters National Freight Industry Negotiating
Committee and the Employers signatory to this Agreement share the concern
expressed by many over the growth of substance abuse in American society.
The parties have agreed that the Drug and Alcohol Abuse Program will be
modified in the event that further federal legislation or Department of
Transportation regulations provide for revised testing methodologies or
requirements. The parties have incorporated the appropriate changes required
by the applicable DOT drug testing rules under 49 CFR Part 40, and agree that
if new federally mandated changes are brought about, they too will become
part of this Agreement. The drug testing procedure, agreed to by labor and
management, incorporates state-of-the-art employee protections during
specimen collection and laboratory testing to protect the innocent.
In order to eliminate the safety risks which result from alcohol or drugs,
the parties have agreed to the following procedures:
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Article 35, Section 3
NMFA UNIFORM TESTING PROCEDURE
(a) Probable Suspicion Testing
In cases in which an employee is acting in an abnormal manner and at least
one (1) supervisor, two (2) if available, have probable suspicion to believe
that the employee is under the influence of controlled substances, the
Employer may require the employee (in the presence of a union shop steward,
if possible) to go to a medical clinic to provide both urine and blood
specimens for laboratory testing. The supervisor(s) must have received
training in the signs of drug intoxication in a prescribed training program
which is endorsed by the Employer. Probable suspicion means suspicion based
on specific personal observations that the Employer representative (s) can
describe concerning the appearance, behavior, speech or breath odor of the
employee. The supervisor(s) must make a written statement of these
observations within twenty-four (24) hours. A copy must be provided to the
shop steward or other union official after the employee is discharged.
Suspicion is not probable and thus not a basis for testing if it is based
solely on third (3rd) party observation and reports. If requested, the
employee will sign a consent form authorizing the clinic to withdraw
specimens of blood and urine and release the results of the urine laboratory
testing to his/her Employer's Medical Review Officer, in the case of DOT
covered employees, and the blood testing results to the Employer, but shall
not be required to waive any claim or cause of action under the law. For all
purposes herein, the parties agree that the terms "probable suspicion" and
"reasonable cause" shall be synonymous.
An employee may raise an affirmative defense that the positive blood test
result was attributable to the proper use of a prescription medication. If
the employee raises such a defense to the Company, at the employee's request,
the Company shall refer the employee to a qualified physician to discuss the
employee's explanation for the positive blood test result. The qualified
physician may decide that there is a legitimate explanation and declare the
blood drug test to be negative. The employee may be required to provide
evidence that a prescription has been lawfully prescribed by a physician.
A refusal to provide either specimen will constitute a presumption of
intoxication and the employee will be subject to discharge without the
receipt of a prior warning letter. In the case of a non-DOT
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Article 35, Section 3
covered employee who is unable to provide a urine specimen after a reasonable
waiting period [not to exceed one (1) hour], the Employer may terminate the
procedure and proceed with laboratory testing based upon blood specimens
alone. In DOT-covered cases, if the employee is unable to produce 3OmL of
urine, he/she shall be given fluids to drink and shall remain at the
collection site under observation until able to produce a 3OmL specimen, for
up to eight (8) hours at the Employer's option. If still unable to produce a
3OmL specimen, the blood specimen will be forwarded to the lab for analysis,
and the employee shall be referred for medical evaluation. Contractual time
limits for disciplinary action, as set forth in the appropriate Supplemental
Agreement, shall begin on the day on which specimens are drawn. In the event
the Employer alleges only that the employee is intoxicated on alcohol and not
drugs, previously agreed-to procedures under the appropriate Supplemental
Agreement for determining alcohol intoxication shall apply.
In the event the Employer is unable to determine whether the abnormal
behavior is due to drugs or alcohol, the drug testing procedure contained
herein shall be used. If the laboratory results are not known prior to the
expiration of the contractual time period for disciplinary action, the cause
for disciplinary action shall specify that the basis for such disciplinary
action is for "alcohol and/or drug intoxication."
(b) DOT Random Testing
It is agreed by the parties that random urine drug testing will be
implemented only in accordance with the DOT rules under 49 CFR Part 391,
Subpart H.
It is agreed that the Employer shall discontinue urine drug testing in
conjunction with the DOT physical after the Employer has implemented its
random urine drug testing program and is testing at the fifty percent (50%)
rate.
The method of selection for random urine drug testing will be neutral so that
all employees subject to testing will have an equal chance to be randomly
selected.
The term "employees subject to testing" under this agreement is meant to
include any employee required to have a DOT physical examination under the
Department of Transportation regulations.
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Article 35, Section 3
Employees out on long term injury or disability for any reason shall be
removed from the random pool.
The provisions of Article 35, Section 3(f)(3) (Split Sample Procedures), and
Article 35, Section 3(j)(1) (One-Time Rehabilitation), shall apply to random
urine drug testing.
(c) Non-Suspicion-Based Post-Accident Testing
Non-suspicion-based post-accident testing is defined as urine drug testing as
a result of an accident when the driver is issued a citation for a moving
traffic violation arising from an accident. Urine drug testing will be
required after accidents meeting the following conditions and drivers are
required to present themselves for such testing within thirty-two (32) hours
after such accident:
"Accident" means an occurrence involving a commercial motor vehicle operating
on a public road which results in: (i) A fatality; (ii) bodily injury to a
person who, as a result of the injury, immediately receives medical treatment
away from the scene of the accident; or (iii) one or more motor vehicles
incurring disabling damage as a result of the accident, requiring the
vehicle(s) to be transported away from the scene by tow truck or other
vehicle.
The driver has the responsibility to make himself/herself available for urine
drug testing within the thirty-two (32) hour period in accordance with the
procedures outlined in this Subsection. The driver is responsible to notify
the Employer upon receipt of a citation and to note receipt thereof on the
accident report. Failure to so notify the Employer shall subject the driver
to disciplinary action.
If a driver receives a citation for a moving violation more than thirty-two
(32) hours after a reportable accident, he/she shall not be required to
submit to post-accident urine drug testing.
The Employer shall make available a urine drug testing kit and an appropriate
collection site for the driver to provide specimens.
The provisions of Article 35, Section 3(f)(3) (Split Sample Procedures), and
Article 35, Section 3(j)(1) (One-Time Rehabilitation), shall apply to non-
suspicion-based post-accident urine drug testing.
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Article 35, Section 3
(d) Chain of Custody Procedures
Any specimens collected for drug testing shall follow the DHHS/DOT
(Department of Health and Human Services/Department of Transportation)
specimen collection procedures. At the time specimens are collected for any
drug testing, the employee shall be given a copy of the specimen collection
procedures. In the presence of the employee, the specimens are to be sealed
and labeled. As per DOT regulations, it is the employee's responsibility to
initial the specimens, additionally ensuring that the specimens tested by the
laboratory are those of the employee. The required procedure follows:
(1) For probable suspicion testing, blood shall be drawn first. The
blood specimen shall be taken promptly with as little delay as possible.
Immediately after the specimens are drawn, the individual test tubes shall,
in the presence of the employee, be sealed and labeled and the employee has
the responsibility to identify each specimen and initial same. Urine is
similarly collected, sealed, labeled and initialed. Following collection,
the specimens shall be placed in the transportation container together with
the appropriate copies of the chain of custody form. The transportation
container shall then be sealed in the employee's presence. The employee has
the responsibility to initial the outside of the container. The container
shall be sent to the designated testing laboratory on the same day or on the
next normal business day, by air courier or other fastest available means.
(2) Where urine specimens are to be provided, at least 3OmL of specimen
shall be collected and placed in one (1) self-sealing, screw-capped
container. Urine specimen in excess of the first (lst) 3OmL shall be placed
in a second (2nd) such container. They shall be sealed, labeled and
initialed by the employee without the containers leaving the employee's
presence. The employee has the responsibility to identify each specimen and
initial same. Following collection, the specimens shall be placed in the
transportation container together with the appropriate copies of the chain of
custody form. The transportation container shall then be sealed in the
employee's presence. The employee has the responsibility to initial the
outside of the container. The container shall be sent to the designated
testing laboratory at the earliest possible time by the fastest available
means.
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Article 35, Section 3
In this urine collection procedure, urine shall be obtained directly in a
wide-mouthed single-use specimen container, which shall remain in full view
of the employee until transferred to tamper-resistant urine bottles, and
sealed and labeled, and the employee has initialed the bottles. At the
employee's request, he/she may void directly into the two (2) self-sealing
tamper-resistant urine bottles in the kit.
It is recognized that the Employer has the right to request the clinic
personnel administering a urine drug test to take such steps as checking the
color and temperature of the urine specimen(s) to detect tampering or
substitution, provided that the employee's right to privacy is guaranteed and
in no circumstances may observation take place while the employee is
producing the urine specimens, unless required by DOT regulations. If it is
established that the employee's specimen has been intentionally tampered with
or substituted by the employee, the employee is subject to discipline as if
the specimen tested positive. In order to deter adulteration of the urine
specimen during the collection process, physiologic determinations such as
creatinine, specific gravity and/or chloride measurements may be performed by
the laboratory.
Any findings by the laboratory outside the "normal" ranges for creatinine,
specific gravity and/or chloride shall be immediately reported to the
Company's MRO for determination as to whether another specimen should be
drawn.
The parties recognize that the key to chain of custody integrity is the
immediate sealing and labeling of the specimen in the presence of the tested
employee. If each container is received undamaged at the laboratory properly
sealed, labeled and initialed, consistent with DOT regulations as certified
by the laboratory, the Employer may take disciplinary action based upon
properly obtained laboratory results.
(e) Drug Testing Kits
(1) Blood and Urine Sample Kits (Probable Suspicion Kits)
The contents of the blood and urine sample kits shall be as follows:
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Article 35, Section 3
a. Security seals for sealing, initialing and labeling each blood
vial.
b. Non-alcohol antiseptic swab (providone-iodine 10%).
c. Holder for evacuated tube and needle.
d. 20 gauge x 1.5" multiple sterile pyrogen-free needle.
e. One (1) sterile evacuated GRAY top blood collection tube con-
taining 100 mg sodium fluoride and 20 mg potassium oxalate (or in the same
proportion), and one (1) sterile evacuated blood collection tube without
anticoagulant, preservative - e.g., RED top tube.
f. Two (2) screw-capped self-sealing tamper-resistant urine collection
bottles of appropriate capacities (for kits manufactured after April, 1994).
g. Instructions for specimen collection.
The chain of custody form shall be completed by the hospital/clinic personnel
during specimen collection and the appropriate copies for the laboratory
placed with the blood and urine specimens into the transportation container.
The exterior of the container must then be secured (e.g., by placing the
tamper-proof Box Seal over the outlined area). If physically capable, the
employee has the responsibility to initial the sealed transportation
container.
(2) Urine Collection Kits
The contents of the urine collection kit shall be as follows:
a. Two (2) screw-capped self-sealing tamper-resistant urine collection
bottles of appropriate capacities, one of which contains a temperature
reading device affixed to the outside of the container capable of registering
the urine temperature specified in the DOT regulations.
b. A uniquely numbered (i.e. Specimen Identification Number) DOT
approved chain of custody form with similarly numbered Bottle Custody Seals,
and a transportation kit seal (e.g., Box Seal) shall be utilized during the
urine collection process and completed by the collection site person. The
appropriate laboratory copies are to be placed into the transportation
container with the urine specimens. The exterior of the transportation kit
shall then be secured, e.g., by placing the tamper-proof Box Seal over the
outlined area.
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Article 35, Section 3
The employee has the responsibility to initial the sealed transportation
container.
c. Shrink-wrapped or similarly protected kits shall be used in all
instances pertaining to (1) and (2) above.
(f) Laboratory Requirements
(1) Urine Testing
In testing urine samples, the testing laboratory shall test specifically for
those drugs and classes of drugs and employing the test methodologies and
cutoff levels covered in the DOT Regulations 49 CFR, Part 40.
(2) Specimen Retention
All specimens deemed "positive" by the laboratory, according to the
prescribed guidelines, must be retained at the laboratory for a period of one
(1) year.
(3) Split Sample Procedure
There will be an optional split sample procedure available to all employees
selected for urine drug testing. When any test kit is received by the
laboratory, the "primary" sealed urine specimen bottle shall be immediately
removed for testing, and the remaining "split" sealed bottle shall be placed
in secured storage. Such specimen shall be placed in refrigerated storage if
it is to be tested outside of the DOT mandated period of time.
The employee will be given a shrink-wrapped or similarly protected urine
collection kit containing two (2) containers for the urine specimen. One (1)
container must contain at least 3OmL of urine, and urine in excess of the
first (lst) 3OmL shall be placed in the second (2nd) container. Both shall
be sealed in the employee's presence, initialed by the employee, then
forwarded to an approved laboratory for testing. If the employee is advised
by the MRO that the first (1st) urine sample tested positive, in a random or
post accident urine drug test, or if the urine portion of a probable
suspicion test is positive after the blood tests negative, the employee may,
within seventy-two (72) hours of receipt of actual notice, request that the
second (2nd) urine specimen be forwarded by the first laboratory to another
independent and unrelated approved laborato-
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Article 35, Section 3
ry of the parties' choice for GC/MS confirmatory testing of the presence of the
drug. If the employee chooses to have the second (2nd) sample analyzed,
he/she shall at that time execute a special checkoff authorization form to
ensure payment by the employee. If the employee chooses the optional split
sample procedure, disciplinary action can only take place after the first
(lst) laboratory reports a positive finding and the second (2nd) laboratory
confirms the presence of the drug. However, the employee may be taken out of
service once the first (lst) laboratory reports a positive finding while the
second (2nd) test is being performed. If the second (2nd) test is positive,
and the employee wishes to use the rehabilitation options of this Section,
the employee shall reimburse the Employer for the cost of the second (2nd)
sample's analysis before entering the rehabilitation program. If the second
(2nd) laboratory report is negative, the employee will be reimbursed for the
cost of the second (2nd) test and for all lost time. It is also understood
that if an employee opts for the split sample procedure, contractual time
limits on disciplinary action in the Supplements are waived.
(4) Laboratory Accreditation
All laboratories used to perform urine drug testing pursuant to this
Agreement must be accredited by the Substance Abuse & Mental Health Services
Administration (SAMHSA).
Laboratories that have not previously been approved for blood drug testing
but which desire to begin such testing, pursuant to this Agreement, must
apply to the parties for approval and be added to the approved list before
testing.
(g) Laboratory Testing Methodology
The initial testing shall be by immunoassay which meets the requirements of
the Food and Drug Administration for commercial distribution. The initial
cutoff levels used when screening urine specimens to determine whether they
are negative or positive for various classes of drugs shall be those
contained in the Scientific and Technical Guidelines for Federal Drug Testing
Programs (subject to revision in accordance with subsequent amendments to the
HHS Guidelines) -
All specimens identified as positive on the initial test shall be confirmed
using gas chromatography/mass spectrometry (GC/MS) tech-
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Article 35, Section 3
niques. Quantitative GC/MS confirmation procedures to determine whether the
test is negative or positive for various classes of drugs shall be those
contained in the Scientific and Technical Guidelines for Federal Drug Testing
Programs (subject to revision in accordance with subsequent amendments to the
HHS Guidelines).
All specimens which test negative on either the initial test or the GC/MS
confirmation test shall be reported only as negative. Only specimens which
test positive on both the initial test and the GC/MS confirmation test shall
be reported as positive.
When a grievance is filed as a result of a positive drug test, the Employer
shall obtain the test results from the laboratory relating to the drug test,
and shall provide a copy to the Union.
(2) Blood Testing
In testing blood specimens, the testing laboratory will analyze blood/serum
by using gas chromatography/mass spectrometry as appropriate.
In probable suspicion testing, a "positive" finding for cannabinoids will be
forensically reported under any of the following results obtained after
testing blood specimens by gas chromatography/mass spectrometry:
a. The blood/serum contains at least two (2) and up to five (5)
nanograms THC/mL and at least ten (10) nanograms THC metabolites/mL.
b. The blood/serum contains at least five (5) or more nanograms
THC/mL, regardless of the THC metabolite concentration.
c. The blood/serum contains twenty (20) or more nanograms THC
metabolites/mL, regardless of THC concentration.
If none of the above blood marijuana findings results are obtained, a
"negative" finding shall be reported.
Where other Schedule I and II drugs in blood are detected, the laboratory is
to report a positive test based on a forensically acceptable positive quantum
of proof. All positive test results must be reviewed by the certifying
scientist and certified as accurate.
All positive test results must be reviewed by the certifying scientist and
certified as accurate.
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Article 35, Section 3
(3) Prescription and Non-prescription Medications
If an employee is taking a prescription or non-prescription medication in the
appropriate described manner he/she will not be disciplined. Medications
prescribed for another individual, not the employee, shall be considered to
be illegally used and subject the employee to discipline.
(4) Medical Review Officer (MRO)
The Medical Review Officer (MRO) shall be a licensed physician with the
knowledge of substance abuse disorders. The MRO shall review and interpret
all urine drug test results, as required by the DOT for all employees tested
for drugs under this Agreement, from the laboratory and shall examine
alternate medical explanations for such positive tests. Prior to the final
decision to verify a positive urine drug test result, all employees shall
have the opportunity to discuss the results with the MRO. If the employee
has not discussed the results of the positive urine drug test with the MRO
within five (5) days after being contacted, or refuses the opportunity to do
so, the MRO shall proceed with the positive verification.
(h) Leave of Absence Prior to Testing
(1) An employee shall be permitted to take leave of absence for the
purpose of undergoing treatment pursuant to an approved program of alcoholism
or drug use. The leave of absence must be requested prior to the commission
of any act subject to disciplinary action.
(2) Such leave of absence shall be granted on a one (1)-time basis and
shall be for a maximum of sixty (60) days unless extended by mutual
agreement. While on such leave, the employee shall not receive any of the
benefits provided by this Agreement or Supplements thereto except continued
accrual of seniority, nor does this provision amend or alter the disciplinary
provision.
(3) Employees requesting to return to work from a leave of absence for
drug use or alcoholism shall be required to submit to testing as provided for
in Part (j) of this Section. Failure to do so will subject the employee to
discipline including discharge without the receipt of a prior warning letter.
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Article 35, Section 3
(4) The provisions of this Section shall not apply to probationary
employees.
(i) Disciplinary Action Based on Positive Test Results
Consistent with past practice under this Agreement, and notwithstanding any
other language in any Supplement, the Employer may take disciplinary action
based on the test results as follows:
(1) If a laboratory, following the procedures described in Parts (f)
and (g), reports that a urine test is positive, the employee shall be subject
to discharge (except as provided in Part (j))
(2) The following actions shall apply in probable suspicion testing
based on DOT and contractual mandates.
a. If the blood test is positive according to the procedures described
in Parts (f) and (g), the employee shall be subject to discharge.
b. If the blood test is negative and the urine test is positive, the
employee shall be medically unqualified as prescribed by the DOT regulations.
c. If the blood test is negative and the urine test is negative, the
employee shall be immediately returned to work and made whole for all lost
earnings.
(3) If test results show a blood alcohol concentration equal to or
above the level previously determined by the appropriate Supplemental
Agreement for alcohol intoxication, the employee shall be subject to
discharge pursuant to the Supplemental Agreement.
(j) Return to Employment After a Positive Urine Drug Test
(1) Any employee testing positive for drugs in a urine drug test,
thereby subjecting the employee to discipline, shall be granted reinstatement
on a one (1)-time lifetime basis if the employee successfully completes a
program of evaluation and/or rehabilitation which has been approved by the
applicable Health & Welfare Fund where such is the practice. Any cost of
evaluation and/or rehabilitation, over and above that paid for by the
applicable Health & Welfare Fund, must be borne by the employee.
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Article 35, Section 3
(2) Employees electing the one-time lifetime evaluation and/or
rehabilitation must notify the Company within ten (10) days of being notified
by the Company of a positive urine drug test. The evaluation process and/or
rehabilitation program must take a minimum of ten (10) days. The employee
must begin the evaluation process and/or rehabilitation program within
fifteen (15) days after notifying the Company. The employee must request
reinstatement promptly after successful completion of the evaluation process
and/or rehabilitation program. After the minimum ten (10) day period, the
employee may request reinstatement, but must first provide a negative urine
drug test, to be conducted by a clinic and laboratory of the Employer's
choice, before the employee can be reinstated. Any employee choosing to
protest the discharge must file a protest under the applicable Supplement.
After the discharge is sustained, the employee must notify the Company within
ten (10) days of the date of the decision, of the desire to enter the
evaluation process and/or rehabilitation program.
(3) While undergoing treatment, the employee shall not receive any of
the benefits provided by this Agreement or Supplements thereto except
continued accrual of seniority.
(4) Upon being reinstated, and after providing the negative drug test
provided in Subpart (2) of this Subsection, the employee will be subject to
three (3) additional tests for drugs without prior notice. Two (2) of these
tests will occur within the six (6) months of the employee's reinstatement
and the third (3rd) test to occur within the six (6) to twelve (12) month
period after the employee's return to employment. A positive test result as
set forth in Part (g) of this Section or a refusal to submit to testing shall
result in discharge without the receipt of a prior warning letter.
(k) Special Grievance Procedure
(1) The parties shall together create a Special Conference Joint Area
Committee consisting of an equal number of employer and union representatives
to hear drug-related discipline disputes. All such disputes arising after
the establishment of the Special Conference Joint Area Committee shall be
taken up between the Employer and Local Union involved. Failing adjustment
by these parties, the dispute shall be heard by the Special Conference Joint
Area Committee within ninety (90) days of the Committee's receipt
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Article 35, Section 3
of the dispute. Where the Special Conference Joint Area Committee, by
majority vote, settles a dispute, such decision shall be final and binding on
both parties with no further appeal. Where the Special Conference Joint Area
Committee is unable to agree on or come to a decision on a dispute, the
dispute will be referred to the National Grievance Committee.
(2) The procedures set forth herein may be invoked only by the
authorized Union Representative or the Employer.
(l) Paid-for Time
(1) Training
Employees undergoing substance abuse training as required by the DOT will be
paid for such time and the training will be scheduled in connection with the
employee's normal work shift, where possible.
(2) Testing
Employees subject to testing and selected by the random selection process for
urine drug testing shall be compensated at the regular straight time hourly
rate of pay in the following manner provided that the test is negative:
A. Random Drug Tests
1. for all time at the collection site.
2. (a) for travel time one way if the collection site is reasonably
en route between the employee's home and the terminal, and the employee is
going to or from work; or
(b) for travel time both ways between the terminal and the collection
site, only if the collection site is not reasonably en route between the
employee's home and the terminal.
3. When an employee is on the clock and a random drug test is taken
any time during the employee's shift, and the shift ends after eight (8)
hours, the employee is paid time and one-half for all time past the eight (8)
hours.
4. The Employer will not require the city employee to go for urine
drug testing before the city employee's shift, provided the collec-
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Article 35, Section 3
tion site is open during or immediately following the employee's shift.
5. During an employee's shift, an employee will not be required to use
his/her personal vehicle from the terminal to and from the collection site to
take a random drug test.
6. If a road driver is called at home to take a random drug test at a
time when the road driver is not en route to or from work, the driver shall
be paid, in addition to all time at the collection site, travel time both
ways between the driver's home and the collection site with no minimum
guarantee.
B. Non-Suspicion-Based Post-Accident Testing
1. In the event of a non-suspicion-based post-accident testing situation,
where the employee has advised the Employer of the issuance of a citation for
a moving violation, but the Employer does not direct the employee to be
tested immediately, but sends the employee for testing at some later time
[during the thirty-two (32) hour period], the employee shall be paid for all
time involved in testing, from the time the employee leaves home until the
employee returns home after the test.
2. When the Employer takes a road driver out of service and directs the
employee to be tested immediately, the Employer will make arrangements for
the road driver to return to his/her home terminal in accordance with the
Supplemental Agreement.
Section 4.
The parties agree that they will negotiate language to be incorporated in
this Agreement consistent with the drug and alcohol testing regulations
published by the U.S. Department of Transportation and the Federal Highway
Administration in the Federal Register of February 15, 1994, to become
effective January 1, 1995. These rules amend 49 CFR Parts 40, 391, 392 and
395, and create Part 382 Controlled Substance and Alcohol Use Testing. The
parties also agree that such language shall be agreed upon no later than
November 1, 1994.
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ARTICLE 36.
NEW ENTRY (NEW HIRE) RATES
Section 1. New Entry Rates
Effective April 1, 1991, all regular employees hired on or after that date
shall receive the following hourly and/or mileage rates of pay:
(a) Effective first (1st) day of employment - 85% of the current rate.
(b) Effective first (1st) anniversary date of employment - 90% of the
current rate.
(c) Effective eighteen (18) months from the first (1st) date of
employment - 100% of the current rate.
The above rates of pay shall not apply to casual employees.
The term" current rate" is the applicable hourly and/or mileage rte of pay
for the job classification including all wage and guaranteed cost-of-living
adjustments payable under this Agreement.
Section 2. New Entry Rates (Effective October 1, 1994)
Effective October 1, 1994, all regular employees hired on or after that date
shall receive the following hourly and/or mileage rates of pay:
(a) Effective first (1st) day of employment 75% of the April 6, 1994
rate.
(b) Effective first (1st) day of employment plus one year - 80% of the
April 6, 1994 rate.
(c) Effective first (1st) day of employment plus eighteen (18) months -
90% of the April 6, 1994 rate.
(d) Effective first (1st) day of employment plus two (2) years - 100%
of the current rate.
The above rates of pay shall not apply to casual employees.
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Article 36, Section 2
The term "current rate" is the applicable hourly and/or mileage rate of pay
for the job classification including all cost-of-living adjustments, under
this Agreement.
ARTICLE 37.
NON-DISCRIMINATION
The employer and the Union agree not to discriminate against any individual
with respect to hiring, compensation, terms or conditions of employment
because of such individual's race, color, religion, sex, age, or national
origin nor will they limit, segregate or classify employees in any way to
deprive any individual employee of employment opportunities because of race,
color, religion, sex, age, or national origin or engage in any other
discriminatory acts prohibited by law. This Article also covers employees
with a qualified disability under the Americans with Disabilities Act.
ARTICLE 38
Section 1. Sick Leave
Effective April 1, 1980 and thereafter, all Supplemental Agreements shall
provide for five (5) days of sick leave per contract year.
Sick leave not used by March 31, of any contract year will be paid on March
31 at the applicable hourly rate in existence on that date. Each day of sick
leave will be paid for on the basis of eight (8) hours' straight-time pay at
the applicable hourly rate.
Sick leave will be paid to eligible employees beginning on the third (3rd)
working day of absence due to sickness or accident except where the employee
is hospitalized prior to that date when it will be paid beginning on the date
of hospitalization.
The additional sick leave days referred to above shall also be included in
those Supplements containing sick leave provisions prior to April 1, 1976.
The National Negotiating Committees may develop rules and regulations to
apply to sick leave provisions negotiated in the 1976 Agreement and amended
in this Agreement uniformly to
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ARTICLE 38, Section
1
the Supplements. The Committee shall not establish rules and regulations for
sick leave programs in existence on March 31, 1976.
Section 2. Jury Duty
Effective April 1, 1979, al regular employees called for jury duty will
receive the difference between eight (8) hours pay at the applicable hourly
wage and actual payment received for jury service for each day jury duty to a
maximum of ten (10) days pay for each contract year.
When such employees report for jury service on a scheduled workday, they will
not unreasonably be required to report for work that particular day.
Time spent on jury service will be considered time worked for purposes of
Employer contributions to health & welfare and pension plans, vacation
eligibility and payment, holidays and seniority, in accordance with the
applicable provisions of the Supplemental Agreements to a maximum of ten (10)
days for each contract year.
Section 3. Family and Medical Leave Act
All employees who worked for the Employer for a minimum of twelve (12) months
and worked at least 1250 hours during the past twelve (12) months are
eligible for unpaid leave as set forth in the Family and Medical Leave Act of
1993.
Eligible employees are entitled to up to a total of 12 weeks of unpaid leave
during any twelve (12) month period for the following reasons:
1. Birth or adoption of a child or the placement of a child for foster
care;
2. To care for a spouse, child or parent of the employee due to a
serious health condition;
3. A serious health condition of the employee.
The employee's seniority rights shall continue as if the employee had not
taken leave under this Section, and the Employer will maintain health
insurance coverage during the period of the leave.
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Article 38, Section 3
The Employer may require the employee to substitute accrued paid vacation or
other paid leave for part of the twelve (12) week leave period.
The employee is required to provide the Employer with at least thirty (30)
days advance notice before FMLA leave begins if the need for leave is
foreseeable. If the leave is not foreseeable, the employee is required to
give notice as soon as practicable. The Employer has the right to require
medical certification of a need for leave under this Act. In addition, the
Employer has the right to require a second (2nd) opinion at the Employer's
expense. If the second opinion conflicts with the initial certification, a
third opinion from a health care provider selected by the first and second
opinion health care providers, at the Employer's expense may be sought, which
shall be final and binding. Failure to provide certification shall cause any
leave taken to be treated as an unexcused absence.
As a condition of returning to work, an employee who has taken leave due to
his/her own serious health condition must be medically qualified to perform
the functions of his/her job. In cases where employees fail to return to work
the provisions of the applicable Supplemental Agreement will apply.
It is specifically understood that an employee will not be required to repay
any of the contributions for his/her health insurance during FMLA leave. No
employee will be disciplined for requesting or taking FMLA leave under the
contract absent fraud, misrepresentation, or dishonesty.
Disputes arising under this provision shall be subject to the grievance
procedure.
The provisions of this Section are in response to the federal FMLA and shall
not supersede any state or local law which provides for greater employee
rights.
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ARTICLE 39.
DURATION
Section 1.
This Agreement shall be in full force and effect from April, 1994, to and
including March 31, 1998, and shall continue from year to year thereafter
unless written notice of desire to cancel or terminate this Agreement is
served by either party upon the other at least sixty (60) days prior to date
of expiration.
When notice of cancellation or termination is given under this Section, the
Employer and the union shall continue to observe all terms of this Agreement
until impasse is reached in negotiations, or until either the Employer or the
Union exercise their rights under Section 3 of this Article.
Section 2.
Where no such cancellation or termination notice is served and the parties
desire to continue said Agreement but also desire to negotiate changes or
revisions in this Agreement, either party may serve upon the other a notice
at least sixty (60) days prior to March 31, 1998 or March 31st of any
subsequent contract year, advising that such party desires to revise or
change terms or conditions of such Agreement.
Section 3.
The Teamsters National Freight Industry Negotiating Committee, as
representative of the Local Unions or the signator Employer or the
authorizing Employer Associations, shall each have the right to unilaterally
determine when to engage in economic recourse (strike or lockout) on or after
April 1, 1998, unless agreed to the contrary.
Section 4.
Revisions agreed upon or ordered shall be effective as of April 1, 1998 or
April 1st of any subsequent contract year.
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Article 39, Section 5
Section 5.
In the event of an inadvertent failure by either party to give the notice set
forth in Sections 1 and 2 of this Article, such party may give such notice at
any time prior to the termination or automatic renewal date of this
Agreement. If a notice is given in accordance with the provisions of this
Section, the expiration date of this Agreement shall be the sixty-first
(61st) day following such notice.
Section 6.
In those circumstances where the Teamsters National Freight Industry
Negotiating Committee, as representative of the Local Union, or the signatory
Employer or the authorizing Employer Associations, shall have served a notice
of reopening pursuant to this Article and have not been able to arrive at an
agreement within six (6) months, then either side shall have the right to
sixty (60) days' written notice to terminate this Agreement.
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IN WITNESS WHEREOF the parties hereto have set their hands and seals this___
day of ____, 1994, to be effective April 1, 1994, except as to those areas
where it has been otherwise agreed between the parties.
NEGOTIATING COMMITTEES
FOR THE LOCAL UNIONS:
TEAMSTER NATIONAL FREIGHT INDUSTRY
NEGOTIATING COMMITTEE
Ron Carey, Chairman
Dennis Skelton, Co-Chairman
Roland Bell Doug Mims
Ray Burkhart Ed Mireles
Frank Busalacchi John Neal
Jimmy Carrington Richard Nelson
Sam Carter Jim Roberts
Ray Cash W. C. Smith
George Cashman C. Sam Theodus
Thomas Griffith Lee Via
Harrison Lushbaugh Harold Yates
FOR THE EMPLOYERS:
TRUCKING MANAGEMENT, INC.
Arthur H. Bunte, Jr., Chairman
Jack G. Ferrone R. V. Pullima, Sr.
Donald E. Hargett C. Kermit Scarborough
Gordon L. Kraemer Fred J. Schrank
Kenneth F. Leedy
REGIONAL CARRIES, INC.
Tom Jones, Chairman
Woody Young, Co-Chairman
Glen Carrol Gene Pikovsky
Lee Kundtz Scott Pikovsky
Gregg Lundner Skiy Rajnowski
Abe Marcus Howard Reinhart
Peter Martin
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REGIONAL CARRIERS, INC.
Addendum
The Agreement with Regional Carriers, Inc. contains the same wages, benefits
and non-monetary provisions as contained herein, with the following
exception:
Add new
Article 2, Section 5(b)
to read as follows:
The parties have agreed to consider the negotiation of Riders and Addenda to
cover certain types of operations, including unionized regional operations.
Such Riders and Addenda shall always be subject to approval by the Union
designated committee, the Local Unions involved and, thereafter, must be
ratified in a secret ballot by a majority of all of the Employer's Teamster
represented employers in its nationwide bargaining unit.
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APPENDIX A
WAGE REDUCTION-JOB SECURITY PLAN
GUIDELINES
Note: Each Plan Must be Approved by TNFINC.
_____a _____Corporation, (hereinafter called the "Company:") hereby
establishes The ___Wage Reduction - Job Security Plan, (hereinafter the
"Plan") for the benefit of all of its employees. These guidelines for
establishing this Plan were created for the express purpose of allowing
freight companies the ability to compete and provide job security for
Teamster bargaining unit employees. This plan has been approved per Article
6, Section 2, of the National Master Freight Agreement.
1. Employee Eligibility. During the period in which the Plan is
effective, each full time employee of the Company (Bargaining Unit and/or Non-
Bargaining Unit) shall participate in the Plan. For purposes of the Plan, the
term "full time employee" means an employee who is on the seniority list and
is scheduled to perform work for the Company when called, including
probationary employees and regular employees on lay off status but, excluding
casual employees.
2. Equal Sacrifice of Non-Bargaining Unit Employees and their
Participation. All non-bargaining unit employees will participate equally in
the Plan in accordance with its terms. The Company will continue the past and
present practice of sharing the burden of sacrifices among all employees. The
Company agrees not to increase wages (including bonuses) and benefits of
current non-bargaining unit employees as an overall percentage beyond the
effective overall percentage increases to be received by the bargaining unit
employees. (This would exclude promotions, new hires, and, for example, data
processing employees, who may be otherwise impossible to hire or retain). In
the event it becomes necessary to exceed this overall percentage increase
limit in order to retain employees for the efficient continued operation of
the business, the Company would request approval from the TNFINC to do so.
3. Relation to Collective Bargaining Agreement. This Plan will be
mandatory for all employees, both bargaining unit and non-bar-
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gaining unit, since job security is the number one asset we all hope to share
equally. This Plan will be effective on the agreed-to date for all those
employees in the entire unit. The Plan will be submitted for secret ballot
vote of all bargaining unit employees, and shall be put into effect if
seventy-five percent (75%) of the bargaining unit employees voting, vote to
adopt the plan.
4. Health, Welfare and Pension Contributions. The Company agrees to
continue to pay the full Health, Welfare and Pension contributions and other
increases set forth in the National Master Freight Agreement and its
Supplements and will continue to be signator to the National Master Freight
Agreements for the life of the Plan.
5. Dispute Settlement. As part of the Collective Bargaining
Agreement, disputes pertaining to the Plan are subject to the grievance
procedure contained in the National Master Freight Agreement. However, any
grievance filed hereunder, by either party, shall be referred directly to the
appropriate Are Conference Grievance Committee for initial hearing and
disposition.
6. Participation. An employee begins or continues participation in the
Plan, on the date of Plan implementation, or, the first day of the pay period
following his/her first day of regular and/or probationary employment subject
to the eligibility rules above.
7. New Hire. Newly hired employees subject to New Hire under the
National Master Freight Agreement beginning after 10/1/94 will begin
participation in the Plan first day of the pay period as a minimum as follows
for a 15% Wage Reduction-Job Security Plan:
Maximum Wage Reduction
Time of Service from New Hire Rate
Effective First Day of Employment Receive 70% of NMFA Wages (%)
Effective First plus One (1) Year Receive 75% of NMFA Wages (%)
Effective First plus 18 Months Receive 80% of NMFA Wages (%)
Effective First Day plus Two (2) Years Receive 85% of NMFA Wages (%)
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Any present employee still subject to New Hire Rates under the National
Master Freight Agreement who began prior to 10/1/94 will participate
according to his seniority date and subject to the above schedule, except
that no one will move backwards in progression.
8. Term of Plan. The term of the Plan or continued Plan shall begin
on or after April 1, 1994 and shall continue in effect through March 31, 1998
or until a replacement Collective Bargaining Agreement is reached between the
parties, whichever is the later.
All Plan years will commence on January 1, and end on December 31.
Distribution of net operating profits will be prorated as appropriate for
calendar years 1994 and 1998 and correspond with Plan implementation date and
Plan termination date as herein provided.
9. Determination and Sharing of Net Operating Profit. For the period
from date of Plan implementation through date of Plan termination as herein
provided for a 15% (maximum) plan:
% of Net Operating
% of Net Operating Profit Distributed
Overall Expense Profit Retained to Plan Participating
Ratio Levels by Company Employees (Profit Pool)
97.0 or Above 100% 0%
96.9 and Below 50% 50%
(Note: The percentage of profit retention below 97.0 set forth above may vary
in Plans for less than maximum allowable reduction provided in Item #11,
pursuant to TNFINC approval.)
(a) As set forth above, the Company will retain all Net Operating
Profit amounts on the first three points of the Overall Expense Ratio, i.e.,
from 97.0 or above, irrespective of what the overall expense ratio is. A
substantial portion of such net operating profit on the first three points of
the Overall Expense Ratio will be reinvested back into the Company's freight
operations for the purpose of continuing to provide job security for all Plan
participants. The Company will distribute the requisite percentage of the Net
Operating Profit in excess of the first three points of the Overall Expense
Ratio, i.e., from 96.9 and below, to the participating employees.
(b) Each participant's proportionate share of the Company's Net
Operating Profit (Profit Pool) for each Plan year for which a deter-
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mination is being made shall equal the ratio of the individual participant's
earnings for such plan year (after applicable wage reduction) divided by the
total earnings by all eligible employees for such plan year, (after
applicable wage reduction) multiplied by the amounts of the Company's Net
Operating Profit (Profit Pool) which is available for distribution under the
Plan.
For example, the distribution for an employee for the first full Plan year
would be:
Individual Participant's Eligible Profit Pool-Net Operating
Earnings for the period January 1, Profits (for the period
through December 31. from January 1 through
_________________________ X December 31) available for
distribution to
Participating Employees
Overall Participating Employees'
Eligible Earnings (January 1
through December 31.)
(c) The term "Earnings" means an employee's wage compensation only as
reportable for W-2 purposes for any plan year for which a profit sharing
determination is being made, less amounts otherwise includable in wage
compensation which are attributable to profit sharing distributions received
during such Plan year, but attributable to a preceding Plan year. Earnings
attributable to wages shall include vacation, sick pay, holiday pay, funeral
leave, jury duty and other paid-for-time not worked.
(d) The term "Net Operating Profit" means all operating revenues
attributable to the Company's LTL trucking operations minus all operating
expenses, including other expenses and debt interest, and any other non-
recurring expenses normally incurred by a regulated general freight carrier,
excluding any provision for Plan distributions and income taxes, as defined
under generally accepted accounting principles. This does not include
extraordinary gains or losses as defined under generally accepted accounting
principles.
(e) The term "Overall Expense Ratio" means all expenses excluding any
provision for Plan distributions, income taxes and extraordinary losses
divided by total revenues excluding extraordinary gains, as defined under
generally accepted accounting principles.
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(f) The company will provide each employee with an annual report
including a basic profit and loss statement, indicating the overall results
of the Plan and the individual distribution available to such employee.
10. Distribution of Operating Profit. Distribution of the employees'
share of Net Operating Profit as determined under the Plan for each calendar
(Plan) year shall be made by the Company within ninety (90) days after the
close of the Company's books for such calendar (Plan) year.
11. Wage Reduction. From and after the effective date on which an
employee becomes a Participant, each employee will have or will have had
his/her gross wages or earnings reduced by %, except for new hires. (See
Item 7.) Such wage reduction and/or reduced wages shall include vacation,
sick pay, holiday pay, funeral leave, jury duty and other paid for time not
worked. Wage or salary increases given during the term of the Plan will be
subject to the applicable wage or salary reduction.
12. Income and Employment Tax Withholding. The Company shall withhold
all applicable federal, state and local income tax and social security or
other tax from employees' wages after the reduction and subsequently from
each employee's distribution under the Plan as required by applicable
federal, state, or local laws and/or regulations of such greater amount as
requested by the employee in writing.
13. Access to Company Financial Records. The Company shall submit an
annual operating statement in the format of the ICC report and independent
audit to TNFINC, and TNFINC reserves the right on an annual basis to examine
the books of the Company or utilize an independent auditor of its choice. In
the event an independent auditing firm is utilized by TNFINC, the Company
shall pay such independent auditor for such annual audit up to a maximum of
five thousand dollars ($5,000). There shall be no inter-company charges
initiated under the Plan for the purpose of defeating the Plan. The Company
will not change accounting assumptions or practices, except as required to
conform to governmental regulation, generally accepted accounting practices
or for good business reasons; and in no event will such assumptions or
practices be changed to evade or defeat the purposes of this Plan.
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14. Past Practices/Company Operations. The existence and maintenance of
this Plan shall not limit or otherwise affect the Company's ability to
continue to exercise its managerial discretion regarding the running of the
Company's business, consistent with the provisions of the Collective
Bargaining Agreement. A committee consisting of at least three (3), but not
more than six (6) bargaining unit employees selected form among themselves
shall have the right to meet and confer with top management on a semi-annual
basis for purposes of being apprised and informed concerning the overall
progress and results of the Company's continuing operations. TNFINC will
appoint the Chairman of this committee and will have the right to send a
representative to any meeting of the committee convened by the Company.
15. Work Preservation. Where legally permissible, the Company agree not
to establish any non-union regular route common carrier dry freight LTL
entity. For purposes of this paragraph, the term "Company" includes the
holding company. In the event the Company acquires a non-union regular route
common carrier dry freight LTL entity whose operations are to be combined
with those of the Company, it will negotiate with the Union concerning wages,
hours and working conditions for the employees of the acquired entity. If the
Company acquires a non-union regular route common carrier dry freight LTL
entity which is to be operated separately from the Company, it agrees that it
will recognize the Union as the representative of employees of that entity in
those jobs comparable to those in the present bargaining unit based on, and
after, a check by the Company of union recognition cards if signed by a
majority of those employees, and the Company will not oppose or obstruct the
Union in its efforts to obtain cards. The company will then negotiate with
the Union concerning wages, hours and working conditions for those employees.
16. Company Agrees Not to Terminate Plan before Termination Date
Without Approval of the Union. However, if the Plan is terminated at any
time, wage levels will revert or snap back to the full National Master
Freight Agreement on a prospective basis and participating employees are
fully vested in the pro-rated share of the profits for period of wage
reduction.
17. Bankruptcy Protection. If the Company files Chapter 7 or 11
petition or is placed in involuntary bankruptcy proceeding, this
129
<PAGE>
Plan is automatically terminated and wages reverted to full National Master
Freight Agreement on a prospective basis unless the Union agrees to continue
the Plan.
18. Voluntary Termination of Operation. If the company voluntarily
terminates operations before the expiration of the current Collective
Bargaining Agreement, the participating employees are fully vested in the
prorated share of the profits for the period of wage reduction.
19. Type of Agreement. NMFA with all applicable supplements and all IBT
Agreements, whether or not supplemental to the NMFA.
20. Transfer of Ownership. If for any reason the Company is sold, the
participating employees are fully vested in the prorated share of the profits
for the period of wage reduction.
21. Resignation, Retirement or Other Termination of Employment. Any
employee who resigns, retires or otherwise incurs a termination of
employment, whether voluntary or involuntary, during the term of the Plan
shall receive a pro rata distribution in accordance with paragraph 9 based
upon his/her participation in the Plan through the date of his/her
resignation, retirement or other termination of employment.
22. Limitation to Current Ownership. Should the Company, at any time
subsequent to approval of this Plan, enter into negotiations for the sale of
the company the following is mutually understood:
This Plan is limited to the current ownership, unless such current
ownership and prospective purchaser obtain approval for continuance of the
Plan from TNFINC after a meeting with TNFINC, such current owner and the
prospective purchaser prior to the actual sale. During such meeting the
feasibility of employee purchase of the Company will be discussed with the
employee committee established in #14 above and with TNFINC.
(COMPANY NAME)
BY: _________________________________
130
<PAGE>
INDEX
A
Accident Reports 62
Accretion Clause for Expanded Operations 96
Additions to Operations, Coverage of 6
Agency Fees, Employment 15
Agency Shop 9-10
Agreement, Cancellation of 120
Agreement, Posting of 71
Agreement, Reopening of 87
Air-Ride Seats 64
Alcohol and Drug Use 101
Arbitration, Conference Panel 35
Arbitration, National Panel 35-36
B
Bail, Employee's 100
Bargaining Unit, Single 6-7
Bonds and Insurance 53
Bulletin Boards, Union 71
Bunk Restraint Strap/Net Buckles (Sleeper Berths) 69
C
Cab Dimensions, Interior 65
Cancellation of Agreement 120
Card Check 5
Cargo and Containers 4-5
Casual Employees 12-15
Chain of Custody Procedures 105-106
Change of Operations Committee 42-43
Change of Operations Committee Procedure 43-44
Checkoff 15-17
Closing of Terminals-Elimination of Work 47-48
Closing, Partial Closing of Terminals
-Transfer of Work 45-47
Commercial Driver's License (CDL) 63
Committee Authority (Mergers of Companies) 23
Company, Transfer of Title or Interest 2-3
Compensation Claims 54-55
131
<PAGE>
Consumer Price Index (CP-W) 98
Cooperation, Union and Employer 71
Cost-of-Living (COLA) 98-99
D
Damage or Loss 52
Dangerous Conditions 62
Discharge 84
Disciplinary Action Based on Positive Test Results 112
Diversion of Work - Parent or Subsidiary Companies 95
Dock Operations 25-26
DRIVE Contribution 16
Drug and Alcohol Use 101
Drug Testing, NMFA Standard Procedure 102-115
Duration of Agreement 120-121
E
Electronic Funds Transfer (EFT) 17
Elimination of Work 47-48
Emergency Reopening 87
Employee's Bail 100
Employees Bond 53
Employer Recommendation 10
Employers Covered 2
Employment, Separation of 84
Equipment and Safety (Preamble) 61
Equipment Purchases (Seniority) 23
Equipment, Qualifications on 63
Equipment, Rates for New 29
Equipment Reports 62-63
Equipment, Requirements 63-69
Equipment, Safe 61-62
ESOP's (see Wage Reduction-Job Security Plan
Guidelines) 124-130
Exclusive Cartage Operations 22
Expansion of Operations 96-97
Extension of Agreement to Additions to Operations 6
Extension of Agreement to Adjoining Operations 96
Extension of Agreement to Non-Adjoining Operations 97
Extra Contract Agreements 28-29
132
<PAGE>
F
Fair Day's Work for Fair Day's Pay 71-72
Family and Medical Leave Act 118-119
Forklifts, Diesel Powered (Phase Out) 66-67
Forty (40) and Out, Rule of 25-26
G
Garnishments 100
Grievance Machinery, Local and Area 30-32
Grievance Procedure, "Innocent Until Proven Guilty" 32
Grievance Procedure, National 32-36
Grievance Procedure, Special (Drug Testing) 113-114
Grievant's Bill of rights 30-32
H
Hazardous Materials Program 69-70
Hiring 9
Hot Cargo 50-51
I
ICC Schedule 600 90, 92
Individual Employer Standards 27
"Innocent Until Proven Guilty" 32
Inspection Privileges and Employer Identification 85
Intent of Parties 23, 49
Intermodal, Job Protections
for Current Road Drivers 92
Intermodal, National Committee 93-94
Intermodal Service 90-93
Intermodal Surface Transportation
Efficiency Act of 1991 90
J
Joint Industry Development Committee 72-73
Jurisdictional Disputes 94
Jury Duty 118
K
Kits, Drug Testing 106-108
Kits, Urine Collection 107-108
133
<PAGE>
L
Laboratory Accreditation (Drug Testing) 109
Laboratory Requirements (Drug Testing) 108
Law, No Violation of 11
Layoff 48
Leave of Absence Prior to Testing 111-112
License Suspension or Revocation 100
Local Standards 27
Loss or Damage 52
M
Maintenance of Records 89-90
Maintenance of Standards 26-27
Master Agreement 4
Master Agreement, Supplements to 4-5
Medical Opinions, Conflicting (Modified Work) 56-57
Medical Review Officer (MRO) 111
Medications, Prescription and Non-Prescription 111
Mergers of Companies-General 19-20
Military Clause 60
Modified Work 55-60
Moving Expenses 44-45
N
National Institute for Occupational Safety
and Health (NIOSH) 66
National Intermodal Committee 93-94
National Safety and Health Committee 69
New Entry Rates 116
New Entry Rates (Effective October 1, 1994) 116-117
New Equipment, Rates for 29
Non-Covered Unites 5-6
Non-Discrimination 117
O
Opening of Terminals 48-49
Other Services 71
Owner-Operators 74-84
134
<PAGE>
P
Paid-for Time (Drug Testing) 114
Parent or Subsidiary Companies 95
Parties to the Agreement 2-3
Passengers 54
Pay Period 70
Picket Lines: Sympathetic Action 50
Piggyback Operations 88-89
Posting of Agreement 71-72
Probable Suspicion Testing 102-103
Probationary Employees 11-12
Profit Sharing Plans (see Wage Reduction-Job
Security Plan Guidelines) 124-130
Purchase of Equipment (Seniority) 23
Purchase of Rights (Seniority) 21-22
Q
Qualifications (Transfers) 49
Qualifications on Equipment 63
R
Rates, Highest Prevail 23-24
Recognition 7-8
Records, Maintenance of 89-90
Reduction, Workweek 29
Reopening of Agreement 87
Reports, Accident, Equipment 62
Revocation of License, Suspension 100
Riders 7
Rights, Protection of 50-51
Rights, Purchase of 21-22
S
Safe Equipment 61-62
Safety & Health Reports, Government Required 70
Savings Clause 10
Seniority, Change of Operations 45
Seniority, Cutting Board 24
Seniority, Continuous Classification 49
135
<PAGE>
Seniority, Intent of Parties 23
Seniority, Intent of Parties
(Change of Operations) 49-50
Seniority List, Active 20
Seniority List, Layoff 20
Seniority List, Posting 24
Seniority, Purchase of Rights 21-22
Seniority Rights 19
Seniority, Temporary Authority 21
Separability and Savings Clause 85
Separation of Employment 84
Sick Leave 117
Sleeper Berths 69
Sleeper Operations, Safe and Healthy
Working Environment in 68
Specimen Retention 108
Split Sample Procedure 108
Standards, Individual Employer 27
Standards, Local 27
Standards, Maintenance of 26-27
State Law 9
Stewards 17
Struck Goods 50
Subcontracting 95
Substitute Service 88
Supplements to Master Agreement 4
Suspension or Revocation of License 100
Sympathetic Action 50, 87
T
Temporary Authority 21
Termination of Agreement 121
Test Results, Disciplinary Action Based on Positive 112
Testing, Blood 110
Testing, DOT Random 103
Testing, Drug Kits 106-108
Testing, Employment Examinations (Hiring) 9
Testing, Laboratory Methodology 109
Testing, Leave of Absence Prior to 111-112
Testing, NMFA Uniform Procedure
(Drug and Alcohol) 102-115
Testing, Non-Suspicion-Based Post-Accident 104
136
<PAGE>
Time Sheets and Time Clocks 86
Transfer of Company Title or Interest 2-3
Transfer of Work 45-47
U
Uniforms 53-54
Union Activities 74
Union Bulletin Boards 71
Unions Covered 2
Union Liability (Equipment and Safety) 70
Union Membership, Employer Recommendations to Retain 11
Union Shop 8
Unit, Multi-Employer, Multi-Union 94
Units, Non-Covered 5-6
Unit, Single Bargaining 6-7
Urine Collection Kits 107-108
V
Video Cameras for Discipline and Discharge, Use of 86-87
W
Wage Reduction-Job Security Plan Guidelines 124-130
Work Assignments 17
Work Opportunity 24-25
Work Preservation (Subcontracting) 95
Work Stoppages 36-37
Workweek Reduction 29
137
<PAGE>
EXHIBIT 10.6
<PAGE>
1995 PERFORMANCE AWARD UNIT PROGRAM
Article I Purpose
Effective this 1st day of January 1996 (the "Effective Date") described
herein, Arkansas Best Corporation (the "Company") adopts the Arkansas Best
Corporation Performance Award Unit Program (the "Plan") to benefit the
Company's stockholders by creating a flexible vehicle to provide incentive
compensation opportunities to executive management of the Company. In doing
so, the Plan provides an important link between the compensation of executive
management and Company performance. The Awards under the Plan will compensate
management for the creation of shareholder value. In this way, the Plan is
intended to encourage and reward superior performance by individuals whose
performance is a key element in achieving the Company's continued financial
and operational success.
Article II Definitions
2.1 "Award or "Awards" means an award granted pursuant to Article IV.
2.2 "Award Agreement" means a written document containing the terms of an
Award made pursuant to this Plan, which evidences the Award.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the Stock Option Committee of the Board.
2.6 "Company" means Arkansas Best Corporation, a Delaware corporation, or
any successor corporation
2.7 "Disability" means a medical condition which precludes the Participant
from engaging in substantially gainful employment and is expected to
continue indefinitely. The determination of Participant's Disability for
purposes of this Plan shall be determined by the Committee.
2.8 "Employee" means any individual who is an employee of the Company or any
Participating Affiliate.
2.9 "Participant" means an Employee who has been designated by the Committee
to be eligible for an Award pursuant to this Plan.
2.10 "Participating Affiliate" means a subsidiary of the Company, of which
the Company beneficially owns, directly or indirectly, more than fifty
percent (50%) of the aggregate voting power of all outstanding classes
and series of stock, and which has one or more employees designated by
the Committee to be eligible for an Award pursuant to this Plan.
2.11 "Performance Award Units" are cash allotments of dollar-denominated
units, which may be performance-based compensation as described in
section 162(m) of the Code.
2.12 "Retirement" means termination of employment with the Company or a
Participating Affiliate upon attainment of normal retirement age of
sixty-five (65).
<PAGE>
Article III Eligibility
The Committee shall consider an individual's position, responsibilities, and
importance to the Company among other factors in determining which Employees
shall be Participants. The types of Awards to be made to Participants and the
terms, conditions, and limitations applicable to the Awards are left to the
sole discretion of the Committee, subject to the terms of the Plan. The
Committee's decision as to eligibility and the nature and timing of Awards
under the Plan is final.
Article IV Awards
4.1 At the discretion of the Committee, Awards and/or Performance Award
Units shall be paid in the form of cash or other property the Committee
deems appropriate.
4.2 Performance Award Units may be granted under this Plan from time to time
based on the terms and conditions as the Committee deems appropriate;
provided, however, that such Awards shall not be inconsistent with the
terms and purposes of this Plan. The Committee shall determine the
performance measurements and criteria for such Awards.
4.3 In the event of the Retirement, Disability, death or other termination
of a Participant's employment with the Company, all Awards granted, but
not unpaid and Performance Award Units credited to the Participant's
account shall be paid in cash or, as the Committee deems appropriate,
other property, to the Participant's designated beneficiary.
4.4 Each Award under this Plan shall be evidenced by an Award Agreement
setting forth the terms of the Award.
(a) Award Agreements shall include the following terms:
(i) a provision that the Awards under the Plan shall not
be assigned, pledged, or otherwise transferred, except by will
or by the laws of descent and distribution;
(ii) a provision describing the treatment of an Award in
the event of the Retirement, Disability, death, or other
termination of a Participant's employment with the Company,
including, but not limited to terms relating to the vesting,
forfeiture, or cancellation of an Award in such circumstances;
and
(iii) a provision describing the withholding of
applicable taxes required by law from all amounts paid in
satisfaction of an Award.
(b) Award Agreements may include the following terms:
(i) any provisions requiring holders of Awards to
surrender outstanding Awards as a condition precedent to the
grant of new Awards under the Plan;
<PAGE>
(ii) such other terms as are necessary and appropriate to
effect an Award to the Participant including, but not limited
to the term of the Award, payment provisions, vesting
provisions, deferrals, any requirements for continued
employment with the Company, limitations regarding the source
of the payment for an Award, any other restrictions or
conditions (including performance requirements) on the Award
and the method by which restrictions or conditions lapse,
effect on the Award of a Change of Control, as defined in
Article IX, and amount or value of Awards; or
(iii) any terms or limitations to comply with the
performance-based compensation requirements under section
162(m)(4)(C) of the Code.
Article V Administration
5.1 A majority of the members of the Committee shall constitute a quorum.
The vote of a majority of a quorum shall constitute action by the
Committee.
5.2 The Committee will be responsible for declaring the material terms under
which the Performance Award Units are to be paid, including performance
goals.
5.3 The Committee shall periodically determine the Participants in the Plan
and the nature, amount, and other terms of Awards to be made to such
individuals.
5.4 The Committee shall have the power to interpret and administer the Plan.
All questions of interpretation with respect to the Plan and its
determination shall be final and conclusive upon all parties in
interest. In the event of any conflict between an Award Agreement and
the Plan, the terms of the Plan shall govern.
5.5 The Committee may delegate to the officers or employees of the Company
the authority to execute and deliver such instruments and documents, to
do all such acts and things, and to take all such other steps deemed
necessary, advisable or convenient for the effective administration of
the Plan in accordance with its terms and purpose.
5.6 In the case of Awards that are intended to be Performance Awards as
described in section 162(m) of the Code, before any such Performance
Award is paid to a "covered employee," as defined in section 162(m) of
the Code, the Committee shall disclose to the shareholders and the
shareholders must approve:
(a) A description of the broad class of employees who are eligible
to participate in the Plan.
(b) A general description of the performance goals set by the
Committee.
(c) Either the formula for computing the compensation or the
maximum dollar amount that will be paid if the performance goal is
satisfied.
<PAGE>
(d) Such other information as the Committee deems necessary to
comply with the requirements under section 162(m) of the Code.
Article VI Change of Control
6.1 In the event of a Change of Control, the terms of the Award Agreement
shall state the effect, if any, on Awards granted under the Plan.
6.2 For the purposes of this Section, a "Change of Control" shall mean the
earliest date on which any of the following events shall occur:
(a) there shall be consummated any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which Shares would be converted into
cash, securities, or other property, other than a merger of the
Company in which the holders of the Shares immediately prior to the
merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or any lease,
exchange, or other transfer (excluding transfer by way of pledge or
hypothecation), in one transaction or a series of related
transactions, of all, or substantially all, of the assets of the
Company;
(b) the stockholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company;
(c) any "person" (as such term is defined in section 3(a)(9) or
section 13(d)(3) under the Exchange Act) or any "group" (as such
term is used in Rule 13d-5 promulgated under the Exchange Act),
other than the Company or any successor of the Company or any
subsidiary of the Company or any employee benefit plan of the
Company or any subsidiary (including such plan's trustee), becomes
a beneficial owner for purposes of Rule 13d-3 promulgated under the
Exchange Act, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the Company's then
outstanding securities having the right to vote in the election of
directors; or
(d) during any period of two consecutive years, individuals who,
at the beginning of such period constituted the entire Board, cease
for any reason (other than death) to constitute a majority of the
directors, unless the election, or the nomination for election, by
the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
Article VII Rights of Employees
7.1 Status as an eligible Employee shall not be construed as a commitment
that any Award will be made under the Plan to such eligible Employee or
to eligible Employees generally.
<PAGE>
7.2 Nothing contained in the Plan (or in any other documents related to this
Plan or to any Award) shall confer upon any Employee or Participant any
right to continue in the employ or other service of the Company or
constitute any contract or limit in any way the right of the Company to
change such person's compensation or other benefits or to terminate the
employment of such person with or without cause.
Article VIII Amendment and Termination
The Board may at any time amend, suspend, or terminate the Plan. The
Committee may at any time alter or amend any or all Award Agreements under
the Plan to comply with any laws that govern such agreements.
Article IX Unfunded Plan
The Plan shall be unfunded. Neither the Company, Board of Directors, nor the
Committee shall be required to segregate any assets that may at any time be
represented by Awards made pursuant to the Plan. Neither the Company, the
Committee, nor the Board of Directors shall be deemed to be a trustee of any
amounts to be paid under the Plan.
Article X Limits of Liability
10.1 Any liability of the Company to any Participant with respect to an Award
shall be based solely upon contractual obligations created by the Plan.
10.2 No member of the Board or the Committee, nor any Employee acting on
behalf of the Board or the Committee, shall be personally liable for any
action, determination, or interpretation taken or made in good faith
with respect to the Plan, and all members of the Board and the Committee
and each Employee acting on their behalf shall, to the extent permitted
by law, be fully indemnified and protected by the Company in respect of
any such action, determination, or interpretation.
Article XI Miscellaneous
The laws of the State of Delaware shall govern all matters relating to this
Plan, except to the extent superseded by the laws of the United States.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its
duly authorized officer to be effective immediately on the date on which this
Plan is adopted by the Board of Directors of the Company.
ARKANSAS BEST CORPORATION
By:
Title:
<PAGE>
EXHIBIT 11
<PAGE>
EXHIBIT 11
<TABLE>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
ARKANSAS BEST CORPORATION
<CAPTION>
Year Ended December 31
1995 1994 1993
($ thousands, except
per share data)
<S> <C> <C> <C>
PRIMARY:
Average shares outstanding 19,520,756 19,249,209 19,132,386
Net effect of dilutive stock
options -- Based on the
treasury stock method using
average market price - 102,587 61,196
---------- ---------- ----------
Average common shares outstanding 19,520,756 19,351,796 19,193,582
========== ========== ==========
Income before extraordinary item
and cumulative effect of
accounting change $ (32,792) $ 18,707 $ 20,972
Less: preferred stock dividend 4,298 4,298 3,904
---------- ---------- ----------
(37,090) 14,409 17,068
Extraordinary item:
Loss on extinguishments of debt - - (661)
---------- ---------- ----------
Net income (loss) available
for common shareholders $ (37,090) $ 14,409 $ 16,407
========== ========== ==========
Per common and common
equivalent share:
Income before extraordinary
item and cumulative effect
of accounting change $ (1.90) $ .74 $ .89
Extraordinary item:
Loss on extinguishments of debt - - (.04)
---------- ---------- ----------
$ (1.90) $ .74 $ .85
========== ========== ==========
<FN>
<FN1>
Fully diluted earnings per common share are not presented, as such
calculations would be anti-dilutive
</FN>
</TABLE>
<PAGE>
EXHIBIT 21
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARY CORPORATIONS
ARKANSAS BEST CORPORATION
The Registrant owns and controls the following subsidiary corporations:
Jurisdiction of % of Voting
Name Incorporation Securities Owned
Subsidiary of Arkansas Best Corporation:
ABF Freight System, Inc. Delaware 100
Treadco, Inc. Delaware 45.7
Transport Realty, Inc. Arkansas 100
Data-Tronics Corp. Arkansas 100
Clover Insurance Company, Ltd. Bermuda 100
Arkansas Underwriters Corporation Arkansas 100
Advertising Counselors, Inc. Arkansas 100
ABF Cartage, Inc. Delaware 100
ABF Farms, Inc. Arkansas 100
Land-Marine Cargo, Inc. Puerto Rico 100
Integrated Distribution, Inc. Arkansas 100
ABF Freight System Canada, Ltd. Canada 100
ABF Freight System de Mexico, Inc. Delaware 100
Best Logistics, Inc. Delaware 100
Agile Freight System, Inc. Delaware 100
Agricultural Express of America, Inc. Delaware 100
Clipper Exxpress Company Delaware 100
WorldWay Corporation North Carolina 100
Subsidiary of ABF Freight System, Inc.:
ABF Freight System (B.C.), Ltd. British Columbia 100
Subsidiary of Treadco, Inc.:
Trans World Casings, Inc. Delaware 100
Subsidiary of WorldWay Corporation
G.I. Trucking Company California 100
Cardinal Freight Carriers, Inc. Virginia 100
CaroTrans International, Inc. North Carolina 100
The Complete Logistics Company California 100
Innovative Logistics Incorporated South Carolina 100
Motor Carrier Insurance, Ltd. Bermuda 100
Carrier Computer Services, Inc. North Carolina 100
Carolina Breakdown Service, Inc. North Carolina 100
Hawaiian Pacific Freight Forwarding California 100
<PAGE>
EXHIBIT 23
<PAGE>
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-66694) pertaining to the Arkansas Best Corporation Stock
Option Plan and Arkansas Best Corporation Disinterested Director
Stockholder Plan, the Form S-8 Registration Statement dated March 30, 1994,
pertaining to the Arkansas Best Corporation Employees' Investment Plan, and
the Form S-8 Registration Statement dated November 30, 1995, pertaining to
(1) the Carolina Freight Corporation Employee Savings and Protection Plan,
(2) Complete Leasing Concepts, Inc. Employee Savings & Profit Sharing Plan,
and (3) IDI 401(k) Savings Plan of our report dated February 21, 1996, with
respect to the consolidated financial statements and schedule of Arkansas
Best Corporation included in this Annual Report (Form 10-K) for the year
ended December 31, 1995.
ERNST & YOUNG LLP
Little Rock, Arkansas
March 28, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ARKANSAS
BEST CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000894405
<NAME> ARKANSAS BEST CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 16,945
<SECURITIES> 0
<RECEIVABLES> 186,273
<ALLOWANCES> 19,403
<INVENTORY> 36,850
<CURRENT-ASSETS> 322,487
<PP&E> 598,189
<DEPRECIATION> 190,906
<TOTAL-ASSETS> 985,837
<CURRENT-LIABILITIES> 303,339
<BONDS> 399,144
195
0
<COMMON> 15
<OTHER-SE> 177,654
<TOTAL-LIABILITY-AND-EQUITY> 985,837
<SALES> 145,127
<TOTAL-REVENUES> 1,437,279
<CGS> 108,686
<TOTAL-COSTS> 1,460,738
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,185
<INTEREST-EXPENSE> 17,046
<INCOME-PRETAX> (46,987)
<INCOME-TAX> (14,195)
<INCOME-CONTINUING> (32,792)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,792)
<EPS-PRIMARY> (1.90)
<EPS-DILUTED> (1.90)
</TABLE>
