-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J5FOr7kxbijaokMIey9F0XkGypISbGPTstV1ONiwYcyIMX3z+7wfVnQ13wkLgqnb TiYwmOadVixgTHX3H3krZg== 0001022581-00-000006.txt : 20000515 0001022581-00-000006.hdr.sgml : 20000515 ACCESSION NUMBER: 0001022581-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED FREIGHTWAYS CORP CENTRAL INDEX KEY: 0001022581 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 770425334 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12149 FILM NUMBER: 629633 BUSINESS ADDRESS: STREET 1: 175 LINFIELD DR CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 6503261700 MAIL ADDRESS: STREET 1: 175 LINFIELD DRIVE CITY: MENLO PARK STATE: CA ZIP: 94025 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from N/A to N/A Commission File Number 1-12149 CONSOLIDATED FREIGHTWAYS CORPORATION Incorporated in the State of Delaware I.R.S. Employer Identification No. 77-0425334 175 Linfield Drive, Menlo Park, CA 94025 Telephone Number (650) 326-1700 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . Number of shares of Common Stock, $.01 par value, outstanding as of April 30, 2000: 21,464,671 CONSOLIDATED FREIGHTWAYS CORPORATION FORM 10-Q Quarter Ended March 31, 2000 ____________________________________________________________________________ ____________________________________________________________________________ INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Balance Sheets - March 31, 2000 and December 31, 1999 3 Statements of Consolidated Operations - Three Months Ended March 31, 2000 and 1999 5 Statements of Consolidated Cash Flows - Three Months Ended March 31, 2000 and 1999 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14 PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements CONSOLIDATED FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2000 1999 (Dollars in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 87,682 $ 49,050 Trade accounts receivable, net of allowances 326,738 343,198 Other receivables 5,513 6,524 Operating supplies, at lower of average cost or market 8,784 9,268 Prepaid expenses 51,338 41,405 Deferred income taxes 20,287 21,567 Total Current Assets 500,342 471,012 PROPERTY, PLANT AND EQUIPMENT, at cost Land 82,766 82,701 Buildings and improvements 354,481 354,012 Revenue equipment 536,645 545,129 Other equipment and leasehold improvements 141,784 139,408 1,115,676 1,121,250 Accumulated depreciation and amortization (755,246) (752,298) 360,430 368,952 OTHER ASSETS Deposits and other assets 57,102 57,712 Deferred income taxes 21,337 18,596 78,439 76,308 TOTAL ASSETS $ 939,211 $ 916,272 The accompanying notes are an integral part of these statements. CONSOLIDATED FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2000 1999 (Dollars in thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 86,368 $ 98,701 Accrued liabilities 220,489 202,287 Accrued claims costs 80,353 78,584 Federal and other income taxes 13,402 16,883 Short-term borrowings 20,000 - Total Current Liabilities 420,612 396,455 LONG-TERM LIABILITIES Long-term debt 15,100 15,100 Accrued claims costs 96,948 97,839 Employee benefits 122,863 121,783 Other liabilities and deferred credits 27,377 26,533 Total Liabilities 682,900 657,710 SHAREHOLDERS' EQUITY Preferred stock, $.01 par value; authorized 5,000,000 shares; issued none -- -- Common stock, $.01 par value; authorized 50,000,000 shares; issued 23,133,848 shares 231 231 Additional paid-in capital 77,224 77,406 Accumulated other comprehensive loss (10,094) (10,087) Retained earnings 204,653 207,632 Treasury stock, at cost (1,760,855 and 1,863,691 shares, respectively) (15,703) (16,620) Total Shareholders' Equity 256,311 258,562 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 939,211 $ 916,272 The accompanying notes are an integral part of these statements. CONSOLIDATED FREIGHTWAYS CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED OPERATIONS (Dollars in thousands except per share amounts) Three Months Ended March 31, 2000 1999 REVENUES $ 593,629 $ 558,208 COSTS AND EXPENSES Salaries, wages and benefits 379,660 358,400 Operating expenses 115,815 91,580 Purchased transportation 49,125 51,772 Operating taxes and licenses 18,468 17,042 Claims and insurance 18,059 13,898 Depreciation 13,741 12,324 594,868 545,016 OPERATING INCOME (LOSS) (1,239) 13,192 OTHER INCOME (EXPENSE) Investment income 353 818 Interest expense (1,087) (1,032) Miscellaneous, net (4,106) (359) (4,840) (573) Income (loss) before income taxes (benefits) (6,079) 12,619 Income taxes (benefits) (3,100) 5,868 NET INCOME (LOSS) $(2,979) $6,751 Basic average shares outstanding 21,350,812 22,607,703 Diluted average shares outstanding 21,350,812 22,607,703 Basic Earnings (Loss) per Share: $(0.14) $ 0.30 Diluted Earnings (Loss) per Share: $(0.14) $ 0.30 The accompanying notes are an integral part of these statements. CONSOLIDATED FREIGHTWAYS CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS Three Months Ended March 31, 2000 1999 (Dollars in thousands) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 49,050 $ 123,081 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) (2,979) 6,751 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 15,255 13,350 Decrease in deferred income taxes (1,461) (1,189) Gains from property disposals, net (297) (38) Issuance of common stock under stock compensation plans 735 230 Changes in assets and liabilities: Receivables 17,471 (10,435) Prepaid expenses (9,933) (4,204) Accounts payable (12,333) 5,600 Accrued liabilities 18,202 14,633 Accrued claims costs 878 (278) Income taxes (3,481) 4,077 Employee benefits 1,080 2,149 Other 2,829 (9,067) Net Cash Provided by Operating Activities 25,966 21,579 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (5,436) (16,624) Software expenditures (2,879) (8,771) Proceeds from sales of property 981 894 Net Cash Used by Investing Activities (7,334) (24,501) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings 20,000 -- Net Cash Provided by Financing Activities 20,000 -- Increase (decrease) in Cash and Cash Equivalents 38,632 (2,922) CASH AND CASH EQUIVALENTS, END OF PERIOD $ 87,682 $ 120,159 The accompanying notes are an integral part of these statements. CONSOLIDATED FREIGHTWAYS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying consolidated financial statements of Consolidated Freightways Corporation and subsidiaries (the Company) have been prepared by the Company, without audit by independent public accountants, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the consolidated financial statements include all normal recurring adjustments necessary to present fairly the information required to be set forth therein. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, should be read in conjunction with the consolidated financial statements included in the Company's 1999 Annual Report to Shareholders. There were no significant changes in the Company's commitments and contingencies as previously described in the 1999 Annual Report to Shareholders and related annual report to the Securities and Exchange Commission on Form 10-K, except as discussed in Footnote 6 below, regarding settlement of tax liabilities. 2. Segment and Geographic Information The Company operates in a single industry segment, primarily providing less-than-truckload transportation and supply chain management services throughout the United States and Canada, as well as in Mexico through a joint venture, and international freight services between the United States and more than 80 countries. The following information sets forth revenues and property, plant and equipment by geographic location. Revenues are attributed to geographic location based upon the location of the customer. No one customer provides 10% or more of total revenues. Geographic Information (Dollars in thousands) Three Months Ended March 31, 2000 1999 Revenues United States $557,903 $529,421 Canada 35,726 28,787 Total $593,629 $558,208 Geographic Information (continued) As of March 31, 2000 1999 Property, Plant and Equipment United States $323,826 $334,916 Canada 36,604 30,288 Total $360,430 $365,204 3. Stock Compensation As of March 31, 2000, there were 1,240,000 granted but unissued restricted common shares remaining from grants made under the Company's various stock incentive plans. The shares vest over time and are contingent upon the Company's average stock price achieving pre-determined increases over the grant prices for 10 consecutive trading days. Compensation expense is recognized based upon the stock price when the minimum stock price is achieved. As of March 31, 2000, the stock price was below the pre-determined levels required for vesting. 4. Comprehensive Income Comprehensive income (loss) for the three months ended March 31, 2000 and 1999 is as follows: (Dollars in thousands) Three Months Ended March 31, 2000 1999 Net Income (Loss) $(2,979) $6,751 Other Comprehensive Income (Loss): Foreign currency translation adjustments (7) 482 Comprehensive Income (Loss) $(2,986) $7,233 5. Debt The Company has a multi-year $175 million unsecured credit facility with several banks to provide for working capital and letter of credit needs. Borrowings under the agreement bear interest at LIBOR plus a margin. As of March 31, 2000, the Company had $20 million of short-term borrowings and $66 million of letters of credit outstanding. The continued availability of funds under this credit facility will require that the Company comply with certain financial covenants, the most restrictive of which requires the Company to maintain a minimum tangible net worth. The Company is in compliance as of March 31, 2000 and expects to be in compliance with these covenants for the remainder of the year. 6. Contingencies The Company and its subsidiaries are involved in various lawsuits incidental to their businesses. It is the opinion of management that the ultimate outcome of these actions will not have a material adverse effect on the Company's financial position or results of operations. The Company's former parent, CNF Transportation Inc., continues to dispute certain tax issues with the Internal Revenue Service relating to the taxable years prior to the spin-off of the Company. The issues arise from tax positions first taken by the former parent in the mid-1980's. Under a tax sharing agreement entered into between CNF Transportation Inc. and the Company at the time of the spin-off, the Company is obligated to reimburse the former parent for its share of any additional taxes and interest that relate to the Company's business prior to the spin-off. Although the former parent's resolution with the Internal Revenue Service is still pending, the Company has reached an agreement in principle on a tax settlement amount that appropriately reflects its liability under the tax sharing agreement as of March 31, 2000. As a result, the Company recorded a $4.0 million charge for the settlement in the quarter ended March 31, 2000. In May, the Company contemplates that a formal tax settlement agreement will be executed between the parties. The agreement will call for a full settlement of the tax sharing liability, except for certain enumerated open tax items that are anticipated to be resolved within the next 24 to 30 months. The settlement entails a current cash payment of $16.7 million, transfer of approximately $1 million of real property, and the grant of promissory notes in an aggregate amount of $40.2 million payable over a four year period. As of March 31, 2000, the Company believes that it has accrued the necessary reserves to adequately provide for its entire liability to CNF Transportation Inc. under the tax sharing agreement. The Company has received notices from the Environmental Protection Agency (EPA) and others that it has been identified as a potentially responsible party (PRP) under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) or other Federal and state environmental statutes at various Superfund sites. Under CERCLA, PRP's are jointly and severally liable for all site remediation and expenses. Based upon cost studies performed by independent third parties, the Company believes its obligations with respect to such sites would not have a material adverse effect on its financial position or results of operations. CONSOLIDATED FREIGHTWAYS CORPORATION AND SUBSIDIARIES ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Revenues for the three months ended March 31, 2000 increased 6.3% over the same period last year to $593.6 million despite lower tonnage. Tonnage decreased 1.6% from the prior year reflecting a higher proportion of lighter weight freight in the system, yield management programs as well as continued competition. Shipments increased 3.3%; however, the average weight per shipment decreased 4.8%. The tonnage decrease was offset by a 7.6% increase in revenue per hundredweight due to rate increases, a fuel surcharge and the change in freight profile. Salaries, wages and benefits increased 5.9% due primarily to a contractual wage and benefit increase and $4.3 million of severance pay due to an administrative reorganization. The Company was also impacted by lower P&D and crossdock efficiencies due to a higher proportion of lighter weight freight in the system. Operating expenses increased 26.5% over the prior year period due primarily to increased fuel costs. The average fuel cost per gallon, excluding tax, increased to $0.88 from $0.41. The Company has a fuel surcharge in place to offset the impact of the increased fuel costs. Higher information systems costs and revenue equipment lease expense, as well as a lower proportion of freight transported via rail also impacted the quarter. The quarter was also impacted by infrastructure costs as management continues to adjust the mix of customer freight and resize the freight flow system to expected business levels. Purchased transportation decreased 5.1% due to a decrease in the use of rail transportation. Rail miles as a percentage of inter-city miles decreased to 22.8% from 26.5% due to concerns about service levels subsequent to a recent rail line merger. Operating taxes and licenses increased 8.4% due to lower rail usage and increased licensing costs due to a larger fleet size. Claims and insurance increased 29.9% due to higher than anticipated cargo claims and higher-cost vehicular accidents. Depreciation increased 11.5% due to increased capital expenditures in 1999. The above resulted in an operating loss of $1.2 million for the quarter compared with $13.2 million of operating income in the same period last year. The operating ratio deteriorated to 100.2 from 97.6. Other expense, net increased $4.3 million reflecting a $4.0 million charge for settlement of a tax liability with CNF Transportation Inc., its former parent. Additionally, investment income on the Company's short-term investments decreased as funds were used for capital expenditure purposes. The Company's effective income tax rates differ from the statutory Federal rate due primarily to foreign and state taxes and non-deductible items. Management is working to improve the freight mix by shedding less profitable freight as well as seeking appropriate compensation for the freight handled. These actions are expected to adversely impact business levels in the short term. An April 1st wage and benefit increase averaging 3.4% will add approximately $21 million of expense in the remainder of 2000. Management will continue to resize the freight flow infrastructure as business levels stabilize. This includes consolidating some terminals and expanding others to expedite freight through the system, reducing handling and related costs. Additionally, management will continue to invest in its 2nd day service offering in an effort to become more competitive in the shorter length-of-haul lanes. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2000, the Company had $87.7 million in cash and cash equivalents. Net cash flow provided by operations for the three months ended March 31, 2000 was $26.0 million compared with $21.6 million in the same period last year. The increase was due primarily to improved collections of accounts receivable. Management expects cash flow from operations for 2000 will be sufficient for working capital requirements. Net cash flows used by investing activities was $7.3 million compared with $24.5 million in the same period last year. The prior year period reflects a higher level of revenue equipment purchases as the Company continued upgrading its fleet, as well as costs to replace certain operational and financial software systems for Year 2000 compliance. Management expects capital and software expenditures to be approximately $72 million for the remainder of the year, primarily for upgrades to terminal properties, technology enhancements and the purchase of revenue equipment. It is anticipated that those expenditures will be funded with existing cash balances and cash from operations, supplemented by financing arrangements. Net cash provided by financing activities of $20 million reflects borrowings under the Company's credit facility in anticipation of settlement of its tax liability with CNF Transportation Inc., as discussed in Footnote 6. The Company has a multi-year $175 million unsecured credit facility with several banks to provide for working capital and letter of credit needs. Borrowings under the agreement bear interest at LIBOR plus a margin. As of March 31, 2000, the Company had $20 million of short-term borrowings and $66 million of letters of credit outstanding. The continued availability of funds under this credit facility will require that the Company comply with certain financial covenants, the most restrictive of which requires the Company to maintain a minimum tangible net worth. The Company is in compliance as of March 31, 2000 and expects to be in compliance with these covenants for the remainder of the year. As discussed in Footnote 6, the Company is party to a tax sharing agreement with its former parent. In May, the Company contemplates that a formal tax settlement agreement will be executed between the parties. The agreement will call for a full settlement of the tax sharing liability, except for certain enumerated open tax items that are anticipated to be resolved within the next 24 to 30 months. The settlement entails a current cash payment of $16.7 million, transfer of approximately $1 million of real property, and the grant of promissory notes in an aggregate amount of $40.2 million payable over a four year period. As of March 31, 2000, the Company believes that it has accrued the necessary reserves to adequately provide for its entire liability to CNF Transportation Inc. under the tax sharing agreement. OTHER On May 8, 2000, the Board of Directors elected Patrick H. Blake president and chief executive officer of the Company and chief executive officer of CF, the Company's long-haul subsidiary. He replaces Vice Chairman of the Board G. Robert Evans, who served as interim CEO after the retirement of W. Roger Curry in January. Mr. Blake previously served as executive vice president of operations and chief operating officer of the Company and president and chief operating officer of CF. The Board elected Thomas A. Paulsen to replace Mr. Blake as president and chief operating officer of CF. He previously served as senior vice president of operations. The Company has received notices from the Environmental Protection Agency and others that it has been identified as a potentially responsible party (PRP) under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) or other Federal and state environmental statutes at various Superfund sites. Under CERCLA, PRP's are jointly and severally liable for all site remediation and expenses. Based upon cost studies performed by independent third parties, the Company believes its obligations with respect to such sites would not have a material adverse effect on its financial condition or results of operations. Certain statements included or incorporated by reference herein constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to a number of risks and uncertainties. Any such forward-looking statements included or incorporated by reference herein should not be relied upon as predictions of future events. Certain such forward- looking statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "pro forma," "estimates," or "anticipates" or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Such forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and they may be incapable of being realized. In that regard, the following factors, among others, and in addition to matters discussed elsewhere herein and in documents incorporated by reference herein, could cause actual results and other matters to differ materially from those in such forward-looking statements: changes in general business and economic conditions; increases in domestic and international competition and pricing pressure; increases in fuel prices; uncertainty regarding the Company's ability to improve results of operations; labor matters, including shortages of drivers and increases in labor costs; changes in governmental regulation; and environmental and tax matters. As a result of the foregoing, no assurance can be given as to future results of operations or financial condition. ITEM 3. Quantitative and Qualitative Disclosures About Market Risk The Company is subject to market risks related to changes in interest rates and foreign currency exchange rates, primarily the Canadian dollar and Mexican peso. Management believes that the impact on the Company's financial position, results of operations and cash flows from fluctuations in interest rates and foreign currency exchange rates would not be material. Consequently, management does not currently use derivative instruments to manage these risks; however, it may do so in the future. PART II. OTHER INFORMATION ITEM 1. Legal Proceedings As previously disclosed, the Company has received notices from the Environmental Protection Agency and others that it has been identified as a potentially responsible party (PRP) under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) or other Federal and state environmental statutes at various Superfund sites. Based upon cost studies performed by independent third parties, the Company believes its obligations with respect to such sites would not have a material adverse effect on its financial condition or results of operations. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits (10.1) Settlement Agreement and Mutual Release of Claims between Consolidated Freightways Corporation and W. Roger Curry dated April 14, 2000. (10.2) Consolidated Freightways Corporation Senior Executive Incentive Plan for 2000. (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed in the quarter ended March 31, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company (Registrant) has duly caused this Form 10-Q Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized. Consolidated Freightways Corporation (Registrant) May 12, 2000 /s/Sunil Bhardwaj Sunil Bhardwaj Senior Vice President and Chief Financial Officer May 12, 2000 /s/Robert E. Wrightson Robert E. Wrightson Senior Vice President and Controller EX-10 2 Exhibit 10.1 SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS This Settlement Agreement and Mutual Release of Claims (hereinafter "Release") is made between W. Roger Curry ("Curry") and Consolidated Freightways ("CFC") (individually, a "Party," and collectively the "Parties") for the complete and final settlement of the Employment Agreement, dated as of December 8, 1998 between Curry and CFC (hereinafter the "Employment Agreement") and the mutual release of claims, if any. The Parties hereto voluntarily and knowingly enter into the following Release and have agreed and do agree as follows: 1 Except as specifically otherwise provided herein, Curry shall and hereby does, acknowledge full and complete satisfaction of the Employment Agreement and does hereby release, absolve and discharge, except as expressly set forth herein, CFC, its subsidiaries and affiliated companies, their predecessors, successors and assigns, past and present, and each of them as well as their directors, officers, stockholders, agents, servants, employees, representatives and attorneys, and each of them (all hereinafter referred to collectively and individually as "CFC and Affiliates") from any and all claims, demands, liens, agreements, contracts, covenants, actions, suits, causes of action, employment discrimination accusations, wages, obligations, debts, expenses, damages, judgements, orders, and liabilities of whatever kind or nature in law, equity or otherwise, whether known or unknown, suspected or unsuspected, which Curry now owns or holds or at any time heretofore owned or held against said entities or persons or any of them, including specifically but not exclusively and without limiting the generality of the foregoing (1) any and all claims arising out of or in any way connected with Curry`s employment by CFC and Affiliates; (2) any and all claims arising out of or in any way connected with Curry's separation from employment with CFC and Affiliates; (3) any and all claims for wages or commissions due as a result of said employment relationship, including any payments under any long or short term incentive plan; (4) any and all claims for statutory penalties, interest, or attorneys' fees; (5) any and all claims for wrongful discharge, whether contractual or tortious, including any claim for constructive discharge or forced involuntary retirement; (6) any and all claims for intentional, negligent, or wrongful termination; (7) any and all claims for breach of contract, whether express or implied; (8) any and all claims for further pension or other retirement benefits other than those benefits provided herein; (9) any and all tort claims, including claims for intentional or negligent infliction of emotional distress or defamation; (10) any and all claims for breach of the covenant of good faith and fair dealing, whether contractual or tortious; (11) any and all claims for labor protection benefits under state, federal or local law; (12) any and all claims that could be raised under any state, federal or municipal laws pertaining to age, sex, race, religion, veteran status, job protection, national origin, disability or other employment discrimination of whatever type; (13) any and all claims arising out of or in any way connected with Curry's Employment Agreement; (14) any and all claims for severance benefits and/or payments of whatever type; (15) any and all claims under any executive or general employee benefit plans or arrangements other than those benefits provided herein; (16) any and all claims arising out of or in any way connected with any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by CFC and Affiliates committed or omitted prior to the date hereof. Curry hereby releases all of his employment rights and privileges with the company and its affiliates. The Company hereby forever and generally and completely releases and discharges Curry and his agents, successors, heirs, assigns, and affiliates, from any and all claims and demands of every kind and nature, in law, equity or otherwise, based on any actions, or failures to act, of Curry, and for damages actual and consequential, past present and future arising therefrom. The Company represents and warrants that it has obtained any necessary approvals or authorizations from its Board of Directors required to consummate this Agreement and effectuate the resolution of all claims which are the subject of this Agreement, and also represents and warrants that it has reasonably investigated and determined that it has no claims against Curry at this time. However, the above releases herein expressly do not apply to or limit either (1) Curry's legally-vested rights (if any) under any benefit plan of the company; (2) Curry's rights to indemnification by the Company as provided for herein and by law; (3) either Party's potential claims with regard to the other Party's future activities; or (4) either Party's rights to enforce the terms of this Agreement. 2.Except as modified by paragraph 1 above, this Release is expressly intended to waive any and all claims either Party may presently possess or previously possessed, however enumerated and regardless of the nature, source or basis for any such claim. The Parties hereby intend this Release to have a broad effect and to settle all disputes, without limitation of any kind or nature, which either Party may have against each other. The Parties knowingly waive the requirement of California Civil Code Section 1542, which reads as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in its favor at the time of executing the Release, which, if known by him, must have materially affected his settlement with the debtor." Notwithstanding the provisions of Section 1542 and of any other laws of similar scope and effect, and for the purpose of implementing a full and complete release of claims, CFC and Curry expressly acknowledge that this Release is intended to include in its effect, without limitation, all claims which they do not know or suspect to exist in their favor at the time of execution of this Release. 3 Curry acknowledges and agrees that the only representations or inducements that have been made to him to secure his signature on this document and the only consideration he will receive for signing this Release are as appears in this document, and Curry further agrees that this document constitutes the entire agreement between him and CFC and Affiliates on the subject of his separation from employment. 4 Curry expressly waives any rights or claims under the Federal Age Discrimination in Employment Act and Older Workers' Benefit Protection Act in connection with his separation from employment at CFC and Affiliates. Curry, with the advice of competent counsel, and after having been advised to consult with an attorney, affirms that he has had at least twenty-one (21) days in which to consider executing the release of age discrimination claims under the aforementioned statutes. Curry is further aware of his right to revoke the waiver of age discrimination claims within seven (7) days after signing this Release. In the event Curry revokes the waiver of claims contained herein, within seven (7) days after signing this Release he shall immediately return to CFC all sums and benefits he has received pursuant to this Release. 5 In consideration of the representations of Curry herein, CFC agrees to provide the following severance pay and arrangements: a) Within ten (10) days from the date of this release, $2,218,783 b) Quarterly payments, less applicable taxes, beginning March 31, 2000 on a January 1, 2000 balance of $2,654,498 relating to deferred compensation earned on or prior to December 31, 1996. The amount and duration of the payments, together with accrued interest, shall be made in accordance with the CNF Transportation Inc. Stock Appreciation Rights Plan and Long-term Incentive Plan, which are a part of this Release. c) Promptly issue Curry 200,000 shares of CF stock upon payment of withholding tax of $484,500. The withholding tax shall be deducted from the $2,218,783 payable under section 5(a) above. CF will provide Curry a W-2 by January 31, 2001 showing compensation of $1,425,000. d) Promptly issue Curry 100,000 shares of CF stock upon attainment of the required CF stock price of $11.96 or in the event of a Change of Control (unless otherwise determined by the Compensation Committee of the Board of Directors prior to the occurrence thereof), all in accordance with the terms of the Stock Award and Deferral Agreement, between Curry and CFC dated as of December 2, 1996, and the 1996 Stock Option and Incentive Plan. As provided therein, the right to receive such shares will be forfeited on January 24, 2001, unless the restrictions have lapsed prior to that date. e) Promptly issue Curry 30,000 shares of CFC stock upon attainment of the required CF stock price of $20 or in the event of a Change in Control (unless the surviving or acquiring corporation refuses to assume such stock award and the applicable agreement), all in accordance with the terms of the Stock Award and Deferral Agreement, between Curry and CFC, dated as of May 12, 1999, and the 1996 Stock Option and Incentive Plan. As provided therein, the right to receive such shares will be forfeited on January 24, 2001, unless the restrictions have lapsed prior to that date. f) Issue upon the exercise of stock options up to 100,000 shares of CFC stock for $14.0625 per share provided such options are exercised on or prior to January 24, 2003, all in accordance with the terms of the Stock Option Grant Notice, dated June 16, 1999, the corresponding Stock Option Agreement, the 1999 Equity Incentive Plan and the Notice of Exercise. g) Pay on behalf of Curry on the last day of each month beginning March 31, 2000 an amount equivalent to the retiree medical premium, less applicable taxes, through December 31, 2002. h) On the last day of each month, beginning April 30, 2000, pay Curry $1,400 per month, in lieu of a car allowance and 401(k) matches, through December 31, 2002, less applicable withholding taxes. As soon as practicable, pay Curry $2,800 for February and March, 2000. i) Pay CFC's share of the split dollar life insurance premiums, provided Curry pays his share of the premiums, in accordance with the split-dollar life program available to senior executives of CFC. Curry authorizes CFC to deduct such premiums monthly from the retirement payments. j) Provide the vested retirement benefits under the CFC Pension Plan in accordance with its terms and the supplemental retirement benefits under the CFC Supplemental Retirement Plan, with age and service credit through December 31, 2002. Retiree medical premiums shall be deducted from pension payments. k) Provide Curry all retiree benefits generally available to employees. l) Reimburse Curry for annual tax preparation services through December 31, 2002, of up to $2,500, and for an executive physical according to the terms of the program for other executives. 6. Curry agrees to bear all tax consequences and pay all withholding taxes for which he is liable for sums referred to herein in connection with this settlement, and agrees to hold harmless and indemnify CFC and Affiliates against all liabilities, penalties, interest and expenses (including reasonable attorneys' fees and expenses) in the event that any proceeding is instituted by any governmental agency in connection with the tax consequences of said sums. 7. Curry agrees to cooperate with CFC and Affiliates at CFC's expense but without additional compensation in connection with any claims, disputes or lawsuits on an as- needed basis. CFC shall pay Curry an hourly consulting fee of $250.00 for Curry's assistance, provided however, Curry shall not be paid to prepare for or give testimony in a deposition or at trial. 8. Curry agrees that he will not seek or accept employment with CFC or its affiliated companies in the future. 9. CFC and Curry agree that, in any publication or communication, they shall represent that Curry has retired from employment with CFC. In addition, each Party agrees not to illegally disparage the other Party. 10. The terms of settlement and this Release of claims are a private matter and are to be held in strict confidence by CFC and Curry and their attorneys and shall not be disclosed to other persons other than their attorneys, spouses, financial planners, tax return preparers, government taxing authorities, or as required to comply with legal process or other legal requirements. The Parties understand that this is a material term of the Release and that any disclosure by the Parties of the terms and conditions of the Release shall be treated as a breach and will entitle the Parties, at their option, to seek all damages occasioned by the breach. 11. The Parties recognize that, in connection with Curry's employment, he had access to certain written and oral information, data, marketing techniques and information, administrative and operational procedures, materials, marketing plans, strategic planning, pricing guidelines, contract terms, and other trade secrets or confidential or proprietary information of CFC and its affiliated companies, which information is not otherwise generally available to the public (the "Confidential Information"). The Parties further recognize that Curry may have, on behalf of CFC and its affiliated companies, produced, refined, or contributed to the production or refinement of such Confidential Information. The Parties further recognize that CFC and its affiliated companies had and have a right to protect the confidentiality and ownership of that Confidential Information, that the nature of their businesses is highly specialized and unique, and that Curry's position with CFC and its affiliated companies was one of confidence and trust. Curry agrees never to use, for himself or others, or disclose to any individual, directly or indirectly, any Confidential Information, as described in the preceding paragraph, without the prior written consent of CFC. Curry understands that an unauthorized disclosure or use of Confidential Information, as set forth herein, will entitle CFC, at is option, to seek all damages occasioned by the breach. Curry covenants and agrees that he will, upon execution of this Release, deliver to CFC any and all Confidential Information as defined above, including but not limited to any and all records, forms, contracts, studies, reports, appraisals, strategic planning documents, price lists, shipper or customer lists or information, special pricing arrangements, financial data, lists of names or other shipper data, and any other articles or papers, computer tapes, and materials that have come into his possession by reason of his employment with CFC, together with all copies thereof, whether or not any of said items were prepared by him, and he shall not retain memoranda or copies of said items. Curry acknowledges and agrees that he will not use for himself or others or disclose to any individual directly or indirectly any Confidential Information as defined above. Further he will not use for himself or others or disclose to any individual directly or indirectly any Confidential Information as defined above. Further he will not use for himself or others or disclose to any individual directly or indirectly any information concerning customer shipping volumes, rates, price lists, special pricing arrangements, financial data, strategic planning information, or other shipper data, that he learned or acquired while at CFC that is not otherwise readily available from the shipper/customer or other public source. 12. By entering into this Release, it is expressly agreed between the Parties that neither Party admits any liability or wrongdoing in connection with any aspect of Curry's employment by CFC and its affiliated companies or his retirement from that employment. Neither the agreement to enter into this Release nor anything in this Release shall be admissible in any proceeding as evidence of any admission by CFC or Curry of any breach of any contractual obligation, wrongdoing, or other wrongful action in any form whatsoever. The Parties hereto enter into this Release in order to resolve actual and potential claims, and no admission of liability can be implied from that action. 13. CFC agrees that it will defend and indemnify Curry for actions taken by him while employed at CFC and its affiliated companies which were within the course and scope of his employment to the fullest extent permitted by law, CFC's articles of incorporation and by-laws. 14. The terms of this Release are contractual and not a mere recital. Should any provision, or part of any provision or application thereof be held invalid, the invalidity shall not affect any other provisions or applications of the Release which can be given effect without the invalid provision or applications, and to this end provisions of this Release are declared to be severable. 15. The Release shall bind and benefit all Parties hereto, their spouses, legal successors, heirs, assigns, partners, guarantors, agents, executors, representatives and advisors, and all other claiming by and through them. In the case of any corporation, the Release shall bind and benefit its subsidiaries, affiliates, parents, assigns, employees, successors-in-interest, agents, directors, officers, and shareholders. 16. All Parties and their counsel have reviewed this Release, and the normal rule of construction providing that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Release. 17. No breach of any provisions hereto can be waived unless done so expressly and in writing. Express waiver of any one breach shall not be deemed a waiver of any other breach of the same or any other provisions hereof. The Release may be amended or modified only by a written agreement executed by all Parties to this Release. 18. The Parties represent and declare that, in executing this Release, they relied solely upon their own judgment, belief and knowledge, and the advice and recommendations of their own independently selected counsel, concerning the nature, extent and duration of their rights and claims, and that they have not been influenced to any extent whatsoever in executing the same by any representations or statements not expressly contained or referred to in this Release. 19. The interpretation of this Release and the provisions thereof shall be governed by the laws of the State of California. 20. All Parties acknowledge they have carefully read and understood the contents of the Release. The Parties hereto further expressly agree that the considerations recited in this Release are the sole and only considerations for this agreement, and that no representations, promises, or inducements have been made by any Party or its officers, employees, agents, or attorneys thereof other than as appear in this Release. This Release supercedes any other oral or written agreements or understandings between the Parties regarding any matter within the scope of the Release. The Parties hereto acknowledge voluntarily entering into this agreement with full knowledge of the rights that they may be waiving. 21. Curry shall not be required to mitigate the amount of payments hereunder by seeking other employment or otherwise, and any amount earned by Curry as a result of employment by others shall not reduce payments hereunder. 22. The Company will reimburse Curry or Curry's successor- in-interest for all reasonable attorney fees and costs associated with bringing any action under the Release to enforce his rights hereunder, regardless of the outcome of such proceeding, provided the court does not find the claim was brought in bad faith. Curry will reimburse CFC for all reasonable attorney fees and cost associated with bringing any action under this Release to enforce its rights if CFC is the "prevailing party" as defined under California law. Date: April 14, 2000 W. Roger Curry Consolidated Freightways Corporation /s/ W. R. Curry By:_/s/ Stephen D. Richards Name: Stephen D. Richards Title: Senior Vice President and General Counsel EX-10 3 EXHIBIT 10.2 CONSOLIDATED FREIGHTWAYS CORPORATION SENIOR EXECUTIVE INCENTIVE PLAN FOR 2000 THE PLAN In order to motivate certain employees of Consolidated Freightways Corporation (CFC) more effectively and efficiently, CFC establishes an Incentive Plan (Plan) under which payments will be made to designated eligible senior executive personnel out of calendar year 2000 Incentive Profits. DESIGNATION OF PARTICIPANTS Participants in this Plan shall be designated full-time executive personnel of CFC. A master list of all Plan participants will be maintained in the office of the President of CFC. ELIGIBILITY FOR PAYMENT Participants will commence participation at the beginning of the first full calendar quarter following becoming eligible. Calendar quarters begin January 1, April 1, July 1, and October 1 or the first working day thereafter. An employee who commences participation in the 2000 Plan during the 2000 Plan year, and who participates less than four full quarters, will receive a pro rata payment based on the number of full calendar quarters of Plan participation. Subject to the following exceptions, no person shall receive any payment under this Plan unless on the date that the payment is actually made that person is then currently (i) employed by CFC or any of its subsidiaries and (ii) a Plan participant. EXCEPTION 1. A Plan participant who is employed by CFC through December 31, 2000 but leaves that employment or otherwise becomes ineligible after December 31, 2000 but before the final payment is made relating to 2000, unless terminated for cause, shall be entitled to receive payments under this Plan resulting from 2000 Incentive Profits. EXCEPTION 2. An appropriate pro rata payment will be made (1) to a Plan participant who retires prior to December 31, 2000 pursuant to the Consolidated Freightways Corporation Retirement Plan or to the provisions of the Social Security Act and who, at the time of retirement, was an eligible participant in this Plan, (2) to the heirs, legatees, administrators or executors of a Plan participant who dies prior to December 31, 2000 and who, at the time of death, was an eligible participant in this Plan, (3) to an eligible Plan participant who is placed on an approved Medical, Sabbatical, or Military Leave of Absence prior to December 31, 2000, or (4) to an eligible Plan participant who is transferred to another subsidiary of Consolidated Freightways Corporation and who remains an employee through December 31, 2000. METHOD OF PAYMENT Each Plan participant will be assigned an incentive participation factor as a percent of Annual Salary. Incentive will be earned based on CFC pretax pre-incentive profit. Incentive will be earned on a pro rata basis for accomplishment between the Minimum level and the Factor Profit Goal. PERSONAL DATA SHEET A "Personal Data Sheet" for calculation of incentive will be prepared for each Plan participant which designates (1) the unit to which the participant is assigned, (2) his assigned participation, (3) the minimum level of profit achievement required, (4) the Factor level of achievement for profit, and (5) the incentive earnings at the Factor profit goal. DATE OF PAYMENT The President of CFC may authorize a partial payment of the estimated annual earned incentive, in December, 2000. The final payment to eligible participants, less any previous partial payment, will be made on or before March 15, 2000. INCENTIVE PROFIT Incentive Profit is defined as the pre-tax earnings of Consolidated Freightways Corporation before deducting any amounts expensed under this or any subsidiary incentive plan, before deducting any amounts expensed under the restricted stock plan and before deducting income taxes, but after deducting expenses incurred from any bonus plan(s). ANNUAL COMPENSATION Annual Compensation for incentive purposes for each Plan participant is his annualized salary before any incentive or other special compensation as of the first pay period following the date the participant becomes eligible to participate in this Plan. MAXIMUM PAYMENT Payments under this Plan are not limited by each participant's participation factor. LAWS GOVERNING PAYMENTS No payment shall be made under this Plan in an amount which is prohibited by law. AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN The Board of Directors of CFC may at any time amend, suspend, or terminate the operation of this Plan, by thirty-day written notice to the Plan participants, and will have full discretion as to the administration and interpretation of this Plan. No participant in this Plan shall at any time have any right to receive any payment under this Plan until such time, if any, as any payment is actually made. DURATION OF PLAN This Plan is for the calendar year 2000 only. EX-27 4
5 1000 3-MOS DEC-31-2000 MAR-31-2000 87,682 0 345,245 (12,994) 8,784 500,342 1,115,676 (755,246) 939,211 420,612 15,100 0 0 77,455 178,856 939,211 0 593,629 0 594,868 4,840 0 1,087 (6,079) (3,100) (2,979) 0 0 0 (2,979) (0.14) (0.14)
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