-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, RuZKmqtht8cHh0sszQgpO6tV609TkAAYMTJjfXkAY11GDj6aNno0hA+lCqLoaRE4 NZYQs6QbyxuLJOzMscB5Ag== 0000023675-94-000008.txt : 19940812 0000023675-94-000008.hdr.sgml : 19940812 ACCESSION NUMBER: 0000023675-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED FREIGHTWAYS INC CENTRAL INDEX KEY: 0000023675 STANDARD INDUSTRIAL CLASSIFICATION: 4213 IRS NUMBER: 941444798 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05046 FILM NUMBER: 94543026 BUSINESS ADDRESS: STREET 1: 3240 HILLVIEW AVE CITY: PALO A LTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4154942900 10-Q 1 2Q9410Q PAGE 1 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 June 30, 1994 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 132-3 CONSOLIDATED FREIGHTWAYS, INC. Incorporated in the State of Delaware I.R.S. Employer Identification No. 94-1444798 3240 Hillview Avenue, Palo Alto, California 94304 Telephone Number (415) 494-2900 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 and (2) has been subject to such filing requirements for the past 90 days. Yes xx No Number of shares of Common Stock, $.625 par value, outstanding as of June 30, 1994 : 36,242,706 PAGE 2 CONSOLIDATED FREIGHTWAYS, INC. FORM 10-Q Quarter Ended June 30, 1994 _________________________________________________________________ _________________________________________________________________ INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1994 and December 31, 1993 3 Statements of Consolidated Income - Three Months and Six Months Ended June 30, 1994 and 1993 5 Statements of Consolidated Cash Flows - Six Months Ended June 30, 1994 and 1993 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 4. Submission of Matters to Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 PAGE 3 PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, 1994 1993 (In thousands) ASSETS CURRENT ASSETS Cash and temporary cash investments $ 133,042 $ 139,044 Trade accounts receivable, net of allowances 547,102 508,669 Other accounts and notes receivable 25,161 24,261 Operating supplies, at lower of average cost or market 35,711 34,940 Prepaid expenses 89,274 69,009 Deferred income taxes 107,911 108,458 Total Current Assets 938,201 884,381 PROPERTY, PLANT AND EQUIPMENT, at cost Land 155,993 152,402 Buildings and improvements 503,303 488,292 Revenue equipment 983,384 935,482 Other equipment and leasehold improvements 357,563 347,601 2,000,243 1,923,777 Accumulated depreciation and amortization (1,062,453) (1,013,333) 937,790 910,444 OTHER ASSETS Cost in excess of net assets of businesses acquired, net of accumulated amortization 348,858 354,076 Operating rights, net of accumulated amortization 8,719 9,129 Long-term receivables 6,600 6,600 Marketable securities at lower of cost or market 14,036 13,727 Restricted funds 12,784 13,954 Deferred income taxes 29,168 16,659 Deferred charges and other assets 113,154 102,889 533,319 517,034 TOTAL ASSETS $2,409,310 $2,311,859 The accompanying notes are an integral part of these statements. PAGE 4 CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, 1994 1993 (Dollars in thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 723,394 $ 634,107 Accrued claims costs 141,101 138,242 Current maturities of long-term debt and capital leases 41,117 39,246 Federal and other income taxes 30,534 33,449 Total Current Liabilities 936,146 845,044 LONG-TERM LIABILITIES Long-term debt and guarantees 294,901 297,215 Long-term obligations under capital leases 111,105 111,194 Accrued claims costs 165,127 173,999 Other liabilities and deferred credits 257,991 261,032 Total Liabilities 1,765,270 1,688,484 SHAREHOLDERS' EQUITY Preferred stock, no par value; authorized 5,000,000 shares: Series A, designated 600,000 shares; none issued -- -- Series B, 8.5% cumulative, convertible, $.01 stated value; designated 1,100,000 shares; issued 965,290 and 968,655 shares, respectively 10 10 Series C, 8.738% cumulative, convertible, $.01 stated value; designated and issued 690,000 shares 7 7 Additional paid-in capital, preferred stock 264,671 265,182 Deferred TASP compensation (124,938) (129,276) Total Preferred Shareholders' Equity 139,750 135,923 Common stock, $.625 par value; authorized 100,000,000 shares; issued 43,861,559 and 43,340,801 shares, respectively 27,413 27,090 Additional paid-in capital, common stock 112,332 104,666 Cumulative translation adjustment (1,380) 1,229 Retained earnings 553,777 542,811 Cost of repurchased common stock (7,618,853 and 7,638,809 shares, respectively) (187,852) (188,344) Total Common Shareholders' Equity 504,290 487,452 Total Shareholders' Equity 644,040 623,375 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,409,310 $2,311,859 The accompanying notes are an integral part of these statements. PAGE 5
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME (Dollars in thousands except per share amounts) Three Months Ended Six Months Ended June 30 June 30 REVENUES 1994 1993 1994 1993 CF MotorFreight $ 396,113 $ 523,919 $ 928,496 $ 1,044,081 Con-Way Transportation Services 273,913 198,933 504,321 386,900 Emery Worldwide 389,749 297,372 730,179 582,224 1,059,775 1,020,224 2,162,996 2,013,205 COSTS AND EXPENSES CF MotorFreight Operating Expenses 364,832 438,515 811,987 871,285 Selling and Administrative Expenses 54,609 58,266 116,176 115,004 Depreciation 18,816 20,745 38,564 41,282 438,257 517,526 966,727 1,027,571 Con-Way Transportation Services Operating Expenses 196,419 148,383 370,192 286,767 Selling and Administrative Expenses 32,257 24,075 59,913 49,600 Depreciation 8,488 8,006 16,543 16,154 237,164 180,464 446,648 352,521 Emery Worldwide Operating Expenses 305,718 241,661 580,960 479,830 Selling and Administrative Expenses 54,352 49,874 102,542 95,872 Depreciation 6,312 5,384 12,663 10,746 366,382 296,919 696,165 586,448 1,041,803 994,909 2,109,540 1,966,540 OPERATING INCOME (LOSS) CF MotorFreight (42,144) 6,393 (38,231) 16,510 Con-Way Transportation Services 36,749 18,469 57,673 34,379 Emery Worldwide 23,367 453 34,014 (4,224) 17,972 25,315 53,456 46,665 OTHER INCOME (EXPENSE) Investment income 706 1,488 1,221 2,994 Interest expense (6,783) (7,921) (13,659) (15,628) Miscellaneous, net (1,090) (1,945) (1,455) (1,613) (7,167) (8,378) (13,893) (14,247) Income Before Income Taxes 10,805 16,937 39,563 32,418 Income Taxes 5,598 8,545 19,100 15,758 Net Income 5,207 8,392 20,463 16,660 Preferred Stock Dividends 4,763 4,747 9,497 9,496 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 444 $ 3,645 $ 10,966 $ 7,164 Primary average shares outstanding (1) 37,314,476 35,402,458 37,217,462 35,381,427 PRIMARY EARNINGS PER SHARE $ 0.01 $ 0.10 $ 0.29 $ 0.20 FULLY DILUTED EARNINGS PER SHARE $ 0.01 $ 0.09 $ 0.26 $ 0.18 (1) Includes the dilutive effect of stock options. The accompanying notes are an intergral part of these statements.
PAGE 6 CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS Six Months Ended June 30, 1994 1993 (In thousands) CASH AND TEMPORARY CASH INVESTMENTS, BEGINNING OF PERIOD $ 139,044 $ 152,064 CASH FLOWS FROM OPERATING ACTIVITIES Net income 20,463 16,660 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 73,223 72,439 Decrease in deferred income taxes (5,047) (12,913) (Gains) losses from property disposals, net 475 (205) Changes in assets and liabilities: Receivables (33,880) (53,507) Notes receivable from sale of trade accounts -- 59,367 Accrued claims costs (6,013) (113) Accounts payable 6,074 (17,507) Income taxes (5,949) (2,326) Accrued liabilities, deferred charges and other 45,664 15,131 Net Cash Provided by Operating Activities 95,010 77,026 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (98,690) (88,908) Purchases of marketable securities (309) (26,412) Proceeds from sale of property 2,122 4,720 Net Cash Used by Investing Activities (96,877) (110,600) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long-term debt and capital lease obligations (532) (12,998) Proceeds from issuance of common stock 7,969 743 Payments of preferred dividends (11,572) (11,597) Net Cash Used by Financing Activities (4,135) (23,852) Decrease in Cash and Temporary Cash Investments (6,002) (57,426) CASH AND TEMPORARY CASH INVESTMENTS, END OF PERIOD $ 133,042 $ 94,638 The accompanying notes are an integral part of these statements. PAGE 7 CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying consolidated financial statements of Consolidated Freightways, Inc. 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 generally accepted accounting principles 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 1993 Annual Report to Shareholders. There have been no significant changes in the accounting policies of the Company. There were no significant changes in the Company's commitments and contingencies as previously described in the 1993 Annual Report to Shareholders and related annual report to the Securities and Exchange Commission on Form 10-K. 2. In November 1993, the Accounting Standards Division of the AICPA issued Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership Plans" (SOP 93-6). This statement changes the recognition of compensation for stock allocated to employee accounts to satisfy plan benefits, settlement of plan liabilities and changes the inclusion in earnings per share of shares held in trust by ESOPs. As provided for under this statement, the Company is not required to adopt this method of accounting as its existing ESOP (TASP) was established before December 31, 1992. Had this statement been adopted January 1, 1994, both the primary and fully diluted earnings per share for the quarter and six months ended June 30, 1994 would have been $.01 and $.29, respectively. 3. The Company and its subsidiaries are defendants 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 impact on the Company's financial position or results of operations. PAGE 8 CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Total Company revenues for the second quarter increased 3.9% to $1.1 billion while year-to-date revenues increased 7.4% to $2.2 billion compared with the same periods a year ago. Revenue declined at CF MotorFreight (CFMF), the Company's less-than- truckload (LTL) carrier, due to a 24-day strike. However, this decline was more than offset by continued growth at the Con-Ways and Emery Worldwide. Operating income for the second quarter declined 29% to $18.0 million while year-to-date operating income increased 14.6% to $53.5 million compared with the prior year. Both quarterly and year-to-date results were adversely impacted by the strike- related losses at CFMF. However, combined Con-Way and Emery operating income of $60.1 million for the quarter and $91.7 million year-to-date exceeded operating losses at CFMF. CF MOTORFREIGHT CF MotorFreight (CFMF) second quarter and year-to-date revenues declined 24.4% and 11.1%, respectively, compared with corresponding periods in the prior year as a result of the 24-day Teamster strike. Total tonnage declined 28.9% and 14.8% for the quarter and six-months periods, respectively. CFMF was able to regain most of the business lost during the strike; June tonnage was down only 6% compared to the prior year. Costs incurred during the strike, and subsequent start-up of business activities following the strike, resulted in a second quarter and year-to-date operating loss of $42.1 million and $38.2 million, respectively. This compared to operating income of $6.4 million and $16.5 million in the prior year second quarter and first six months, respectively. In May 1994, CFMF signed a new four-year contract with the Teamsters that will allow more flexibility in the use of part- timers and rail. As business levels increase, CFMF will benefit from such operating flexibility. Additionally, in an effort to re-invigorate the LTL carrier, a new management team was brought in in July 1994. This new management team will focus on continually improving service provided to customers, emphasizing value-added service and continuing to reduce costs. PAGE 9 CON-WAY TRANSPORTATION SERVICES Con-Way Transportation Services (CTS) revenues for the second quarter increased significantly to $273.9 million, or 37.7% over the same period last year, setting another revenue record. Total tonnage increased 28.7% while the higher rated LTL tonnage increased 38.1%. Year-to-date revenues increased 30.3% over the prior year on a total tonnage increase of 26.6% with higher rated LTL tonnage increasing 30.9% The Con-Ways have benefited from consistent growth throughout 1994 and, during the quarter, from the Teamsters strike of the unionized LTL carriers. Operating income for the second quarter increased $18.3 million, or 99.0% over the same period last year, while year-to- date operating income was up $23.3 million, or 67.8%, to $57.7 million. Operating margins continued to improve as CTS benefited from the revenue growth. The Con-Ways will continue to expand into new markets and benefit from utilizing joint service agreements. The joint service agreements augment business levels by allowing the companies to provide additional service to customers in certain markets. The expected growth should help offset planned hourly wage increases and start-up costs associated with expansion into new markets. EMERY WORLDWIDE Tonnage increased in the quarter from domestic and international operations by 52% and 45%, respectively, resulting in 31.1% growth in Emery's revenues over last year. Emery continues to benefit from a successful marketing strategy and a growing air freight market. Second quarter revenues also benefited from the Teamster strike of the unionized LTL carriers. These factors also contributed to a year-to-date increase in revenues of 25.4% over the prior year. The strong revenue growth coupled with managed cost containment resulted in an increase of operating income for the quarter to $23.4 million from $453,000 in the prior year. Emery's second quarter operating income exceeded the 1993 full year operating income by 40.8%. Operating income for the first- half of 1994 of $34.0 million was a $38.2 million improvement over the $4.2 million loss in the same period 1993. Emery management will continue with the same programs that have proven successful at increasing revenues and controlling costs. To this end, Emery has put into service 6 of 9 DC-8 jet freighters ordered earlier in the year with the remainder to be put into service through the fourth quarter. Although these additions replace existing short-term leased planes, they allow Emery to more efficiently service existing business levels and PAGE 10 the approaching peak seasonal shipping levels. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1994 the Company had $133.0 million in cash and cash equivalents and $14.0 million in long term investments. Cash flow from operations of $95.0 million was primarily the result of income from operations and significant depreciation and amortization. The Company was able to finance its capital expenditures with cash flows from operations as capital expenditures during the first six months of the year were $98.7 million. The Company's Board of Directors recently approved an increase of approximately 45% in 1994 capital expenditures to $260 million for revenue equipment, freight terminal facilities, technology expansion and aircraft. The Company intends to finance the remaining capital requirements for the year with cash from operations supplemented by other contemplated external financing arrangements. In May 1994, the Company secured an additional $25 million under the Emery receivables sale facility. This brings the total availability under this facility for cash and non-transferable promissory notes and related letters of credit to $100 million. At June 30, 1994, $72 million of letters of credit were issued and secured with Emery receivables. The Company has a $250 million unsecured credit facility and previously a related $110 million facility that provide for a combined maximum of $250 million for letters of credit and working capital needs. In May 1994, the $110 million agreement was amended to $55 million and allows the Company, at its option, to separate this agreement from the $250 million restriction. Should the Company elect to separate the $55 million, the interest rate charged on outstanding balances under this agreement will increase by .375%. At June 30, 1994, $93.6 million of letters of credit were issued under these agreements. Separately in May, the Company entered into a $50 million unsecured revolving credit facility to provide for working capital needs. Loans bear interest at Prime plus an amount dependent on the Company's credit rating (.125% at June 30, 1994). As of June 30, 1994, no amounts were outstanding under this agreement. In addition, the Company negotiated several unsecured letter of credit facilities with various banks that total $30 million. At June 30, 1994, $22.2 million was outstanding under these agreements. Subsequent to June 30, 1994, the Company added an additional $15 million unsecured letter of credit facility. PAGE 11 OTHER The Company's operations necessitate the storage of fuel in underground tanks as well as the disposal of substances regulated by various federal and state laws. The Company adheres to a stringent site-by-site tank testing and maintenance program performed by a qualified independent party to protect the environment and comply with regulations. Where the need for clean-up is necessary, the Company takes appropriate action. PART II. OTHER INFORMATION ITEM 1. Legal Proceedings As previously reported, the Company has been designated a Potentially Responsible Party (PRP) by the EPA with respect to the disposal of hazardous substances at various sites. The Company expects its share of the total cleanup costs of all sites to be immaterial. Certain legal matters are discussed in Note 3 in the Notes to Consolidated Financial Statements in Part I of this form. ITEM 4. Submission of Matters to a Vote of Security Holders There were presented at the Annual Shareholders Meeting held April 25, 1994 the following proposals with respective voting results: For the purpose of electing certain members of the Board of Directors, the votes representing shares of Common and Preferred stock were cast with the following results: Nominee For Withheld Robert Alpert 29,913,644 1,032,555 Robert Jaunich II 29,985,225 960,974 Raymond F. O'Brien 29,954,617 991,582 Robert P. Wayman 29,971,620 974,579 The following directors did not stand for election and continued in office as a director after the Annual Shareholders Meeting: John C. Bolinger, Jr., Earl. F Cheit, G. Robert Evans, Gerhard E. Liener, Richard B. Madden, Donald E. Moffitt, Ronald E. Poelman, Robert D. Rodgers. The appointment of Arthur Andersen & Co. as independent public accountants for the year 1994 was approved by the following vote: For 30,017,697; Against 277,388; Abstaining 150,380; Broker non-votes 1,048,124. PAGE 12 The proposal to adopt the Consolidated Freightways, Inc. Equity Incentive Plan for Non-Employee Directors was approved by the following vote: For 27,290,068; Against 2,722,847; Abstaining 430,830; Broker non-votes 1,049,844. The stockholder proposal to declassify the Board of Directors for the purpose of Director elections was defeated by the following vote: For 11,073,478; Against 15,541,934; Abstaining 1,295,150; Broker non-votes 3,583,027. The stockholder proposal to eliminate the 80% vote requirement in the by-laws to change the structure of the Board of Directors was defeated by the following vote: For 11,704,571; Against 16,338,804; Abstaining 323,939; Broker non-votes 3,126,275. The proposal required the favorable vote of 80% of all outstanding shares of stock entitled to vote. It received the favorable vote of 28.4% of such voting shares. The stockholder proposal to adopt a policy of confidential voting was defeated by the following vote: For 3,576,779; Against 27,337,181; Abstaining 17,561; Broker non-votes 562,068. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits (10) Material Contracts 10.1 First Amendment to Letter of Credit Facility Agreement dated as of May 26, 1994, between Consolidated Freightways, Inc. and Bank of America National Trust and Savings Association. (11) Computation of Per Share Earnings (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1994. PAGE 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, INC. (Registrant) August 11, 1994 /s/Gregory L. Quesnel Gregory L. Quesnel Executive Vice President - Chief Financial Officer August 11, 1994 /s/Robert E. Wrightson Robert E. Wrightson Vice President and Controller EX-10 2 EXHIBIT 10.1 First Amendment to Letter of Credit Facility Agreement THIS FIRST AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENT (the "Amendment"), dated as of May 26, 1994, is entered into by and between CONSOLIDATED FREIGHTWAYS, INC. (the "Company") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank"). RECITALS A. The Company and the Bank are parties to a Letter of Credit Facility Agreement dated as of July 30, 1993 (the "Credit Agreement") pursuant to which the Bank has extended certain letter of credit facilities to the Company. B. The Company has requested that the Bank agree to certain amendments of the Credit Agreement. C. The Bank is willing to amend the Credit Agreement subject to the terms and conditions of this Amendment. NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the meanings, if any, assigned to them in the Credit Agreement. 2. Amendments to Credit Agreement. (a) Section 1.01 of the Credit Agreement shall be amended as follows: (i) The definition of "Maximum Amount" is amended in its entirety to provide: "Maximum Amount" means Fifty Five Million Dollars ($55,000,000). (ii) The definition of "Termination Date" is amended in its entirety to provide: "Termination Date" means July 31, 1995. (iii) A new definition "6.07 Notice" is inserted in its proper alphabetical order, providing as follows: "6.07 Notice" means a notice pursuant to Section 6.07." (b) Section 2.02(e) of the Credit Agreement shall be amended as follows: (i) in the first line thereof, "(f)" shall be deleted and "(1)" shall be inserted in lieu thereof; (ii) clauses (1), (2), (3) and (4) shall be renumbered as (2), (3), (4) and (5) respectively; (iii) as so renumbered, clause (2) shall be amended in its entirety to provide: "(2) The Company shall pay the Bank per annum fees on the Standby Letters of Credit determined in accordance with the following: On any day the rating assigned to And the And the the Company's senior unsecured long- 6.07 6.07 term debt is: Notice Notice is not is in in effect effect Below BBB- by Standard & Poor's Corporation AND below Baa3 by Moody's Investors Service, Inc. 0.9375% 1.3125% BBB- or better by Standard & Poor's Corporation OR Baa3 or better by Moody's Investors Service, Inc. 0.7500% 1.1250% BBB- or better by Standard & Poor's Corporation AND Baa3 or better by Moody's Investors Service, Inc. 0.6250% 1.0000% "These fees shall be computed quarterly in arrears on the average daily amount of the Outstanding Letters of Credit, payable on the last day of each fiscal quarter of the Company so long as there is an Outstanding Letter of Credit; and if at any time there is no Outstanding Letter of Credit, all such accrued and unpaid fees shall be due and payable within 10 days of billing." (c) Section 6.07 of the Credit Agreement is amended in its entirety to provide: "6.07 Availability Under the Morgan Agreement. "(a) The Company shall maintain at all times, undrawn and available credit to the Company under the Morgan Agreement in an amount not less than the aggregate amount of outstanding Letter of Credit Obligations and Outstanding Letters of Credit. In computing the undrawn and available credit to the Company under the Morgan Agreement, the Company's reimbursement obligations with respect to letters of credit issued and outstanding thereunder and drafts paid but not yet reimbursed shall not be included in computing the available amount of credit under the Morgan Agreement; except that the Company may: "(b) Once, during the term of this Agreement, notify the Bank that the Company is not, or will not be, complying with the provisions of subsection (a) of this Section (the "6.07 Notice") and during such period, the increased letter of credit per annum fees under Section 2.02(e)(2) shall be in effect. "(c) After sending the Bank the 6.07 Notice, thereafter notify the Bank that it will comply with the provisions of subsection (a) of this Section and, upon receipt of such subsequent notice the lower letter of credit per annum fees under Section 2.02(e)(2) shall be in effect." 3. Representations and Warranties. The Company hereby represents and warrants to the Bank as follows: (a) No Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Company of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, without defense, counterclaim or offset. (c) (c) All representations and warranties of the Company contained in the Credit Agreement are true and correct. (d) The Company is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Bank or any other Person. 4. Effective Date. This Amendment will become effective as of May 26, 1994 (the "Effective Date"), provided that each of the following conditions precedent has been satisfied: (a) The Bank has received from the Company a duly executed original of this Amendment. (b) The Bank has received from the Company a copy of a resolution passed by the board of directors of such corporation, certified by the Secretary or an Assistant Secretary of such corporation as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Amendment. (c) The Bank has received from the Company the amount of Twenty Thousand Dollars ($20,000), representing payment in full of a non-refundable amendment fee, which amount the Company hereby covenants to pay to the Bank on demand. 5. Reservation of Rights. The Company acknowledges and agrees that the execution and delivery by the Bank of this Amendment shall not be deemed to create a course of dealing or otherwise obligate the Bank to forbear or execute similar amendments under the same or similar circumstances in the future. 6. Miscellaneous. (a) Except as herein expressly amended, all terms, covenants and provisions of the Credit Agreement are and shall remain in full force and effect and all references therein to such Credit Agreement shall henceforth refer to the Credit Agreement as amended by this Amendment. This Amendment shall be deemed incorporated into, and a part of, the Credit Agreement. (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment. (c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. (d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. (e) This Amendment supersedes all prior drafts and communications with respect thereto. This Amendment may not be amended except in accordance with the provisions of Section 8.01 of the Credit Agreement. (f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment or the Credit Agreement, respectively. (g) Company covenants to pay to or reimburse the Bank, upon demand, for all costs and expenses (including allocated costs of in-house counsel) incurred in connection with the preparation, negotiation, execution and delivery of this Amendment. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written. Consolidated Freightways, Inc. By: /s/David F. Morrison Name: David F. Morrison Title: Vice President - Treasurer By: Name: Title: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/Michael J. Dasher Name: Michael J. Dasher Title: Vice President EX-11 3 EXHIBIT 11 EXHIBIT 11 COMPUTATION OF PER SHARE EARNINGS
The following is the computation of fully-diluted earnings per share: Three Months Ended Six Months Ended June 30 June 30 1994 1993 1994 1993 (Dollars in thousands except per share data) Earnings: Net income $ 5,207 $ 8,392 $ 20,463 $ 16,660 Preferred dividends 4,763 4,747 9,497 9,496 Net income applicable to common shareholders 444 3,645 10,966 7,164 Non-discretionary adjustments under the if-converted method: Addback: Series B, preferred dividends, net of tax benefits 2,106 2,090 4,184 4,183 Less: Replacement of funding adjustment, net of tax benefits (1) (2,106) (2,090) (4,184) (4,183) Net income applicable to common shareholders $ 444 $ 3,645 10,966 $ 7,164 WEIGHTED AVERAGE SHARES OUTSTANDING: Common shares 36,213,566 35,402,458 36,088,779 35,381,427 Equivalents - stock options 1,100,910 464,530 1,128,683 563,863 Preferred stock - if-converted method 4,228,495 4,551,249 4,228,495 4,551,249 41,542,971 40,418,237 41,445,957 40,496,539 FULLY-DILUTED EARNINGS PER SHARE Net income applicable to common shareholders $ 0.01 $ 0.09 0.26 $ 0.18 (1) Additional payment to the TASP to replace the funding lost under the if-converted method.
-----END PRIVACY-ENHANCED MESSAGE-----