-----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, OlyhcRpKzCtmer8p5b9N7zJ6BYIFcCTsyd12ovNh5kj45b4H/gsvs4T2aoB8jT35 XabBwuqr3MW79jmrm/LqGw== 0000023675-96-000005.txt : 19960515 0000023675-96-000005.hdr.sgml : 19960515 ACCESSION NUMBER: 0000023675-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED FREIGHTWAYS INC CENTRAL INDEX KEY: 0000023675 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [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: 96563428 BUSINESS ADDRESS: STREET 1: 3240 HILLVIEW AVE CITY: PALO A LTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4154942900 10-Q 1 10-Q 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 March 31, 1996 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 1-5046 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 April 30, 1996: 43,998,515 PAGE 2 CONSOLIDATED FREIGHTWAYS, INC. FORM 10-Q Quarter Ended March 31, 1996 ___________________________________________________________________________ ___________________________________________________________________________ INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1996 and December 31, 1995 3 Statements of Consolidated Operations - Three Months Ended March 31, 1996 and 1995 5 Statements of Consolidated Cash Flows - Three Months Ended March 31, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 4. Submission of Matters to a Vote of Security Holders 10 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 PAGE 3 PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 1996 1995 (Dollars in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 110,884 $ 86,345 Trade accounts receivable, net of allowances 732,852 762,134 Other accounts receivable 39,853 53,784 Operating supplies, at lower of average cost or market 44,038 45,890 Prepaid expenses 98,384 69,374 Deferred income taxes 134,037 134,035 Total Current Assets 1,160,048 1,151,562 PROPERTY, PLANT AND EQUIPMENT, at cost Land 179,554 177,614 Buildings and improvements 571,590 562,760 Revenue equipment 1,095,128 1,073,505 Other equipment and leasehold improvements 392,515 377,644 2,238,787 2,191,523 Accumulated depreciation and amortization (1,132,256) (1,115,538) 1,106,531 1,075,985 OTHER ASSETS Restricted funds 14,073 11,189 Deposits and other assets 93,594 88,573 Unamortized aircraft maintenance, net 124,987 114,636 Costs in excess of net assets of businesses acquired, net of accumulated amortization 305,881 308,141 538,535 522,539 TOTAL ASSETS $2,805,114 $2,750,086 The accompanying notes are an integral part of these statements. PAGE 4 CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 1996 1995 (Dollars in thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 279,762 $ 269,203 Accrued liabilities 478,173 474,028 Accrued claims costs 156,779 150,643 Current maturities of long-term debt and capital leases 3,282 2,412 Short-term borrowings 90,000 50,000 Federal and other income taxes 9,308 12,938 Total Current Liabilities 1,017,304 959,224 LONG-TERM LIABILITIES Long-term debt and guarantees 381,425 384,545 Long-term obligations under capital leases 110,948 110,965 Accrued claims costs 165,055 166,442 Employee benefits 240,722 236,131 Other liabilities and deferred credits 97,371 93,685 Deferred income taxes 76,775 76,734 Total Liabilities 2,089,600 2,027,726 SHAREHOLDERS' EQUITY Preferred stock, no par value; authorized 5,000,000 shares: Series B, 8.5% cumulative, convertible, $.01 stated value; designated 1,100,000 shares; issued 949,982 and 954,412 shares, respectively 10 10 Additional paid-in capital, preferred stock 144,483 145,156 Deferred TASP compensation (113,501) (114,896) Total Preferred Shareholders' Equity 30,992 30,270 Common stock, $.625 par value; authorized 100,000,000 shares; issued 51,505,502 and 51,451,490 shares, respectively 32,192 32,157 Additional paid-in capital, common stock 240,507 239,696 Cumulative translation adjustment (445) (2,028) Retained earnings 597,751 608,399 Cost of repurchased common stock (7,522,750 and 7,549,174 shares, respectively) (185,483) (186,134) Total Common Shareholders' Equity 684,522 692,090 Total Shareholders' Equity 715,514 722,360 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,805,114 $2,750,086 The accompanying notes are an integral part of these statements. PAGE 5 CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED OPERATIONS (Dollars in thousands except per share amounts) Three Months Ended March 31, 1996 1995 REVENUES CF MotorFreight $ 573,434 $ 608,425 Con-Way Transportation Services 301,841 274,890 Emery Worldwide 446,599 412,772 1,321,874 1,296,087 COSTS AND EXPENSES CF MotorFreight Operating Expenses 519,642 524,784 Selling and Administrative Expenses 58,546 56,827 Depreciation 16,473 16,691 594,661 598,302 Con-Way Transportation Services Operating Expenses 232,777 203,540 Selling and Administrative Expenses 37,326 33,219 Depreciation 11,354 9,283 281,457 246,042 Emery Worldwide Operating Expenses 365,703 339,175 Selling and Administrative Expenses 61,848 53,938 Depreciation 7,548 6,597 435,099 399,710 1,311,217 1,244,054 OPERATING INCOME (LOSS) CF MotorFreight (21,227) 10,123 Con-Way Transportation Services 20,384 28,848 Emery Worldwide 11,500 13,062 10,657 52,033 OTHER INCOME (EXPENSE) Investment income 78 125 Interest expense (9,904) (7,201) Miscellaneous, net (288) (206) (10,114) (7,282) Income Before Income Taxes 543 44,751 Income Taxes 263 20,585 NET INCOME 280 24,166 Preferred Stock Dividends 2,134 4,324 NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS $ (1,854) $ 19,842 Primary average shares outstanding (1) 43,952,397 44,217,465 PRIMARY EARNINGS (LOSS) PER SHARE $ (0.04) $ 0.50 FULLY DILUTED EARNINGS (LOSS) PER SHARE $ (0.04) $ 0.46 (1) The three months ended March 31, 1995 includes the dilutive effect of stock options. The accompanying notes are an integral part of these statements. PAGE 6 CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS Three Months Ended March 31, 1996 1995 (Dollars in thousands) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 86,345 $ 95,711 CASH FLOWS FROM OPERATING ACTIVITIES Net income 280 24,166 Adjustments to reconcile income to net cash provided by operating activities: Depreciation and amortization 38,359 35,310 Increase in deferred income taxes 950 2,098 Gains from property disposals, net (457) (171) Changes in assets and liabilities: Receivables 43,213 (2,440) Prepaid expenses (29,010) (27,391) Accounts payable 10,559 9,753 Accrued claims costs 4,749 (2,278) Income taxes (3,630) 14,884 Incentive compensation (9,301) (30,971) Accrued liabilities and other 3,331 (14,289) Net Cash Provided by Operating Activities 59,043 8,671 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (68,092) (56,541) Proceeds from sales of property 2,511 825 Net Cash Used by Investing Activities (65,581) (55,716) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long-term debt and capital lease obligations (2,267) (1,707) Net borrowings under revolving line of credit 40,000 55,000 Proceeds from issuance of common stock 824 511 Payments of common dividends (4,396) (3,636) Payments of preferred dividends (3,084) (5,318) Net Cash Provided by Financing Activities 31,077 44,850 Increase (Decrease) in Cash and Cash Equivalents 24,539 (2,195) CASH AND CASH EQUIVALENTS, END OF PERIOD $ 110,884 $ 93,516 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 1995 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 1995 Annual Report to Shareholders and related annual report to the Securities and Exchange Commission on Form 10-K. 2. 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 adverse effect on the Company's consolidated financial position or results of operations. CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company's first quarter revenues increased 2% from the same quarter in the prior year with growth at Con-Way Transportation Services (CTS) and Emery Worldwide partially offset by lower revenues at CF MotorFreight (CFMF). Revenues at CFMF remain depressed following the fourth quarter, 1995 implementation of changes to its freight flow system that disrupted operations. CTS continued to benefit from its regional expansion while Emery benefited from growth in both its domestic and international operations. All three business units were affected by the harsh winter storms. Operating income declined 79.5% from the same quarter last year as a result of continued operating losses at CFMF and lower operating income at CTS and Emery. Increases in diesel and jet fuel prices adversely impacted operating results at all three units. CFMF operating results were also adversely affected by lowered productivity and under-utilization of capacity following the implementation of changes to its freight flow system described below. PAGE 8 Other expense, net increased from the first quarter of 1995 due to increased interest expense from the $100 million 10-year notes issued in June 1995 and increased short-term bank borrowings. Preferred stock dividends decreased as a result of the conversion of Series C preferred stock to common stock in March of last year. Significant variations in segment revenues and operating income are as follows. CF MOTORFREIGHT CFMF first quarter revenues were down 5.8% from the comparable quarter in 1995 on a total tonnage decline of 9.6%. Less-than-truckload (LTL) tonnage declined 8.7%. Partially mitigating the impact of the tonnage decline was an increase in revenues from the operations of Menlo Logistics, which are combined with CFMF for reporting purposes, and a partial retention of the January 1, 1996 rate increase. Business levels at CFMF were adversely affected by the October 1995 implementation of a freight flow improvement plan called the Business Accelerator System (BAS). Implementation of BAS disrupted freight service, resulting in customers withholding business from CFMF. During 1996 CFMF's average transit time improved nearly a full day from that prior to the implementation of BAS. The Company believes that this improved service has contributed to a gradual increase in business levels throughout the first quarter. The operating loss for the quarter of $21.2 million represents a $31.3 million decline from the $10.1 million operating profit in the prior year quarter. The operating loss is attributable to lower than expected system utilization and productivity. The winter storms and increased fuel prices also contributed to the operating loss. Management believes that its efforts to restore business levels and system productivity contributed to reduced operating losses each month of this quarter. Included in CFMF quarterly operating results are the combined operating income of its Canadian subsidiaries and Menlo Logistics of $3.6 million and $3.2 million for first quarter 1996 and 1995, respectively. The implementation of BAS has improved on-time performance and reduced average transit times. Management efforts to increase productivity in dock and city pickup and delivery operations have yielded improvements. However, in the short-term, management expects to continue to incur additional losses as system utilization remains below expected levels and due to an approximate 3.5% contractual wage and benefit increase, effective April 1, 1996. Accordingly, management efforts are focused on regaining customer confidence and restoring business levels lost during the implementation of BAS. CON-WAY TRANSPORTATION SERVICES CTS first quarter revenues increased 9.8% on a total tonnage increase of 4.5% from the comparable period in 1995. LTL tonnage increased 6.3% from the first quarter of 1995. The revenue increase reflects the benefits of CTS's geographic expansion and growth of its inter-regional business. CTS was adversely affected by the winter storms and floods and the discounting by competitors in the regional and inter-regional LTL markets. PAGE 9 Operating income declined 29.3% compared with the first quarter of 1995 due to higher fuel prices and costs associated with winter storms. Also adversely affecting the first quarter of 1996 was under-utilization of system capacity in new geographic regions and in inter-regional business. Management will seek to improve operating margins by directing efforts toward replacing unprofitable business with business that earns a higher yield and improving system utilization in new markets with aggressive marketing programs emphasizing a full complement of service offerings. However, discounting is expected to continue industry wide into the foreseeable future. EMERY WORLDWIDE Emery's first quarter revenues increased 8.2% over the comparable period last year. Domestic revenues increased 6.7% on a tonnage gain of 10.4% despite the strike at General Motors, a major Emery customer. International revenues increased 9.5% on tonnage growth of 11.9% indicating softness in the international market compared to the first quarter of 1995 when tonnage increased 37.2%. The largest deteriorations in international revenues were from imports into the US from Japan and Southeast Asia and in inter- European business. Operating income was down 12% due to declining rates of nearly 3% from the same quarter last year. Higher fuel charges and costs associated with the winter storms also lowered operating income. The elimination of excise taxes in the first quarter of 1996 essentially offset the costs of the harsh weather. Emery's management is focused on expanding its share of the export freight markets and on expanding market share in international and domestic markets, with a broad assortment of service offerings. Furthermore, management will seek to improve yields on low margin and unprofitable business and reduce costs, system wide. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1996, the Company had $110.9 million in cash and cash equivalents. Net cash flow from operations during the first three months of 1996 of $59.0 million was primarily the result of depreciation and amortization and a reduction in customer receivables. Capital expenditures for the three months ended March 31, 1996, were $68.1 million, an increase of $11.6 million over the same period in 1995. Debt repayment and preferred dividend requirements during the quarter were $5.3 million. The Company borrowed $40 million under various bank lines to finance its obligations. The Company intends to fund the remaining capital expenditure requirements for the year with cash from operations supplemented by financing arrangements. At March 31, 1996, $116.7 million of letters of credit were outstanding under the Company's $300 million unsecured credit facility. In addition, $78.3 million of letters of credit were outstanding and secured with Emery receivables under the $100 million Emery receivables sale facility. Also at March 31, 1996, $40.4 million of letters of credit were outstanding under several unsecured letter of credit facilities. Under the above facilities PAGE 10 and other offered lines of credit, the Company has $180 million available for additional borrowings and letter of credit needs. 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 qualified independent parties to protect the environment and comply with regulations. Where clean-up is necessary, the Company takes appropriate action. Certain statements included herein constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to a number of risks and uncertainties. In that regard, the following factors, among others, could cause actual results and other matters to differ materially from those in such statements: changes in general business and economic conditions; increasing domestic and international competition and pricing pressure; changes in fuel prices; uncertainty regarding the Company's ability to improve results of operations through, among other things, implementation of BAS at CFMF; labor matters, including changes in labor costs, renegotiation of labor contracts and the risk of work stoppages or strikes; 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. PART II. OTHER INFORMATION ITEM 1. Legal Proceedings As previously reported, the Company has been designated a Potentially Responsible Party by the Environmental Protection Agency with respect to the disposal of hazardous substances at various sites. The Company expects its share of the total cleanup costs of all sites will not have a material adverse effect on its consolidated financial position or results of operations. Certain legal matters are discussed in Note 2 in the Notes to Consolidated Financial Statements in Part I of this form. ITEM 4. Submission of Matter to a Vote of Security Holders At the Annual Shareholders Meeting held April 29, 1996 the following proposals were presented with the indicated voting results: For the purpose of electing members of the Board of Directors, the votes representing shares of Common and Preferred stock were cast as follows: Nominee For Withheld Donald E. Moffitt 42,121,969 444,093 Ronald E. Poelman 42,065,026 501,036 Robert D. Rogers 42,143,607 422,455 William D. Walsh 42,130,058 436,004 PAGE 11 The following directors did not stand for election and continued in office as a director after the Annual Shareholders Meeting: Robert Alpert, Richard A. Clarke, Earl F. Cheit, G. Robert Evans, Margaret G. Gill, Robert Jaunich II, Richard B. Madden, and Robert P. Wayman. The appointment of Arthur Andersen LLP as independent public accountants for the year 1996 was approved by the following vote: For 42,089,174; Against 229,663; Abstaining 247,225. The stockholder proposal to declassify the Board of Directors for the purpose of Director elections was defeated by the following votes: For 14,972,429; Against 21,762,242; Abstaining 1,066,323; Broker non-votes 4,765,068. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits (10.1) Consolidated Freightways, Inc. Executive Incentive Plan for 1996. (10.2) Leland James Service Corporation - CFI Executive Incentive Plan for 1996. (10.3) CF MotorFreight Executive Incentive Plan for 1996. (10.4) Con-Way Transportation Services, Inc. Incentive Plan for 1996. (10.5) Emery Worldwide Incentive Plan for 1996. (11) Computation of Per Share Earnings (12) Computation of Ratios of Earnings to Fixed Charges (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended March 31, 1996. PAGE 12 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) May 14, 1996 /s/Gregory L. Quesnel Gregory L. Quesnel Executive Vice President and Chief Financial Officer May 14, 1996 /s/Gary D. Taliaferro Gary D. Taliaferro Vice President and Controller EX-10 2 EXHIBIT 10.1 Exhibit 10.1 CONSOLIDATED FREIGHTWAYS, INC. EXECUTIVE INCENTIVE PLAN FOR 1996 THE PLAN In order to motivate certain of its employees more effectively and efficiently, Consolidated Freightways, Inc. (CF, Inc.) establishes an Incentive Plan (Plan) under which payments will be made to eligible executive personnel out of calendar year 1996 Incentive Profits. DESIGNATION OF PARTICIPANTS Participants in this Plan shall be all full-time executive personnel of CF, Inc. A master list of all Plan participants will be maintained in the office of the Chief Executive Officer of CF, Inc. 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 1996 Plan during the 1996 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 Consolidated Freightways, Inc. or any of its subsidiaries and (ii) a Plan participant. EXCEPTION 1. A Plan participant who is employed by CF, Inc. or any of its subsidiaries through December 31, 1996 but leaves that employment or otherwise becomes ineligible after December 31, 1996 but before the final payment is made relating to 1996, unless terminated for cause, shall be entitled to receive payments under this Plan resulting from 1996 Incentive Profits. EXCEPTION 2. An appropriate pro rata payment will be made (1) to a Plan participant who retires prior to December 31, 1996 pursuant to the Consolidated Freightways, Inc. 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, 1996 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, 1996, or (4) to an eligible Plan participant who is transferred to another subsidiary of CF, Inc. and who remains an employee through December 31, 1996. METHOD OF PAYMENT Each Plan participant will be assigned an incentive participation factor as a percent of annual compensation. The Incentive Participation Factor may be further allocated to specific performance goals for each participant. Profit goals will be partitioned between CF MotorFreight (25%) and all other CF components (75%). Incentive compensation for the assigned goals will be earned on a pro rata basis for accomplishments between the Minimum level and the Incentive Factor Goals and will continue to be earned ratably for performance over the Incentive Factor Goals. No incentive will be earned by a participant until the respective Minimum Profit Goals are achieved. Incentive earned from the achievement of Performance Goals other than profit will be restricted to the extent that post ICP profit cannot fall below the Minimum Profit Goal. There is a maximum percent of accomplishment for any performance goal of 200%. PERSONAL DATA SHEET A "Personal Data Sheet" for calculation of incentive earnings will be prepared for each Plan participant which designates (1) the unit to which the participant is assigned, (2) his assigned incentive participation factor, (3) the minimum level of achievement required for each assigned goal, (4) the incentive factor level of achievement for each assigned goal, and (5) the incentive earnings at the incentive factor level for each assigned goal. DATE OF PAYMENT The Chief Executive Officer of CF, Inc. may authorize a partial payment of the estimated annual earned incentive, in December, 1996. The final payment to eligible participants, less any previous partial payment, will be made on or before March 15, 1997. INCENTIVE PROFIT Incentive Profit is defined as earnings before deducting any amounts expensed under any CF, Inc. and qualified LJSC incentive plans and before deducting income taxes. 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. The term "special compensation" used herein does not include deferred salary arrangements wherein the participant could have chosen to receive the deferred salary in the Plan year. MAXIMUM PAYMENT Payments under this Plan are limited to double 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 CF, Inc. 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 1996 only. EX-10 3 EXHIBIT 10.2 Exhibit 10.2 LELAND JAMES SERVICE CORPORATION - CFI EXECUTIVE INCENTIVE PLAN FOR 1996 THE PLAN In order to motivate certain employees of Leland James Service Corporation (LJSC) more effectively and efficiently, The Company (LJSC) establishes an Incentive Plan (Plan) under which payments will be made to eligible executive personnel of LJSC out of calendar year 1996 Incentive Profits. DESIGNATION OF PARTICIPANTS Participants in this Plan shall be all full-time executive personnel of LJSC. A master list of all Plan participants will be maintained in the office of the President of LJSC. 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 1996 Plan during the 1996 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 LJSC and (ii) a Plan participant. EXCEPTION 1. A Plan participant who is employed by LJSC through December 31, 1996 but leaves that employment or otherwise becomes ineligible after December 31, 1996 but before the final payment is made relating to 1996, unless terminated for cause, shall be entitled to receive payments under this Plan resulting from 1996 Incentive Profits. EXCEPTION 2. An appropriate pro rata payment will be made (1) to a Plan participant who retires prior to December 31, 1996 pursuant to the Consolidated Freightways, Inc. 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, 1996 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, 1996, or (4) to an eligible Plan participant who is transferred to another subsidiary of CF, Inc. and who remains an employee through December 31, 1996. METHOD OF PAYMENT Each Plan participant will be assigned an incentive participation factor as a percent of annual compensation. The Incentive Participation Factor may be further allocated to specific performance goals for each participant. Profit goals will be partitioned between CF MotorFreight (25%) and all other CF components (75%). Incentive compensation for the assigned goals will be earned on a pro rata basis for accomplishments between the Minimum level and the Incentive Factor Goals and will continue to be earned ratably for performance over the Incentive Factor Goals. No incentive will be earned by a participant until the respective Minimum Profit Goals are achieved. Incentive earned from the achievement of Performance Goals other than profit will be restricted to the extent that post ICP profit cannot fall below the Minimum Profit Goal. There is a maximum percent of accomplishment for any performance goal of 200%. PERSONAL DATA SHEET A "Personal Data Sheet" for calculation of incentive earnings will be prepared for each Plan participant which designates (1) the unit to which the participant is assigned, (2) his assigned incentive participation factor, (3) the minimum level of achievement required for each assigned goal, (4) the incentive factor level of achievement for each assigned goal, and (5) the incentive earnings at the incentive factor level for each assigned goal. DATE OF PAYMENT The President of LJSC may authorize a partial payment of the estimated annual earned incentive, in December, 1996. The final payment to eligible participants, less any previous partial payment, will be made on or before March 15, 1997. INCENTIVE PROFIT Incentive Profit is defined as earnings before deducting any amounts expensed under any CF, Inc. and qualified LJSC incentive plans and before deducting income taxes. 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. The term "special compensation" used herein does not include deferred salary arrangements wherein the participant could have chosen to receive the deferred salary in the Plan year. MAXIMUM PAYMENT Payments under this Plan are limited to double 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 LJSC 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 1996 only. EX-10 4 EXHIBIT 10.3 Exhibit 10.3 CF MOTORFREIGHT EXECUTIVE INCENTIVE PLAN FOR 1996 THE PLAN In order to motivate certain employees of CF MotorFreight (CFMF) more effectively and efficiently, Consolidated Freightways Corporation of Delaware (CFCD) establishes an Incentive Plan (Plan) under which payments will be made to designated eligible executive personnel out of calendar year CFMF 1996 Incentive Profits. DESIGNATION OF PARTICIPANTS Participants in this Plan shall be designated full-time executive personnel of CFMF. A master list of all Plan participants will be maintained in the office of the President of CFCD. 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 1996 Plan during the 1996 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 CFCD or any of its subsidiaries and (ii) a Plan participant. EXCEPTION 1. A Plan participant who is employed by CFCD through December 31, 1996 but leaves that employment or otherwise becomes ineligible after December 31, 1996 but before the final payment is made relating to 1996, unless terminated for cause, shall be entitled to receive payments under this Plan resulting from 1996 Incentive Profits. EXCEPTION 2. An appropriate pro rata payment will be made (1) to a Plan participant who retires prior to December 31, 1996 pursuant to the Consolidated Freightways, Inc. 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, 1996 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, 1996, or (4) to an eligible Plan participant who is transferred to another subsidiary of CF, Inc. and who remains an employee through December 31, 1996. METHOD OF PAYMENT Each Plan participant will be assigned an incentive participation factor as a percent of annual compensation. Each Plan participant will also be assigned to a CFMF operating unit (service center, division, total company, etc.) to earn incentive. The participation factor may be further indexed to specific performance goals such as revenue, profit, service, etc. Incentive for assigned goals will be earned on a pro rata basis for accomplishment between the Minimum Level and the Incentive Factor Goal. Once incentive earnings exceed the Incentive Factor Goal, incentive compensation will be earned ratably at 50% of the previous level. No incentive will be earned by a participant until CFMF has achieved its Minimum Profit Goal. Actual incentive payout is subject to the ICP pool. Incentive Compensation will be adjusted proportionately to the amount in the ICP pool. PERSONAL DATA SHEET A "Personal Data Sheet" for calculation of incentive earnings will be prepared for each Plan participant which designates (1) the unit to which the participant is assigned, (2) his profit sharing percentage, (3) the minimum level of achievement required for each assigned goal, (4) the incentive factor level of achievement for each assigned goal, and (5) the incentive earnings at the incentive factor level for each assigned goal. DATE OF PAYMENT The President of CFCD may authorize a partial payment of the estimated annual earned incentive, in December, 1996. The final payment to eligible participants, less any previous partial payment, will be made on or before March 15, 1997. INCENTIVE PROFIT Incentive Profit is defined as the operating earnings of CF MotorFreight before deducting any amounts expensed under this or any similar incentive or bonus plan, before deducting interest expense and other non-operating expenses, before adding interest income, and before deducting income taxes. ANNUAL COMPENSATION Annual Compensation for incentive purposes for each Plan participant is his annualized salary or hourly base pay before any incentive, overtime, 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 limited to double 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 CFCD 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 1996 only. EX-10 5 EXHIBIT 10.4 Exhibit 10.4 CON-WAY TRANSPORTATION SERVICES, INC. INCENTIVE PLAN FOR 1996 THE PLAN In order to motivate certain of its employees more effectively and efficiently, Con-Way Transportation Services, Inc. (CTS) establishes an Incentive Plan (Plan) under which payments will be made to eligible managerial personnel out of calendar year 1996 Incentive Profits. DESIGNATION OF PARTICIPANTS Participants in the Plan shall be designated full-time managerial personnel of CTS Administration. A master list of Plan participants will be maintained in the office of the President of CTS. ELIGIBILITY FOR PARTICIPATION 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 1996 Plan during the 1996 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 CTS or any of its subsidiaries and (ii) a Plan participant. EXCEPTION 1. A Plan participant who is employed by CTS or any of its subsidiaries through December 31, 1996 but leaves that employment or otherwise becomes ineligible after December 31, 1996 but before the final payment is made relating to 1996, unless terminated for cause, shall be entitled to receive payments under this Plan resulting from 1996 Incentive Profits. EXCEPTION 2. An appropriate pro rata payment will be made (1) to a Plan participant who retires prior to December 31, 1996 pursuant to the Consolidated Freightways, Inc. 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, 1996 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, 1996, or (4) to an eligible Plan participant who is transferred to another subsidiary of Consolidated Freightways, Inc. and who remains an employee through December 31, 1996. METHOD OF PAYMENT Each Plan participant will be assigned an incentive participation factor as a percent of Annual Compensation in accordance with the enclosed Personal Data Sheet. The incentive participation factor will be allocated 85% to the assigned profit goal and 15% to the assigned accounts receivable goal. Incentive for assigned goals will be earned on a pro rata basis for accomplishment between the Minimum level and the Incentive Factor Goal. Incentive earnings over the Incentive Factor Goal will continue to earn at the same pro rata relationship that exists between minimum level and factor goal. No incentive will be earned by a participant until CTS has achieved its Minimum Profit Goal. Incentive earned from the achievement of Performance Goals will be restricted to the extent that post ICP earnings cannot fall below the Minimum Profit Goal. The maximum percent of accomplishment for any goal is 200%. PERSONAL DATA SHEET A "Personal Data Sheet" for calculation of incentive earnings will be prepared for each Plan participant which designates (1) the unit to which the participant is assigned, (2) his assigned incentive participation factor, (3) the minimum level of achievement required for each assigned goal, (4) the incentive factor level of achievement for each assigned goal, and (5) the incentive earnings at the incentive factor level for each assigned goal. DATE OF PAYMENT The President of CTS may authorize a partial payment of the estimated annual earned incentive, in December 1996. The final payment to eligible participants, less any previous partial payment, will be made on or before March 15, 1997. INCENTIVE PROFIT Incentive profit is defined as the consolidated earnings of all of the companies comprising CTS, before deducting any amounts expensed under this or any similar incentive or bonus plan and before deducting income taxes and excluding interest income and expense. ANNUAL COMPENSATION Annual Compensation for incentive purposes for each Plan participant is his annualized salary or hourly base pay before any incentive, overtime, 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 limited to double 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 CTS 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 the payment is actually made. DURATION OF PLAN This Plan is for the calendar year 1996 only. EX-10 6 EXHIBIT 10.5 Exhibit 10.5 EMERY WORLDWIDE INCENTIVE PLAN FOR 1996 THE PLAN In order to motivate certain employees more effectively and efficiently, Emery Worldwide (EWW) establishes an Incentive Plan (Plan) under which payments will be made to designated participants out of calendar year 1996 Incentive Profits. DESIGNATION OF PARTICIPANTS Participants in the Plan shall be all supervisory, managerial, and regular full-time and part-time non-contractual (time-sheet) personnel of EWW. A master list of Plan participants will be maintained in the office of the President of EWW. ELIGIBILITY FOR PARTICIPATION 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 1996 Plan during the 1996 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 EWW or any of its subsidiaries and (ii) a Plan participant. EXCEPTION 1. A Plan participant who is employed by EWW through December 31, 1996 but leaves that employment or otherwise becomes ineligible after December 31, 1996 but before the final payment is made relating to 1996, unless terminated for cause, is entitled to receive payments under this Plan resulting from 1996 Incentive Profits. EXCEPTION 2. An appropriate pro rata payment will be made (1) to a Plan participant who retires prior to December 31, 1996 pursuant to the Consolidated Freightways, Inc. Retirement Plan, The Purolator Courier Corporation Hourly Employee Pension Plan or to the provisions of the Social Security Act and who, at the time of retirement, was an eligible participant in this Plan, (ii) to the heirs, legatees, administrators or executors of a Plan participant who dies prior to December 31, 1996 and who, at the time of death, was an eligible participant in this Plan, (iii) to an eligible Plan participant who is placed on approved Medical, Sabbatical, or Military Leave of Absence prior to December 31, 1996, or (iv) to an eligible Plan participant who is transferred to another subsidiary of Consolidated Freightways, Inc. and who remains an employee through December 31, 1996. METHOD OF PAYMENT Each Plan participant will be assigned an incentive participation factor as a percent of annual compensation. The President of Emery will assign each Plan participant to an operating unit (service center, division, total company, etc.) to earn incentive. The participation factor may be further indexed to specific performance goals such as revenue, profit, service, etc. Incentive compensation will be paid from an ICP pool earned ratably between the Minimum and Incentive Factor Profit Goals and will continue to be earned ratably over the Incentive Factor Goal. Incentive Factor Plan Goals and minimum levels of accomplishment will be established for all performance goals. No incentive will be earned by a participant until the system Minimum Profit Goal is achieved. Actual incentive payout is subject to the ICP pool. Incentive Compensation will be adjusted proportionately to the amount in the ICP pool, thus actual system incentive payout for all goals other than Accounts Receivable can never surpass the percent of accomplishment for system profit. Company profit contributions will be paid first and other participation factors thereafter. Incentive earned from the achievement of the Accounts Receivable Performance Goal will be restricted to the extent that post ICP earnings cannot fall below the Minimum Profit Goal. There is a maximum percent of accomplishment for any performance goal of 200%. PERSONAL DATA SHEET A "Personal Data Sheet" for calculation of incentive earnings will be prepared for each Plan participant which designates (1) the unit to which the participant is assigned, (2) his assigned incentive participation factor and the allocation of that factor to specific Performance Goals, (3) the minimum level of achievement required for each assigned goal, (4) the incentive factor level of achievement for each assigned goal, and (5) the incentive earnings at the incentive factor level for each assigned goal. DATE OF PAYMENT The President of EWW may authorize a partial payment of the estimated annual earned incentive, in December 1996. The final payment to eligible participants, less any previous partial payment, will be made on or before March 15, 1997. INCENTIVE PROFIT Incentive Profit is defined as the earnings of Emery Worldwide, Emery Custom Brokers, Emery Ocean Services, Emery Global Logistics, Emery Expedite and Emery Worldwide Airlines before deducting any amounts expensed under this or any similar incentive or bonus plan and before deducting income taxes and excluding interest income and expense. ANNUAL COMPENSATION Annual Compensation for incentive purposes for each Plan participant is his annual earnings for 1996 before any incentive or bonus payments earned during the period of Plan participation eligibility. MAXIMUM PAYMENT Payments under this plan are limited to double 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 EWW 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 1996 only. EX-11 7 EXHIBIT 11 Exhibit 11 CONSOLIDATED FREIGHTWAYS, INC. COMPUTATION OF PER SHARE EARNINGS The following is the computation of fully diluted earnings per share: Three Months Ended March 31 1996 1995 (Dollars in thousands except per share data) Net income (loss) applicable to common shareholders $ (1,854) $ 19,842 Non-discretionary adjustments under the if-converted method: Addback: Series C, preferred dividends - 2,207 Addback: Series B, preferred dividends, net of tax benefits 2,134 2,117 Less: Replacement of funding adjustment, net of tax benefits (1) (1,668) (1,664) Net income (loss) applicable to common shareholders $ (1,388) $ 22,502 WEIGHTED AVERAGE SHARES OUTSTANDING: Common shares 43,952,397 43,274,729 Equivalents - stock options 990,587 1,244,429 Series B, Preferred stock if-converted method 4,194,726 4,142,418 49,137,710 48,661,576 FULLY DILUTED EARNINGS PER SHARE (2) $ (0.03) $ 0.46 (1) Additional payment to the Company's Thrift and Stock Plan to replace the funding lost under the if-converted method. (2) Fully diluted loss per share was reported at $(.04) per share on the Statement of Consolidated Operations for the three months ended March 31, 1996, as this computation indicates that the items included under the if-converted method were anti-dilutive. EX-12 8 EXHIBIT 12
Exhibit 12 CONSOLIDATED FREIGHTWAYS, INC. COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES Three Months Ended March 31, Year Ended December 31, 1996 1995 1995 1994 1993 1992 1991 (Dollars in thousands) Fixed Charges: Interest Expense $ 9,904 $ 7,201 $ 34,325 $ 27,945 $ 30,333 $ 38,893 $ 46,703 Capitalized Interest 539 175 1,092 1,042 1,224 543 1,703 Preferred Dividends 3,160 3,206 12,419 12,475 12,551 12,618 12,691 Total Interest 13,603 10,582 47,836 41,462 44,108 52,054 61,097 Interest Component of Rental Expense 18,091 17,740 73,004 62,304 57,585 55,773 58,052 Total Fixed Charges 31,694 28,322 120,840 103,766 101,693 107,827 119,149 Less: Capitalized Interest 539 175 1,092 1,042 1,224 543 1,703 Preferred Dividends 3,160 3,206 12,419 12,475 12,551 12,618 12,691 Net Fixed Charges $ 27,995 $ 24,941 $ 107,329 $ 90,249 $ 87,918 $ 94,666 $ 104,755 Earnings: Income (Loss) Before Income Taxes $ 543 $ 44,751 $ 110,873 $ 111,920 $ 91,441 $ (10,733) $ (43,337) Add: Net Fixed Charges 27,995 24,941 107,329 90,249 87,918 94,666 104,755 Total Earnings $ 28,538 $ 69,692 $ 218,202 $ 202,169 $ 179,359 $ 83,933 $ 61,418 Ratio of Earnings to Fixed Charges: Total Earnings $ 28,538 $ 69,692 $ 218,202 $ 202,169 $ 179,359 $ 83,933 $ 61,418 Fixed Charges (1) 31,694 28,322 120,840 103,766 101,693 107,827 119,149 Ratio 0.9 x(2) 2.5 x 1.8 x 1.9 x 1.8 x 0.8 x(2) 0.5 x(2) (1) Fixed Charges represent interest on capital leases and short-term and long-term debt, capitalized interest, dividends on shares of the Series B Cumulative Convertible Preferred Stock used to pay debt service on notes issued by the Company's Thrift and Stock Plan and the applicable portion of the consolidated rent expense which approximates the interest portion of lease payments. (2) Earnings were inadequate to cover fixed charges for the periods shown; the deficiency was $3.2 million for the three months ended March 31, 1996 and $23.9 million and $57.7 million for the years ended December 31, 1992 and 1991, respectively.
EX-27 9 EXHIBIT 27
5 1000 3-MOS DEC-31-1996 MAR-31-1996 110,884 0 757,733 (24,881) 44,038 1,160,048 2,238,787 (1,132,256) 2,805,114 1,017,304 492,373 272,699 0 144,493 298,322 2,805,114 0 1,321,874 0 1,311,217 10,114 3,059 9,904 543 263 280 0 0 0 (1,854) (.04) (.04)
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