-----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, OlWetCWAXIMQ7Ec8ZvsQ7pdFuNTIbjcGRlqlSCFS5ZUlr4VMOxWNGUJrydP/TSI+ hF2kdNw8kj5I2CBUKBaVtg== 0000023675-96-000009.txt : 19960814 0000023675-96-000009.hdr.sgml : 19960814 ACCESSION NUMBER: 0000023675-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96609328 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 June 30, 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 July 31, 1996: 44,019,740 PAGE 2 CONSOLIDATED FREIGHTWAYS, INC. FORM 10-Q Quarter Ended June 30, 1996 ___________________________________________________________________________ ___________________________________________________________________________ INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1996 and December 31, 1995 3 Statements of Consolidated Income - Three and Six Months Ended June 30, 1996 and 1995 5 Statements of Consolidated Cash Flows - Six Months Ended June 30, 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 11 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 June 30, December 31, 1996 1995 (Dollars in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 123,064 $ 86,345 Trade accounts receivable, net of allowances 792,044 762,134 Other accounts receivable 33,111 53,784 Operating supplies, at lower of average cost or market 39,524 45,890 Prepaid expenses 82,628 69,374 Deferred income taxes 134,044 134,035 Total Current Assets 1,204,415 1,151,562 PROPERTY, PLANT AND EQUIPMENT, at cost Land 181,475 177,614 Buildings and improvements 582,898 562,760 Revenue equipment 1,109,522 1,073,505 Other equipment and leasehold improvements 404,268 377,644 2,278,163 2,191,523 Accumulated depreciation and amortization (1,146,027) (1,115,538) 1,132,136 1,075,985 OTHER ASSETS Restricted funds 11,306 11,189 Deposits and other assets 98,808 88,573 Unamortized aircraft maintenance, net 125,918 114,636 Costs in excess of net assets of businesses acquired, net of accumulated amortization 303,585 308,141 539,617 522,539 TOTAL ASSETS $2,876,168 $2,750,086 The accompanying notes are an integral part of these statements. PAGE 4 CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, 1996 1995 (Dollars in thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 287,216 $ 269,203 Accrued liabilities 494,139 474,028 Accrued claims costs 163,350 150,643 Current maturities of long-term debt and capital leases 3,216 2,412 Short-term borrowings 122,000 50,000 Federal and other income taxes 6,586 12,938 Total Current Liabilities 1,076,507 959,224 LONG-TERM LIABILITIES Long-term debt and guarantees 381,419 384,545 Long-term obligations under capital leases 110,931 110,965 Accrued claims costs 162,117 166,442 Employee benefits 246,515 236,131 Other liabilities and deferred credits 96,596 93,685 Deferred income taxes 78,090 76,734 Total Liabilities 2,152,175 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 946,301 and 954,412 shares, respectively 9 10 Additional paid-in capital, preferred stock 143,923 145,156 Deferred TASP compensation (111,899) (114,896) Total Preferred Shareholders' Equity 32,033 30,270 Common stock, $.625 par value; authorized 100,000,000 shares; issued 51,512,452 and 51,451,490 shares, respectively 32,196 32,157 Additional paid-in capital, common stock 240,602 239,696 Cumulative translation adjustment (760) (2,028) Retained earnings 604,820 608,399 Cost of repurchased common stock (7,499,035 and 7,549,174 shares, respectively) (184,898) (186,134) Total Common Shareholders' Equity 691,960 692,090 Total Shareholders' Equity 723,993 722,360 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,876,168 $2,750,086 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 1996 1995 1996 1995 REVENUES CF MotorFreight $ 608,149 $ 599,092 $ 1,181,583 $ 1,207,517 Con-Way Transportation Services 316,653 288,122 618,494 563,012 Emery Worldwide 476,329 433,372 922,928 846,144 1,401,131 1,320,586 2,723,005 2,616,673 COSTS AND EXPENSES CF MotorFreight Operating Expenses 538,089 519,416 1,054,520 1,041,695 Selling and Administrative Expenses 63,516 60,809 125,273 120,141 Depreciation 16,209 16,539 32,682 33,230 617,814 596,764 1,212,475 1,195,066 Con-Way Transportation Services Operating Expenses 233,433 216,338 463,485 419,878 Selling and Administrative Expenses 40,668 33,841 80,719 67,060 Depreciation 12,547 9,705 23,901 18,988 286,648 259,884 568,105 505,926 Emery Worldwide Operating Expenses 383,698 353,459 749,401 692,634 Selling and Administrative Expenses 66,174 55,548 128,022 109,486 Depreciation 7,807 6,711 15,355 13,308 457,679 415,718 892,778 815,428 1,362,141 1,272,366 2,673,358 2,516,420 OPERATING INCOME (LOSS) CF MotorFreight (9,665) 2,328 (30,892) 12,451 Con-Way Transportation Services 30,005 28,238 50,389 57,086 Emery Worldwide 18,650 17,654 30,150 30,716 38,990 48,220 49,647 100,253 OTHER INCOME (EXPENSE) Investment income 145 397 223 522 Interest expense (10,086) (8,217) (19,990) (15,418) Miscellaneous, net (598) 762 (886) 556 (10,539) (7,058) (20,653) (14,340) Income Before Income Taxes 28,451 41,162 28,994 85,913 Income Taxes 14,795 18,935 15,058 39,520 Net Income 13,656 22,227 13,936 46,393 Preferred Stock Dividends 2,183 2,141 4,317 6,465 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 11,473 $ 20,086 $ 9,619 $ 39,928 Primary average shares outstanding (1) 44,876,168 44,390,346 44,898,563 44,276,122 PRIMARY EARNINGS PER SHARE $ 0.26 $ 0.45 $ 0.21 $ 0.95 FULLY DILUTED EARNINGS PER SHARE $ 0.24 $ 0.42 $ 0.21 $ 0.89 (1) 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 Six Months Ended June 30, 1996 1995 (Dollars in thousands) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 86,345 $ 95,711 CASH FLOWS FROM OPERATING ACTIVITIES Net income 13,936 46,393 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 77,854 71,039 Increase in deferred income taxes 1,853 4,275 Gains from property disposals, net (1,226) (821) Changes in assets and liabilities: Receivables (9,237) (43,856) Prepaid expenses (13,254) (15,703) Accounts payable 18,013 12,963 Accrued claims costs 8,382 64 Income taxes (6,352) 5,700 Incentive compensation 1,338 (25,093) Accrued liabilities and other 13,995 16,118 Net Cash Provided by Operating Activities 105,302 71,079 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (129,785) (162,475) Proceeds from sales of property 5,576 4,347 Net Cash Used by Investing Activities (124,209) (158,128) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt -- 98,890 Repayment of long-term debt and capital lease obligations (2,356) (1,884) Net borrowings under revolving lines of credit 72,000 8,000 Proceeds from issuance of common stock 948 2,402 Payments of common dividends (8,796) (7,982) Payments of preferred dividends (6,170) (8,431) Net Cash Provided by Financing Activities 55,626 90,995 Increase in Cash and Cash Equivalents 36,719 3,946 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 123,064 $ 99,657 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 second quarter and six months revenues increased 6.1% and 4.1%, respectively, compared with the same periods in the prior year. Second quarter revenues increased at all three operating units while the six-month revenue increase came from Con-Way Transportation Services (Con- Way) and Emery Worldwide which offset slightly lower six month revenues at CF MotorFreight (CFMF). Much of the first half revenue increase came from a late second quarter surge of business as the first quarter of 1996 yielded only a marginal improvement over the prior year. Operating income for the second quarter was down 19.1% from the prior year while the six-month operating income was down 50.5%. Operating income for the second quarter was up at both Con-Way and Emery. CFMF had an operating loss for both the quarter and six months ended June 30, 1996 compared to operating income in the same periods in the prior year. Despite the decline in operating income compared to the prior year, second quarter operating income increased $28.3 million from the first quarter of 1996 reflecting reduced operating losses at CFMF and an improved business environment. PAGE 8 Other expense, net increased for the second quarter and first half of the year compared to the same periods in the prior year due primarily to increased interest expense on additional borrowings under the Company's unsecured credit facilities and on the $100 million 7.35% Notes issued in June of 1995. The effective income tax rate for both the second quarter and first six months of 1996 increased to approximately 52% from 46% in the respective periods in the prior year as a result of a relatively higher proportion of non-deductible items to taxable income compared with the prior year. Significant variations in segment revenues and operating income are as follows. CF MOTORFREIGHT CFMF second quarter revenues increased 1.5% from the prior year while six month revenues were down 2.2%. Tonnage for the quarter and six months was down 2.4% and 7.2%, respectively, with less-than-truckload (LTL) tonnage down .5% for the quarter and 4.4% for the six months compared to last year. Since the implementation of its freight flow improvement plan, Business Accelerator System (BAS), in the fourth quarter of 1995, much of the revenue improvement from the fourth quarter is a result of continued restoration of volumes by way of increased customer acceptance of the improved service. Also contributing to improved revenues for the quarter are increased revenues from the operations of Menlo Logistics which are combined with CFMF for reporting purposes. The operating loss for the second quarter was $9.7 million compared to operating income of $2.3 million for the second quarter of 1995, but improved by $11.6 million compared to the first quarter of 1996. The first half of 1996 operating loss was $30.9 million compared to operating income of $12.5 million for the same period last year. Improved system utilization in the second quarter contributed to reduced operating losses compared with the previous two quarters. The losses in the second quarter were due in part to higher fuel costs of about $3 million and a 3.5% contractual labor wage and benefit increase beginning April 1, 1996. Included in operating results of CFMF is operating income from Canadian subsidiaries and Menlo Logistics totaling $5.9 million in the second quarter and $9.5 million in the six-month period compared with $3.2 million and $6.5 million in the respective periods in the prior year. Since the implementation of BAS, management has steadily increased the system utilization with increased volumes and has reduced costs by increasing dock and city pickup and delivery productivity. Achieving improved results of operations is dependent on continuing the restoration of business levels lost during implementation of BAS to fully utilize the freight flow system and further improve productivity and cost controls throughout the operation. Management strategies are focused on achieving improved results of operations by improving customer confidence in BAS with superior service while continuing programs to reduce costs in the system. PAGE 9 CON-WAY TRANSPORTATION SERVICES Con-Way second quarter revenues increased 9.9% compared with the same period in the prior year as did the revenues for the first half of 1996. Tonnage was up 8.7% in the quarter and 6.6% for the six-month period compared to the same periods in the prior year with LTL tonnage up 5.5% and 5.8% for the respective periods. Despite continued rate discounting by competitors attempting to capture market share, revenue improvements were almost equally attributable to both increased weight and higher rate levels compared with the prior year periods. Operating income for the second quarter increased 6.3% from the prior year quarter while operating income in the six months ended June 30 was down 11.7%. The second quarter operating income improved in part by not sacrificing rates to achieve greater tonnage growth. Payroll and fuel cost increases were more than offset by improved volumes, improved system utilization in new markets and other operating efficiencies. Fuel costs were up approximately $2 million and $3 million for the second quarter and first six months of 1996, respectively, compared to the prior year. Con-Way management intends to continue with the strategies that yielded improvements during the second quarter of the year. These strategies include seeking to maintain pricing levels commensurate with Con-Way's superior service levels, aggressive marketing programs emphasizing a full complement of service offerings and continued emphasis on cost reductions. EMERY WORLDWIDE Emery second quarter revenues increased 9.9% from the prior year quarter and six-month revenues increased 9.1% over the prior year. Most of the revenue increase was caused by strong second quarter growth in domestic revenues while international revenues increased less year-to-year because of lower increases in US imports and volumes in Europe. The domestic and international weight increases for the quarter were 17.0% and 9.3%, respectively, and the domestic and international increases for the six months ended June 30 were 13.7% and 10.5%, respectively, in each case compared to the same periods in 1995. For both periods, rates were down about 3% compared to the corresponding 1995 periods. Operating income for the second quarter increased 5.6% compared to the second quarter last year and six-month operating income declined 1.8% from the same period in the prior year. Operating income improved in the quarter because of increased revenues, reductions in airhaul and terminal costs and improved utilization of the freight system after a slow start in the first quarter. Both the quarter and six-month periods were adversely affected by higher fuel costs of $4.1 million and $8.0 million, respectively, which were offset by the absence of cargo excise taxes of about $4.0 million and $7.0 million, respectively. PAGE 10 Emery management continues to work toward improving revenue with expansions of service offerings that provide more time-definite and new express services, including an array of North American service offerings and new European and Asian services to meet customer demands. These enhancements include a new guaranteed 09:30 Service, Time-Definite Deferred Service and expanded regional hub network. Management is also continuing efforts to reduce international airhaul and agent costs as well as improve utilization of its domestic freight system, efforts that contributed to improved results in the second quarter of 1996. Although fuel costs began to decline in the second quarter and into July of 1996, management anticipates a reinstatement of the cargo excise tax in August that will offset some of the fuel cost savings. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1996, the Company had $123.1 million in cash and cash equivalents. Net cash flow from operations during the first half of 1996 of $105.3 million was primarily the result of income from operations and depreciation and amortization. Capital expenditures for the six months ended June 30, 1996, were $129.8 million, a decrease of $32.7 million from the same period in 1995. Debt repayment and preferred dividend requirements during the first half of 1996 were $8.5 million. The Company borrowed $72.0 million under various bank lines to finance its obligations bringing the total borrowings under unsecured lines of credit to $122.0 million. The Company intends to fund the remaining capital expenditure requirements for the year with cash from operations supplemented by financing arrangements. At June 30, 1996, $113.9 million of letters of credit were outstanding under the Company's $300 million unsecured credit facility. In addition, $77.6 million of letters of credit were outstanding and secured with Emery receivables under the $100 million Emery receivables sale facility. Also at June 30, 1996, $40.4 million of letters of credit were outstanding under several unsecured letter of credit facilities. Under the above facilities and other offered lines of credit, the Company has $157.3 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; PAGE 11 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 6. Exhibits and Reports on Form 8-K (a) Exhibits (10) Material Contracts 10.1 Consolidated Freightways, Inc. Special Bonus 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 June 30, 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) August 12, 1996 /s/Gregory L. Quesnel Gregory L. Quesnel Executive Vice President and Chief Financial Officer August 12, 1996 /s/Gary D. Taliaferro Gary D. Taliaferro Vice President and Controller EX-10 2 EXHIBIT 10.1 Exhibit 10.1 CONSOLIDATED FREIGHTWAYS, INC. SPECIAL BONUS PLAN FOR 1996 THE PLAN In order to motivate certain key employees more effectively, Consolidated Freightways, Inc. (CF, Inc.) establishes a Special Bonus Plan for 1996 (Plan) under which payments will be made to designated executive personnel out of calendar year 1996 profits. DESIGNATION OF PARTICIPANTS Participants in this Plan shall be designated full-time executive personnel of CF, Inc. subsidiaries. A master list of all Plan participants will be maintained in the office of the Chief Financial Officer of CF, Inc. METHOD OF PAYMENT Each Plan participant will be assigned specific Operating Profit Ratio (O/R) performance goals. Compensation for the assigned goals will be earned on a pro rata basis for accomplishments between the Minimum level and the Target O/R Goal. No special 1996 bonus will be earned by a participant until the Minimum O/R Goal is achieved. For 1996, payments under this Plan are limited to 50 percent of each participant's annual compensation. OPERATING RATIO Operating Ratio is defined as: 1) operating expense before taxes, interest and non-operating expenses, but, including all amounts expensed under any qualified incentive and bonus plans; divided by 2) net revenue. Since this Plan begins on July 1, 1996, results for the third and fourth quarter only will be used. ANNUAL COMPENSATION Annual Compensation for Bonus Plan purposes for each Plan participant is annualized salary (ie. weekly base salary as of July 1, 1996 multiplied by 52) excluding 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 includes deferred salary arrangements wherein the participant could have chosen to receive the deferred salary in the Plan year. ELIGIBILITY FOR PAYMENT Eligible employees will commence participation on July 1, 1996. An employee who commences participation after the July 1 date 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. DATE OF PAYMENT The Chief Executive Officer of CF, Inc. will select a date for payment to eligible participants. Such date will be no later than March 15, 1997. 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 Compensation Committee of 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 have any right to receive any payment under this Plan until the date for payment. DURATION OF PLAN This Plan is effective from July 1, 1996 through December 31, 1996 only. 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 1996 1995 1996 1995 (Dollars in thousands except per share data) Net income available to common shareholders $ 11,473 $ 20,086 $ 9,619 $ 39,928 Non-discretionary adjustments under the if-converted method: Addback: Series C, preferred dividends - - - 2,207 Addback: Series B, preferred dividends, net of tax benefits 2,183 2,141 4,317 4,258 Less: Replacement of funding adjustment, net of tax benefits (1) (1,633) (1,655) (3,301) (3,286) Net income available to common shareholders $ 12,023 $ 20,572 $ 10,635 $ 43,107 WEIGHTED AVERAGE SHARES OUTSTANDING: Common shares 44,004,494 43,417,331 43,976,483 43,346,424 Equivalents - stock options 871,674 973,015 922,080 929,698 Series B, Preferred stock if-converted method 4,473,885 4,364,104 4,473,885 4,364,104 49,350,053 48,754,450 49,372,448 48,640,226 FULLY DILUTED EARNINGS PER SHARE (2) $ 0.24 $ 0.42 $ 0.22 $ 0.89 (1) Additional payment to the Company's Thrift and Stock Plan to replace the funding lost under the if-converted method. (2) Fully diluted earnings per share was reported at $.21 per share on the Statement of Consolidated Income for the six months ended June 30, 1996, as this computation indicates that the items included under the if-converted method were anti-dilutive.
EX-12 4 EXHIBIT 12 Exhibit 12
CONSOLIDATED FREIGHTWAYS, INC. COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES Six Months Ended June 30, Year Ended December 31, 1996 1995 1995 1994 1993 1992 1991 (Dollars in thousands) Fixed Charges: Interest Expense $ 19,990 $ 15,418 $ 34,325 $ 27,945 $ 30,333 $ 38,893 $ 46,703 Capitalized Interest 1,201 475 1,092 1,042 1,224 543 1,703 Preferred Dividends 6,170 6,224 12,419 12,475 12,551 12,618 12,691 Total Interest 27,361 22,117 47,836 41,462 44,108 52,054 61,097 Interest Component of Rental Expense 35,293 37,429 73,004 62,304 57,585 55,773 58,052 Total Fixed Charges 62,654 59,546 120,840 103,766 101,693 107,827 119,149 Less: Capitalized Interest 1,201 475 1,092 1,042 1,224 543 1,703 Preferred Dividends 6,170 6,224 12,419 12,475 12,551 12,618 12,691 Net Fixed Charges $ 55,283 $ 52,847 $ 107,329 $ 90,249 $ 87,918 $ 94,666 $ 104,755 Earnings: Income (Loss) Before Income Taxes $ 28,994 $ 85,913 $ 110,873 $ 111,920 $ 91,441 $ (10,733) $ (43,337) Add: Net Fixed Charges 55,283 52,847 107,329 90,249 87,918 94,666 104,755 Total Earnings $ 84,277 $ 138,760 $ 218,202 $ 202,169 $ 179,359 $ 83,933 $ 61,418 Ratio of Earnings to Fixed Charges: Total Earnings $ 84,277 $ 138,760 $ 218,202 $ 202,169 $ 179,359 $ 83,933 $ 61,418 Fixed Charges (1) 62,654 59,546 120,840 103,766 101,693 107,827 119,149 Ratio 1.3 x 2.3 x 1.8 x 1.9 x 1.8 x 0.8 x(2) 0.5X(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 $23.9 million and $57.7 million for the years ended December 31, 1992 and 1991, respectively.
EX-27 5 EXHIBIT 27
5 1000 6-MOS DEC-31-1996 JUN-30-1996 123,064 0 816,750 (24,706) 39,524 1,204,415 2,278,163 (1,146,027) 2,876,168 1,076,507 492,350 0 143,932 272,798 307,263 2,876,168 0 2,723,005 0 2,673,358 20,653 3,059 19,990 28,994 15,058 13,936 0 0 0 9,619 0.21 0.21
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