0000912057-95-006105.txt : 19950810
0000912057-95-006105.hdr.sgml : 19950810
ACCESSION NUMBER: 0000912057-95-006105
CONFORMED SUBMISSION TYPE: S-4/A
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 19950809
SROS: NYSE
SROS: PSE
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: S-4/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 033-60625
FILM NUMBER: 95559805
BUSINESS ADDRESS:
STREET 1: 3240 HILLVIEW AVE
CITY: PALO A LTO
STATE: CA
ZIP: 94304
BUSINESS PHONE: 4154942900
S-4/A
1
S-4/A
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 9, 1995.
REGISTRATION NO. 33-60625
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
CONSOLIDATED FREIGHTWAYS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 4213 94-1444798
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
3240 HILLVIEW AVENUE
PALO ALTO, CALIFORNIA 94304
(415) 494-2900
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
---------------------
EBERHARD G. H. SCHMOLLER
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
CONSOLIDATED FREIGHTWAYS, INC.
3240 HILLVIEW AVENUE
PALO ALTO, CALIFORNIA 94304
(415) 494-2900
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
---------------------
WITH COPIES TO:
Eric S. Haueter William H. Hinman, Jr.
Brown & Wood Shearman & Sterling
555 California Street 555 California Street
San Francisco, California 94104 San Francisco, California 94104
(415) 772-1200 (415) 616-1100
(415) 397-4621 (fax) (415) 616-1199 (fax)
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
---------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
7.35% Notes due 2005.................. $100,000,000 100% $100,000,000 $34,482.76(2)
(1) Estimated solely for the purpose of computing the registration fee.
(2) Paid previously.
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CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K Showing
the Location of Information Required by Part I of Form S-4
ITEM NO. CAPTION LOCATION IN PROSPECTUS
---------- --------------------------------------------------- ------------------------------------------------------
Item 1. Forepart of Registration Statement and Outside
Front Cover Page of
Prospectus........................................ Facing Page of the Registration Statement; Outside
Front Cover Page of the Prospectus
Item 2. Inside Front and Outside Back Cover Pages of
Prospectus........................................ Available Information; Incorporation of Certain
Documents by Reference
Item 3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information............................. Incorporation of Certain Documents by Reference;
Summary; Selected Consolidated Financial Data; The
Exchange Offer
Item 4. Terms of the Transaction........................... Summary; The Exchange Offer; Description of the New
Notes; Description of the Old Notes; Certain United
States Federal Income Tax Considerations
Item 5. Pro Forma Financial Information.................... *
Item 6. Material Contracts with the Company Being
Acquired.......................................... *
Item 7. Additional Information Required for Reoffering by
Persons and Parties Deemed to Be Underwriters..... *
Item 8. Interest of Named Experts and Counsel.............. *
Item 9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.... *
Item 10. Information with Respect to S-3 Registrants........ Available Information; Incorporation of Certain
Documents by Reference
Item 11. Incorporation of Certain Information by
Reference......................................... Incorporation of Certain Documents by Reference
Item 12. Information with Respect to S-2 or S-3
Registrants....................................... *
Item 13. Incorporation of Certain Information by
Reference......................................... *
Item 14. Information with Respect to Registrants Other than
S-2 or S-3 Registrants............................ *
Item 15. Information with Respect to S-3 Companies.......... *
Item 16. Information with Respect to S-2 or S-3 Companies... *
Item 17. Information with Respect to Companies Other than
S-2 or S-3 Companies.............................. *
Item 18. Information if Proxies, Consents or Authorizations
are to be Solicited............................... *
Item 19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange Offer... The Exchange Offer
------------------------
* Omitted because the item is inapplicable or the answer is negative.
PROSPECTUS
-------------
CONSOLIDATED FREIGHTWAYS, INC.
OFFER TO EXCHANGE ITS
7.35% NOTES DUE 2005
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
7.35% NOTES DUE 2005
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 8, 1995, UNLESS EXTENDED.
-------------------
Consolidated Freightways, Inc., a Delaware corporation (the "Company"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus (as the same may be amended or supplemented from time to time, the
"Prospectus") and in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange up to $100,000,000 aggregate
principal amount of its 7.35% Notes due 2005 (the "New Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for a like principal amount of its outstanding
7.35% Notes due 2005 (the "Old Notes"), of which $100,000,000 aggregate
principal amount is outstanding.
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except that (i) the New Notes have been registered under
the Securities Act and therefore will not be subject to certain restrictions on
transfer applicable to the Old Notes and will not be entitled to registration
rights, (ii) the New Notes are issuable in minimum denominations of $1,000
compared to minimum denominations of $250,000 for the Old Notes, and (iii) the
New Notes will not provide for any increase in the interest rate thereon. In
that regard, the Old Notes provide that, if the Exchange Offer is not
consummated by October 29, 1995, the interest rate borne by the Old Notes will
increase by 0.25% per annum following October 29, 1995 until the Exchange Offer
is consummated. See "Description of the Old Notes." The New Notes are being
offered for exchange in order to satisfy certain obligations of the Company
under the Registration Rights Agreement dated as of June 1, 1995 (the
"Registration Rights Agreement") between the Company and the Initial Purchasers
(as defined herein) of the Old Notes. The New Notes will be issued under the
same Indenture (as defined herein) as the Old Notes and the New Notes and the
Old Notes will constitute a single series of debt securities under the
Indenture. In the event that the Exchange Offer is consummated, any Old Notes
which remain outstanding after consummation of the Exchange Offer and the New
Notes issued in the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding principal amount of Notes (as defined herein) have taken certain
actions or exercised certain rights under the Indenture. The New Notes and the
Old Notes are collectively referred to herein as the "Notes." See "Description
of the New Notes" and "Description of the Old Notes."
Interest on the New Notes is payable semiannually on June 1 and December 1
of each year (each, an "Interest Payment Date"), commencing on the first such
date following the original issuance date of the New Notes. The New Notes will
mature on June 1, 2005. The New Notes are not entitled to any sinking fund and
are not redeemable prior to maturity. The New Notes will constitute unsecured,
unsubordinated indebtedness of the Company and will rank PARI PASSU in right of
payment with all other unsecured and unsubordinated indebtedness of the Company
for borrowed money. Because the Company is a holding company, the New Notes will
be effectively subordinated in right of payment to all existing and future
indebtedness, trade payables, guarantees, lease obligations and letter of credit
obligations of the Company's subsidiaries. See "Capitalization" and "Description
of the New Notes -- Ranking; Holding Company Structure."
--------------------------
(CONTINUED ON FOLLOWING PAGE)
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is August 9, 1995.
The Company is making the Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of the Securities and Exchange
Commission (the "Commission") as set forth in certain interpretive letters
addressed to third parties in other transactions. However, the Company has not
sought its own interpretive letter and there can be no assurance that the staff
of the Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance, and subject to the two immediately following
sentences, the Company believes that New Notes issued pursuant to this Exchange
Offer in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Notes. However, any holder of Old Notes who is an "affiliate" of the
Company or who intends to participate in the Exchange Offer for the purpose of
distributing New Notes, or any broker-dealer who purchased Old Notes from the
Company to resell pursuant to Rule 144A under the Securities Act ("Rule 144A")
or any other available exemption under the Securities Act, (a) will not be able
to rely on the interpretations of the staff of the Division of Corporation
Finance of the Commission set forth in the above-mentioned interpretive letters,
(b) will not be permitted or entitled to tender such Old Notes in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Notes unless such sale is made pursuant to an exemption from such
requirements. In addition, as described below, if any broker-dealer holds Old
Notes acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Notes for New Notes, then such broker-dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Notes.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that (i) it is not an
"affiliate" of the Company, (ii) any New Notes to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes, and (iv) if such holder is not
a broker-dealer, such holder is not engaged in, and does not intend to engage
in, a distribution (within the meaning of the Securities Act) of such New Notes.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, the Company believes that broker-dealers who acquired Old
Notes for their own accounts, as a result of market-making activities or other
trading activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Notes received upon exchange of
such Old Notes (other than Old Notes which represent an unsold allotment from
the original sale of the Old Notes) with a prospectus meeting the requirements
of the Securities Act, which may be the prospectus prepared for an exchange
offer so long as it contains a description of the plan of distribution with
respect to the resale of such New Notes. Accordingly, this Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
New Notes received in exchange for Old Notes where such Old Notes were acquired
by such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, the Company has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Notes
for a period ending 90 days after the Expiration Date referred to below (subject
to extension under certain limited circumstances described below) or, if
earlier, when all such New Notes have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Company may not rely on such interpretive letters and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. See "The Exchange
Offer -- Resales of New Notes."
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit
2
to state a material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of New Notes pursuant to this Prospectus until the Company has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer or the Company has given notice that the sale of the
New Notes may be resumed, as the case may be. If the Company gives such notice
to suspend the sale of the New Notes, it shall extend the 90-day period referred
to above during which Participating Broker-Dealers are entitled to use this
Prospectus in connection with the resale of New Notes by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the New Notes or to and including the date on which the Company has given notice
that the sale of New Notes may be resumed, as the case may be.
The New Notes will be a new issue of securities for which there currently is
no market. Although the Initial Purchasers have informed the Company that they
each currently intend to make a market in the New Notes, they are not obligated
to do so, and any such market making may be discontinued at any time without
notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the New Notes. The Company currently does not intend
to apply for listing of the New Notes on any securities exchange or for
quotation through the National Association of Securities Dealers Automated
Quotation System.
Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same rights and will be subject to
the same limitations applicable thereto under the Indenture (except for those
rights which terminate upon consummation of the Exchange Offer). Following
consummation of the Exchange Offer, the holders of Old Notes will continue to be
subject to the existing restrictions upon transfer thereof and the Company will
have no further obligation to such holders (other than to the Initial Purchasers
under certain limited circumstances) to provide for registration under the
Securities Act of the Old Notes held by them. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Notes could be adversely affected. See "Summary -- Certain
Consequences of a Failure to Exchange Old Notes."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
Old Notes may be tendered for exchange on or prior to 5:00 p.m., New York
City time, on September 8, 1995 (such time on such date being hereinafter called
the "Expiration Date"), unless the Exchange Offer is extended by the Company (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). Tenders of Old Notes may be withdrawn at
any time on or prior to the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Company and to the terms and provisions of
the Registration Rights Agreement. Old Notes may be tendered in whole or in part
in a principal amount of $1,000 and integral multiples thereof, provided that if
any Old Note is tendered for exchange in part, the untendered principal amount
thereof must be $250,000 or any integral multiple of $1,000 in excess thereof.
The Company has agreed to pay all expenses of the Exchange Offer. See "The
Exchange Offer -- Fees and Expenses". Each New Note will bear interest from the
most recent date to which interest has been paid or duly provided for on the Old
Note surrendered in exchange for such New Note or, if no such interest has been
paid or duly provided for on such Old Note, from June 1, 1995. Holders of the
Old Notes whose Old Notes are accepted for exchange will not receive accrued
interest on such Old Notes for any period from and after the last Interest
Payment Date to which interest has been paid or duly provided for on such Old
Notes prior to the original issue date of the New Notes or, if no such interest
has been paid or duly provided for, will not receive any accrued interest on
such Old Notes, and will be deemed to have waived the right to receive any
interest on such Old Notes accrued from and after such Interest Payment Date or,
if no such interest has been paid or duly provided for, from and after June 1,
1995.
This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Old Notes as of August 9, 1995.
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. No dealer-manager is being used in connection with this
Exchange Offer. See "Use of Proceeds" and "Plan of Distribution."
3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the Commission's Regional Offices in New York City (Seven
World Trade Center, 13th Floor, New York, New York 10048), and Chicago (Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). Copies of
these materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Reports, proxy statements and other information concerning the Company may also
be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005 and at the offices of the Pacific Stock Exchange, 301 Pine
Street, San Francisco, California 94104.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments thereto, the "Registration Statement") filed by
the Company with the Commission under the Securities Act. This Prospectus, which
forms a part of the Registration Statement, does not contain all the information
set forth in the Registration Statement, certain parts of which have been
omitted in accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and related exhibits and
schedules filed therewith for further information with respect to the Company
and the New Notes offered hereby. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed or incorporated by
reference as an exhibit to the Registration Statement or otherwise filed by the
Company with the Commission and each such statement is qualified in its entirety
by such reference. The Registration Statement and the exhibits and schedules
thereto may be inspected and copied at the public reference facilities
maintained by the Commission at the addresses described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by the Company
pursuant to the Exchange Act are incorporated herein by reference: (i) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994; and (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the Exchange Offer for the New Notes shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement or document so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus. Subject to the foregoing, all
information appearing in this Prospectus is qualified in its entirety by the
information appearing in the documents incorporated herein by reference.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any and all of the documents
incorporated by reference other than exhibits to such documents which are not
specifically incorporated by reference in such documents. Written or telephone
requests should be directed to: Consolidated Freightways, Inc., Office of the
Corporate Secretary, at 3240 Hillview Avenue, Palo Alto, California 94304
(telephone (415) 494-2900).
4
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND IS SUBJECT TO,
THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS CONTAINED ELSEWHERE AND
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED OR
UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES IN THIS PROSPECTUS TO THE
COMPANY INCLUDE CONSOLIDATED FREIGHTWAYS, INC. AND ITS SUBSIDIARIES.
THE COMPANY
Consolidated Freightways, Inc. (the "Company") is a holding company which
participates through subsidiaries in various forms of nationwide and regional
trucking services, truckload and intermodal rail services, domestic and
international air cargo delivery services, contract logistics and related
transportation activities. These operations are organized into three primary
business groups: nationwide, full-service trucking (CF MotorFreight); regional
trucking and full-service truckload services (Con-Way); and air freight (Emery
Worldwide).
CF MOTORFREIGHT
CF MotorFreight provides general freight services nationwide and in Canada
and, on a limited basis, in Mexico, the Caribbean area, Central and South
America, Europe and the Pacific Rim. Operations consist of an extensive
transportation network moving freight that typically consists of shipments of
manufactured or non-perishable processed products having relatively high value
and requiring expedited service. The primary business of CF MotorFreight is
transporting freight that is less-than-truckload ("LTL"), an industry
designation for shipments weighing less than 10,000 pounds. Based on its 1994
revenues of $2,094.1 million, CF MotorFreight is one of the nation's largest LTL
motor carriers.
CON-WAY TRANSPORTATION SERVICES
Con-Way includes three business units that provide regional LTL freight
trucking and one business unit that provides full-service truckload freight
delivery utilizing over-the-road and intermodal rail resources for
transcontinental, inter-regional and regional transportation. Con-Way also
provides local and interstate container drayage and freight assembly and
distribution services. Con-Way's 1994 revenues were $1,018.5 million.
EMERY WORLDWIDE
Emery Worldwide provides commercial door-to-door delivery for same-day,
next-day, second-day and deferred shipments in North America through a dedicated
aircraft and ground fleet. Internationally, with offices and agents in 89
countries, Emery Worldwide operates primarily as a freight forwarder. Emery
Worldwide is focused primarily on heavy air freight. Emery Worldwide was formed
when the Company purchased Emery Air Freight Corporation in April 1989 and
merged it with the Company's existing air freight operation. Emery Worldwide's
1994 revenues were $1,567.9 million.
The Company was incorporated in Delaware in 1958 as a successor to a
business originally established in 1929. The Company's principal executive
office is located at 3240 Hillview Avenue, Palo Alto, California 94304
(telephone (415) 494-2900).
5
THE EXCHANGE OFFER
The Exchange Offer................ Up to $100,000,000 aggregate principal amount of New
Notes are being offered in exchange for a like aggregate
principal amount of Old Notes. Old Notes may be tendered
for exchange in whole or in part in a principal amount
of $1,000 and integral multiples thereof, provided that
if any Old Note is tendered for exchange in part, the
untendered principal amount thereof must be $250,000 or
any integral multiple of $1,000 in excess thereof. The
Company is making the Exchange Offer in order to satisfy
its obligations under the Registration Rights Agreement
relating to the Old Notes. For a description of the
procedures for tendering Old Notes, see "The Exchange
Offer -- Procedures for Tendering Old Notes."
Expiration Date................... 5:00 p.m., New York City time, on September 8, 1995
(such time on such date being hereinafter called the
"Expiration Date") unless the Exchange Offer is extended
by the Company (in which case the term "Expiration Date"
shall mean the latest date and time to which the
Exchange Offer is extended). See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Certain Conditions to the Exchange
Offer............................ The Exchange Offer is subject to certain conditions. The
Company reserves the right in its sole and absolute
discretion, subject to applicable law, at any time and
from time to time, (i) to delay the acceptance of the
Old Notes for exchange, (ii) to terminate the Exchange
Offer if certain specified conditions have not been
satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Notes tendered
pursuant to the Exchange Offer, subject, however, to the
right of holders of Old Notes to withdraw their tendered
Old Notes, or (iv) to waive any condition or otherwise
amend the terms of the Exchange Offer in any respect.
See "The Exchange Offer -- Expiration Date; Extensions;
Amendments" and "-- Certain Conditions to the Exchange
Offer."
Withdrawal Rights................. Tenders of Old Notes may be withdrawn at any time on or
prior to the Expiration Date by delivering a written
notice of such withdrawal to the Exchange Agent in
conformity with certain procedures set forth below under
"The Exchange Offer -- Withdrawal Rights."
Procedures for Tendering Old
Notes............................ Tendering holders of Old Notes must complete and sign a
Letter of Transmittal in accordance with the
instructions contained therein and forward the same by
mail, facsimile or hand delivery, together with any
other required documents, to the Exchange Agent (as
defined below), either with the Old Notes to be tendered
or in compliance with the specified procedures for
guaranteed delivery of Old Notes. Certain brokers,
dealers, commercial banks, trust companies and other
nominees may also effect tenders by book-entry transfer.
Holders of Old Notes registered in the name of a broker,
dealer, commercial bank, trust company or other nominee
are urged to contact such person promptly if they wish
to tender Old Notes pursuant to the
6
Exchange Offer. See "The Exchange Offer -- Procedures
for Tendering Old Notes." Letters of Transmittal and
certificates representing Old Notes should not be sent
to the Company. Such documents should only be sent to
the Exchange Agent. Questions regarding how to tender
and requests for information should be directed to the
Exchange Agent. See "The Exchange Offer -- Exchange
Agent."
Resales of New Notes.............. The Company is making the Exchange Offer in reliance on
the position of the staff of the Division of Corporation
Finance of the Commission as set forth in certain
interpretive letters addressed to third parties in other
transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance
that the staff of the Division of Corporation Finance of
the Commission would make a similar determination with
respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these
interpretations by the staff of the Division of
Corporation Finance, and subject to the two immediately
following sentences, the Company believes that New Notes
issued pursuant to this Exchange Offer in exchange for
Old Notes may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such
holder's business and that such holder is not
participating, and has no arrangement or understanding
with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New
Notes. However, any holder of Old Notes who is an
"affiliate" of the Company or who intends to participate
in the Exchange Offer for the purpose of distributing
the New Notes, or any broker-dealer who purchased the
Old Notes from the Company to resell pursuant to Rule
144A or any other available exemption under the
Securities Act, (a) will not be able to rely on the
interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be
permitted or entitled to tender such Old Notes in the
Exchange Offer and (c) must comply with the registration
and prospectus delivery requirements of the Securities
Act in connection with any sale or other transfer of
such Old Notes unless such sale is made pursuant to an
exemption from such requirements. In addition, as
described below, if any broker-dealer holds Old Notes
acquired for its own account as a result of
market-making or other trading activities and exchanges
such Old Notes for New Notes, then such broker-dealer
must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales of
such New Notes.
Each holder of Old Notes who wishes to exchange Old
Notes for New Notes in the Exchange Offer will be
required to represent that (i) it is not an "affiliate"
of the Company, (ii) any New Notes to be received by it
are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within
the meaning of the
7
Securities Act) of such New Notes, and (iv) if such
holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act)
of such New Notes. Each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer
must acknowledge that it acquired the Old Notes for its
own account as the result of market-making activities or
other trading activities and must agree that it will
deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New
Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division
of Corporation Finance of the Commission in the
interpretive letters referred to above, the Company
believes that broker-dealers who acquired Old Notes for
their own accounts as a result of market-making
activities or other trading activities ("Participating
Broker-Dealers") may fulfill their prospectus delivery
requirements with respect to the New Notes received upon
exchange of such Old Notes (other than Old Notes which
represent an unsold allotment from the original sale of
the Old Notes) with a prospectus meeting the
requirements of the Securities Act, which may be the
prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with
respect to the resale of such New Notes. Accordingly,
this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes
were acquired by such Participating Broker-Dealer for
its own account as a result of market-making or other
trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement and to the
limitations described below under "The Exchange Offer --
Resale of New Notes", the Company has agreed that this
Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New
Notes for a period ending 90 days after the Expiration
Date (subject to extension under certain limited
circumstances) or, if earlier, when all such New Notes
have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate" of the
Company may not rely on such interpretive letters and
must comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. See "The
Exchange Offer -- Resales of New Notes."
Exchange Agent.................... The exchange agent with respect to the Exchange Offer is
Bank One, Columbus, NA (the "Exchange Agent"). The
addresses, and telephone and facsimile numbers of the
Exchange Agent are set forth in "The Exchange Offer --
Exchange Agent" and in the Letter of Transmittal.
8
Use of Proceeds................... The Company will not receive any cash proceeds from the
issuance of the New Notes offered hereby. See "Use of
Proceeds."
Certain United States Federal
Income Tax Considerations........ Holders of Old Notes should review the information set
forth under "-- Certain United States Federal Income Tax
Considerations" prior to tendering Old Notes in the
Exchange Offer.
THE NEW NOTES
Securities Offered................ Up to $100,000,000 aggregate principal amount of the
Company's 7.35% Notes due 2005 which have been
registered under the Securities Act.
The New Notes will be issued and the Old Notes were
issued under an Indenture dated as of August 1, 1989
(the "Indenture") between the Company and Bank One,
Columbus, NA, as successor trustee (the "Trustee"). The
New Notes and any Old Notes which remain outstanding
after consummation of the Exchange Offer will constitute
a single series of debt securities under the Indenture
and, accordingly, will vote together as a single class
for purposes of determining whether holders of the
requisite percentage in outstanding principal amount
thereof have taken certain actions or exercised certain
rights under the Indenture. See "Description of the New
Notes -- General."
The terms of the New Notes are identical in all material
respects to the terms of the Old Notes, except that (i)
the New Notes have been registered under the Securities
Act and therefore are not subject to certain
restrictions on transfer applicable to the Old Notes and
will not be entitled to registration rights or other
rights under the Registration Rights Agreement, (ii) the
New Notes are issuable in minimum denominations of
$1,000 compared to minimum denominations of $250,000 for
the Old Notes and (iii) the New Notes will not provide
for any increase in the interest rate thereon. See "The
Exchange Offer -- Purpose of the Exchange Offer,"
"Description of the New Notes" and "Description of the
Old Notes."
Maturity Date..................... June 1, 2005.
Interest Payment Dates............ June 1 and December 1 of each year, commencing on the
first such date following the original issuance of the
New Notes.
Denominations..................... The New Notes will be issued in minimum denominations of
$1,000 and integral multiples of $1,000 in excess
thereof.
Redemption........................ The New Notes may not be redeemed prior to maturity.
Sinking fund...................... None.
Ranking........................... The New Notes will constitute unsecured unsubordinated
indebtedness of the Company and will rank PARI PASSU in
right of payment with all other unsecured and
unsubordinated indebtedness of the Company for borrowed
money. Because the Company is a holding company, the New
Notes will be effectively subordinated in right of
payment to all existing and future indebtedness, trade
payables, guarantees, lease obligations and
9
letter of credit obligations of the Company's
subsidiaries. As of March 31, 1995, the Company's
subsidiaries had approximately $133 million of
outstanding indebtedness and obligations under capital
leases and approximately $88 million of outstanding
undrawn letters of credit. In addition, certain
subsidiaries are guarantors under the Company's $300
million bank credit facility (the "Credit Agreement").
At December 31, 1994, the Company's subsidiaries were
subject to long-term non-cancelable operating leases
requiring future minimum lease payments of approximately
$501 million. See "Capitalization" and "Description of
the New Notes -- Ranking; Holding Company Structure."
Absence of Market for the New
Notes............................ The New Notes will be a new issue of securities for
which there currently is no market. Although Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., J.P. Morgan
Securities Inc., and Salomon Brothers Inc, the initial
purchasers of the Old Notes (the "Initial Purchasers"),
have informed the Company that they each currently
intend to make a market in the New Notes, they are not
obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly,
there can be no assurance as to the development or
liquidity of any market for the New Notes. The Company
currently does not intend to apply for listing of the
New Notes on any securities exchange or for quotation
through the National Association of Securities Dealers
Automated Quotation System.
FOR FURTHER INFORMATION REGARDING THE NEW NOTES, SEE "DESCRIPTION OF THE NEW
NOTES."
10
CERTAIN CONSEQUENCES OF A FAILURE TO EXCHANGE OLD NOTES
The Old Notes have not been registered under the Securities Act or any state
securities laws and therefore may not be offered, sold or otherwise transferred
except in compliance with the registration requirements of the Securities Act
and any other applicable securities laws, or pursuant to an exemption therefrom
or in a transaction not subject thereto, and in each case in compliance with
certain other conditions and restrictions, including the Company's and the
Trustee's right in certain cases to require the delivery of opinions of counsel,
certifications and other information prior to any such transfer. Old Notes which
remain outstanding after consummation of the Exchange Offer will continue to
bear a legend reflecting such restrictions on transfer. In addition, upon
consummation of the Exchange Offer, holders of Old Notes which remain
outstanding will not be entitled to any rights to have such Old Notes registered
under the Securities Act or to any similar rights under the Registration Rights
Agreement (subject to certain limited exceptions applicable solely to the
Initial Purchasers). The Company currently does not intend to register under the
Securities Act any Old Notes which remain outstanding after consummation of the
Exchange Offer (subject to such limited exceptions, if applicable).
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Notes could be adversely
affected. In addition, although the Old Notes are eligible for trading in the
Private Offerings, Resale and Trading through Automatic Linkages ("PORTAL")
market, to the extent that Old Notes are tendered and accepted in connection
with the Exchange Offer, any trading market for Old Notes which remain
outstanding after the Exchange Offer could be adversely affected.
The New Notes and any Old Notes which remain outstanding after consummation
of the Exchange Offer will constitute a single series of debt securities under
the Indenture and, accordingly, will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding principal amount thereof have taken certain actions or exercised
certain rights under the Indenture. See "Description of the New Notes --
General."
The Old Notes provide that, if the Exchange Offer is not consummated by
October 29, 1995, the interest rate borne by the Old Notes will increase by
0.25% per annum following October 29, 1995 until the Exchange Offer is
consummated. See "Description of the Old Notes." Following consummation of the
Exchange Offer, the Old Notes will not be entitled to any increase in the
interest rate thereon. The New Notes will not be entitled to any such increase
in the interest rate thereon.
11
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. In consideration for issuing the New Notes in exchange for
Old Notes as described in this Prospectus, the Company will receive Old Notes in
like principal amount. The Old Notes surrendered in exchange for the New Notes
will be retired and cancelled. Accordingly, the issuance of the New Notes will
not result in any change in the indebtedness of the Company.
The net proceeds to the Company from the sale of the Old Notes was
approximately $98,890,000. The Company used approximately $71 million of the net
proceeds from the sale of the Old Notes to repay short-term borrowings incurred
for capital expenditures and other general corporate purposes, and used the
remaining net proceeds for capital expenditures and other general corporate
purposes.
CAPITALIZATION
The following table sets forth (i) the current maturities of long-term debt
and capital leases and short-term borrowings of the Company as of March 31, 1995
and as adjusted to reflect the application of a portion of the estimated net
proceeds from the sale of the Old Notes to repay short-term borrowings, and (ii)
the consolidated capitalization of the Company as of March 31, 1995 and as
adjusted to reflect the sale of the Old Notes.
AS OF MARCH 31, 1995
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
(UNAUDITED)
SHORT-TERM DEBT
Current maturities of long-term debt and capital leases................................................. $ 2,174 $ 2,174
Short-term borrowings (1)............................................................................... 55,000 --
---------- -----------
Total Short-Term Debt............................................................................... $ 57,174 $ 2,174
---------- -----------
---------- -----------
LONG-TERM DEBT AND CAPITAL LEASES (NET OF CURRENT MATURITIES)
9 1/8% Notes due 1999................................................................................... $ 117,705 $ 117,705
Industrial Revenue Bonds due through 2014............................................................... 19,900 19,900
7.35% Notes due 2005.................................................................................... -- 100,000
Guaranteed TASP Notes due through 2009 (2).............................................................. 149,000 149,000
Obligations under capital leases........................................................................ 111,010 111,010
Other debt.............................................................................................. 74 74
---------- -----------
Total Long-Term Debt (3)............................................................................ 397,689 497,689
---------- -----------
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 961,032
shares............................................................................................... 10 10
Additional paid-in capital, preferred stock............................................................. 146,163 146,163
Deferred Thrift and Stock Plan compensation............................................................. (119,167) (119,167)
---------- -----------
Total Preferred Shareholders' Equity................................................................ 27,006 27,006
---------- -----------
Common Stock, $.625 par value; authorized 100,000,000 shares; issued 50,892,217 shares.................. 31,808 31,808
Additional paid-in capital, common stock................................................................ 230,229 230,229
Cumulative translation adjustment....................................................................... 2,672 2,672
Retained earnings....................................................................................... 594,726 594,726
Cost of repurchased common stock (7,589,934 shares)..................................................... (187,139) (187,139)
---------- -----------
Total Common Shareholders' Equity................................................................... 672,296 672,296
---------- -----------
Total Shareholders' Equity.......................................................................... 699,302 699,302
---------- -----------
Total Capitalization................................................................................ $1,096,991 $1,196,991
---------- -----------
---------- -----------
------------------------------
(1) Short-term borrowings consist of borrowings outstanding under the Company's
$300 million Credit Agreement.
(2) These notes (the "TASP Notes") were issued by the Company's Thrift and
Stock Plan and are guaranteed by the Company. See "Description of the Notes
-- Certain Covenants of the Company."
(3) In addition to the amounts reflected in the above table, at March 31, 1995
the Company had $110.1 million of letters of credit outstanding under the
Credit Agreement, $70.4 million of letters of credit outstanding and
secured by Emery Worldwide receivables under the $100 million Emery
Worldwide receivables sales facility, and $40.4 million of letters of
credit outstanding under several unsecured letter of credit facilities. At
that date, no drawings were outstanding under these letters of credit.
12
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Company and its subsidiaries as of and for the three months ended March 31, 1994
and 1995 and as of and for the five years ended December 31, 1994. The selected
consolidated financial data (other than the ratio of earnings to fixed charges
set forth below) as of and for the five years ended December 31, 1994 has been
derived from the Company's audited consolidated financial statements. The
selected consolidated financial data (other than the ratio of earnings to fixed
charges set forth below) as of and for the three months ended March 31, 1994 and
1995 has been derived from the Company's unaudited consolidated financial
statements. In the opinion of management, such unaudited consolidated financial
statements include all normal recurring adjustments necessary to present fairly
the information required to be set forth therein. Operating results for the
three months ended March 31, 1995 are not necessarily indicative of the results
to be expected for the year ending December 31, 1995. The following data should
be read in conjunction with the Company's consolidated financial statements and
notes thereto incorporated by reference herein. See "Available Information."
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
----------------------------- -------------------------------------------------------------
1995 1994 1994 1993 1992 1991
------------- ------------- ------------- ------------- ------------- -------------
(UNAUDITED) (DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
REVENUES
CF MotorFreight........... $ 608,425 $ 532,383 $2,094,081 $2,112,237 $2,184,190 $2,142,603
Con-Way................... 274,890 230,408 1,018,544 818,301 724,195 639,443
Emery Worldwide........... 412,772 340,430 1,567,854 1,261,273 1,147,204 1,300,211
------------- ------------- ------------- ------------- ------------- -------------
Total................... $1,296,087 $1,103,221 $4,680,479 $4,191,811 $4,055,589 $4,082,257
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
OPERATING INCOME (LOSS)
CF MotorFreight........... $ 10,123 $ 3,913 $ (46,602) $ 31,712 $ 27,485(1) $ 51,991
Con-Way................... 28,848 20,924 111,220 71,854 53,747 33,318
Emery Worldwide........... 13,062 10,647 77,616 16,591 (32,651) (83,573)
------------- ------------- ------------- ------------- ------------- -------------
Total................... $ 52,033 $ 35,484 $ 142,234 $ 120,157 $ 48,581 $ 1,736
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
Depreciation and
amortization............... $ 35,310 $ 36,749 $ 145,765 $ 146,297 $ 166,917 $ 168,527
Investment income........... 125 515 2,205 5,586 5,041 10,558
Interest expense............ 7,201 6,876 27,945 30,333 38,893 46,703
Net income (loss)........... 24,166 15,256 54,773(3) 50,574 (81,075)(4) (40,421)
Preferred stock dividends... 4,324 4,734 19,063 18,967 16,653 12,691
Net income (loss) applicable
to common shareholders..... 19,842 10,522 35,710(3) 31,607 (97,728)(4) (53,112)
Ratio of earnings to fixed
charges(5)................. 2.5x 2.0x 1.9x 1.8x 0.8x(6) 0.5x(6)
BALANCE SHEET DATA AT END OF
PERIOD:
Net working capital......... $ 63,601 $ 80,069 $ 86,297 $ 56,931 $ 152,309 $ 141,008
Cost in excess of net assets
of businesses acquired,
net........................ 319,585 351,463 322,169 354,076 363,710 373,881
Property, plant and
equipment, net............. 972,474 913,230 944,592 910,444 886,834 896,922
Total assets................ 2,558,865 2,335,031 2,472,723 2,316,350 2,293,067 2,285,466
Long-term indebtedness
(7)........................ 397,689 408,199 397,857 408,409 505,320 646,655
Shareholders' equity........ 699,302 640,351 673,629 623,375 579,161 547,083
1990
-------------
STATEMENT OF OPERATIONS DATA:
REVENUES
CF MotorFreight........... $2,185,271
Con-Way................... 638,098
Emery Worldwide........... 1,385,158
-------------
Total................... $4,208,527
-------------
-------------
OPERATING INCOME (LOSS)
CF MotorFreight........... $ 108,462
Con-Way................... 25,547(2)
Emery Worldwide........... (127,965)
-------------
Total................... $ 6,044
-------------
-------------
Depreciation and
amortization............... $ 170,757
Investment income........... 2,531
Interest expense............ 40,178
Net income (loss)........... (27,981)
Preferred stock dividends... 12,746
Net income (loss) applicable
to common shareholders..... (40,727)
Ratio of earnings to fixed
charges(5)................. 0.6x(6)
BALANCE SHEET DATA AT END OF
PERIOD:
Net working capital......... $ 125,161
Cost in excess of net assets
of businesses acquired,
net........................ 384,179
Property, plant and
equipment, net............. 953,504
Total assets................ 2,412,003
Long-term indebtedness
(7)........................ 673,611
Shareholders' equity........ 581,979
------------------------------
(1) Includes special charges of $17.3 million related to CF MotorFreight and
the write-off of Canadian operating authorities.
(2) Includes one-time subsidiary closure costs of $11.3 million.
(3) Includes $5.5 million extraordinary charge, net of related tax benefits,
for the write-off of intrastate operating rights.
(4) Includes $70 million cumulative effect of change in method of accounting
for post retirement benefits and $7.4 million extraordinary charge from
early retirement of debt, net of income tax benefits. Also included are
special charges of $11.6 million and $6.5 million of charges for the
write-down of properties held for sale and certain other intangibles, net
of income tax benefits.
(5) The ratio of earnings to fixed charges is unaudited for all periods
presented. The ratio of earnings to fixed charges was derived by dividing
earnings before fixed charges and income taxes by fixed charges. For this
purpose, "earnings" represents income before consolidated income taxes and
fixed charges (excluding capitalized interest and dividends on all of the
Company's preferred stock). "Fixed charges" represents 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
(the "TASP") (see "Capitalization"), and the applicable portion of the
consolidated rent expense which approximates the interest portion of lease
payments. All of the outstanding shares of such Series B Cumulative
Convertible Preferred Stock are held by the TASP.
(6) Earnings were inadequate to cover fixed charges for the periods shown; the
deficiency was $23.9 million, $57.7 million and $47.9 million for the years
ended December 31, 1992, 1991 and 1990, respectively.
(7) Long-term indebtedness includes capital lease obligations and notes issued
by the TASP which are guaranteed by the Company. See "Capitalization."
13
RECENT DEVELOPMENTS
The following table sets forth selected consolidated operating data for the
Company and its subsidiaries for the three and six months ended June 30, 1994
and 1995. In the opinion of management, the following selected consolidated
operating data includes all normal recurring adjustments necessary to present
fairly the information required to be set forth therein. Operating results for
the periods ended June 30, 1995 are not necessarily indicative of the results to
be expected for the year ending December 31, 1995. The following data should be
read in conjunction with the Company's consolidated financial statements and
notes thereto incorporated by reference herein (see "Available Information") and
the information set forth herein under "Selected Consolidated Financial Data"
and "Business of the Company."
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
(UNAUDITED) (UNAUDITED)
1995 1994 1995 1994
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
REVENUES
CF MotorFreight........................................ $ 599,092 $ 396,113 $ 1,207,517 $ 928,496
Con-Way................................................ 288,122 273,913 563,012 504,321
Emery Worldwide........................................ 433,372 389,749 846,144 730,179
------------ ------------ ------------ ------------
Total................................................ $ 1,320,586 $ 1,059,775 $ 2,616,673 $ 2,162,996
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS)
CF MotorFreight........................................ $ 2,328 $ (42,144) $ 12,451 $ (38,231)
Con-Way................................................ 28,238 36,749 57,086 57,673
Emery Worldwide........................................ 17,654 23,367 30,716 34,014
------------ ------------ ------------ ------------
Total................................................ 48,220 17,972 100,253 53,456
Other expense, net....................................... (7,058) (7,167) (14,340) (13,893)
------------ ------------ ------------ ------------
Income before income taxes............................... 41,162 10,805 85,913 39,563
Income taxes............................................. 18,935 5,598 39,520 19,100
------------ ------------ ------------ ------------
Net income............................................... 22,227 5,207 46,393 20,463
Preferred stock dividends................................ 2,141 4,763 6,465 9,497
------------ ------------ ------------ ------------
Net income applicable to common shareholders............. $ 20,086 $ 444 $ 39,928 $ 10,966
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
For the first six months of 1995, the Company reported operating income of
$100.3 million on revenues of $2,616.7 million, compared to operating income of
$53.5 million on revenues of $2,163.0 million for the comparable period in 1994.
The Company's results of operations for the second quarter of 1994 were
adversely affected by a 24-day strike against CF MotorFreight and other national
carriers by the International Brotherhood of Teamsters (the "IBT") in April
1994. However, Con-Way's and Emery Worldwide's results of operations for the
second quarter of 1994 were positively affected by additional business received
as a result of the strike. Net income applicable to common shareholders was
$39.9 million for the first six months of 1995 compared to $11.0 million for the
first six months of 1994. Net income applicable to common shareholders for the
second quarter of 1995 of $20.1 million compared favorably to $19.8 million of
net income applicable to common shareholders for the first quarter of 1995,
despite a slowing U.S. economy and extensive price discounting throughout the
freight transportation industry.
CF MOTORFREIGHT
CF MotorFreight reported operating income of $12.5 million on revenues of
$1,207.5 million for the first six months of 1995, compared to an operating loss
of $38.2 million on revenues of $928.5 million for the first six months of 1994.
Results of operations for the six months ended June 30, 1994 reflect the adverse
impact of the April 1994 IBT strike and the subsequent recovery period, while
results of operations for the first six months of 1995 include a 3.3% wage and
benefit increase for contractual labor which went into effect
14
on April 1, 1995. Results of operations for the 1995 period also reflect
extensive price discounting (chiefly during the second quarter of 1995) which
largely eroded the effect of a rate increase announced by CF MotorFreight in
January 1995, increased competition and a slowing U.S. economy.
CF MotorFreight is seeking to implement a rate increase of approximately
3.5% effective as of August 1, 1995 for some of its customers. However, there
can be no assurance that CF MotorFreight will be able to maintain this rate
increase in light of continued rate discounting.
CON-WAY
For the first six months of 1995, Con-Way had operating income of $57.1
million on revenues of $563.0 million, compared to $57.7 million of operating
income on revenues of $504.3 million during the comparable period in 1994.
Results for the second quarter of 1994 benefitted from additional freight
carried during the IBT strike referred to above.
EMERY WORLDWIDE
Emery Worldwide reported operating income of $30.7 million on revenues of
$846.1 million for the six months ended June 30, 1995, compared to operating
income of $34.0 million on revenues of $730.2 million for the same period in
1994. Results for the second quarter of 1994 benefitted from the April 1994 IBT
strike referred to above, as shippers turned to airfreight to replace ground
capacity lost during the strike.
Revenues and tonnage from Emery Worldwide's international operations grew in
the second quarter of 1995 compared to the second quarter of 1994, although
revenue and tonnage from its domestic operations for the second quarter of 1995
declined in comparison to the 1994 period. For the second quarter of 1995,
international revenue was up approximately 58.3% over the second quarter of
1994, while domestic revenue for the same periods was down approximately 10.7%
due in large part to the impact of the IBT strike in 1994. Tonnage from
international operations increased approximately 52.6% for the second quarter of
1995 over the second quarter of 1994, compared to an approximately 10.5% decline
in domestic tonnage for the same periods.
BUSINESS OF THE COMPANY
Consolidated Freightways, Inc. is a holding company which participates
through subsidiaries in various forms of nationwide and regional trucking
services, truckload and intermodal rail services, domestic and international air
cargo delivery services, contract logistics and related transportation
activities. These operations are organized into three primary business groups:
nationwide, full-service trucking (CF MotorFreight); regional trucking and
full-service truckload services (Con-Way); and air freight (Emery Worldwide).
CF MOTORFREIGHT
CF MotorFreight provides general freight services nationwide and in Canada
and, on a limited basis, in Mexico, the Caribbean area, Central and South
America, Europe and the Pacific Rim. General freight consists typically of
shipments of manufactured or non-perishable processed products of relatively
high value and requiring expedited service, compared to the bulk raw materials
characteristically transported by railroads, pipelines and water carriers. The
primary business of CF MotorFreight is transporting freight that is
less-than-truckload ("LTL"), an industry designation for shipment weighing less
than 10,000 pounds. Based on its 1994 revenues of $2,094.1 million, CF
MotorFreight is one of the nation's largest LTL motor carriers.
As a large carrier of LTL general freight, CF MotorFreight has pick-up and
delivery fleets in each area served, in addition to a fleet of intercity
tractors and trailers. It has a network of 437 U.S. and Canadian
freight-terminals, metro centers and regional consolidation centers. The metro
centers reduce freight handling by allowing more direct city to city service,
thereby improving productivity. CF MotorFreight operations are supported by a
sophisticated data processing system for the control and management of the
business.
Industry trends towards regionalization and new competitors entering the
small shipment segment of the business have led to increased competition and
consequent pricing pressure. The Company believes that
15
these competitive pressures will be offset, in part, by various CF MotorFreight
initiatives. In that regard, CF MotorFreight began to implement changes to its
operations in the fourth quarter of 1994 which are intended, among other things,
to take advantage of flexibilities achieved through a new labor agreement
entered into in 1994 with the International Brotherhood of Teamsters (the
"IBT"). The agreement, which expires in 1998, allows the Company to (i) increase
its use of lower-cost rail on long-haul segments, (ii) utilize part-time
employees to supplement the regular work force rather than providing overtime
for unionized employees, and (iii) pay new hires 75% of the standard wage for an
initial employment period. In addition, the Company expects to continue to
implement changes to its transportation network to reduce freight handling and
total miles driven. These changes are expected to be implemented throughout 1995
and thereafter. CF MotorFreight also believes that the trend towards certain
customers limiting themselves to a core group of carriers plays to the strengths
of CF MotorFreight's national network and integrated information services.
CF MotorFreight had approximately 20,700 employees at December 31, 1994, at
which time approximately 85% of its domestic employees were represented by labor
unions, primarily the IBT. The Company's results of operations for 1994 were
adversely affected by a 24-day strike against CF MotorFreight and other national
carriers by the IBT in April 1994. In connection with the settlement of the
strike, CF MotorFreight and the IBT entered into the new labor agreement
described above.
CF MotorFreight's 1994 revenues of $2,094.1 million were 0.9% less than 1993
revenues of $2,112.2 million. Due in large part to losses incurred during the
April 1994 strike and the subsequent recovery period, CF MotorFreight
experienced a 1994 operating loss of $46.6 million, compared to 1993 operating
income of $31.7 million. For the first quarter of 1995, CF MotorFreight had
operating income of $10.1 million on revenues of $608.4 million, compared to
$3.9 million of operating income on revenues of $532.4 million during the
comparable period in 1994. CF MotorFreight's first quarter 1995 results reflect
benefits from a rate increase announced in January 1995 and programs intended to
improve its revenues and operational efficiencies. Also contributing to first
quarter 1995 results was increased operating income from CF MotorFreight's
non-carrier operations compared to the first quarter of 1994. However, with
growth in the economy beginning to slow, CF MotorFreight is experiencing
increased rate discounting and intensified competition. A 3.3% wage and benefit
increase for contractual labor went into effect on April 1, 1995. To offset, in
part, the impact of rate discounting and this wage and benefit increase, CF
MotorFreight intends to initiate additional changes to operations designed to
reduce freight handling and transit times.
The CF MotorFreight business group also includes three non-carrier operating
units. Menlo Logistics Inc., founded in 1990, provides customized single-source
logistics solutions for manufacturing, industrial and retail businesses. These
services include carrier management, dedicated fleet and warehouse operations,
just-in-time delivery programs, customer order processing and freight bill
payment and auditing. Road Systems, Inc. primarily manufactures trailers for
sale to other business units within the Company. VantageParts (formerly known as
Willamette Sales Co.) serves as a distributor of heavy-duty truck, marine and
construction equipment parts and generates a substantial portion of its revenues
from sales within the Company.
CON-WAY
Con-Way includes three business units that provide regional LTL freight
trucking and one business unit that provides full-service truckload freight
delivery utilizing over-the-road and intermodal rail resources for
transcontinental, inter-regional and regional transportation. Con-Way also
provides local and interstate container drayage and freight assembly and
distribution services. At December 31, 1994, Con-Way had approximately 10,000
employees, none of whom were unionized.
Three of Con-Way's business units are regional motor carriers, each of which
operates dedicated regional trucking networks principally serving core
geographic territories with next-day and second-day service. The regional
carriers serve manufacturing, industrial, commercial and retail
business-to-business customers with a fleet in excess of 16,700 trucks, tractors
and trailers. For 1994, more than two-thirds of the shipments made by these
three regional carriers were next-day shipments.
16
Con-Way Western Express ("CWX") operates in 13 western states and also
serves Canada and Mexico. In 1994, CWX expanded operations to include Utah and
Colorado. At December 31, 1994, CWX operated 74 service centers. In January
1995, CWX expanded operations into Oregon, Washington, Idaho and Vancouver,
British Columbia, opening 22 new service centers in the Pacific Northwest.
Con-Way Central Express ("CCX") serves 23 states of the central and
northeast U.S. and Ontario, Canada. CCX expanded into the New England states in
1994 and, at December 31, 1994, operated 187 service centers. In February 1995,
CCX expanded into New Jersey and began providing service for metropolitan New
York City.
Con-Way Southern Express ("CSE") serves a 14-state southern market from
Texas to the Carolinas and Florida, and also serves Puerto Rico and Mexico. CSE
operated 92 service centers at December 31, 1994. CSE was formed in December
1994 when, in order to improve operating efficiencies, Con-Way Southern Express,
Inc. and Con-Way Southwest Express, Inc. were combined into a single operating
unit under the CSE name.
A service expansion program initiated by Con-Way in 1994 allows each of CWX,
CCX and CSE to provide next-day and second-day freight delivery between their
principal geographic regions. The program generates additional business by
allowing each carrier to compete for new traffic and to provide coverage of
regional market lanes not individually serviced as part of the carrier's core
territory. Business from this initiative is expected to continue to increase as
additional lanes are opened.
Regional carriers currently face increasing competition as national LTL
companies extend into regional markets and acquire and combine formerly
independent regional carriers into inter-regional groups. Con-Way has pursued a
geographic expansion program in recent years and believes that further growth
can be anticipated as these new territories are developed. Additionally, new
service offerings, extension of next-day and second-day service standards and
enhanced inter-regional network capabilities are positioning Con-Way for growth
opportunities.
Con-Way's fourth business unit is Con-Way Truckload Services, Inc. ("CWT"),
a full-service, multi-modal truckload company. It provides door-to-door
transcontinental movement of truckload shipments by rail container and rail
trailer, utilizing nationwide operating alliances with major railroads. It also
provides expedited inter-regional and regional over-the-road truckload service
with a fleet of Company-owned tractors and trailers. Additionally, CWT provides
rail freight forwarding with domestic intermodal marketing services, and local
and interstate container drayage.
Con-Way's 1994 revenues of $1,018.5 million were 24.5% greater than 1993
revenues of $818.3 million. This revenue growth was largely due to a tonnage
gain of approximately 21% over 1994, attributable to geographic expansion and
growth in existing markets, and also reflects business obtained during the April
1994 strike against unionized LTL carriers. Con-Way's 1994 operating income of
$111.2 million increased 54.8% from 1993 operating income of $71.9 million. For
the first quarter of 1995, Con-Way had revenues of $274.9 million, a 19.3%
increase over first quarter 1994 revenues of $230.4 million, while first quarter
1995 operating income of $28.8 million represented a 37.9% increase over the
$20.9 million in operating income for the comparable 1994 period. With weaker
economic growth expected for the second quarter of 1995, Con-Way is expecting
increased pricing pressure, especially in light of deregulation of intrastate
traffic. Con-Way expects to counter, at least in part, the weakness in the
economy by differentiating the level and type of services it provides customers,
including its ability to provide expanded geographic coverage.
EMERY WORLDWIDE
Emery Worldwide provides commercial door-to-door delivery for same-day,
next-day, second-day and deferred shipments in North America through a dedicated
aircraft and ground fleet and, as discussed separately below, also provides
domestic services to the United States Postal Service ("USPS"). Internationally,
with offices and agents in 89 countries, Emery Worldwide operates primarily as a
freight forwarder.
17
Emery Worldwide is focused primarily on heavy air freight. Emery Worldwide was
formed when the Company purchased Emery Air Freight Corporation in April 1989
and merged it with the Company's existing air freight operation.
Emery Worldwide provides commercial door-to-door service within North
America by using its own airlift system, supplemented with commercial airlines.
International services are performed by operating primarily as an air freight
forwarder using commercial airlines and, when appropriate, using dedicated lift
capacity which is generally comprised of aircraft under contract from third
parties. For the first quarter of 1995, approximately 40% of Emery Worldwide's
commercial revenues were attributable to international shipments.
As of December 31, 1994, Emery Worldwide's commercial operations utilized a
fleet of 69 aircraft, 42 of which were leased on a long-term basis, 9 of which
were owned by the Company and 18 of which were contracted on a short-term basis
to supplement nightly volumes and to provide feeder services. At that date, the
nightly lift capacity of the aircraft fleet, excluding charters, was
approximately 4 million pounds. Emery Worldwide also operated approximately
1,300 trucks, vans and tractors at December 31, 1994.
Emery Worldwide's hub-and-spoke system is centralized at the Dayton
International Airport where a leased air cargo facility (the "Hub") and related
support facilities are located. The Hub handles all types of shipments, ranging
from small packages to heavyweight cargo, with a total effective sort capacity
of approximately 1.2 million pounds per hour. The operation of the Hub in
conjunction with Emery Worldwide's airlift system enables Emery Worldwide to
maintain a high level of service reliability.
Through a separate subsidiary, the Company provides nightly cargo airline
services under a contract with the USPS to carry Express and Priority Mail,
using 23 aircraft, 6 of which are leased on a long-term basis and 17 of which
are owned by the Company. The original contract for this operation was awarded
to the Company in 1989 and had been renewed and extended through early January
1994. A new USPS contract was awarded to the Company during 1993 and expires in
2004. In total, the Company recognized approximately $112 million of revenue in
1994 under contracts with the USPS, of which approximately $95 million was
realized under the new ten-year USPS contract.
Emery Worldwide's 1994 revenues of $1,567.9 million were 24.3% greater than
1993 revenues of $1,261.3 million. Emery Worldwide's 1994 operating income of
$77.6 million represented an approximately four-fold increase over 1993
operating income of $16.6 million. In addition, since Emery Worldwide's 1990
operating loss of $128.0 million, 1994 marked the fourth consecutive year in
which Emery Worldwide's operating income (loss) had improved by more than
approximately $45 million over the prior year. For the first quarter of 1995,
Emery Worldwide had revenues of $412.8 million, a 21.3% increase over $340.4
million for the first quarter of 1994, while first quarter 1995 operating income
of $13.1 million represented a 22.7% increase over $10.6 million of operating
income recorded in the first quarter of 1994. Domestic revenues for the first
quarter of 1995 increased 8.4% over the comparable quarter of 1994, despite a
weakening U.S. economy, particularly in the automotive sector which constitutes
a significant customer base for Emery Worldwide. International revenues for the
first quarter of 1995 increased 54.7% over the first quarter of 1994, reflecting
a continuation of Emery Worldwide's marketing strategy to increase its global
market share. Although the Company believes that improvements at its Hub
operation, the better utilization of dedicated lift capacity and other operating
efficiencies could yield improvements in its results of operations, there can be
no assurance in this regard.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Notes, the Company entered into the
Registration Rights Agreement with the Initial Purchasers, pursuant to which the
Company agreed to use its best efforts to file with the Commission a
registration statement with respect to the exchange of the Old Notes for debt
securities with terms identical in all material respects to the terms of the Old
Notes, except that (i) the New Notes have been registered under the Securities
Act and therefore will not be subject to certain restrictions
18
on transfer applicable to the Old Notes and will not be entitled to registration
and other rights under the Registration Rights Agreement, (ii) the New Notes are
issuable in minimum denominations of $1,000 compared to minimum denominations of
$250,000 for the Old Notes, and (iii) the New Notes will not provide for any
increase in the interest rate thereon. In that regard, the Old Notes provide,
among other things, that, if the Exchange Offer is not consummated by October
29, 1995, the interest rate borne by the Old Notes following October 29, 1995
will increase by 0.25% per annum until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, Holders of Old Notes will not be entitled to
any increase in the rate of interest thereon or any further registration rights
under the Registration Rights Agreement, except that the Initial Purchasers may
have certain registration rights under limited circumstances. See "Summary --
Certain Consequences of a Failure to Exchange Old Notes" and "Description of the
Old Notes."
The Exchange Offer is not being made to, nor will the Company accept tenders
for exchange from, holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
TERMS OF THE EXCHANGE
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $100,000,000 aggregate principal amount of New Notes for a like
aggregate principal amount of Old Notes properly tendered on or prior to the
Expiration Date (as defined below) and not properly withdrawn in accordance with
the procedures described below. The Company will issue, promptly after the
Expiration Date, an aggregate principal amount of up to $100,000,000 of New
Notes in exchange for a like principal amount of outstanding Old Notes tendered
and accepted in connection with the Exchange Offer. Holders may tender their Old
Notes in whole or in part in a principal amount of $1,000 and integral multiples
thereof, provided that if any Old Note is tendered for exchange in part, the
untendered principal amount thereof must be $250,000 or any integral multiple of
$1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered. As of the date of this Prospectus $100,000,000 aggregate
principal amount of the Old Notes is outstanding.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer. Old Notes which are not tendered for
exchange or are tendered but not accepted in connection with the Exchange Offer
will remain outstanding and be entitled to the benefits of the Indenture, but
will not be entitled to any further registration rights under the Registration
Rights Agreement, except that the Initial Purchasers may have certain
registration rights under limited circumstances.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof promptly after the Expiration
Date.
Holders who tender Old Notes in connection with the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes in connection with the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See " -- Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ALL OR ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS
OF OLD NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
19
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on September
8, 1995 unless the Exchange Offer is extended by the Company (in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended).
The Company expressly reserves the right in its sole and absolute
discretion, subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Old Notes for exchange, (ii) to terminate the
Exchange Offer (whether or not any Old Notes have theretofore been accepted for
exchange) if the Company determines, in its sole and absolute discretion, that
any of the events or conditions referred to under "-- Certain Conditions to the
Exchange Offer" have occurred or exist or have not been satisfied, (iii) to
extend the Expiration Date of the Exchange Offer and retain all Old Notes
tendered pursuant to the Exchange Offer, subject, however, to the right of
holders of Old Notes to withdraw their tendered Old Notes as described under "--
Withdrawal Rights," and (iv) to waive any condition or otherwise amend the terms
of the Exchange Offer in any respect. If the Exchange Offer is amended in a
manner determined by the Company to constitute a material change, or if the
Company waives a material condition of the Exchange Offer, the Company will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders of the Old Notes, and the Company will
extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to the Dow Jones News Service.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange, and will issue to the Exchange Agent, New Notes for Old
Notes validly tendered and not withdrawn (pursuant to the withdrawal rights
described under "-- Withdrawal Rights") promptly after the Expiration Date.
In all cases, delivery of New Notes in exchange for Old Notes tendered and
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of (i) Old Notes or a book-entry
confirmation of a book-entry transfer of Old Notes into the Exchange Agent's
account at The Depositary Trust Company ("DTC"), (ii) the Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company will
be deemed to have accepted for exchange, and thereby exchanged, Old Notes
validly tendered and not withdrawn as, if and when the Company gives oral or
written notice to the Exchange Agent of the Company's acceptance of such Old
Notes for exchange pursuant to the Exchange Offer. The Exchange Agent will act
as agent for the Company for the purpose of receiving tenders of Old Notes,
Letters of Transmittal and related documents, and as agent for tendering holders
for the purpose of receiving Old Notes, Letters of Transmittal and related
documents and transmitting New Notes to validly tendering holders. Such exchange
will be made promptly after the Expiration Date. If for any reason whatsoever,
acceptance for exchange or the exchange of any Old Notes tendered pursuant to
the Exchange Offer is delayed (whether before or after the Company's acceptance
for exchange of Old Notes) or the Company extends the Exchange Offer or is
unable to accept for exchange or exchange Old Notes tendered pursuant to the
Exchange Offer, then, without prejudice to the Company's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Company and
20
subject to Rule 14e-1(c) under the Exchange Act, retain tendered Old Notes and
such Old Notes may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "-- Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Notes will warrant
and agree in the Letter of Transmittal that it has full power and authority to
tender, exchange, sell, assign and transfer Old Notes, that the Company will
acquire good, marketable and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances, and the Old
Notes tendered for exchange are not subject to any adverse claims or proxies.
The holder also will warrant and agree that it will, upon request, execute and
deliver any additional documents deemed by the Company or the Exchange Agent to
be necessary or desirable to complete the exchange, sale, assignment, and
transfer of the Old Notes tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD NOTES
VALID TENDER. Except as set forth below, in order for Old Notes to be
validly tendered pursuant to the Exchange Offer, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Exchange Agent at one of its addresses set forth under "-- Exchange Agent," and
either (i) tendered Old Notes must be received by the Exchange Agent, or (ii)
such Old Notes must be tendered pursuant to the procedures for book-entry
transfer set forth below and a book-entry confirmation must be received by the
Exchange Agent, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedures set forth below must be complied with.
If less than all of the Old Notes are tendered, a tendering holder should
fill in the amount of Old Notes being tendered in the appropriate box on the
Letter of Transmittal. The entire amount of Old Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Old Notes at DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus. Any financial institution that
is a participant in DTC's book-entry transfer facility system may make a
book-entry delivery of the Old Notes by causing DTC to transfer such Old Notes
into the Exchange Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in any
case be delivered to and received by the Exchange Agent at its address set forth
under "-- Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Old Notes need not be endorsed
and signature guarantees on the Letter of Transmittal are unnecessary unless (a)
a certificate for the Old Notes is registered in a name other than that of the
person surrendering the certificate or (b) such registered holder completes the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
in the Letter of Transmittal. In the case of (a) or (b) above, such certificates
for Old Notes must be duly endorsed or accompanied by a properly executed bond
power, with the endorsement or signature on the bond power and on the Letter of
Transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union;
21
(iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Old Notes pursuant to
the Exchange Offer and the certificates for such Old Notes are not immediately
available or time will not permit all required documents to reach the Exchange
Agent on or before the Expiration Date, or the procedures for book-entry
transfer cannot be completed on a timely basis, such Old Notes may nevertheless
be tendered, provided that all of the following guaranteed delivery procedures
are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Notes, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees and any other documents required by
the Letter of Transmittal, are received by the Exchange Agent within three
New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Notes in
exchange for Old Notes tendered and accepted for exchange pursuant to the
Exchange Offer will in all cases be made only after timely receipt by the
Exchange Agent of Old Notes, or of a book-entry confirmation with respect to
such Old Notes, and a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees and any
other documents required by the Letter of Transmittal. Accordingly, the delivery
of New Notes might not be made to all tendering holders at the same time, and
will depend upon when Old Notes, book-entry confirmations with respect to Old
Notes and other required documents are received by the Exchange Agent.
The Company's acceptance for exchange of Old Notes tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering holder and the Company upon the terms and subject to the
conditions of the Exchange Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Notes will be determined by the Company, in its sole
discretion, whose determination shall be final and binding on all parties. The
Company reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by it not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the
Company, be unlawful. The Company also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "-- Certain Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Notes of any particular holder whether or not
similar conditions or irregularities are waived in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Notes will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. Neither the Company, any affiliates or assigns of the Company, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-
22
fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and unless
waived by the Company, proper evidence satisfactory to the Company, in its sole
discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Notes that are held by or registered in the name
of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW NOTES
The Company is making the Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of the Commission as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, the Company has not sought its own interpretive letter and there can be
no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and subject
to the two immediately following sentences, the Company believes that New Notes
issued pursuant to this Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such holder's business and that
such holder is not participating, and has no arrangement or understanding with
any person to participate, in a distribution (within the meaning of the
Securities Act) of such New Notes. However, any holder of Old Notes who is an
"affiliate" of the Company or who intends to participate in the Exchange Offer
for the purpose of distributing New Notes, or any broker-dealer who purchased
Old Notes from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Notes in the Exchange Offer and (c)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer of such Old Notes
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Notes acquired for
its own account as a result of market-making or other trading activities and
exchanges such Old Notes for New Notes, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Notes.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that (i) it is not an
"affiliate" of the Company, (ii) any New Notes to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes, and (iv) if such holder is not
a broker-dealer, such holder is not engaged in, and does not intend to engage
in, a distribution (within the meaning of the Securities Act) of such New Notes.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, the Company believes that broker-dealers who acquired Old
Notes for their own accounts as a result of market-making activities or other
trading activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Notes received upon exchange of
such Old Notes (other than Old Notes which represent an unsold allotment from
the original sale of the Old Notes) with a prospectus meeting the requirements
of the Securities Act, which may be the prospectus prepared for an exchange
offer so long as it contains a description of the plan of distribution with
respect to the resale of such New Notes. Accordingly, this Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred
23
to below in connection with resales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such Participating Broker-Dealer for
its own account as a result of market-making or other trading activities.
Subject to certain provisions set forth in the Registration Rights Agreement,
the Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Notes for a period ending 90 days after the
Expiration Date (subject to extension under certain limited circumstances
described below) or, if earlier, when all such New Notes have been disposed of
by such Participating Broker-Dealer. See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate" of the Company may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New
Notes pursuant to this Prospectus until the Company has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be. If the Company gives such notice to suspend the
sale of the New Notes, it shall extend the 90-day period referred to above
during which Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of New Notes by the number of days during the period
from and including the date of the giving of such notice to and including the
date when Participating Broker-Dealers shall have received copies of the amended
or supplemented Prospectus necessary to permit resales of the New Notes or to
and including the date on which the Company has given notice that the sale of
New Notes may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn, and (if certificates for such Old
Notes have been tendered) the name of the registered holder of the Old Notes as
set forth on the Old Notes, if different from that of the person who tendered
such Old Notes. If Old Notes have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Old Notes, the
tendering holder must submit the serial numbers shown on the particular Old
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Notes tendered
for the account of an Eligible Institution. If Old Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in "-- Procedures
for Tendering Old Notes," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Notes, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of
tenders of Old Notes may not be rescinded. Old Notes properly withdrawn will not
be deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "-- Procedures for
Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on
24
all parties. Neither the Company, any affiliates or assigns of the Company, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Notes which have
been tendered but which are withdrawn will be returned to the holder thereof
promptly after withdrawal.
INTEREST ON THE NEW NOTES
Each New Note will bear interest at the rate of 7.35% per annum from the
most recent date to which interest has been paid or duly provided for on the Old
Note surrendered in exchange for such New Note or, if no interest has been paid
or duly provided for on such Old Note, from June 1, 1995. Interest on the New
Notes will be payable semiannually on June 1 and December 1 of each year,
commencing on the first such date following the original issuance date of the
New Notes.
Holders of Old Notes whose Old Notes are accepted for exchange will not
receive accrued interest on such Old Notes for any period from and after the
last Interest Payment Date to which interest has been paid or duly provided for
on such Old Notes prior to the original issue date of the New Notes or, if no
such interest has been paid or duly provided for, will not receive any accrued
interest on such Old Notes, and will be deemed to have waived the right to
receive any interest on such Old Notes accrued from and after such Interest
Payment Date or, if no such interest has been paid or duly provided for, from
and after June 1, 1995.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to accept for exchange,
or to exchange, any Old Notes for any New Notes, and, as described below, may
terminate the Exchange Offer (whether or not any Old Notes have theretofore been
accepted for exchange) or may waive any conditions to or amend the Exchange
Offer, if any of the following conditions have occurred or exists or have not
been satisfied:
(a) the Exchange Offer, or the making of any exchange by a holder,
violates any applicable law or any applicable interpretation of the staff of
the Commission;
(b) any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with respect to
the Exchange Offer which, in the Company's judgment, would reasonably be
expected to impair the ability of the Company to proceed with the Exchange
Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or California or New York state authorities which, in the Company's
judgment, would reasonably be expected to impair the ability of the Company
to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Company's
judgment, would reasonably be expected to impair the ability of the Company
to proceed with the Exchange Offer; or
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Company, threatened for that purpose.
If the Company determines in its sole and absolute discretion that any of
the foregoing events or conditions has occurred or exists or has not been
satisfied, the Company may, subject to applicable law, terminate the Exchange
Offer (whether or not any Old Notes have theretofore been accepted for exchange)
or may waive any such condition or otherwise amend the terms of the Exchange
Offer in any respect. If such waiver or amendment constitutes a material change
to the Exchange Offer, the Company will promptly
25
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the Old Notes, and the Company will
extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
EXCHANGE AGENT
Bank One, Columbus, NA, has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
BY MAIL: BY OVERNIGHT DELIVERY OR HAND:
-------------------------------- ------------------------------------------
Bank One, Columbus, NA Bank One, Columbus, NA
235 West Schrock Road 235 West Schrock Road
Columbus, OH 43271-0184 Westerville, OH 43081
or or
Bank One, Columbus, NA Bank One, Columbus, NA
c/o First Chicago Trust Company c/o First Chicago Trust Company
of New York of New York
Attn: Corporate Trust Department Attn: Corporate Trust Department
14 Wall Street 14 Wall Street
8th Floor, Window 2 8th Floor, Window 2
New York, NY 10005 New York, NY 10005
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(614) 248-4856 (Ohio)
(212) 240-8862 (NY)
FACSIMILE TRANSMISSIONS:
(614) 248-7238 (Ohio)
(212) 240-8938 (NY)
Delivery to other than one of the above addresses or facsimile numbers will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Notes, and in handling or tendering for their
customers.
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith. If, however, New Notes are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of the Old Notes tendered, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
The Company will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer.
DESCRIPTION OF THE NEW NOTES
GENERAL
The Old Notes were issued and the New Notes are to be issued under the
Indenture dated as of August 1, 1989 (the "Indenture") between the Company and
Bank One, Columbus, NA, as successor trustee
26
(the "Trustee"). The summaries of certain provisions of the Indenture, the Old
Notes and the New Notes set forth below and under "Description of the Old Notes"
do not purport to be complete and are subject to and are qualified in their
entirety by reference to all of the provisions of the Indenture and the forms of
the certificates evidencing the Old Notes and the New Notes, which documents
have been filed or incorporated by reference as exhibits to the Registration
Statement and are incorporated herein by reference. See "Available Information."
Certain capitalized terms used herein are defined in the Indenture. As used in
this "Description of the New Notes," all references to the "Company" shall mean
Consolidated Freightways, Inc., excluding, unless the context shall otherwise
require, its subsidiaries.
The Indenture does not limit the aggregate principal amount of debt
securities which may be issued thereunder and provides that debt securities may
be issued thereunder from time to time in one or more series.
The Old Notes and the New Notes will constitute a single series of debt
securities under the Indenture. If the Exchange Offer is consummated, holders of
the Old Notes who do not exchange their Old Notes for New Notes will vote
together with the holders of New Notes for all relevant purposes under the
Indenture. In that regard, the Indenture requires that certain actions by the
holders thereunder (including acceleration following an Event of Default) must
be taken, and certain rights must be exercised, by specified minimum percentages
of the aggregate principal amount of the outstanding debt securities of the
relevant series. In determining whether holders of the requisite percentage in
principal amount have given any notice, consent or waiver or taken any other
action permitted under the Indenture, any Old Notes which remain outstanding
after the Exchange Offer will be aggregated with the New Notes and the holders
of such Old Notes and New Notes will vote together as a single series for all
such purposes. Accordingly, all references herein to specified percentages in
aggregate principal amount of the outstanding Notes shall be deemed to mean, at
any time after the Exchange Offer is consummated, such percentage in aggregate
principal amount of the Old Notes and New Notes then outstanding.
The New Notes and the Old Notes are sometimes referred to as, collectively,
the "Notes" and, individually, a "Note."
The New Notes will be unsecured and unsubordinated obligations of the
Company and will be limited to an aggregate principal amount of $100,000,000.
Each New Note will bear interest at the rate of 7.35% per annum from the most
recent date to which interest has been paid or duly provided for on the Old Note
surrendered in exchange for such New Note or, if no interest has been paid or
duly provided for on such Old Note, from June 1, 1995, payable semiannually on
June 1 and December 1 of each year (each, an "Interest Payment Date"),
commencing with the first Interest Payment Date occurring after the date of
original issuance of such New Note, to the person in whose name such New Note is
registered at the close of business on the May 15 or November 15 next preceding
such Interest Payment Date. Interest on the New Notes will be computed on the
basis of a 360-day year of twelve 30-day months. The New Notes will mature on
June 1, 2005. The New Notes may not be redeemed prior to maturity and will not
be subject to any sinking fund.
The New Notes will not provide for any increase in the interest rate
thereon. For a discussion of the circumstances in which the interest rate on the
Old Notes may be temporarily increased, see "Description of the Old Notes."
FORM, DENOMINATION AND REGISTRATION
The New Notes will be issued only in fully registered form, without coupons,
in denominations of $1,000 and any integral multiple of $1,000 in excess
thereof.
Principal and interest on the New Notes will be payable, and New Notes may
be registered for transfer or exchange, at an office or agency maintained by the
Company in New York City, except that, at the option of the Company, interest
may be paid by check mailed to the persons entitled thereto. No service charge
may be made to a holder for any registration of transfer or exchange of the New
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
27
In case any New Note shall become mutilated, defaced, destroyed, lost or
stolen, the Company will execute and, upon the Company's request, the Trustee
will authenticate and deliver a new New Note, of like tenor and equal principal
amount in exchange and substitution for such New Note (upon surrender and
cancellation thereof) or in lieu of and substitution for such New Note. In case
such New Note is destroyed, lost or stolen, the applicant for a substituted New
Note shall furnish to the Company and the Trustee such security or indemnity as
may be required by them to hold each of them harmless, and, in every case of
destruction, loss or theft of such New Note, the applicant shall also furnish to
the Company or the Trustee satisfactory evidence of the destruction, loss or
theft of such New Note and of the ownership thereof. Upon the issuance of any
substituted New Note, the Company may require the payment by the registered
holder thereof of a sum sufficient to cover fees and expenses connected
therewith.
RANKING; HOLDING COMPANY STRUCTURE
The Old Notes are and the New Notes will be unsecured unsubordinated
obligations of the Company and rank and will rank on a parity in right of
payment with all other unsecured and unsubordinated indebtedness of the Company
for borrowed money.
The Old Notes are and the New Notes will be obligations exclusively of the
Company. The Company is a holding company substantially all of whose
consolidated assets are held by its subsidiaries. Accordingly, the cash flow of
the Company and the consequent ability to service its debt, including the Notes,
are largely dependent upon the earnings of such subsidiaries.
Because the Company is a holding company, the Old Notes are and the New
Notes will be effectively subordinated in right of payment to all existing and
future indebtedness, trade payables, guarantees, lease obligations and letter of
credit obligations of the Company's subsidiaries. Therefore, the Company's
rights and the rights of its creditors, including the holders of the Notes, to
participate in the assets of any subsidiary upon the latter's liquidation or
reorganization will be subject to the prior claims of such subsidiary's
creditors, except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary, in which case the claims of the
Company would still be effectively subordinate to any security interest in, or
mortgages or other liens on, the assets of such subsidiary and would be
subordinate to any indebtedness of such subsidiary senior to that held by the
Company. As of March 31, 1995, (i) the Company had approximately $322 million of
outstanding indebtedness (including TASP debt guaranteed by the Company (see
"Capitalization")) and approximately $133 million of outstanding letters of
credit, and (ii) the Company's subsidiaries had approximately $133 million of
outstanding indebtedness and obligations under capital leases and approximately
$88 million of outstanding letters of credit; no drawings were outstanding under
any such letters of credit at that date. In addition, certain subsidiaries of
the Company are guarantors under the Credit Agreement, including letters of
credit issued thereunder. At December 31, 1994, the Company's subsidiaries were
subject to long-term non-cancelable operating leases requiring future minimum
lease payments of approximately $501 million. Although certain debt instruments
to which the Company and its subsidiaries are parties impose limitations on the
incurrence of additional indebtedness, both the Company and its subsidiaries
retain the ability to incur substantial additional indebtedness and lease and
letter of credit obligations.
CERTAIN COVENANTS OF THE COMPANY
The Indenture does not limit the amount of indebtedness or lease obligations
that may be incurred by the Company and its subsidiaries. The Indenture does not
contain provisions which would give holders of the Notes the right to require
the Company to repurchase their Notes in the event of a decline in the credit
rating of the Company's debt securities resulting from a takeover,
recapitalization or similar restructuring. Holders of certain of the Company's
outstanding indebtedness, including its 9 1/8% Notes due 1999, the TASP Notes
and indebtedness under the Credit Agreement, have the right to require the
Company to repurchase or repay such indebtedness upon the occurrence of certain
changes in control of the Company or similar events or declines in the credit
rating on such indebtedness. See "Capitalization."
LIMITATION ON LIENS. In the Indenture, the Company covenants that, so long
as any of the Notes remain outstanding, it will not, nor will it permit any
Restricted Subsidiary (as defined below) to, create, assume or guarantee any
Debt (as defined below) that is secured by a mortgage, pledge, lien, security
interest or other
28
encumbrance (a "Lien"), on any property or shares of capital stock or Debt of
the Company or any Restricted Subsidiary without in any such case effectively
providing, concurrently with the creation, assumption or guarantee of any such
Debt, that the Notes shall, so long as such other Debt is so secured (and, if
the Company shall so determine, any other existing Debt (or Debt thereafter in
existence) created, assumed or guaranteed by the Company or any Restricted
Subsidiary), be secured by any such Lien equally and ratably with or prior to
the Debt thereby secured; provided that Debt secured by such Liens may be
created, assumed or guaranteed if immediately after giving effect thereto the
aggregate amount of all such Debt of the Company and its Restricted Subsidiaries
(not including Debt described in (i) through (vii) below) does not exceed 15% of
Consolidated Net Tangible Assets (as defined below).
The foregoing restrictions shall not apply to Debt secured by (i) Liens on
property of the Company or any Restricted Subsidiary existing on the date of the
Indenture (August 1, 1989); (ii) certain Liens on property existing at the time
of acquisition thereof; (iii) Liens in favor of the Company or a Restricted
Subsidiary securing Debt of the Company or a Restricted Subsidiary; (iv) Liens
created in connection with tax assessments or legal proceedings and mechanic's
and materialman's liens and other similar liens created in the ordinary course
of business; (v) Liens on property of the Company or any Restricted Subsidiary
(except Liens on the capital stock or Debt of the Company or any Restricted
Subsidiary) in favor of the United States of America or any state thereof, or
any agency or political subdivision of either, or in favor of any other country
or agency or political subdivision thereof, in each case to secure payments
pursuant to contract or statute or to secure Debt created, assumed or guaranteed
for the purpose of financing all or any part of the purchase price or the cost
of construction or improvement of the property subject to such Liens, including
Liens incurred in connection with pollution control, industrial revenue bond or
other similar financings; (vi) certain purchase money Liens on property of the
Company or any Restricted Subsidiary that constitutes a fixed asset or a surface
or air transportation vehicle used in the freight business securing all or any
part of the purchase price thereof, or any Debt incurred to finance the purchase
price or the cost of construction or improvement thereof for which a written
commitment was executed within 180 days after acquisition or the completion of
construction or improvement, as the case may be; or (vii) certain permitted
extensions, renewals or replacements (or successive extensions, renewals or
replacements), in whole or in part, of any Lien referred to in the foregoing
clauses (i) through (vi), inclusive.
CONSOLIDATION, MERGER AND SALE OF ASSETS. The Indenture provides that the
Company may not (i) consolidate with or merge into any Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, or (ii) permit any Person to consolidate with or merge into the Company,
or convey, transfer or lease its properties and assets substantially as an
entirety to the Company, unless (a) in the case of (i) above, such Person is
organized and existing under the laws of the United States, any State thereof or
the District of Columbia and shall expressly assume the due and punctual payment
of the principal of and interest on all of the Notes and the performance of the
Company's obligations under the Indenture and the Notes; (b) immediately after
giving effect to such transaction no Event of Default, and no event which after
notice or lapse of time or both would become an Event of Default, shall have
happened and be continuing; and (c) certain other conditions are met.
DEFINITION OF CERTAIN TERMS. The term "Consolidated Net Tangible Assets" as
used in the Indenture means, as of any particular time, the aggregate amount of
the Consolidated Assets (as defined in the Indenture) of the Company and its
consolidated Subsidiaries (as defined in the Indenture) (less depreciation,
amortization and other applicable reserves and other properly deductible items)
after deducting therefrom (i) all current liabilities, and (ii) all goodwill,
tradenames, trademarks, patents, debt discount and expense and other
intangibles, in each case net of applicable amortization, all as shown on the
Company's most recent consolidated financial statements prepared in accordance
with generally accepted accounting principles. The term "Restricted Subsidiary"
as used in the Indenture means any majority-owned or controlled Subsidiary of
the Company or any of its Subsidiaries (A) substantially all of the operating
assets of which are located or the principal business of which is carried on in
the United States, Puerto Rico, the U.S. Virgin Islands or Canada, and (B) the
assets of which have a gross book value (without deduction of any depreciation,
amortization and other applicable reserves) which exceeds 1% of the Company's
Consolidated Assets (except for any Subsidiary which in the opinion of the
Company's Board of Directors is not of
29
material importance to the total business conducted by the Company and its
Subsidiaries taken as a whole). The term "Debt" as used in the Indenture means
(a) any liability of the Company or any Restricted Subsidiary (1) for borrowed
money, or under any reimbursement obligation relating to a letter of credit, or
(2) evidenced by a bond, note, debenture or similar instrument, or (3) for
payment obligations arising under any conditional sale or other title retention
arrangement (including a purchase money obligation) given in connection with the
acquisition of any businesses, properties or assets of any kind, or (4) for the
payment of money relating to a capitalized lease obligation; (b) any liability
of others described in the preceding clause (a) that the Company or any
Restricted Subsidiary has guaranteed or that is otherwise its legal liability;
and (c) any amendment, supplement, modification, deferral, renewal, extension or
refunding of any liability of the types referred to in clauses (a) and (b)
above.
EVENTS OF DEFAULT
An Event of Default with respect to the Notes is defined in the Indenture as
being: (i) default for 30 days in payment of any interest with respect to any
Note; (ii) default in payment of principal with respect to any Note when due
upon maturity or otherwise; (iii) default by the Company in the performance, or
breach, of any other covenant or warranty in the Indenture or any Note which
shall not have been remedied for a period of 90 days after notice to the Company
by the Trustee or the holders of not less than 25% in aggregate principal amount
of the Notes then outstanding; (iv) acceleration of the maturity of any single
outstanding issue of Debt of the Company or any Restricted Subsidiary with an
outstanding principal amount in excess of $25,000,000, as a result of an event
of default thereunder, which acceleration is not annulled or which Debt is not
discharged within 30 days thereafter or such longer period during which the
Company is contesting in good faith such acceleration; (v) default in payment
(after the expiration of any applicable grace period) of any portion of the
principal or any premium with respect to any single outstanding issue of Debt of
the Company or any Restricted Subsidiary with an outstanding principal amount in
excess of $25,000,000, which default is not cured or which Debt is not
discharged within 30 days thereafter or such longer period during which the
Company is contesting in good faith such default; or (vi) certain events of
bankruptcy, insolvency or reorganization of the Company. The Indenture provides
that the Trustee may withhold notice to the holders of the Notes of any default
with respect thereto (except a default in payment of principal or interest) if
the Trustee considers it in the interest of the holders to do so.
The Indenture provides that if an Event of Default with respect to the Notes
shall have occurred and be continuing, the Trustee or the holders of at least
25% in principal amount of the Notes then outstanding may declare the principal
amount of all the Notes to be due and payable immediately, but upon certain
conditions such declaration may be annulled and past defaults (except for
payment defaults and certain other defaults) may be waived by the holders of a
majority in principal amount of the Notes then outstanding.
Subject to the provisions of the Indenture requiring the Trustee, during an
Event of Default, to act with the requisite standard of care, the Trustee is
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the holders of Notes unless such holders
have offered the Trustee reasonable indemnity. Subject to the foregoing, holders
of a majority in principal amount of the Notes then outstanding shall have the
right, subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee under the
Indenture. The Indenture requires the annual filing by the Company with the
Trustee of a certificate as to the absence of default and as to compliance with
the terms of the Indenture.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of a majority in principal amount of the
outstanding Notes, to modify the rights of the holders of the Notes under the
Indenture or any supplemental indenture or the terms of the Notes, provided that
no such modification shall, among other things, (i) change the stated maturity
of any Notes or reduce the principal amount thereof, or reduce the rate or
change the time of payment of interest thereon, or change any place where, or
the currency in which, any Notes are payable, or impair the holder's right to
enforce the payment of any Notes, or (ii) reduce the aforesaid percentage of
Notes, the consent of the holders of which is required for any such
modification; without in each such case obtaining the consent of the holder of
each outstanding
30
Note so affected. The Indenture also contains provisions permitting the Company
and the Trustee, without the consent of the holders of any Notes, to modify the
Indenture or any supplemental indenture in order to, among other things, (a) add
to the Events of Default or the covenants of the Company for the benefit of the
holders of Notes, or (b) cure any ambiguity or correct or supplement any
provision therein which may be inconsistent with other provisions therein, or to
make any other provisions with respect to matters or questions arising under the
Indenture, provided that such actions shall not adversely affect the interests
of the holders of the Notes in any material respect.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may elect either (A) to defease and
be discharged from any and all obligations with respect to the Notes (except for
the obligations to register the transfer or exchange of the Notes, to replace
temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office
or agency in respect of the Notes and to hold moneys for payment in trust)
("defeasance"), or (B) to be released from its obligations with respect to the
Notes described above under "-- Certain Covenants of the Company -- Limitation
on Liens" ("covenant defeasance"), upon the irrevocable deposit with the Trustee
(or other qualifying trustee), in trust for such purpose, of money, and/or U. S.
Government Obligations (as defined in the Indenture) which through the payment
of principal and interest in accordance with their terms will provide money, in
an amount sufficient to pay the principal of and interest on the Notes on the
due dates therefor, whether upon maturity or otherwise. Such defeasance or
covenant defeasance shall only be effective if, among other things, (i) it shall
not result in a breach or violation of, or constitute a default under, the
Indenture or any other agreement to which the Company or any Restricted
Subsidiary is a party or is bound, and (ii) the Company has delivered to the
Trustee an opinion of counsel (as specified in the Indenture) to the effect that
the holders of the Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance or covenant defeasance, as
the case may be, and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred. It shall also be a condition
to the effectiveness of such defeasance (but not covenant defeasance) that no
Event of Default or event which with notice or lapse of time or both would
become an Event of Default with respect to the Notes shall have occurred and
been continuing on the date of, or during the period ending on the 91st day
after the date of, such deposit into trust.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in accordance
with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Trust Indenture Act of 1939 contains limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases or to realize on certain property received by it in respect of
any such claims, as security or otherwise. The Trustee is permitted to engage in
other transactions with the Company and its subsidiaries from time to time,
provided that if the Trustee acquires any conflicting interest it must eliminate
such conflict upon the occurrence of an Event of Default, or else resign.
DESCRIPTION OF THE OLD NOTES
The terms of the Old Notes are identical in all material respects to the New
Notes, except that (i) the Old Notes have not been registered under the
Securities Act, are subject to certain restrictions on transfer and are entitled
to certain registration rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except to the
extent that the Initial Purchasers may have certain registration rights under
limited circumstances); (ii) the New Notes are issuable in minimum denominations
of $1,000 and integral multiples thereof compared to minimum denominations of
$250,000 and integral multiples of $1,000 in excess thereof for the Old Notes;
and (iii) the New Notes will not provide for any increase in the interest rate
thereon. In that regard, the Old Notes provide that, in the event that the
Exchange Offer is not consummated or a shelf registration statement (the "Shelf
Registration Statement")
31
with respect to the resale of the Old Notes is not declared effective on or
prior to October 29, 1995, the interest rate on the Old Notes will increase by
0.25% per annum following October 29, 1995; provided, however, that if the
Company requests holders of Old Notes to provide certain information called for
by the Registration Rights Agreement for inclusion in any such Shelf
Registration Statement, then Old Notes owned by holders who do not deliver such
information to the Company or who do not provide comments on the Shelf
Registration Statement when required pursuant to the Registration Rights
Agreement will not be entitled to any such increase in the interest rate. Upon
the consummation of the Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after October 29, 1995, the interest
rate on any Old Notes which remain outstanding will be reduced, from the date of
such consummation or effectiveness, as the case may be, to 7.35% per annum and
the Old Notes will not thereafter be entitled to any increase in the interest
rate thereon. The New Notes are not entitled to any such increase in the
interest rate thereon. In addition, the Old Notes and the New Notes will
constitute a single series of debt securities under the Indenture. See
"Description of the New Notes -- General." Accordingly, holders of Old Notes
should review the information set forth under "Summary -- Certain Consequences
of a Failure to Exchange Old Notes" and "Description of the New Notes."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States Federal income tax
considerations to holders of the New Notes who are subject to U.S. net income
tax with respect to the New Notes ("U.S. persons") and who will hold the New
Notes as capital assets. There can be no assurance that the U.S. Internal
Revenue Service (the "IRS") will take a similar view of the purchase, ownership
or disposition of the New Notes. This discussion is based upon the provisions of
the Internal Revenue Code of 1986, as amended, and regulations, rulings and
judicial decisions now in effect, all of which are subject to change. It does
not include any description of the tax laws of any state, local or foreign
governments or any estate or gift tax considerations that may be applicable to
the New Notes or holders thereof. It does not discuss all aspects of U.S.
Federal income taxation that may be relevant to a particular investor in light
of his particular investment circumstances or to certain types of investors
subject to special treatment under the U.S. Federal income tax laws (for
example, dealers in securities or currencies, S corporations, life insurance
companies, tax-exempt organizations, taxpayers subject to the alternative
minimum tax and non-U.S. persons) and also does not discuss New Notes held as a
hedge against currency risks or as part of a straddle with other investments or
as part of a "synthetic security" or other integrated investment (including a
"conversion transaction") comprised of a New Note and one or more other
investments, or situations in which the functional currency of the holders is
not the U.S. dollar.
Holders of Old Notes contemplating acceptance of the Exchange Offer should
consult their own tax advisors with respect to their particular circumstances
and with respect to the effects of state, local or foreign tax laws to which
they may be subject.
EXCHANGE OF NOTES
The exchange of Old Notes for New Notes should not be a taxable event to
holders for federal income tax purposes. The exchange of Old Notes for the New
Notes pursuant to the Exchange Offer should not be treated as an "exchange" for
federal income tax purposes because the New Notes should not be considered to
differ materially in kind or extent from the Old Notes. If, however, the
exchange of the Old Notes for the New Notes were treated as an exchange for
federal income tax purposes, such exchange should constitute a recapitalization
for federal income tax purposes. Accordingly, a holder should have the same
adjusted basis and holding period in the New Notes as it had in the Old Notes
immediately before the exchange.
INTEREST ON THE NEW NOTES
A holder of a New Note will be required to report as ordinary interest
income for U.S. Federal income tax purposes interest earned on the New Note in
accordance with the holder's method of tax accounting.
DISPOSITION OF NEW NOTES
A holder's tax basis for a New Note generally will be the holder's purchase
price for the Old Note. Upon the sale, exchange, redemption, retirement or other
disposition of a New Note, a holder will recognize gain
32
or loss equal to the difference (if any) between the amount realized and the
holder's tax basis in the New Note. Such gain or loss will be long-term capital
gain or loss if the New Note has been held for more than one year and otherwise
will be short-term capital gain or loss (with certain exceptions to the
characterization as capital gain if the New Note was acquired at a market
discount).
BACKUP WITHHOLDING
A holder of a New Note may be subject to backup withholding at the rate of
31% with respect to interest paid on the New Note and proceeds from the sale,
exchange, redemption or retirement of the New Note, unless such holder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates that fact or (b) provides a correct taxpayer identification number,
certifies as to no loss of exemption from backup withholding and otherwise
complies with applicable requirements of the backup withholding rules. A holder
of a New Note who does not provide the Company with his correct taxpayer
identification number may be subject to penalties imposed by the IRS.
A holder of a New Note who is not a U.S. person will generally be exempt
from backup withholding and information reporting requirements, but may be
required to comply with certification and identification procedures in order to
obtain an exemption from backup withholding and information reporting.
Any amount paid as backup withholding will be creditable against the
holder's U.S. Federal income tax liability.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in connection
with the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by Participating Broker-
Dealers during the period referred to below in connection with resales of New
Notes received in exchange for Old Notes if such Old Notes were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Company has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Notes
for a period ending 90 days after the Expiration Date (subject to extension
under certain limited circumstances described herein) or, if earlier, when all
such New Notes have been disposed of by such Participating Broker-Dealer. See
"The Exchange Offer -- Resales of New Notes."
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. New Notes received by broker-dealers for their own
accounts in connection with the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by it for its own
account in connection with the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the New Notes will be passed upon
for the Company by Brown & Wood, San Francisco, California.
33
EXPERTS
The audited consolidated financial statements and schedule incorporated by
reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated herein by
reference in reliance upon the authority of said firm as experts in giving said
reports.
34
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED AND
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF ITS AFFILIATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES
OFFERED HEREBY BY ANY PERSON IN ANY JURISDICTION IN WHICH OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
DOCUMENT INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT
TO THE DATE HEREOF OR THEREOF, AS THE CASE MAY BE.
-------------------
TABLE OF CONTENTS
PAGE
-----
Available Information.......................... 4
Incorporation of Certain Documents by
Reference..................................... 4
Summary........................................ 5
Use of Proceeds................................ 12
Capitalization................................. 12
Selected Consolidated Financial Data........... 13
Recent Developments............................ 14
Business of the Company........................ 15
The Exchange Offer............................. 18
Description of the New Notes................... 26
Description of the Old Notes................... 31
Certain United States Federal Income Tax
Considerations................................ 32
Plan of Distribution........................... 33
Legal Matters.................................. 33
Experts........................................ 34
[LOGO]
CONSOLIDATED
FREIGHTWAYS, INC.
OFFER TO EXCHANGE ITS
7.35% NOTES DUE 2005
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
7.35% NOTES DUE 2005
---------------------
PROSPECTUS
---------------------
AUGUST 9, 1995
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As authorized by Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL"), the Company's Certificate of Incorporation, as amended, eliminates
to the fullest extent permitted by Delaware law the personal liability of its
directors to the Company or its stockholders for monetary damages for any breach
of fiduciary duty as a director.
The Company's By-laws, as amended (the "By-laws"), provide that each person
who was or is made a party or is threatened to be made a party to or is involved
in any threatened, pending or completed action, suit or proceeding by reason of
the fact that he or she is or was a director, officer, employee or agent of the
Company or of another enterprise, serving as such at the request of the Company,
shall be indemnified and held harmless by the Company to the fullest extent
permitted under the DGCL; provided, however, that except as to actions to
enforce indemnification rights, the Company shall indemnify any such person
seeking indemnification in connection with an action, suit or proceeding (or
part thereof) initiated by such person only if the action, suit or proceeding
(or part thereof) was authorized by the Board of Directors of the Company. When
indemnification is authorized by the Company's By-laws, the director, officer,
employee or agent shall be indemnified for expenses, liabilities and losses
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred by him or her
in connection therewith. The Company's By-laws also provide that expenses
incurred by an officer or director (acting in his or her capacity as such) in
defending a proceeding shall be paid by the Company in advance of final
disposition of the proceeding; provided, however, that if required by the DGCL,
the officer or director shall deliver to the Company an undertaking by the
officer or director to repay such expenses if it is ultimately determined that
he or she is not entitled to be indemnified by the Company. The Company's By-
laws also provide that in other circumstances expenses may be advanced upon such
terms and conditions as the Board of Directors deems appropriate.
The Company's By-laws further provide that the right to indemnification
granted thereunder shall be a contract right for the benefit of the Company's
directors, officers, employees and agents. The Company's By-laws also authorize
actions against the Company to enforce the indemnification rights provided by
the By-laws, subject to the Company's right to assert a defense in any such
action that the claimant has not met the standards of conduct that make it
permissible under the DGCL for the Company to indemnify the claimant for the
amount claimed, and the Company shall bear the burden of proving any such
defense.
Under Section 145 of the DGCL, a corporation may provide indemnification to
directors, officers, employees and agents may be provided against judgments,
penalties, fines, settlements and reasonable expenses (including attorneys'
fees) incurred in the defense or settlement of a third party action, or against
reasonable expenses (including attorneys' fees) in the defense or settlement of
a derivative action, provided there is a determination by a majority vote of a
quorum of disinterested directors, a committee of directors, independent legal
counsel, or a majority vote of stockholders that a person seeking
indemnification acted in good faith and in a manner reasonably believed to be in
or not opposed to the best interests of the corporation, and, in the case of a
criminal proceeding, with no reasonable cause to believe his or her conduct was
unlawful. However, Section 145 also states that no indemnification may be made
in derivative actions where such person is adjudged liable to the corporation,
unless, and only to the extent, that a court determines upon application that
such person is fairly and reasonably entitled to indemnity for such expenses
which the court deems proper. Section 145 also permits indemnification of
expenses which the court deems proper and provides that indemnification of
expenses actually and reasonably incurred shall be provided when the individual
being indemnified has successfully defended the action on the merits or
otherwise in any action, suit or proceeding. The indemnification rights provided
by statute in Delaware are not deemed to be exclusive of any other rights which
those seeking indemnification may be entitled under any bylaw, agreement or
otherwise.
II-1
The Company's By-laws also authorize the Company to purchase and maintain
insurance to protect itself and any person who is or was a director, officer,
employee or agent of the Company against any liability, expense or loss incurred
by or asserted against such person, whether or not the Company would have the
power to indemnify such person against such liability, expense or loss under
applicable law or the Company's By-laws. The Company presently maintains a
directors' and officers' liability insurance policy which insures directors and
officers of the Company and those of certain of its subsidiaries.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
----------- ---------------------------------------------------------------------------------------------------
4.1 Indenture dated as of August 1, 1989 between the Registrant and Security Pacific National Bank, as
trustee. (Exhibit 4.3 to December 31, 1989 Form 10-K, as filed on Form SE dated March 20, 1990*).
4.2 Registration Rights Agreement, dated as of June 1, 1995, between the Registrant and Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., J.P. Morgan
Securities Inc. and Salomon Brothers Inc.**
4.3 Form of Security for 7.35% Notes due 2005 originally issued by Consolidated Freightways, Inc. on
June 1, 1995.**
4.4 Form of Security for 7.35% Notes due 2005 to be issued by Consolidated Freightways, Inc. and
registered under the Securities Act of 1933.**
5 Opinion of Brown & Wood.**
12 Statement re computation of ratio of earnings to fixed charges.**
23.1 Consent of Independent Public Accountants (included on page II-6).**
23.2 Consent of Counsel (included in Exhibit 5).**
24 Powers of Attorney (included on page II-4).**
25 Statement of eligibility of trustee.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Exchange Agent Agreement.**
------------------------
* Previously filed with the Securities and Exchange Commission and incorporated
herein by reference.
** Previously filed.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business
II-2
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired or involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto,
State of California, on the 8th day of August, 1995.
CONSOLIDATED FREIGHTWAYS, INC.
By /s/ EBERHARD G.H. SCHMOLLER
------------------------------------
Eberhard G.H. Schmoller
SENIOR VICE PRESIDENT AND GENERAL
COUNSEL
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
------------------------------------------------------ -------------------------------------- -----------------
/s/ DONALD E. MOFFITT* Chairman of the Board, President and
------------------------------------------- Chief Executive Officer (Principal August 8, 1995
Donald E. Moffitt Executive Officer)
Executive Vice President and Chief
/s/ GREGORY L. QUESNEL* Financial Officer (Principal
------------------------------------------- Financial and Principal Accounting August 8, 1995
Gregory L. Quesnel Officer)
/s/ ROBERT ALPERT*
------------------------------------------- Director August 8, 1995
Robert Alpert
------------------------------------------- Director
Earl F. Cheit
/s/ G. ROBERT EVANS*
------------------------------------------- Director August 8, 1995
G. Robert Evans
/s/ MARGARET G. GILL*
------------------------------------------- Director August 8, 1995
Margaret G. Gill
/s/ ROBERT JAUNICH II*
------------------------------------------- Director August 8, 1995
Robert Jaunich II
II-4
SIGNATURE TITLE DATE
------------------------------------------------------ -------------------------------------- -----------------
------------------------------------------- Director
Gerhard E. Liener
/s/ RICHARD B. MADDEN*
------------------------------------------- Director August 8, 1995
Richard B. Madden
/s/ RONALD E. POELMAN*
------------------------------------------- Director August 8, 1995
Ronald E. Poelman
/s/ ROBERT D. ROGERS*
------------------------------------------- Director August 8, 1995
Robert D. Rogers
/s/ WILLIAM D. WALSH*
------------------------------------------- Director August 8, 1995
William D. Walsh
/s/ ROBERT P. WAYMAN*
------------------------------------------- Director August 8, 1995
Robert P. Wayman
*By /s/ DAVID F. MORRISON
-------------------------------------------
David F. Morrison
ATTORNEY-IN-FACT
II-5