-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Tq73YgQ/mBhybdDrg8weQLXI3VBn6+WTc9RqyxqyCd2DPvctNvdVhWDTheR+T9EI 7M+IQMrMV2es0I3pjLICag== 0000950131-95-001066.txt : 19950501 0000950131-95-001066.hdr.sgml : 19950501 ACCESSION NUMBER: 0000950131-95-001066 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950428 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN FREIGHTWAYS CORP CENTRAL INDEX KEY: 0000846729 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 742391754 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17570 FILM NUMBER: 95532803 BUSINESS ADDRESS: STREET 1: 2200 FORWARD DR CITY: HARRISON STATE: AR ZIP: 72601 BUSINESS PHONE: 5017419000 MAIL ADDRESS: STREET 1: 2200 FORWARD DR CITY: HARRISON STATE: AR ZIP: 72601 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 34-0-17570 American Freightways Corporation (Exact name of registrant as specified in its charter) Arkansas 74-2391754 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2200 Forward Drive, Harrison, Arkansas 72601 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (501) 741-9000 Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding at March 31, 1995: 30,639,582.
PART I. FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000's omitted, except per share data) March 31, December 31, 1995 1994 ----------- ------------ (Unaudited) (Note) Assets Current assets Cash and cash equivalents $ 4,481 $ 3,999 Trade receivables, less allowance for doubtful accounts (1995-$664; 1994-$639) 49,042 39,818 Operating supplies and inventories 1,678 1,519 Prepaid expenses 7,225 4,247 Deferred income taxes 5,689 4,664 -------- -------- Total current assets 68,115 54,247 Property and equipment 435,234 396,594 Allowances for depreciation and amortization (deduction) (107,031) (98,701) --------- --------- 328,203 297,893 Other assets 2,917 3,208 --------- ---------- $399,235 $ 355,348 ======== ========= Liabilities and Shareholders' Equity Current liabilities Trade accounts payable $ 14,127 $ 13,358 Accrued expenses 31,022 24,449 Federal and state income taxes 841 233 Current portion of long-term debt 6,204 6,338 -------- --------- Total current liabilities 52,194 44,378 Long-term debt, less current portion (Note B) 129,840 104,843 Deferred income taxes 32,094 28,947 Shareholders' equity: Common stock, par value $.01 per share-- authorized 250,000 shares; issued and outstanding 30,640 in 1995 and 30,496 in 1994 306 305 Additional paid-in capital 94,995 93,347 Retained earnings 89,806 83,528 -------- --------- 185,107 177,180 -------- --------- $399,235 $ 355,348 ======== =========
Note: The condensed consolidated balance sheet at December 31, 1994, has been derived from the audited consolidated financial statements at that date. See notes to condensed consolidated financial statements. AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (000's omitted, except per share data)
Three Months Ended March 31 1995 1994 -------------------- Operating revenue $132,533 $99,272 Operating expenses and costs: Salaries, wages and benefits 73,407 53,939 Operating supplies and expenses 8,703 7,042 Operating taxes and licenses 5,736 4,356 Insurance 4,800 2,541 Communications and utilities 2,549 2,180 Depreciation and amortization 8,436 6,173 Rents and purchased transportation 10,697 11,052 Other 5,949 4,394 -------- ------- 120,277 91,677 -------- ------- Operating income 12,256 7,595 Other income (expense): Interest expense (2,199) (1,335) Interest income 44 33 Gain on disposal of assets 5 0 Other, net 61 54 ------- ------- (2,089) (1,248) Income before income taxes 10,167 6,347 ------ ------- Federal and state income taxes: Current 1,789 1,450 Deferred 2,100 964 ------- ------- 3,889 2,414 ------- ------- Net income $ 6,278 $ 3,933 ======= ======= Net income per share $ 0.20 $ 0.14 ======= ======= Average shares outstanding 31,376 28,881 ======= =======
See notes to condensed consolidated financial statements.
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31 1995 1994 ------------------ (000's omitted) Net cash provided by operating activities $13,606 $ (319) Investing activities Proceeds from sales of equipment 21 16 Capital expenditures (38,792) (26,472) -------- --------- Net cash used by investing activities (38,771) (26,456) Financing activities Principal payments on long-term debt (4,638) (304) Proceeds from notes payable and long-term borrowings 29,500 28,500 Proceeds from issuance of common stock 785 340 ------- --------- Net cash provided by financing activities 25,647 28,536 ------- --------- Net increase in cash and cash equivalents $ 482 $ 1,761 ======= ========
See notes to condensed consolidated financial statements. AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 1995 NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results of the three month period ended March 31, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. For further information, refer to the Company's consolidated financial statements and footnotes thereto included in Form 10-K for the year ended December 31, 1994. NOTE B - LONG-TERM DEBT As of March 31, 1995, the Company has outstanding borrowings of $47,500,000 under its existing $75,000,000 unsecured revolving line of credit. The proceeds of these borrowings were used for the purchase of revenue equipment and for the purchase and construction of terminal facilities. At March 31, 1995, the amount available for borrowing under the line of credit was $27,500,000. In addition to this credit facility, the Company has obtained letters of credit totaling $7,000,000 to back the premium for the excess coverage on its self-insurance plan. As of March 31, 1995, the Company has outstanding borrowings of $45,000,000 under an uncommitted Master Shelf Agreement which provides for the issuance of up to $90,000,000 of senior promissory notes with an average life not to exceed eight years. NOTE C - COMMITMENTS Commitments for the purchase of revenue equipment and the purchase or construction of terminals aggregated approximately $44,954,000 at March 31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following table sets forth, for the periods indicated, the percentages of operating expenses and other items to operating revenues: Three Months Ended March 31 1995 1994 ------------------ Operating revenue 100.0% 100.0% Operating expenses and costs: Salaries, wages and benefits 55.4% 54.3% Operating supplies and expenses 6.6% 7.1% Operating taxes and licenses 4.3% 4.4% Insurance 3.6% 2.6% Communications and utilities 1.9% 2.2% Depreciation and amortization 6.4% 6.2% Rents and purchased transportation 8.1% 11.1% Other 4.5% 4.4% --------------- Total operating expenses and costs 90.8% 92.3% --------------- Operating income 9.2% 7.7% Interest expense (1.7)% (1.3)% Other income, net 0.1% --% --------------- Income before income taxes 7.6% 6.4% Income taxes 2.9% 2.4% --------------- Net income 4.7% 4.0% ===============
Results of Operations Revenue Operating revenue for the three months ended March 31, 1995 was $132,533,000, up 33.5%, compared to $99,272,000 for the three months ended March 31, 1994. The growth in operating revenue was primarily attributable to a 27.4% increase in tonnage handled by the Company from new and existing customers. The major reasons for this increase in tonnage were: - - On January 1, 1995, the Company expanded its all-points coverage to the states of North Carolina and South Carolina with the opening of thirteen new terminals. - - The Company continued to increase its market penetration into existing service territories. - - The deregulation of intra-state commerce as of January 1, 1995 by the Federal Aviation Administration Authorization Act of 1994. In addition to the increase in tonnage, operating revenue was increased by a 4.2% increase in revenue per hundred weight. The major factors contributing to this increase in revenue per hundred weight were: - - A general rate increase of approximately 3.5% effective January 1, 1995. General rate increases initially affect approximately 50% of the Company's customers. The remaining customers' rates are determined by contracts and guarantees and are negotiated throughout the year. - - The Company's average length of haul increased 7.6% to 583 miles in the three months ended March 31, 1995 as compared to the three months ended March 31, 1994. The increase in average length of haul was primarily a result of the Company's expanded service territory. - - The percentage of the Company's total revenue that was truckload (shipments greater than 10,000 pounds) declined to 8.1% in the three months ended March 31, 1995 as compared to 8.7% in the three months ended March 31, 1994. Management expects that growth in operating revenue is sustainable in the near future; however, the rate of growth will most likely occur at a slower rate than that experienced in the three months ended March 31, 1995. Any growth in operating revenue will primarily be the result of increased tonnage handled by the Company, as any future rate increases can be expected to be closely tied to the overall rate of inflation and general economic conditions. Operating Expenses Operating expenses as a percentage of operating revenue improved to 90.8% in the three months ended March 31, 1995 from 92.3% in the three months ended March 31, 1994. This overall improvement was primarily attributable to: - - Rents and purchased transportation as a percentage of operating revenue decreased to 8.1% in the three months ended March 31, 1995 from 11.1% in the three months ended March 31, 1994. This decrease was due to two primary reasons. The first was the Company's philosophy of utilizing Company- operated terminals rather than contractor-operated terminals in expansions of service territory, along with the conversion of four contractor-operated terminals to Company-operated terminals during 1994. Management does not expect significant additional conversions of contractor-operated terminals to Company-operated terminals in the near future. The second primary reason for the decrease in rents and purchased transportation as a percentage of operating revenue was the decreased usage of rented equipment in favor of Company-owned equipment. Management expects this increased utilization of Company-owned equipment, rather than rented equipment, to continue in the near term. - - Operating supplies and expenses as a percentage of operating revenue decreased to 6.6% in the three months ended March 31, 1995 from 7.1% in the three months ended March 31, 1994. This decrease was primarily due to a 6.4% improvement in the Company's linehaul load factor (the average tonnage transported in a typical movement of freight between terminals). These improvements in operating expenses as a percentage of operating revenue were partially offset by increases in the following areas: - - Salaries, wages and benefits as a percentage of operating revenue increased to 55.4% in the three months ended March 31, 1995 from 54.3% in the three months ended March 31, 1994. The utilization of Company-operated terminals in expansions of service territory and the conversion of four contractor- operated terminals to Company-operated terminals contributed to this increase. In addition, the continuation of the Company's philosophy of sharing its success with its associates through increased wages and enhanced benefit packages contributed to this increase. On March 6, 1995, the Company increased the wages of its drivers, dockmen and clerical workers by approximately 5.5%. - - Insurance as a percentage of operating revenue increased to 3.6% in the three months ended March 31, 1995 from 2.6% in the three months ended March 31, 1994. This increase was primarily a result of the Company's increased experience of accidents and cargo claims, particularly in the areas of cargo care and liability insurance. During the twelve months prior to March 31, 1995, accidents and cargo claims returned to historical levels after being somewhat lower in the prior two years. Management does not expect a continuation of the upward trend in insurance expenses as they relate to operating revenue but expects a stabilization of these expenses near historical levels. Other Interest expense as a percentage of operating revenue increased to 1.7% in the three months ended March 31, 1995 from 1.3% in the three months ended March 31, 1994. This increase was attributable to increased costs of borrowing funds under the Company's variable- rate, revolving line of credit facility, as well as an increase in the overall amount of borrowings. The increased costs of borrowing funds were a reflection of increased interest rates in the general economy. The effective tax rate of the Company was 38.3% for the first three months of 1995, up from 38.0% for the same time period during 1994. Net income for the three months ended March 31, 1995, was $6,278,000, up 59.6%, from $3,933,000 for the three months ended March 31, 1994. Liquidity and Capital Resources The continued growth in operating revenue and the expansion of service territory initiated on January 1, 1995 required significant capital resources in the three months ended March 31, 1995. Capital requirements during the three months ended March 31, 1995 consisted primarily of $38,771,000 in investing activities. The Company invested $38,792,000 in capital expenditures during the three months ended March 31, 1995 comprised of $25,346,000 in additional revenue equipment, $9,622,000 in new terminal facilities or the expansion of existing terminal facilities and $3,824,000 in other equipment. Management expects capital expenditures for the full year of 1995 will be approximately $110,000,000. However, the amount of capital expenditures required in 1995 will be dependent on the growth rate of the Company and the timing and size of any future expansions of service territory. At March 31, 1995, the Company had commitments for land, terminals, revenue and other equipment of approximately $44,954,000. These commitments were for the completion of projects in process at March 31, 1995, and for the purchase of additional revenue equipment in anticipation of increased revenue levels during the remainder of 1995. The Company provided for its capital resource requirements in the three months ended March 31, 1995 with cash from operations and financing activities. Cash from operations totaled $13,606,000 in the three months ended March 31, 1995 compared to $319,000 used by operations in the three months ended March 31, 1994. This increase was primarily attributable to the increase in net income in the first quarter of 1995 compared to the first quarter of 1994, and the amount of accounts payable outstanding. Financing activities augmented cash flow by $25,647,000 in the three months ended March 31, 1995 by utilizing two primary sources of financing: the revolving line of credit and the Master Shelf facility. - - The Company experiences periodic cash flow fluctuations common to the industry. Cash outflows are heaviest during the first part of any given year while cash inflows are normally weighted towards the last two quarters of the year. To smooth these fluctuations and to provide flexibility to fund future growth, the Company utilizes a variable-rate, unsecured revolving line of credit of $75,000,000 provided by NationsBank of Texas, N.A., Texas Commerce Bank, N.A. and Wachovia Bank of Georgia, N.A. During the three months ended March 31, 1995, the Company utilized this facility to provide $10,500,000 of net financing, leaving $27,500,000 available for borrowing. The Company also had $5,000,000 available under its short-term, unsecured revolving line of credit with NationsBank of Texas, N.A. In addition, the Company maintains a $10,000,000 line of credit with NationsBank, N.A. to obtain letters of credit to back premiums for excess coverage on its self-insurance program. At March 31, 1995, the Company had obtained letters of credit totaling $7,000,000 for this purpose. - - To assist in financing longer-lived assets, the Company has an uncommitted Master Shelf Agreement with the Prudential Insurance Company of America which provides for the issuance of up to $90,000,000 in medium to long-term unsecured notes at an interest rate calculated at issuance. During the three months ended March 31, 1995, the Company utilized this agreement to issue a $15,000,000 note at 8.55% with a ten year maturity, leaving $45,000,000 available for borrowing. Management expects that the Company's existing working capital and its available lines of credit are sufficient to meet the Company's commitments as of March 31, 1995, and to fund current operating and capital needs. However, if additional financing is required, management believes it will be available. The Company uses off-balance sheet financing in the form of operating leases primarily in two areas; terminal facilities and computer equipment. At March 31, 1995, future rental commitments on operating leases were $40,605,000. The Company prefers to utilize operating leases for these two areas and plans to use them in the future when such financing is available and suitable. Environmental At March 31, 1995, the Company had no outstanding inquiries with any state or federal environmental agency. Recent Events On April 17, 1995, the Company expanded its service territory to nine new cities including: Colorado Springs, Denver, Fort Collins and Pueblo, Colorado; Des Moines, Iowa; Minneapolis/St. Paul, Minnesota; Omaha, Nebraska; Madison and Milwaukee, Wisconsin. INDEX AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Condensed consolidated balance sheets--March 31, 1995 and December 31, 1994 Condensed consolidated statements of income--Three months ended March 31, 1995 and 1994 Condensed consolidated statements of cash flows--Three months ended March 31, 1995 and 1994 Notes to condensed consolidated financial statements-- March 31, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings. On March 15, 1995, a complaint by American Freight System, Inc. of Kansas City, Kansas, was filed, alleging, among other things, federal trade name and trademark infringement. The lawsuit was filed in the United States District Court, Kansas District, Case 95- 2125. Management reports that based upon American Freightways' counsel's advice, the plaintiff's claims are without any merit and we intend to aggressively defend this lawsuit. Item 2. Changes in securities. See Item 4(c). Item 4. Submission of Matters to a Vote of Security Holders. a) The Annual Meeting of Shareholders was held March 28, 1995. c) Below is a list of each proposal voted on and number of votes cast at the 1995 Annual Shareholders' Meeting:
1. TO FIX THE NUMBER OF DIRECTORS AT NINE AND TO ELECT NINE DIRECTORS TO THE TERMS SET FORTH BELOW: TERM FOR WITHHELD BROKER NON-VOTES F. S. Garrison 3 YEARS 24,823,755 1,541,473 3,615,416 Ben A. Garrison 1 YEAR 24,822,045 1,543,183 3,615,416 Tom Garrison 2 YEARS 24,822,160 1,543,068 3,615,416 Will Garrison 1 YEAR 24,812,340 1,552,888 3,615,416 James R. Dodd 3 YEARS 24,440,769 1,924,459 3,615,416 Tony Balisle 1 YEAR 24,441,090 1,924,138 3,615,416 Frank Conner 2 YEARS 24,436,490 1,928,738 3,615,416 T. J. Jones 2 YEARS 24,450,595 1,914,633 3,615,416 Ken Reeves 3 YEARS 24,445,625 1,919,603 3,615,416
2. TO APPROVE AN AMENDMENT TO CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION RELATING TO: BROKER FOR AGAINST NON-VOTES ABSTAIN Part A Classification of the Board 19,982,863 4,237,674 5,519,936 243,171 Part B Removal of Directors only for cause 18,596,928 5,616,656 5,519,936 250,124 Part C Filling of vacancies on the Board 20,514,840 5,600,545 3,618,416 249,843 Part D Fixing the size of the Board 21,246,905 4,872,256 3,618,416 246,067
Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: (3.i)Amended and Restated Articles of Incorporation of American Freightways Corporation as of April 12, 1995 (10) $15,000,000 note dated January 30, 1995, issued under the $90,000,000 Master Shelf Agreement with the Prudential Insurance Company of America dated September 3, 1993 (27) Financial Data Schedule (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the three month period ended March 31, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN FREIGHTWAYS CORPORATION (Registrant) Date: April 28, 1995 /s/James R. Dodd James R. Dodd Executive Vice President-Accounting & Finance and Chief Financial Officer EX-3.(I) 2 RSS027DA.WP5 SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF AMERICAN FREIGHTWAYS CORPORATION The undersigned President and Secretary of American Freightways Corporation (the "Corporation"), hereby certify that the Corporation has duly adopted these Second Amended and Restated Articles of Incorporation as set forth below. 1. The name of this Corporation is American Freightways Corporation (the "Corporation"). 2. The street address of the Corporation's registered office is 2200 Forward Drive, Harrison, Arkansas 72601, and the name of the registered agent of the Corporation at that address shall be Tom Garrison. 3. The nature of the business of the Corporation and the primary object or purposes proposed to be transacted, promoted or carried on by it, are as follows: (a) To acquire and own property, both real and personal, including common stock or other beneficial interests in corporations, associations, trusts and other forms of business, whether incorporated or unincorporated, and to provide services to or for such businesses, and to engage in businesses related to any such businesses, and to do any and all lawful acts necessary, convenient, and advisable or desirable that may be incidental or pertinent to such businesses. (b) To conduct any other business enterprise not contrary to law. (c) To buy, sell, lease, use, develop, mortgage, improve and otherwise deal in and dispose of all types of real or personal property in connection with the conduct of business carried on by the Corporation. (d) To exercise all of the powers enumerated in the Arkansas Business Corporation Act of 1987 (the "Act"), the Corporation elects to be governed by the Act. 4. The total amount of the authorized capital stock of this Corporation is two hundred fifty million (250,000,000) shares of common stock with one cent ($.01) par value each. 5. The name and post office address of the incorporator was: NAME POST OFFICE ADDRESS Gene C. Campbell P.O. Box 729 Harrison, AR 72602 6. (a) The number of directors constituting the entire Board shall be not less than nine nor more than fifteen as fixed from time to time by vote of a majority of the entire Board, provided, however, that the number of directors constituting the entire Board shall be nine until otherwise fixed by a majority of the entire Board. (b) The Board of Directors shall be divided into three classes, as nearly equal in numbers as the then total number of directors constituting the entire Board permits with the term of office of one class expiring each year. At the 1995 annual meeting of stockholders, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any directorship resulting from any increase in the number of directors, shall be filled exclusively by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any director so chosen shall hold office until the next election of the class for which such director shall have been chosen or until the expiration of the term of the director(s) whom such director(s) replaced, as applicable, and until his successor shall be elected and qualified. Subject to the foregoing, at each annual meeting of stockholders the successors to the class of directors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting. (c) Notwithstanding any other provisions of these Articles of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, these Articles of Incorporation or the By-Laws of the Corporation), any director or the entire Board of Directors of the Corporation may be removed at any time, but only for cause and only by the affirmative vote of the holders of 66 2/3% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. "Cause" shall mean that a court of competent jurisdiction shall have definitely concluded that a director has engaged in fraudulent or dishonest conduct or gross abuse of authority or discretion with respect to the Corporation. (d) Notwithstanding any other provision of these Articles of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, these Articles of Incorporation or By-Laws), the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of each voting group of the Corporation entitled to vote with respect to such matter shall be required to amend, alter, repeal or adopt any provision inconsistent with any provision of Article 6 of these Articles of Incorporation. 7. (a) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to be the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. (c) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraph (a) or (b), or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under paragraph (a) or (b) (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standards of conduct set forth in paragraphs (a) or (b). Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders. (e) Expenses (including attorneys' fees) incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article 7. (f) The indemnification provided by this Article 7 shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (g) The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article 7. (h) The powers and duties of the Corporation to indemnify any person under this Article 7 shall apply with equal force whether an action, suit, or proceeding is threatened or commenced in this State or outside this State. 8. No member of the Board of Directors shall be liable to the Corporation or the shareholders of the Corporation for any monetary damages for breach of his duty as a director, provided that this provision shall not eliminate or limit the liability of a director: (a) for any breach of the director's duty of loyalty to the Corporation or its shareholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (c) for liability under Ark. Code Ann. 4-27-833; (d) for any transaction from which the director derived an improper personal benefit; (e) for any action, omission, transaction, or breach of a director's duty creating any third-party liability to any person or entity other than the Corporation or shareholder; or (f) for any act or omission occurring prior to the date of filing these Amended and Restated Articles of Incorporation with the Secretary of State. 9. Shareholders of the Corporation shall not have preemptive rights. 10. Unless the Act provides otherwise, a quorum at any meeting of the shareholders of the Corporation shall consist of a majority of the votes entitled to be cast on the matter, represented in person or by duly authorized proxy at such meeting. 11. In any election of directors, the shareholders of the Corporation shall not be entitled to cumulative voting rights. EXECUTED this ___ day of April, 1995. /s/F.S. Garrison________________ F. S. Garrison, Chairman, President and Chief Executive Officer /s/Tom Garrison_________________ Tom Garrison, Secretary- Treasurer, Vice President EX-10 3 AMERICAN FREIGHTWAYS CORPORATION AMERICAN FREIGHTWAYS, INC. SENIOR NOTE No. U-001 ORIGINAL PRINCIPAL AMOUNT: $15,000,000 ORIGINAL ISSUE DATE: January 30, 1995 INTEREST RATE: 8.85% INTEREST PAYMENT DATES: April 30, July 30, October 30 and January 30 FINAL MATURITY DATE: January 30, 2005 PRINCIPAL INSTALLMENT DATES AND AMOUNTS: January 30, 2001, $3,000,000; January 30, 2002, $3,000,000; January 30, 2003, $3,000,000; and January 30, 2004, $3,000,000. FOR VALUE RECEIVED, the undersigned, American Freightways Corporation, a corporation organized and existing under the laws of the State of Arkansas ("AFC"), and American Freightways, Inc., a corporation organized and existing under the laws of the State of Arkansas ("AFI", AFC and AFI are collectively referred to herein as the "Companies"), hereby promise to pay to The Prudential Insurance Company of America, or registered assigns, the principal sum of FIFTEEN MILLION DOLLARS ($15,000,000), payable in installments on the Principal Installment Dates and in the amounts specified above, and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, and any overdue payment of any Yield-Maintenance Amount (as defined in the Note Agreement referred to below), payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 10.85% or (ii) 2% over the rate of interest publicly announced by Morgan Guaranty Trust Company of New York from time to time in New York City as its Prime Rate. Payments of principal of, and interest on, and any Yield- Maintenance Amount payable with respect to, this Note are to be made at the main office of Morgan Guaranty Trust Company of New York in New York City or at such other place as the holder hereof shall designate to the Companies in writing, in lawful money of the United States of America. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to a Master Shelf Agreement, dated as of September 3, 1993, as amended (herein called the "Agreement"), between the Companies and The Prudential Insurance Company of America and is entitled to the benefits thereof. As provided in the Agreement, this Note is subject to prepayment, in whole or from time to time in part on the terms specified in the Agreement. This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Companies may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Companies shall not be affected by any notice to the contrary. In case an Event of Default, as defined in the Agreement, shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement. This Note shall be construed and enforced in accordance with the laws of the State of Texas. AMERICAN FREIGHTWAYS CORPORATION BY:/s/James R. Dodd Executive Vice President and Chief Financial Officer AMERICAN FREIGHTWAYS, INC. BY:/s/James R. Dodd Executive Vice President and Chief Financial Officer EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31, 1995 QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 4,481 0 49,706 664 1,678 68,115 435,234 107,031 399,235 52,194 129,840 306 0 0 184,801 399,235 0 132,533 0 120,277 0 0 2,199 10,167 3,889 6,278 0 0 0 6,278 .20 .20 PROVISION FOR DOUBTFUL ACCOUNTS INCLUDED IN COSTS AND EXPENSES APPLICALBE TO REVENUES
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