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PROSPECTUS
$100,000,000
USFREIGHTWAYS LOGOUSFREIGHTWAYS CORPORATION
6 1/2% GUARANTEED NOTES DUE MAY 1, 2009
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We are offering and selling an aggregate of $100,000,000 of our 6 1/2%
guaranteed notes due May 1, 2009. We will receive the proceeds from the sale of
the guaranteed notes.
Interest on the guaranteed notes is payable on May 1 and November 1 of each
year, beginning November 1, 1999. The guaranteed notes will mature on May 1,
2009. We may redeem some or all of the guaranteed notes at any time. We describe
the redemption price under the heading "Description of the Guaranteed
Notes--Optional Redemption" on page 9 of this prospectus. We will also pay
accrued interest to the date of any redemption.
The guaranteed notes are unsecured and rank equally with all of our other
unsecured senior indebtedness. Substantially all of our domestic subsidiaries
will guarantee the payment of principal and interest under the guaranteed notes.
The guaranteed notes will not be entitled to the benefit of any sinking fund.
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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PER NOTE TOTAL
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Public Offering Price(1).................................... 99.192% $99,192,000
Underwriting Discount....................................... .65% $650,000
Proceeds, before expenses, to USFreightways Corporation..... 98.542% $98,542,000
(1) Plus accrued interest from May 5, 1999, if settlement occurs after that date
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The guaranteed notes will be ready for delivery through The Depository
Trust Company on or about May 5, 1999.
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MERRILL LYNCH & CO. CREDIT SUISSE FIRST BOSTON
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The date of this prospectus is April 29, 1999.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT, AND THE UNDERWRITERS HAVE NOT,
AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE
PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON
IT. WE ARE NOT, AND THE UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU
SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS, AS WELL AS
INFORMATION WE PREVIOUSLY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
INCORPORATED BY REFERENCE, IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS
PROSPECTUS ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
TABLE OF CONTENTS
USFreightways Corporation................................... 3
Where to Find More Information.............................. 4
Risk Factors................................................ 5
Ratios of Earnings to Fixed Charges......................... 6
Use of Proceeds............................................. 6
Summary Consolidated Financial Data......................... 7
Description of the Guaranteed Notes......................... 8
Underwriting................................................ 14
Legal Opinions.............................................. 15
Experts..................................................... 15
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USFREIGHTWAYS CORPORATION
We are a leading full-service provider of transportation services and
innovative logistics solutions. We accomplish this through the following
decentralized business units:
- Regional less than truckload trucking
- Logistics
- Freight forwarding
- Truckload transportation
REGIONAL LESS THAN TRUCKLOAD ("LTL") TRUCKING
We own a group of five regional LTL companies which deliver freight
overnight and by the second day throughout the United States, Hawaii, Alaska and
parts of Canada. Over 70% of the freight we deliver for our regional customers
is delivered within one day and over 95% is delivered within two days. The
principal companies in our regional LTL group are USF Holland Inc., USF Bestway
Inc., USF Red Star Inc., USF Reddaway Inc. and USF Dugan Inc.
Typically, LTL carriers transport freight weighing 10,000 pounds or less
along scheduled routes from many customers to various destinations. These
carriers operate a network of terminals and fleets of line-haul and pick-up and
delivery tractors and trailers. Freight is picked up from customers by local
drivers and consolidated for shipment. The freight is then loaded into intercity
trailers and transferred by line-haul drivers to the terminal servicing the
delivery area. There, the freight is transferred to local trailers and delivered
to its destination by local drivers.
LTL carriers generally are categorized as regional, interregional or
long-haul carriers, depending on the distance freight travels from pick-up to
final delivery. Regional LTL carriers usually have average lengths of haul of
500 miles or less and tend to provide overnight or second-day service. Regional
LTL carriers usually can deliver the freight directly from the origin terminal
to the destination terminal. This avoids the costly and time-consuming use of
breakbulk terminals, which are terminals where the freight is rehandled and
reloaded to its ultimate destination. In contrast, long-haul LTL carriers
(average lengths of haul in excess of 1,000 miles) operate networks of breakbulk
and satellite terminals (hub and spoke systems) and rely heavily on the interim
handling of freight. Interregional carriers (500 to 1,000 miles per average
haul) also rely on breakbulk terminals but less so than long-haul carriers.
We believe that the regional LTL market is the most attractive segment of
the LTL trucking industry. Because the way customers manufacture and distribute
their products has changed, there is an increased demand for the direct shipment
and delivery of freight. Today, freight is moving over shorter distances to its
ultimate destination. Companies are making more use of regional distribution
centers and using the services of regional LTL carriers to deliver the products
from these centers to their customers. We also believe that the market for our
services may continue to grow because (1) substantial capital is required for
terminals and trucks and (2) a large number of skilled workers is needed, which
makes it difficult for new companies to compete against us in the regional LTL
market.
LOGISTICS
Our logistics companies provide logistics and distribution services in the
United States and Canada. The principal companies in the logistics group, USF
Logistics Inc. and USF Distribution Services Inc., provide integrated supply
chain solutions for their clients, including transportation, warehousing, cross
docking, product configuration and reverse logistics. Reverse logistics is the
process of handling unsaleable assets (for example, products that are damaged,
defective, returned-to-stock, discontinued or recalled). The companies primarily
serve clients in the automotive, consumer, food distribution, healthcare,
metals, retail and technology industries. These companies are supply chain
partners to many Fortune 500 companies, including Proctor & Gamble, Fleming
Foods, Becton Dickinson, Ryerson and Microsoft.
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FREIGHT FORWARDING
Our freight forwarding companies provide domestic and international freight
forwarding services. The principal companies in the freight forwarding group are
USF Seko Worldwide Inc. and Golden Eagle Group Inc. Freight forwarding involves
the handling and management of the transportation of freight to domestic and
international destinations using third-party carriers, including pick up and
delivery carriers, commercial airlines and ocean vessels.
TRUCKLOAD
Truckload service involves the shipping of freight weighing 10,000 pounds
or more from a single shipper to a single destination along an irregular route.
The principal company in the truckload group is Glen Moore Transport Inc. We
deliver shipments from the Mid-Atlantic and Southeast states to the West Coast
and into the Midwest states. The average length of our hauls is approximately
1,000 miles.
Our principal executive offices are located at 9700 Higgins Road, Suite
570, Rosemont, Illinois 60018; our telephone number is (847) 696-0200; and our
World Wide Web home site is http://www.usfreightways.com.
RECENT DEVELOPMENTS
On April 15, 1999, we released information regarding our financial
performance for the first quarter of this year. Net income was $17.5 million (or
$0.65 diluted earnings per share) for the quarter, an increase of $3.8 million
(or $0.13 per share) over the first quarter of 1998. Operating revenue for the
quarter increased to $513.2 million from $442.3 million, an increase of 16% over
the first quarter of 1998. Operating revenue for the first quarter of 1999
includes $30.4 million from three acquisitions completed since the first quarter
of 1998.
We are considering a proposal to exchange guaranteed notes, with terms
identical to those of the guaranteed notes described in this prospectus, for our
currently outstanding 6 5/8% Notes due May 1, 2000. We have not made any
decision on whether to proceed with this proposal.
WHERE TO FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file with the SEC
at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the SEC's regional offices located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, New York, New York 10048. You can call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our reports, proxy statements
and other information may also be inspected at the offices of the National
Association of Securities Dealers, Inc., Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file later with the
SEC will automatically update and supersede the information included or
incorporated by reference in this prospectus. We incorporate by reference the
document listed below and any future filings with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we sell all of
the guaranteed notes:
- Annual Report on Form 10-K for the year ended December 31, 1998.
You may request a free copy of this filing by writing or telephoning
Christopher L. Ellis, Senior Vice President, USFreightways Corporation, 9700
Higgins Road, Suite 570, Rosemont, Illinois 60018, telephone (847) 696-0200.
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RISK FACTORS
Before you invest in the guaranteed notes, you should be aware that there
are various risks, including those described below. You should carefully
consider these risk factors, together with all of the other information included
in this prospectus, before you decide whether to purchase the guaranteed notes.
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
such statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read statements that contain these words carefully because they: (1) discuss our
future expectations, (2) contain projections of our future results of operations
or of our financial condition or (3) state other "forward-looking" information.
We believe it is important to communicate our expectations to our investors.
However, there may be events in the future which we are not able to accurately
predict or over which we have no control. The risk factors listed in this
section, as well as any cautionary language in this prospectus, provide examples
of risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in the guaranteed notes, you should be aware that the
occurrence of the events described in these risk factors and documents
incorporated by reference could have a material adverse effect on our business,
operating results and financial condition.
INCREASES IN FUEL COSTS
We depend on diesel fuel to run our trucks. If the cost of fuel increases,
our results of operation will be affected even though we are able to charge our
customers for a portion of the fuel increase. We are only able to charge our
customers for increased fuel costs above a certain price level, so we must bear
any increase in fuel costs below that level.
RISKS OF ACQUISITION STRATEGY
Our growth has depended in part on our ability to acquire small- to
medium-sized trucking, logistics and freight forwarding companies throughout the
United States. We expect to continue to acquire companies as an element of our
growth strategy. However, acquisitions involve certain risks that could cause
our actual growth to differ from our expectations. For example:
- We compete with other companies to acquire transportation services
companies. We cannot predict whether this competition will increase. If
competition does increase, there may be fewer suitable transportation
services companies available to be acquired and the price for suitable
acquisitions may increase.
- We may not be able to continue to identify suitable acquisition
candidates or to acquire additional transportation services companies on
favorable terms. We may also be entering markets in which we have limited
direct experience.
- We may not be able to successfully integrate the operations of an
acquired business, particularly in the period immediately following an
acquisition. We may lose customers, key employees and drivers after we
acquire the business that could adversely affect the results of our
operations.
- The attention of our management may be diverted from the concerns of our
other businesses.
ADVERSE IMPACT OF YEAR 2000 COMPUTER SYSTEMS COMPLIANCE
Many older computer software programs refer to years in terms of final two
digits only. Such programs may incorrectly interpret the year 2000 to mean the
year 1900. If not corrected, such programs could cause date-related transaction
failures. Although we have corrected substantially all of the systems that we
believe are critical to our business, the year 2000 problem may, however,
adversely impact our business, financial condition and results of operation by
affecting the business and operations of our suppliers and customers. For
example, if the year 2000 problem affects our customers, we may lose revenues
because our customers may not be able to ship freight or pay us for our
services. We cannot predict whether our suppliers and customers will suffer any
adverse impact because of the year 2000 problem or the effect they may have on
our business.
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RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratio of earnings to fixed charges for each of the years
in the five-year period ended December 31, 1998 is set forth below.
YEARS ENDED DECEMBER 31,
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1994 1995 1996 1997 1998
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Ratio of Earnings to Fixed Charges.......................... 4.3 4.4 3.8 6.7 8.0
For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes plus fixed charges, less interest
capitalized during the period. Fixed charges consist of interest expense plus
that portion of rental expense that is deemed to represent interest.
USE OF PROCEEDS
The proceeds (after deducting the underwriting discount and estimated
expenses) to be received by us from the sale of the guaranteed notes are
estimated to be approximately $98,276,700. We will use the net proceeds to
reduce the unsecured lines of credit we have with various banks. The unsecured
lines of credit have a weighted average effective cost of approximately 5.1% per
year. Until we apply the net proceeds for specific purposes, we may invest them
in marketable securities.
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SUMMARY CONSOLIDATED FINANCIAL DATA
FISCAL YEAR ENDED
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52 WEEKS 52 WEEKS 52 WEEKS 53 WEEKS
DEC. 31, 1994 DEC. 30, 1995 DEC. 28, 1996 JAN. 3, 1998 DEC. 31, 1998(1)
------------- ------------- ------------- ------------ ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Operating revenues............ $1,016,464 $1,144,458 $1,330,972 $1,565,249 $1,834,893
Income from operations........ 69,666 67,543 67,128(2) 105,010 129,433
Interest expense.............. (9,081) (8,884) (12,144) (8,461) (8,784)
Interest income............... 664 707 649 1,038 757
Other non-operating expense... (2,011) (878) (704) (92) 88
---------- ---------- ---------- ---------- ----------
Net income from operations
before income taxes........ 59,238 58,488 54,929 97,495 121,494
Net income from operations.... 33,356 33,338 31,478 56,581 71,445
Extraordinary item-operating
rights..................... (1,291) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income.................... $ 32,065 $ 33,338 $ 31,478(2) $ 56,581 $ 71,445
========== ========== ========== ========== ==========
Diluted Earnings Per Share:
Net income per share from
operations................. $ 1.51 $ 1.51 $ 1.40(2) $ 2.19 $ 2.70
Net income per share.......... $ 1.45 $ 1.51 $ 1.40(2) $ 2.19 $ 2.70
Average shares
outstanding-basic.......... 22,142 22,123 22,249 25,544 26,209
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(1) For fiscal year 1998, USFreightways Corporation began reporting on a
calendar year basis.
(2) Income from operations, net income and earnings per share include the USF
Red Star Inc. restructuring charge of $4,050, before income tax, equivalent
to $0.10 per share, net of tax.
DEC. 31, DEC. 30, DEC. 28, JAN. 3, DEC. 31,
1994 1995 1996 1998 1998
-------- -------- -------- ------- --------
BALANCE SHEET DATA:
Working capital......................... $ 26,168 $ 30,127 $ 59,229 $ 55,402 $ 50,972
Total assets............................ 501,002 578,194 688,508 799,535 974,673
Long-term obligations excluding current
portion.............................. 105,667 137,333 178,000 115,000 151,096
Stockholders' equity.................... 208,094 233,152 269,260 392,200 459,134
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DESCRIPTION OF THE GUARANTEED NOTES
GENERAL
The guaranteed notes will be issued under an indenture (we refer to the
indenture, as supplemented from time to time, as the "Indenture") among
USFreightways Corporation, the Guarantors and NBD Bank, the Trustee. The
guaranteed notes are unsecured obligations of USFreightways Corporation. They
will rank on a parity with all of our other unsecured and unsubordinated
indebtedness. The guaranteed notes will mature on May 1, 2009. The guaranteed
notes will bear interest at the rate shown on the front cover of this prospectus
from May 5, 1999, payable semi-annually on each May 1 and November 1 to the
persons in whose name they are registered at the close of business on April 15
or October 15 preceding the interest payment date. The first interest payment
will be made on November 1, 1999. The guaranteed notes are subject to redemption
prior to maturity as described below, but are not entitled to the benefit of any
sinking fund. They will be issued in book-entry form only. See "Book-Entry
System."
The following summary of certain provisions of the guaranteed notes and the
Indenture is not complete and is subject to the detailed provisions of the
Indenture. We have filed a copy of the Indenture as an exhibit to the
Registration Statement. Whenever particular provisions or defined terms in the
Indenture are referred to in this prospectus, such provisions or defined terms
are incorporated by reference in this prospectus. Section references used in
this prospectus are references to the Indenture.
GUARANTEES
Substantially all of our U.S. subsidiaries, as Guarantors, will, jointly
and severally, fully and unconditionally guarantee our obligations under the
guaranteed notes on an equal and ratable basis subject to the limitation
described in the next paragraph. In addition, we will cause any U.S. Person
which becomes our subsidiary after the date of the Indenture to enter into a
supplemental indenture pursuant to which such subsidiary shall agree to
guarantee our obligations under the guaranteed notes. If we default in payment
of the principal of, premium, if any, or interest on the guaranteed notes, the
Guarantors, jointly and severally, will be unconditionally obligated to duly and
punctually pay the same.
The obligations of each Guarantor under the Guarantee are limited to the
maximum amount of which, after giving effect to all other contingent and fixed
liabilities of such Guarantor, and after giving effect to any collections from,
or payments made by or on behalf of, any other Guarantor in respect of the
obligations of such other Guarantor under the Guarantee or pursuant to its
contribution obligations under the Indenture, will result in the obligations of
such Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under Federal or state law. Each Guarantor that makes a
payment or distribution under the Guarantee shall be entitled to contribution
from each other Guarantor in a pro rata amount based on the net assets of each
Guarantor determined in accordance with GAAP.
Notwithstanding the foregoing, but subject to the requirements described
below under "Consolidation or Merger," any Guarantee by a Guarantor shall be
automatically and unconditionally released and discharged upon any sale,
exchange or transfer to any Person (other than an Affiliate of ours) of all of
the capital stock of such subsidiary, or all or substantially all of the assets
of such subsidiary, pursuant to a transaction which is in compliance with the
Indenture.
Each Guarantee (including the payment of principal of, premium, if any, and
interest on the guaranteed notes) will rank pari passu in right of payment with
all other unsecured and unsubordinated indebtedness of such Guarantor and will
rank senior in right of payment to all subordinated indebtedness of such
Guarantor.
"GAAP" means generally accepted accounting principles in effect in the
United States which are applicable as of the original issue date of the
guaranteed notes under the Indenture and which are consistently applied for all
applicable periods.
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"Guarantee" means the guarantee by each of the Guarantors of the guaranteed
notes and our obligations under the Indenture.
"Guarantor" means (1) each of our subsidiaries which is a party to the
Indenture on the original issue date of the guaranteed notes under the Indenture
and (2) each other of our U.S. subsidiaries that is required to execute a
supplemental indenture and become a Guarantor subsequent to the original issue
date of the guaranteed notes under the Indenture.
OPTIONAL REDEMPTION
Our guaranteed notes will be redeemable, as a whole or in part, at our
option, at any time or from time to time, on at least 30 days, but not more than
60 days, prior notice mailed to the registered address of each holder of our
guaranteed notes. The redemption price will be equal to the greater of (1) 100%
of the principal amount of the guaranteed notes to be redeemed or (2) the sum of
the present values of the Remaining Scheduled Payments (as defined below)
discounted, on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months), at a rate equal to the sum of the Treasury Rate (as defined
below) and 15 basis points.
In the case of each of clause (1) and (2), accrued interest will be payable
to the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the guaranteed notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such guaranteed notes. "Independent Investment
Banker" means one of the Reference Treasury Dealers appointed by us.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the Reference Treasury Dealer Quotations for such redemption date
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third
business day preceding such redemption date.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Credit Suisse First Boston Corporation and their
respective successors. If the foregoing shall cease to be a primary U.S.
Government securities dealer (a "Primary Treasury Dealer"), we shall substitute
another nationally recognized investment banking firm that is a Primary Treasury
Dealer.
"Remaining Scheduled Payments" means, with respect to each guaranteed note
to be redeemed, the remaining scheduled payments of principal and interest on
such guaranteed note that would be due after the related redemption date but for
such redemption. If such redemption date is not an interest payment date with
respect to such guaranteed note, the amount of the next succeeding scheduled
interest payment on such guaranteed note will be reduced by the amount of
interest accrued on such guaranteed note to such redemption date.
On and after the redemption date, interest will cease to accrue on the
guaranteed notes or any portion of the guaranteed notes called for redemption
(unless we default in the payment of the redemption price and accrued interest).
On or before the redemption date, we will deposit with a paying agent (or the
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Trustee) money sufficient to pay the redemption price of and accrued interest on
the guaranteed notes to be redeemed on such date. If less than all of the
guaranteed notes are to be redeemed, the guaranteed notes to be redeemed shall
be selected by the Trustee by such method as the Trustee shall deem fair and
appropriate.
BOOK-ENTRY SYSTEM
The guaranteed notes initially will be represented by one or more global
securities deposited with The Depository Trust Company ("DTC") and registered in
the name of DTC's nominee. Except under the circumstances described below, we
will not issue the guaranteed notes in definitive form.
Upon the issuance of a global security, DTC will credit on its book-entry
registration and transfer system the accounts of persons designated by the
underwriters with the respective principal amounts of the guaranteed notes
represented by the global security. Ownership of beneficial interests in a
global security is limited to persons that have accounts with DTC or its nominee
("participants") or persons that may hold interests through participants.
Ownership of beneficial interests in a global security will be shown on, and the
transfer of that ownership may be effected only through, records maintained by
DTC or its nominee (for interests of persons who are participants) and records
maintained by participants (for interests of persons who are not participants).
The laws of some states require that certain purchasers of securities take
physical delivery of the securities in definitive form. Such limits and laws may
impair a purchaser's ability to transfer beneficial interests in a global
security.
DTC or its nominee will be considered the sole owner or holder of the
guaranteed notes represented by the global security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a global
security will not be entitled to have guaranteed notes represented by the global
security registered in their names, will not receive or be entitled to receive
physical delivery of guaranteed notes in definitive form, and will not be
considered the owners of record or holders of guaranteed notes under the
Indenture.
We will make principal and interest payments on guaranteed notes registered
in the name of DTC or its nominee to DTC or its nominee as the registered holder
of the relevant global security. None of us, the Trustee, any paying agent nor
the registrar for the guaranteed notes will have any responsibility or liability
for any aspect of the records relating to, or payment made on account of,
beneficial interests in a global security or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the relevant global security as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in a global security held through such participants will be governed
by standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participants.
If DTC at any time is unwilling or unable to continue as a depository and
we do not appoint a successor depository within 90 days, we will issue
guaranteed notes in definitive form in exchange for the entire global security.
In addition, we may at any time and in our sole discretion determine not to have
guaranteed notes represented by a global security and, in such event, we will
issue guaranteed notes in definitive form in exchange for the entire global
security. In any such instance, an owner of a beneficial interest in a global
security will be entitled to physical delivery in definitive form of guaranteed
notes represented by such global security equal in principal amount to such
beneficial interest and to have such guaranteed notes registered in the owner's
name. Guaranteed notes so issued in definitive form will be issued as registered
guaranteed notes in denominations of $1,000 and integral multiples thereof,
unless we specify otherwise.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that we believe to be reliable, but we do not
take responsibility for its accuracy.
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LIMITATION ON LIENS OF STOCK OR INDEBTEDNESS OF SIGNIFICANT SUBSIDIARIES
We will not, nor will we permit any Significant Subsidiary (as defined
below) to, create, assume, incur or suffer to exist any mortgage, security
interest, lien, pledge, charge or any other encumbrance (referred to in this
prospectus as a "lien") on any stock or indebtedness of any Significant
Subsidiary to secure any Obligation (as defined below) other than the guaranteed
notes, without in any such case effectively providing that all the guaranteed
notes will be directly secured equally and ratably with such Obligation. These
restrictions do not apply to debt secured by:
- liens on stock or indebtedness of a corporation existing at the time it
becomes a Significant Subsidiary;
- liens on stock or indebtedness of a Significant Subsidiary at the time of
the acquisition of such stock or indebtedness; and
- any extensions, renewals or replacements, in whole or in part, of any
lien referred to above. (Section 1008)
"Obligation" means every obligation for money borrowed and every obligation
evidenced by a bond, note, debenture or other similar instrument.
"Significant Subsidiary" means (1) any subsidiary which had total assets
that constituted at least 10% of our total assets on a consolidated basis
determined as of the date of the most recent quarterly consolidated balance
sheet or (2) any subsidiary which had revenues for the three-month period ending
on the date of the most recent quarterly consolidated statement of operations
that constituted at least 10% of our total revenues on a consolidated basis.
CONSOLIDATION OR MERGER
We may consolidate or merge with, or sell all or substantially all of our
assets to, another corporation. The remaining or acquiring corporation must
assume all of our responsibilities and liabilities under the Indenture,
including the payment of all amounts due on the guaranteed notes and performance
of the covenants. Under these circumstances, if our properties or assets become
subject to a lien not permitted by the Indenture, we will equally and ratably
secure the guaranteed notes. (Section 801)
EVENTS OF DEFAULT
An event of default under the Indenture with respect to the guaranteed
notes includes the following:
- failure to pay interest on the guaranteed notes for 30 days;
- failure to pay principal on the guaranteed notes when due;
- failure to perform any of the other covenants or agreements in the
Indenture relating to the guaranteed notes that continues for 60 days
after notice to us by the Trustee or holders of at least 10% in principal
amount of the outstanding guaranteed notes;
- failure to pay when due any obligation of ours or any subsidiary having
an aggregate principal amount outstanding of at least $5,000,000 that
continues for 10 days after notice to us by the Trustee or holders of at
least 10% in principal amount of the outstanding guaranteed notes; or
- any Guarantee ceases to be in full force and effect or is declared null
and void or any Guarantor denies that it has any further liability under
any Guarantee, or gives notice to such effect (other than by reason of
the termination of the Indenture or the release of any such Guarantee in
accordance with the terms of the Indenture); or
- certain events of bankruptcy, insolvency or reorganization relating to us
or any Significant Subsidiary. (Section 501)
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The Indenture provides that the Trustee will, with certain exceptions,
notify the holders of the guaranteed notes of any event of default known to it
within 90 days after the occurrence of such event. (Section 602)
If an event of default (other than with respect to certain events of
bankruptcy, insolvency or reorganization) occurs and is continuing for the
guaranteed notes, the Trustee or the holders of not less than 25% in principal
amount of the guaranteed notes may declare the principal amount to be due and
payable. In such a case, subject to certain conditions, the holders of a
majority in principal amount of the guaranteed notes then outstanding can
rescind and annul such declaration and its consequences. (Section 502)
We are required to file an annual officers' certificate with the Trustee
concerning our and the Guarantors' compliance with our respective obligations
under the Indenture. (Section 1004) Subject to the provisions of the Indenture
relating to the duties of the Trustee, the Trustee is not obligated to exercise
any of its rights or powers at the request or direction of any of the holders
unless they have offered the Trustee reasonable security or indemnity. (Section
603) If the holders provide reasonable security or indemnity, the holders of a
majority in principal amount of the outstanding guaranteed notes during an event
of default may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee under the Indenture or exercising any of
the Trustee's trusts or powers with respect to the guaranteed notes. (Section
512)
MODIFICATION AND AMENDMENT OF THE INDENTURE
We and the Guarantors may enter into supplemental indentures with the
Trustee without the consent of the holders of the guaranteed notes to, among
other things:
- evidence the assumption by a successor corporation of our obligations;
- appoint additional, separate or successor trustees to act under the
Indenture;
- add covenants for the protection of the holders of the guaranteed notes;
- cure any ambiguity or correct any inconsistency in the Indenture; and
- establish the form or terms of the guaranteed notes. (Section 901)
With the consent of the holders of 66 2/3% in principal amount of the
outstanding guaranteed notes, we and the Guarantors may execute supplemental
indentures with the Trustee to add provisions or change or eliminate any
provision of the Indenture or any supplemental indenture or to modify the rights
of the holders of the guaranteed notes. Without the consent of the holders of
all the guaranteed notes, no such supplemental indenture will, with respect to
the guaranteed notes:
- change their stated maturity;
- reduce their principal amount or their interest rate;
- reduce the principal amount payable upon their acceleration;
- change the place or currency in which they are payable;
- impair the right to institute suit for their or the Guarantee's
enforcement;
- reduce the percentage in principal amount of guaranteed notes, the
consent of the holders of which is required for any such supplemental
indenture;
- reduce the percentage in principal amount of guaranteed notes required
for waiver of compliance with certain provisions of the Indenture or
certain defaults;
- release any Guarantor from any of its obligations under the Guarantee or
the Indenture otherwise than in accordance with the Indenture; or
- modify provisions with respect to modification and waiver. (Section 902)
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DISCHARGE OF INDENTURE
At our option, we (1) will be discharged from all obligations under the
Indenture in respect of the guaranteed notes (except for certain obligations to
exchange or register the transfer of the guaranteed notes, replace stolen, lost
or mutilated guaranteed notes, maintain paying agencies and hold monies for
payment in trust) or (2) need not comply with certain restrictive covenants of
the Indenture (including the limitation on liens) with respect to the guaranteed
notes, in each case if we or any Guarantor deposits with the Trustee, in trust,
money or U.S. government obligations (or a combination thereof) sufficient to
pay the principal of and any premium or interest on the guaranteed notes when
due. In order to select either option, we must provide the Trustee with an
opinion of counsel or a ruling from, or published by, the Internal Revenue
Service, to the effect that holders of the guaranteed notes will not recognize
gain or loss for Federal income tax purposes, as if we had not exercised either
option. (Sections 1302 and 1304)
In the event we exercise our option under (2) above with respect to the
guaranteed notes and the guaranteed notes are declared due and payable because
of the occurrence of any event of default other than default with respect to
such obligations, the amount of money and U.S. government obligations on deposit
with the Trustee will be sufficient to pay amounts due on the guaranteed notes
at the time of their stated maturity but may not be sufficient to pay amounts
due on the guaranteed notes at the time of the acceleration resulting from such
event of default. We would remain liable, however, for such amounts. (Sections
1303 and 1304)
GOVERNING LAW
The Indenture, the guaranteed notes and the Guarantees will be governed by,
and construed in accordance with, the laws of the State of New York.
CONCERNING THE TRUSTEE
We maintain lines of credit and have customary banking relationships with
NBD Bank, the Trustee under the Indenture.
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UNDERWRITING
Subject to the terms and conditions contained in the underwriting
agreement, dated April 29, 1999, among us and the several underwriters, for whom
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse First
Boston Corporation are acting as representatives, we have agreed to sell to the
underwriters, and the underwriters have severally agreed to purchase from us,
the aggregate principal amount of the guaranteed notes set forth after their
respective names below. The obligations of the underwriters are subject to
certain conditions. The underwriters must purchase all of the guaranteed notes
if they purchase any.
PRINCIPAL AMOUNT
UNDERWRITER OF GUARANTEED NOTES
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Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $ 80,000,000
Credit Suisse First Boston Corporation...................... 20,000,000
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Total.......................................... $100,000,000
============
The underwriters have advised us that they propose initially to offer the
guaranteed notes to the public at the public offering price set forth on the
cover page of this prospectus, and to certain dealers at such price less a
concession not in excess of .4% of the principal amount of the guaranteed notes.
The underwriters may allow, and such dealers may reallow, a discount not in
excess of .25% of the principal amount of the guaranteed notes to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
The guaranteed notes are a new issue of securities with no established
trading market. We do not intend to apply for listing of the guaranteed notes on
a national securities exchange. We have been advised by the representatives that
they intend to make a market in the guaranteed notes, but they are not obligated
to do so and may discontinue market-making at any time without notice. We can
provide no assurance as to the liquidity of, or any trading market for, the
guaranteed notes.
In connection with the offering, the underwriters are permitted to engage
in certain transactions that stabilize the price of the guaranteed notes in
accordance with Regulation M under the Securities Act of 1934, as amended. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the guaranteed notes. If the underwriters create a
short position in the guaranteed notes in connection with the offering, i.e., if
they sell a greater aggregate principal amount of guaranteed notes than is set
forth on the cover of this prospectus, the underwriters may reduce that short
position by purchasing guaranteed notes in the open market. In general,
purchases of a security for the purpose of stabilization or to reduce a short
position could cause the price of the security to be higher than it might be in
the absence of such purchases. Such activities, if commenced, may be
discontinued at any time.
Neither we nor any underwriter makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the guaranteed notes. In addition, neither we nor any
underwriter makes any representation that the underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or if
indemnification is not allowed, to contribute to payments the underwriters may
be required to make because of those liabilities.
In the ordinary course of business, Merrill Lynch & Co. has from time to
time provided investment banking and financial advisory services to us and has
also acted as representative of various other underwriters in connection with
public offerings of our common stock in February 1997 and debt securities in May
1993.
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We estimate that we will spend $265,300 for fees and expenses associated
with the offering of the guaranteed notes.
LEGAL OPINIONS
Sachnoff & Weaver, Ltd., Chicago, Illinois, will pass on the validity of
the guaranteed notes and Guarantees for us. Winston & Strawn, Chicago, Illinois,
will pass on the validity of the guaranteed notes for the underwriters.
EXPERTS
The consolidated financial statements and schedules appearing in our Annual
Report on Form 10-K for the years ended December 31, 1998 and January 3, 1998
and for each of the two years in the period ended December 31, 1998 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 by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
The consolidated financial statements for the year ended December 28, 1996
incorporated by reference in this prospectus and elsewhere in the registration
statement have been audited by KPMG LLP, independent public accountants, as
indicated in their report with respect thereto, and is incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
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$100,000,000
USFREIGHTWAYS LOGO
USFREIGHTWAYS CORPORATION
6 1/2% GUARANTEED NOTES DUE MAY 1, 2009
---------------------
PROSPECTUS
---------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
APRIL 29, 1999
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