UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2001 Commission File Number 1-12149
CONSOLIDATED FREIGHTWAYS CORPORATION
Incorporated in the State of Delaware
I.R.S. Employer Identification No. 77-0425334
16400 S.E. CF Way, Vancouver, WA 98683
Telephone Number (360) 448-4000
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each
Exchange on
Title of Each Class Which Registered
Common Stock ($.01 par value) NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (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___X___ No_______
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ___X____
Aggregate market value of voting stock held by persons other than
Directors, Officers and those shareholders holding more than 5% of the
outstanding voting stock, based upon the closing price per share on the
National Automated System of the National Association of Securities
Dealers Inc. Automated Quotation System on March 31, 2002: $68,037,580.
Number of shares of Common Stock outstanding
as of March 31, 2002: 22,318,790
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV
Parts I, II and IV are incorporated by reference from Consolidated
Freightways Corporation's 2001 Annual Report to Shareholders. (Only
those portions referenced herein are incorporated in this Form 10-K.)
Part III
Part III is incorporated by reference from the proxy statement to be
filed in connection with the Company's 2002 Annual Meeting of
Shareholders. (Only those portions referenced herein are incorporated
in this Form 10-K.)
Page 1
CONSOLIDATED FREIGHTWAYS CORPORATION
FORM 10-K
Year Ended December 31, 2001
_______________________________________________________________________
INDEX
Item Page
PART I
1. Business 3
2. Properties 8
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 9
PART II
5. Market for the Registrant's Common Stock and
Related Stockholder Matters 9
6. Selected Financial Data 9
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
7A. Quantitative and Qualitative Disclosures About
Market Risk 10
8. Financial Statements and Supplementary Data 10
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 10
PART III
10. Directors and Executive Officers of the Registrant 11
11. Executive Compensation 11
12. Security Ownership of Certain Beneficial
Owners and Management 12
13. Certain Relationships and Related Transactions 12
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 12
Signatures 13
Index to Information Incorporated by Reference 14
Index to Financial Information 15
Page 2
CONSOLIDATED FREIGHTWAYS CORPORATION
FORM 10-K
Year Ended December 31, 2001
_______________________________________________________________________
PART I
ITEM 1. BUSINESS
(a) General Development of Business
Consolidated Freightways Corporation is a holding company that was
incorporated in Delaware in 1996. It is herein referred to as the
"Registrant" or "Company". The Company was formerly a subsidiary of CNF
Inc. (the former parent) through December 1, 1996. The Company
consists of Consolidated Freightways Corporation of Delaware (CFCD), a
long-haul freight transportation company, incorporated in 1958 as
successor to the original trucking company organized in 1929, and its
Canadian operations, including Canadian Freightways Ltd., Epic Express,
Milne & Craighead, Interport Sufferance Warehouses, Blackfoot
Logistics, and other related businesses; CF AirFreight Corporation, a
non-asset based provider of domestic and international air freight
forwarding and full and less-than-container load ocean freight
transportation; Redwood Systems, Inc., a non-asset based supply chain
management services provider; CF Risk Management, a captive insurance
company; and CF Funding LLC, a wholly owned, consolidated special
purpose company. The Company primarily provides less-than-truckload
transportation, air freight forwarding and supply chain management
services throughout the United States and Canada, as well as in Mexico
through a joint venture, and international freight services between the
United States and more than 80 countries.
(b) Financial Information About Industry Segments
The Company does not present segment disclosures because the air
freight forwarding, supply chain management and international freight
service offerings do not meet the quantitative thresholds of Statement
of Financial Accounting Standards No. 131 "Disclosures about Segments
of an Enterprise and Related Information."
(c) Narrative Description of Business
The Company, headquartered in Vancouver, Washington, is the holding
company of CFCD, a long-haul freight transportation company providing
less-than-truckload freight services throughout the United States and
Canada, as well as in Mexico through a joint venture, and international
freight services between the United States and more than 80 countries
through operating agreements with ocean carriers and a network of
international partners. Operations consist of an extensive
transportation network that typically moves shipments of manufactured
or non-perishable processed products having relatively high value and
requiring consistent, expedited service, compared to the bulk raw
materials characteristically transported by railroads, pipelines and
water carriers. Less-than-truckload (LTL) is an industry designation
for shipments weighing less than 10,000 pounds. CFCD is one of the
nation's largest LTL motor carriers in terms of 2001 revenues.
CFCD's primary competitors in the national LTL market are Yellow
Freight System, Inc., Roadway Express, Inc. and Arkansas Best
Corporation. CFCD also competes for LTL freight with regional LTL
motor carriers, small package carriers, private carriage and freight
forwarders. Competition for freight is based primarily upon price,
service consistency and transit time.
Page 3
As of December 31, 2001, CFCD operated 37,000 vehicle units including
inter-city tractors and trailers and pick-up and delivery units. It
had a network of 295 freight terminals, metro centers and regional
consolidation centers.
There is a broad diversity in the customers served, size of shipments,
commodities transported and length-of-haul. No single commodity
accounted for more than a small fraction of total revenues.
In 2001, CFCD operated in excess of 572 million linehaul miles. Road
equipment consists of one tractor pulling two 28-foot trailers or, to a
limited extent, one semi-trailer or three 28-foot trailers. CFCD
operates daily schedules utilizing relay drivers who drive
approximately eight to ten hours each day and sleeper teams, which in
2001, approximated 20% of all linehaul miles. Rail miles as a
percentage of total linehaul miles approximated 27%.
CFCD and several Canadian subsidiaries serve Canada through terminals
and warehouses in the provinces of Alberta, British Columbia, Manitoba,
New Brunswick, Nova Scotia, Ontario, Quebec, Saskatchewan and in the
Yukon Territory. The Canadian subsidiaries utilize 54 terminals and
warehouses and a fleet of over 1,555 trucks, tractors and trailers.
CFCD serves Mexico through participation in a joint venture, which was
formed in 1998. In 2002, the Company entered into an agreement to
acquire 100% ownership of the businesses operated by the joint venture.
Please refer to Note 3 of the 2001 Annual Report to Shareholders,
incorporated herein by reference, for a complete discussion of
acquisition.
CF AirFreight (CFAF) was incorporated in 2000 to acquire substantially
all of the assets and liabilities of privately held FirstAir, Inc., a
non-asset based provider of domestic and international air freight
forwarding and full and less-than-container load ocean freight
transportation. CFAF utilizes 12 terminals in the United States and 2
in Europe.
Redwood Systems, Inc. (Redwood), incorporated in 1997, is a third
party, non-asset based logistics company providing complete supply
chain management services including dedicated contract warehousing and
carriage, just-in-time delivery and specialized time-definite
distribution, information-based logistics services and worldwide multi-
modal logistics. Redwood operates 4 warehouses in the United States
and 3 in Mexico.
CF Risk Management (CFRM) is a captive insurance company that was
incorporated in 1999. Through CFRM, the Company participates in a
reinsurance pool to reinsure the majority of its workers' compensation
liability. Please refer to Note 2 of the 2001 Annual Report to
Shareholders, incorporated herein by reference, for a complete
discussion of CFRM.
CF Funding LLC (CFFC) is a wholly owned, consolidated special purpose
company that was formed in 2001. Through CFFC, the Company
participates in an accounts receivable securitization agreement to
provide for working capital and letter of credit needs of the Company.
Please refer to Note 5 of the 2001 Annual Report to Shareholders,
incorporated by reference herein, for a complete discussion of CFFC.
Cyclicality and Seasonality
Cyclicality and Seasonality: The months of September, October and
November of each year usually have the highest business levels while
January, February and December have the lowest. The LTL industry
is affected by seasonal fluctuations, which affect the amount of
freight to be transported. Freight shipments and operating results are
also adversely affected by inclement weather conditions.
Page 4
Employees
As of December 31, 2001, 81% of the Company's domestic employees were
represented by various labor unions, primarily the International
Brotherhood of Teamsters (IBT). The Company and the IBT are parties to
the National Master Freight Agreement, which expires on March 31, 2003.
Although the Company believes it will be able to successfully negotiate
a new contract with the IBT, there can be no assurance that it will be
able to do so, or that work stoppages will not occur, or that the terms
of any such contract will not be substantially less favorable than
those of the existing contract, any of which could have a material
adverse effect on the Company's financial position and results of
operations.
Labor costs, including fringe benefits, averaged approximately 66% of
the Company's 2001 revenues. The Company had approximately 18,100,
21,100 and 22,100 employees as of December 31, 2001, 2000 and 1999,
respectively. The decrease in number of employees in 2001 reflects
headcount reductions made by the Company to adjust to lower business
levels due to the economic slowdown.
Fuel
The average fuel cost per gallon, excluding taxes, was $0.866, $0.947
and $0.578 for the years ended December 31, 2001, 2000 and 1999,
respectively. The Company's rules tariff allows for a fuel surcharge
when the average cost per gallon of on-highway diesel fuel exceeds
$1.10, including tax, as determined from the Energy Information
Administration of the Department of Energy's publication of weekly
retail on-highway diesel prices. This provision of the rules tariff
became effective in July 1999 and remains in effect. However, there can
be no assurance that the Company will be able to maintain this
surcharge or successfully implement such surcharges in response to
increased fuel costs in the future.
Federal and State Regulation
Regulation of motor carriers has changed substantially in the last 22
years. The process started with the Motor Carrier Act of 1980, which
allowed easier access to the industry by new trucking companies,
removed many restrictions on expansion of services by existing
carriers, and increased price competition by narrowing the antitrust
immunities available to the industry's collective ratemaking
organizations. This deregulatory trend was continued by subsequent
legislation in 1982, 1986, 1993 and 1994. The process culminated with
federal pre-emption of most economic regulation of intrastate trucking
services by state agencies effective January 1, 1995, and with
legislation that terminated the Interstate Commerce Commission (ICC)
effective January 1, 1996.
Currently, the motor carrier industry is subject to specialized federal
regulation by a variety of agencies, including several which are units
of the United States Department of Transportation (DOT). Within the
DOT, the Federal Motor Carrier Safety Administration (FMCSA) has
inherited certain areas of jurisdiction from the ICC. These areas
relate chiefly to motor carrier registration, cargo and liability
insurance documentation, rules for extension of credit to motor carrier
customers, and rules for leasing of equipment by motor carriers from
owner-operators. The majority of FMCSA's resources, however, are
devoted to enforcement of comprehensive trucking safety regulations
relating to driver qualifications, drivers' hours of service, safety-
related equipment requirements, vehicle inspection and maintenance,
analysis of and record-keeping for accidents, and highway
transportation of hazardous materials. As the Company expands into
modes of transportation other than trucking, it faces regulation by
additional units of DOT. For example, CFCD must comply with
regulations of the Federal Railroad Administration and the Coast Guard,
respectively, to the extent that it arranges to move shipments of
hazardous materials in rail "piggyback" (trailer-on-flatcar) service or
in oceangoing cargo containers. Compliance with hazardous-materials
and cargo-security regulations of the DOT's Federal Aviation
Administration is required when CF AirFreight tenders shipments to air
carriers.
Page 5
The Company also faces specialized regulation by federal agencies
outside the DOT, especially as its international operations expand.
CFCD's ocean freight consolidation services are subject to regulation
by the Federal Maritime Commission, and its use of foreign-based truck
equipment and drivers for operations on U.S. territory is restricted by
regulations of the Customs Service and the Immigration and
Naturalization Service, respectively. The Company also is subject to
federal regulations of general applicability in such areas as labor
relations, employee benefits, occupational safety and environmental
matters.
At the state level, federal pre-emption of economic regulation does not
prevent the states from regulating motor vehicle safety on their
highways. In addition, federal law allows all states to impose
insurance requirements on motor carriers conducting business within
their borders, and empowers most states to require motor carriers
conducting interstate operations through their territory to make annual
filings verifying that they hold appropriate registrations from FMCSA.
Motor carriers also must pay state fuel taxes and vehicle registration
fees, which normally are apportioned on the basis of mileage operated
in each state.
Canadian Regulation
Although the provinces in Canada have regulatory authority over intra-
provincial operations of motor carriers, they have elected to
substantially eliminate intra-provincial economic regulation of the
general freight trucking industry. Nonetheless, the Canadian provinces
have implemented increasingly rigorous safety regulations of trucking
services. These regulations are applicable to both extra-provincial
and intra-provincial operations of motor carriers.
Mexican Regulation and Market Access
Mexico has a centralized system for registration and safety regulation
of motor carriers through its federal Secretariat of Commerce and
Transportation (SCT). The Company's participation in transportation
services between the United States and Mexico has been accomplished
through a joint venture with Mexican investors. However, as discussed
above, the Company is acquiring 100% ownership of the businesses
operated by the joint venture.
Page 6
General
The research and development activities of the Company are not
significant.
During 2001, 2000 and 1999 there was no single customer of the Company
that accounted for 10% or more of consolidated revenues.
The Company is subject to Federal, state and local environmental laws
and regulations relating to, among other things, contingency planning
for spills of petroleum products, and its disposal of waste oil.
Additionally, the Company is subject to significant regulations dealing
with underground fuel storage tanks. The Company stores some of its
fuel for its trucks and tractors in 228 underground tanks located in 36
states. The Company believes that it is in substantial compliance with
all such environmental laws and regulations and is not aware of any
leaks from such tanks that could reasonably be expected to have a
material adverse effect on the Company's business, financial position
or results of operations. However, there can be no assurances that
environmental matters existing with respect to the Company, or
compliance by the Company with laws relating to environmental matters,
will not have a material adverse effect on the Company's business,
financial position or results of operations.
The Company has in place policies and methods designed to conform with
these regulations. The Company estimates that capital expenditures for
upgrading underground tank systems and costs associated with cleaning
activities for 2002 will not be material.
The Company has received notices from the Environmental Protection
Agency (EPA) and others that it has been identified as a potentially
responsible party (PRP) under the Comprehensive Environmental Response
Compensation and Liability Act (CERCLA) or other Federal and state
environmental statutes at various Superfund sites. Under CERCLA, PRP's
are jointly and severally liable for all site remediation and expenses.
Based upon the advice of local environmental attorneys and cost studies
performed by environmental engineers hired by the EPA (or other Federal
or State agencies), the Company believes its obligations with respect
to such sites would not have a material adverse effect on its financial
position or results of operations.
(d) Financial Information About Foreign and Domestic Operations and
Export Sales
Geographic information is summarized in Note 11 on page 23 of the 2001
Annual Report to Shareholders and is incorporated herein by reference.
Page 7
ITEM 2. PROPERTIES
The following summarizes the terminals, freight service centers and
warehouses operated by the Company or its subsidiaries as of December
31, 2001. These major facilities generally consist of a large dock with
loading doors, a small office and a large yard for the movement of
tractors and trailers in the normal business operations. As the Company
continues to invest in its infrastructure to become more competitive
and efficient, some terminals will be consolidated and others expanded.
Owned Leased Total
217 153 370
The following table sets forth the location and square footage of the
principal facilities operated by the Company or its subsidiaries:
Location Square Footage
(c) Rancho Cucamonga, CA 419,064
(c) Guadalajara, Mexico 369,750
Mira Loma, CA 280,672
Chicago, IL 231,159
Carlisle, PA 151,100
Kansas City, MO 131,916
(d) Edmonton, Alberta, Canada 121,415
Memphis, TN 118,745
(e) Nashville, TN 118,622
(a) Indianapolis, IN 109,460
(e) Orlando, FL 101,557
South Chicago, IL 98,738
(c) St. Petersburg, FL 95,812
(d) Vancouver, British Columbia,
Canada 95,725
(a)(e) Minneapolis, MN 94,890
Charlotte, NC 89,204
St. Louis, MO 88,640
(e) Laredo, TX 87,136
Akron, OH 82,494
Sacramento, CA 81,286
Atlanta, GA 77,920
Houston, TX 77,346
Dallas, TX 75,358
Buffalo, NY 73,380
Brooklyn, NY 70,695
(e) Milwaukee, WI 70,661
Philadelphia, PA 70,620
(e) Salt Lake City, UT 68,480
Seattle, WA 59,720
(e) Phoenix, AZ 58,200
(d) Toronto, Ontario, Canada 53,431
(b) Springfield, MA 51,760
(a) Facility partially or wholly financed through the issuance of
industrial revenue bonds.
(b) Property is leased from a subsidiary of CNF Inc. through December 1, 2005.
(c) Dedicated contract warehouse and distribution facility operated by Redwood.
(d) Property is owned by one of the Company's Canadian subsidiaries.
(e) Property serves as collateral under one of the Company's financing
agreements.
ITEM 3. LEGAL PROCEEDINGS
The legal proceedings of the Company are summarized in Item 8.
Discussions of certain environmental matters are presented in Items 1
and 7.
Page 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock is listed for trading on the NASDAQ Stock
Market's National Market. The Company's Common Stock began trading on
December 3, 1996. The quarterly ranges of the market price of the
Company's Common Stock during the period January 1, 2000 to December
31, 2001 are presented in the "Quarterly Financial Data" on page 26 of
the 2001 Annual Report to Shareholders and are incorporated herein by
reference. Currently there are no cash dividends paid on the Company's
Common Stock. The Company is prohibited from paying dividends under
certain of its current financing agreements. The Company's future
dividend policy will be dependent on the circumstances then in
existence. There can be no assurance, however, that the Company will
pay any cash dividends on its Common Stock in the future.
Under the current stock repurchase plan authorized by the Board of
Directors, the Company is authorized to repurchase $19.5 million of
stock. However, the Company is prohibited from repurchasing its stock
by certain of its current financing agreements.
As of December 31, 2001, there were 32,000 holders of record of the
common stock ($.01 par value) of the Company.
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data is presented in the "Five Year Financial
Summary" on page 27 of the 2001 Annual Report to Shareholders and is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations is presented on pages 9 through 12 of the 2001 Annual
Report to Shareholders and is incorporated herein by reference.
Certain statements included or incorporated by reference herein
constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are subject to a
number of risks and uncertainties. Any such forward-looking statements
included or incorporated by reference herein should not be relied upon
as predictions of future events. Certain such forward-looking
statements can be identified by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "pro forma," "estimates," or
"anticipates" or the negative thereof or other variations thereof or
comparable terminology, or by discussions of strategy, plans or
intentions. Such forward-looking statements are necessarily dependent
on assumptions, data or methods that may be incorrect or imprecise and
they may be incapable of being realized. In that regard, the following
factors, among others, and in addition to matters discussed elsewhere
herein and in documents incorporated by reference herein, could cause
actual results and other matters to differ materially from those in
such forward-looking statements: general economic conditions; general
business conditions of customers served and other shifts in market
demand; increases in domestic and international competition; pricing
pressures, rate levels and capacity in the motor-freight industry;
future operating costs such as employee wages and benefits, fuel prices
and workers compensation and self-insurance claims; weather;
environmental and tax matters; changes in governmental regulation;
technology costs; legal claims; timing and amount of capital
expenditures; and failure to execute operating plans, freight mix
adjustment plans, yield improvements efforts, process and operations
improvements, cost reduction efforts, customer service initiatives;
pension funding requirements; and financing needs and availability.
As a result of the foregoing, no assurance can be given as to future
results of operations or financial condition.
Page 9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosures about market risk are
presented on page 10 of the 2001 Annual Report to Shareholders and are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Auditors' Report are
presented on pages 13 through 27 of the 2001 Annual Report to
Shareholders and are incorporated herein by reference. The unaudited
quarterly financial data is included on page 26 of the 2001 Annual
Report to Shareholders and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
Page 10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The identification of the Company's Directors is presented on pages 2
through 4 of the
Company's 2002 Proxy Statement and those pages are incorporated herein
by reference.
The Executive Officers of the Company, their ages at December 31, 2001
and their applicable business experience are as follows:
Patrick H. Blake, 52, President and Chief Executive Officer of the
Company and Chairman and Chief Executive Officer of CFCD since May
2000. Mr. Blake previously served as Executive Vice President -
Operations and Chief Operating Officer of the Company and President and
Chief Operating Officer of CFCD since May 1999. From December 1996
through May 1999, Mr. Blake served as Executive Vice President -
Operations of the Company and as Executive Vice President - Operations
of CFCD since July 1994. He was Vice President - Eastern Region of
CFCD from 1992-1994 and a Division Manager from 1985-1992.
Wayne M. Bolio, 45, Vice President - Human Resources of the Company
since March 2000. From April 1997 through February 2000, Mr. Bolio
served as Assistant General Counsel for the Company and was responsible
for its labor and employment legal matters. Prior to joining the
Company in April 1997, he was an attorney for Southern Pacific
Transportation Company from 1991, most recently as Assistant General
Counsel from 1993.
Martin W. Larson, 44, Senior Vice President - Sales and Marketing since
September 2001. Mr. Larson previously served as Chief Information
Officer since June 2001 and Vice President of eCommerce since September
2000. Prior to that, Mr. Larson served as Director of eCommerce and
Marketing Technology since June 1999 and Marketing Manager since 1995.
Stephen D. Richards, 58, Senior Vice President and General Counsel of
the Company since December 1996. Mr. Richards served as Vice President
and General Counsel of CFCD since September 1995. He was Deputy General
Counsel of the former parent for the preceding four years.
Thomas A. Paulsen, 58, Executive Vice President and Chief Operating
Officer of the Company and President and Chief Operating Officer of
CFCD since May 2000. Mr. Paulsen previously served as Senior Vice
President - Operations of CFCD from August 1998 through May 2000. Mr.
Paulsen was a Vice President of CFCD from March 1985 to July 1998.
Robert E. Wrightson, 62, Executive Vice President and Chief Financial
Officer of the Company since July 2000. Mr. Wrightson previously
served as Senior Vice President and Controller of the Company since
December 1996 and as Senior Vice President and Controller of CFCD since
July 1994. Prior to joining CFCD, he was Vice President and Controller
of the former parent, assuming that position in 1989.
Page 11
ITEM 11. EXECUTIVE COMPENSATION
The required information for Item 11 is presented on pages 13 through
19 of the Company's 2002 Proxy Statement, and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The required information for Item 12 is included on pages 9 through 11
of the Company's 2002 Proxy Statement and is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Exhibits Filed
1. Financial Statements
See Index to Financial Information.
2. Financial Statement Schedules
See Index to Financial Information.
3. Exhibits
See Index to Exhibits.
(b) Reports on Form 8-K
A Form 8-K was filed on October 25, 2001 disclosing a $50 million
revolving credit facility secured by the Company. Please refer to Note
5 of the 2001 Annual Report to Shareholders, incorporated herein by
reference, for a complete discussion of this agreement.
Page 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K
Annual Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
April 11, 2002 CONSOLIDATED FREIGHTWAYS CORPORATION
(Registrant)
By:/s/Robert E. Wrightson
Robert E. Wrightson
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
April 11, 2002 /s/Patrick H. Blake
Patrick H. Blake
President, Chief Executive Officer
and Director
April 11, 2002 /s/Robert E. Wrightson
Robert E. Wrightson
Executive Vice President and
Chief Financial Officer
April 11, 2002 /s/James R. Tener
James R. Tener
Vice President and Controller
April 11, 2002 /s/William D. Walsh
William D. Walsh, Chairman of the Board
April 11, 2002 /s/G. Robert Evans
G. Robert Evans, Director
April 11, 2002 /s/Paul B. Guenther
Paul B. Guenther, Director
April 11, 2002 /s/Henry C. Montgomery
Henry C. Montgomery, Director
Page 13
CONSOLIDATED FREIGHTWAYS CORPORATION
FORM 10-K
Year Ended December 31, 2001
_______________________________________________________________________
INDEX TO INFORMATION INCORPORATED BY REFERENCE
Consolidated Freightways Corporation and Subsidiaries
The following items are incorporated herein by reference from the
Company's 2001 Annual Report to Shareholders. The page references
refer to the Annual Report to Shareholders.
Item Page
Item 1(c). Narrative Description of Business 17, 19
Item 1(d). Financial Information About Foreign and Domestic
Operations and Export Sales 23
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 26
Item 6. Selected Financial Data 27
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 10
Item 8. Financial Statements and Supplementary Data 13-27
The following items are incorporated herein by reference from the
Company's 2002 Proxy Statement. The page references refer to the Proxy
Statement.
Item Page
Item 10. Directors and Executive Officers of the Registrant 2-4
Item 11. Executive Compensation 13-19
Item 12. Security Ownership of Certain Beneficial Owners
and Management 9-11
Page 14
CONSOLIDATED FREIGHTWAYS CORPORATION
FORM 10-K
Year Ended December 31, 2001
_______________________________________________________________________
INDEX TO FINANCIAL INFORMATION
Consolidated Freightways Corporation and Subsidiaries
The following Consolidated Financial Statements of Consolidated
Freightways Corporation and Subsidiaries appearing on pages 13 through
27 of the Company's 2001 Annual Report to Shareholders are incorporated
herein by reference:
Consolidated Balance Sheets - December 31, 2001 and 2000
Statements of Consolidated Operations - Years Ended December 31,
2001, 2000 and 1999
Statements of Consolidated Cash Flows - Years Ended December 31,
2001, 2000 and 1999
Statements of Consolidated Shareholders' Equity - Years Ended
December 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
In addition to the above, the following consolidated financial information
is filed as part of this Form 10-K:
Page
Consent of Independent Public Accountants 16
Report of Independent Public Accountants 16
Schedule II - Valuation and Qualifying Accounts 17
The other schedules have been omitted because either (1) they are
neither required nor applicable or (2) the required information has
been included in the consolidated financial statements or notes
thereto.
Page 15
SIGNATURE
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included and incorporated by reference in
this Form 10-K, into Consolidated Freightways Corporation's previously
filed Registration Statement File Nos. 333-16851, 333-16835, 333-25167,
333-95859, 333-85775, 333-95861 and 333-42456.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Portland, Oregon,
April 12, 2002
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Consolidated Freightways Corporation:
We have audited in accordance with auditing standards generally
accepted in the United States, the consolidated financial statements
included in Consolidated Freightways Corporation's 2001 Annual Report
to Shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated April 12, 2002. Our audit was made for
the purpose of forming an opinion on those statements taken as a whole.
The Schedule on page 17 is the responsibility of the Company's
management and is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial
data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Portland, Oregon,
April 12, 2002
Page 16
SCHEDULE II
CONSOLIDATED FREIGHTWAYS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 2001
(In thousands)
DESCRIPTION
ALLOWANCE FOR DOUBTFUL ACCOUNTS
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
2001 $12,887 $24,044 $ -- $(25,304)(a) $11,627
2000 $13,340 $18,468 $ -- $(18,921)(a) $12,887
1999 $11,413 $18,166 $ -- $(16,239)(a) $13,340
(a) Accounts written off net of recoveries.
DEFERRED TAX VALUATION
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
2001 $ -- $39,620 $ -- $ -- $39,620
2000 $ -- $ -- $ -- $ -- $ --
1999 $ -- $ -- $ -- $ -- $ --
Page 17
INDEX TO EXHIBITS
ITEM 14(a)(3)
Exhibit No.
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession:
2.1 Distribution Agreement between Consolidated Freightways
Corporation and Consolidated Freightways, Inc., dated
November 25, 1996. (Exhibit 2.1 to the Company's Form 8-K dated
March 12, 1997.) (*)
(3) Articles of incorporation and bylaws:
3.1 Amended and Restated Certificate of Incorporation of Consolidated
Freightways Corporation. (Exhibit 3.1 to the Company's Form 10
filed October 2, 1996.) (*)
3.2 Amended and Restated Bylaws of Consolidated Freightways
Corporation. (Exhibit 3.2 to the Company's Form 10-K for the
year ended December 31, 1998.) (*)
(10) Material Contracts:
10.1 Alternative Dispute Resolution Agreement Between Consolidated
Freightways Corporation and Consolidated Freightways, Inc., dated
as of December 2, 1996. (Exhibit 10.2 to the Company's Form 8-K
dated March 12, 1997.) (*)
10.2 Employee Benefit Matters Agreement between Consolidated
Freightways Corporation and Consolidated Freightways, Inc., dated
as of December 2, 1996. (Exhibit 10.3 to the Company's Form 8-K
dated March 12, 1997.) (*)
10.3 Tax Sharing Agreement between Consolidated Freightways
Corporation and Consolidated Freightways, Inc., dated as of
December 2, 1996. (Exhibit 10.4 to the Company's Form 8-K dated
March 12, 1997.) (*)
10.4 Reimbursement and Indemnification Agreement between
ConsolidatedFreightways Corporation of Delaware and Consolidated
Freightways,Inc., dated as of October 1, 1996. (Exhibit 10.5 to
the Company's Form 8-Kdated March 12, 1997.) (*)
10.5 Consolidated Freightways Corporation 1996 Stock Option and
Incentive Plan. (Exhibit 10.6 to the Company's Form 10 filed
October 2, 1996)(*)(#)
10.6 Consolidated Freightways Corporation 1996 Restricted Stock Award
Agreements. (Exhibit 10.8 to the Company's Form 10-K for the year
ended December 31, 1996.) (*)(#)
10.7 Consolidated Freightways Corporation Supplemental Executive
Retirement Plan. (Exhibit 10.11 to the Company's Form 10-K for
the year ended December 31, 1996.) (*)(#)
10.8 Reimbursement and Security Agreement dated July 3, 1997 between
Consolidated Freightways Corporation and CNF Transportation Inc.
(Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
June 30, 1997.)(*)
10.9 Consolidated Freightways Corporation 1999 Equity Incentive Plan
and Forms of Stock Options Agreements. (Exhibit 10.3 to the
Company's Form 10-Q for the quarter ended June 30, 1999.) (*)(#)
10.10 Form of Restricted Stock Award and Deferral Agreement under
the 1999 Equity Incentive Plan. (Exhibit 4.5 to the Company's
Registration Statement on Form S-8 dated August 23, 1999,
File No 333-85775.) (*)(#)
10.11 Consolidated Freightways Corporation Non-Employee Directors'
Equity Plan and Form of Stock Option Agreement. (Exhibit 10.4
to the Company's Form 10-Q for the quarter ended June 30,
1999.) (*)(#)
(*) Previously filed with the Securities and Exchange Commission and
incorporated by reference.
(#) Designates a contract or compensation plan for Management or Directors.
Page 18
INDEX TO EXHIBITS
ITEM 14(a)(3)
Exhibit No.
10.12 Employment Agreements with Senior Management. (Exhibits 10.21
to the Company's Form 10-K for the year ended December 31, 1998
and 10.1 to the Company Form 10-Q for the quarter ended June 30,
1999.) (*)(#)
10.13 Consolidated Freightways Corporation Management Change-of-Control
Plan. (Exhibit 10.22 to the Company's Form 10-K for the year ended
December 31, 1998.) (*)(#)
10.14 Settlement Agreement and Mutual Release of Claims between
Consolidated Freightways Corporation and W. Roger Curry dated
April 14, 2000. (Exhibit 10.1 to the Company's Form 10-Q for
the quarter ended March 31, 2000)(*)(#)
10.15 Agreement Resolving Certain Maters under the Tax Sharing Agreement
between CNF Transportation Inc. and Consolidated Freightways.
(Filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter
ended June 30, 2000)(*)
10.16 CF AirFreight Savings Plan (Exhibit 4.3 to the Company's
Registration Statement on Form S-8 dated July 28, 2000,
File No 333-42456.) (*)(#)
10.17 Employment Agreements with Senior Management. (Exhibit 10.24 to the
Company's Form 10-K for the year ended December 31, 2000)(*)(#)
10.18 Consolidated Freightways Corporation Deferred Compensation Plan for
Executives. (Exhibit 10.26 to the Company's Form 10-K for the year
ended December 31, 2000) (*)(#)
10.19 Receivables Sale and Contribution Agreement dated April 27, 2001
between Consolidated Freightways Corporation of Delaware, as
Originator, and CF Funding LLC, as Buyer. (Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended June 30, 2001.)(*)
10.20 Receivables Funding Agreement dated April 27, 2001 between CF
Funding LLC, as Borrower, Redwood Receivables Corporation, as
Conduit Lender, and General Electric Capital Corporation, as
Committed Lender and Administrative Agent. (Exhibit 10.1 to
the Company's Form 10-Q for the quarter ended June 30, 2001.)(*)
10.21 Servicing Agreement dated April 27, 2001 between CF Funding LLC,as
Borrower, Consolidated Freightways Corporation of Delaware, as
Servicer,
Redwood Receivables Corporation, as Conduit Lender, and General
Electric Capital Corporation, as Committed Lender and
Administrative Agent. (Exhibit 10.1 to the Company's Form 10-Q
for the quarter ended June 30, 2001.)(*)
10.22 Letter of Credit Agreement dated April 27, 2001 between
Consolidated Freightways Corporation, as Debtor, and General
Electric Capital Corporation, as Creditor. (Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended June 30, 2001.)(*)
10.23 First Amendment, dated May 2001, to the Letter of Credit Agreement
between Consolidated Freightways Corporation and General Electric
Capital Corporation dated April 27, 2001. (Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended June 30, 2001.)(*)
10.24 First Amendment, dated May 2001, to the Securitization Agreement
between Consolidated Freightways Corporation and General Electric
Capital Corporation dated April 27, 2001. (Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended June 30, 2001.)(*)
(*) Previously filed with the Securities and Exchange Commission and
incorporated by reference.
(#) Designates a contract or compensation plan for Management or Directors.
Page 19
INDEX TO EXHIBITS
ITEM 14(a)(3)
Exhibit No.
10.25 Second Amendment, dated July 19, 2001, to the Letter of Credit
Agreement between Consolidated Freightways Corporation and
General Electric Capital Corporation dated April 27, 2001.
(Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
June 30, 2001.)(*)
10.26 Second Amendment, dated July 19, 2001, to the Securitization
Agreement between Consolidated Freightways Corporation and
General Electric Capital Corporation dated April 27, 2001.
(Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
June 30, 2001.)(*)
10.27 Third Amendment, dated August 13, 2001, to the Letter of Credit
Agreement between Consolidated Freightways Corporation and
General Electric Capital Corporation dated April 27, 2001.
(Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
June 30, 2001.)(*)
10.28 Third Amendment, dated August 13, 2001, to the Securitization
Agreement between Consolidated Freightways Corporation and
General Electric Capital Corporation dated April 27, 2001.
(Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
June 30, 2001.)(*)
10.29 Fourth Amendment, dated October 18, 2001, to the Letter of Credit
Agreement between Consolidated Freightways Corporation and General
Electric Capital Corporation dated April 27, 2001. (Exhibit 10.1
to the Company's Form 10-Q for the quarter ended September 30,
2001.)(*)
10.30 Fourth Amendment, dated October 18, 2001, to the Securitization
Agreement between Consolidated Freightways Corporation and General
Electric Capital Corporation dated April 27, 2001. (Exhibit
10.2 to the Company's Form 10-Q for the quarter ended
September 30, 2001.)(*)
10.31 Fifth Amendment, dated October 24, 2001, to the Letter of Credit
Agreement between Consolidated Freightways Corporation and General
Electric Capital Corporation dated April 27, 2001. (Exhibit 10.3
to the Company's Form 10-Q for the quarter ended September 30,
2001.)(*)
10.32 Fifth Amendment, dated October 24, 2001, to the Securitization
Agreement between Consolidated Freightways Corporation and General
Electric Capital Corporation dated April 27, 2001. (Exhibit 10.4
to the Company's Form 10-Q for the quarter ended September 30,
2001.)(*)
10.33 Credit Agreement dated October 24, 2001 among Consolidated
Freightways Corporation, as Borrower and General Electric Capital
Corporation, as Lender. (Exhibit 99.1 to the Company's 8-K dated
as October 25, 2001.)(*)
10.34 First Amendment, dated November 2, 2001, to the Credit Agreement
among Consolidated Freightways Corporation, as Borrower and General
Electric Capital, as Lender, dated October 24, 2001.
10.35 Second Amendment, dated November 9, 2001, to the Credit Agreement
among Consolidated Freightways Corporation, as Borrower and
General Electric Capital, as Lender, dated October 24, 2001.
10.36 Third Amendment, dated November 20, 2001, to the Credit Agreement
among Consolidated Freightways Corporation, as Borrower and
General Electric Capital, as Lender, dated October 24, 2001.
10.37 Fourth Amendment, dated December 17, 2001, to the Credit Agreement
among Consolidated Freightways Corporation, as Borrower and
General Electric Capital, as Lender, dated October 24, 2001.
10.38 Sixth Amendment, dated December 21, 2001, to the Letter of Credit
Agreement between Consolidated Freightways Corporation and General
Electric Capital Corporation dated April 27, 2001.
(*) Previously filed with the Securities and Exchange Commission and
incorporated by reference.
(#) Designates a contract or compensation plan for Management or Directors.
Page 20
INDEX TO EXHIBITS
ITEM 14(a)(3)
Exhibit No.
10.39 Sixth Amendment, dated December 17, 2001, to the Securitization
Agreement between Consolidated Freightways Corporation and General
Electric Capital Corporation dated April 27, 2001.
10.40 Employment Agreements with Senior Management. (#)
(13) Annual Report to Security Holders:
Consolidated Freightways Corporation 2001 Annual Report to
Shareholders. (Only those portions referenced herein are incorporated
in this Form 10-K. Other portions such as the "Letter to Shareholders"
are not required and therefore not "filed" as part of this Form 10-K.)
(21) Subsidiaries of the Company
(23) Consents of Experts and Counsel
(23.1) Consent of Arthur Andersen LLP, independent public
accountants (included on page 16 with the auditor's report
in this Annual Report on Form 10-K)
(99) Additional Documents
(99.1) Confirmation of representations received from Arthur Andersen LLP
(*) Previously filed with the Securities and Exchange Commission and
incorporated by reference.
(#) Designates a contract or compensation plan for Management or Directors.