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, 1996 Commission File Number 1-12149
CONSOLIDATED FREIGHTWAYS CORPORATION
Incorporated in the State of Delaware
I.R.S. Employer Identification No. 77-0425334
175 Linfield Drive, Menlo Park, CA 94025
Telephone Number (415) 326-1700
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 Sections 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.
Yes ___X___ No ______
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 February 28, 1997: $126,329,074
Number of shares of Common Stock outstanding
as of February 28, 1997: 22,025,323
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV
Consolidated Freightways Corporation 1996 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 1997 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, 1996
___________________________________________________________________________
INDEX
Item Page
PART I
1. Business 3
2. Properties 7
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
PART II
5. Market for the Company's Common Stock and
Related Security Holder Matters 8
6. Selected Financial Data 8
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
8. Financial Statements and Supplementary Data 9
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 9
PART III
10. Directors and Executive Officers of the Company 9
11. Executive Compensation 9
12. Security Ownership of Certain Beneficial
Owners and Management 10
13. Certain Relationships and Related Transactions 10
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 10
SIGNATURES 11
INDEX TO FINANCIAL INFORMATION 13
Page 2
CONSOLIDATED FREIGHTWAYS CORPORATION
FORM 10-K
Year Ended December 31, 1996
___________________________________________________________________________
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". Formerly a subsidiary of CNF Transportation
Inc. (the former parent) through December 1, 1996, the Company was spun-off
in a tax free distribution (the Distribution) to shareholders of the former
parent at a rate of one Company share for every two shares outstanding of
the former parent. The Company consists of Consolidated Freightways
Corporation of Delaware (CFCD), a nationwide motor carrier, incorporated in
1958 as successor to the original trucking company organized in 1929, and
its Canadian operations, including Canadian Freightways, Ltd. (CFL), Epic
Express, Milne & Craighead, Canadian Sufferance Warehouses and other
related businesses; Redwood Systems, a third party logistics company, as
well as the Leland James Service Corporation (LJSC), an administrative
service provider. The Company provides less-than-truckload transportation
and logistics services nationwide and in parts of Canada, Mexico, the
Caribbean area, Latin and Central America, Europe and Pacific Rim
countries.
The Company established Redwood Systems Inc., in January 1997. Redwood
Systems Inc. is a third party, non-asset based logistics company that
offers 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.
(b) Financial Information About Industry Segments
The Company operates in a single industry segment.
(c) Narrative Description of Business
The Company, headquartered in Menlo Park, California, is the holding
company of CFCD, a full-service trucking company providing general freight
services nationwide and in Canada and Mexico, and one-stop international
freight service between the United States and 70 countries worldwide
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. The basic business
of the general freight industry is to transport freight that is
less-than-truckload (LTL), 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 1996 revenues.
Competition continues to increase in the industry with trends toward
regionalization, continued pricing pressures and new competitors moving
into the small shipment segment of the business. CFCD's primary
competitors in the national LTL market are Yellow Freight System, Inc.,
Roadway Express, Inc., Arkansas Best Corporation and Overnite
Transportation Co. 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. In an effort to provide faster service and
better compete, CFCD implemented a comprehensive reengineering of its line-
haul operations in October 1995. This reengineering, called the Business
Accelerator System (BAS), replaced CFCD's traditional hub-and-spoke network
with one that moves freight directly from point-to-point and streamlines
the freight network. BAS has the effect of reducing miles and handling,
thereby reducing transit times and costs as well as more efficiently using
system capacity. CFCD will seek to continue to improve service and reduce
costs by refining BAS.
Page 3
As a large carrier of LTL general commodity freight, at December 31, 1996,
CFCD operated approximately 40,300 vehicle units including pick-up and
delivery fleets in each area served, and a fleet of intercity tractors and
trailers. It had a network of 359 U.S. and Canadian freight terminals,
metro centers and regional consolidation centers. Under BAS, several
regional consolidation centers have become metro centers. The metro
centers reduce freight handling through more direct city to city service,
thereby improving productivity. CFCD's operations are supported by a
sophisticated data processing system for the control and management of the
business.
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.
CFCD operates daily schedules utilizing relay drivers who drive
approximately eight to ten hours each day and an increasing number of
sleeper teams which in 1996 approximated 15% of all linehaul miles in North
America. Road equipment consists of one tractor pulling two 28-foot double
trailers or, to a limited extent, one semi-trailer or three 28-foot
trailers. CFCD generally utilizes trailer equipment that is 102 inches in
width. CFCD believes that trailers in double or triple combination are
more efficient and economical, and safer, than a tractor and single
semi-trailer combination. In 1996, CFCD operated in excess of 449 million
linehaul miles in North America, almost all of which was conducted by
equipment in doubles and triples configuration. The accident frequency of
the triples configuration was lower than all other types of vehicle
combinations used by CFCD.
CFCD and several Canadian subsidiaries serve Canada through terminals in
the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Nova
Scotia, Ontario, Quebec, Saskatchewan and in the Yukon Territory. The
Canadian operations utilize a fleet of over 1,200 trucks, tractors and
trailers.
Cyclicality and Seasonality
The LTL trucking industry is affected directly by the state of the overall
economy and seasonal fluctuations, which affect the amount of freight to be
transported. Freight shipments, operating costs and earnings are also
affected adversely by inclement weather conditions. The months of
September, October and November of each year usually have the highest
business levels while the first quarter has the lowest.
Employees
At December 31, 1996, approximately 85% of the Company's domestic employees
were represented by various labor unions, primarily the International
Brotherhood of Teamsters (IBT). CFCD and the IBT are parties to the
National Master Freight Agreement which expires on March 31, 1998.
Although CFCD believes that it will be able to successfully negotiate a new
contract with the IBT, there can be no assurances 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
CFCD's business, financial condition or results of operations.
Page 4
Labor costs, including fringe benefits, averaged approximately 67% of the
Company's 1996 revenues. The Company had approximately 20,300 and 20,200
employees at December 31, 1996 and 1995, respectively. The Company had
approximately 22,000 employees at December 31, 1994. The decline from 1994
levels is primarily the result of the implementation of BAS.
Fuel
The Company's average annual fuel cost per gallon (without tax) was
$.578 in 1994 and $.576 in 1995. The Company experienced a significant
increase in fuel costs in 1996 as its average fuel cost per gallon
rose to $.697. To partially offset this increase, the Company instituted a
fuel surcharge program in the second half of the year, recovering
approximately $9.2 million or 80% of total increased fuel costs.
Significant increases in fuel prices, to the extent not offset by increases
in transportation rates, would have a material adverse effect on the
profitability of the Company. Historically, the Company has responded to
periods of sharply higher fuel prices by implementing fuel surcharge
programs or base rate increases, or both, to recover additional costs, but
there can be no assurance that the Company will be able to successfully
implement such surcharges or increases in response to increased fuel costs
in the future.
Federal and State Regulation
Regulation of motor carriers has changed substantially in recent 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 regulatory bodies effective January 1, 1995, and with
legislation which terminated the Interstate Commerce Commission (ICC)
effective January 1, 1996.
Currently, the motor carrier industry is subject to federal regulation by
the Federal Highway Administration (FHWA) and the Surface Transportation
Board (STB), both of which are units of the United States Department of
Transportation (DOT). The FHWA performs certain functions inherited from
the ICC relating chiefly to motor carrier registration, cargo and liability
insurance, extension of credit to motor carrier customers, and leasing of
equipment by motor carriers from owner-operators. In addition, the FHWA
enforces comprehensive trucking safety regulations relating to driver
qualifications, drivers' hours of service, safety-related equipment
requirements, vehicle inspection and maintenance, recordkeeping on
accidents, and transportation of hazardous materials. As pertinent to the
general freight trucking industry, the STB has authority to resolve certain
types of pricing disputes and authorize certain types of intercarrier
agreement under jurisdiction inherited from the ICC.
At the state level, federal preemption 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 FHWA. 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.
Page 5
Canadian Regulation
The provinces in Canada have regulatory authority over intra-provincial
operations of motor carriers. Federal legislation to phase in deregulation
of the inter-provincial motor carrier industry took effect January 1, 1988.
The new legislation relaxed economic regulation of inter-provincial
trucking by easing market entry regulations, and implemented safety
regulations of trucking services under Federal jurisdiction. CFCD wrote
off substantially all of the unamortized cost of its Canadian operating
authority in 1992.
General
The research and development activities of the Company are not significant.
During 1996, 1995 and 1994 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 approximately 350 underground tanks located in 48 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 competitive position, operations or financial condition.
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 condition 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 1997 will not be material.
The Company has received notices from the Environmental Protection Agency
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 statues at
various Superfund sites. Based upon cost studies performed by independent
third parties, 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.
Less than 5% of the Company's revenues are derived from international
business.
Page 6
ITEM 2. PROPERTIES
The following summarizes the terminals and freight service centers operated
by the Company at December 31, 1996. In general, the Company believes such
facilities are suitable and adequate to handle CFCD's current business
needs. These 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.
Owned Leased Total
207 152 359
The following table sets forth the location and square footage of CFCD's
principal freight handling facilities:
Location Square Footage
Mira Loma, CA 280,672
**Chicago, IL 231,159
Carlise, PA 151,100
Kansas City, MO 131,916
**Columbus, OH 118,774
**Memphis, TN 118,745
Nashville, TN 118,622
*Indianapolis, IN 109,460
Orlando, FL 101,557
*Minneapolis, MN 94,890
Charlotte, NC 89,204
St. Louis, MO 88,640
**Akron, OH 82,494
Sacramento, CA 81,286
Atlanta, GA 77,920
Houston, TX 77,346
Dallas, TX 75,358
*Freemont, IN 73,760
*Peru, IL 73,760
Buffalo, NY 73,380
Milwaukee, WI 70,661
Salt Lake City, UT 68,480
Seattle, WA 59,720
***Springfield, MA 51,760
Portland, OR 47,824
Phoenix, AZ 20,237
* Facility partially or wholly financed through the issuance of
industrial revenue bonds. Principal amount of debt is secured by
the property.
** Property pledged as collateral for the benefit of CNF Transportation
Inc. for workers' compensation claims prior to the Distribution, as
required under the Reimbursement and Indemnification Agreement dated
October 1, 1996.
*** Property is leased from a subsidiary of CNF Transportation Inc. through
December 1, 2005.
Page 7
ITEM 3. LEGAL PROCEEDINGS
The legal proceedings of the Company are summarized in Note 9 on pages 19
and 20 of the 1996 Annual Report to Shareholders and are incorporated
herein by reference. Discussions of certain environmental matters are
presented in Item 1 and Item 7.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
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 market price range of the common stock for the
period December 3, 1996 to December 31, 1996 was $7.125 to $8.875.
Currently there are no cash dividends paid on the Company's common stock.
The Company presently expects that it will not pay a dividend in 1997. The
Company's dividend policy thereafter will be dependent on the circumstances
then in existence. There can be no assurance, however, that the Company
will pay any cash dividends on its common stock in the future.
As of December 31, 1996, there were 13,500 holders of record of the common
stock ($.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 23 of the 1996 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 in the "Financial Review and Management Discussion"
on pages 10 and 11 of the 1996 Annual Report to Shareholders and is
incorporated herein by reference. Certain statements included and
incorporated by reference herein, including certain statements under
"Financial Review and Management Discussion" referred to above, constitute
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, and are subject to a number of
risks and uncertainties. In that regard, the following factors, among
others, could cause actual results and other matters to differ materially
from those in such statements: changes in general business and economic
conditions; increasing domestic and international competition and pricing
pressure; changes in fuel prices; uncertainty regarding the Company's
ability to improve results of operations; labor matters, including changes
in labor costs, renegotiation of labor contracts and the risk of work
stoppages or strikes; changes in governmental regulation; and environmental
and tax matters. As a result of the foregoing, no assurance can be given
as to future results of operations or financial condition.
Page 8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Auditors' Report are presented on
pages 12 through 21, inclusive, of the 1996 Annual Report to Shareholders
and are incorporated herein by reference. The unaudited quarterly
financial data is included on page 22 of the 1996 Annual Report to
Shareholders and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The identification of the Company's Directors is presented on pages 2 and 3
of the Company's 1997 Proxy Statement and those pages are incorporated
herein by reference.
The Executive Officers of the Company, their ages at December 31, 1996 and
their applicable business experience are as follows:
W. Roger Curry, 58, President and Chief Executive Officer of the Company
since December 2, 1996. Mr. Curry has served as President and Chief
Executive Officer of CFCD since July 1994. Mr. Curry served as a Senior
Vice President of the former parent from 1986 to December 2, 1996. In 1991,
he was elected President of Emery Air Freight Corporation, relinquishing
the position in 1994 to become President of CFCD.
Patrick H. Blake, 47, Executive Vice President - Operations of the Company
since December 2, 1996. Mr. Blake has served 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.
David F. Morrison, 43, Executive Vice President and Chief Financial Officer
of the Company since December 2, 1996. Mr. Morrison served as Vice
President and Treasurer of the former parent from October 1991 to November
1, 1996 when he became Executive Vice President and Chief Financial Officer
of CFCD.
Stephen D. Richards, 53, Senior Vice President and General Counsel of the
Company since December 2, 1996. Mr. Richards has been Vice President and
General Counsel of CFCD since September 1995. He was Deputy General
Counsel of the former parent for the preceding four years.
Robert E. Wrightson, 57, Senior Vice President and Controller of the
Company since December 2, 1996. Mr. Wrightson has served 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.
ITEM 11. EXECUTIVE COMPENSATION
The required information for Item 11 is presented on pages 6 through 13,
inclusive, of the Company's 1997 Proxy Statement, and those pages are
incorporated herein by reference.
Page 9
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The required information for Item 12 is included on pages 4 and 15 of the
Company's 1997 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, dated November 7, 1996, was filed under Item 5, Other Events,
to report the record date and distribution date for the spin-off of the
Company from its former parent. Included in the filing were Unaudited Pro
Forma Condensed Statements of Operations for the three months ended March
31, June 30 and September 30, 1996 and March 31, June 30, September 30,
and December 31, 1995; an Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of September 30 1996; Unaudited Pro Forma Condensed
Consolidated Statement of Operations for the Nine Months Ended September
30, 1996 and an Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1995.
A Form 8-K, dated November 25, 1996, was filed under Item 5, Other Events,
to report the finalization of certain agreements pursuant to the
Distribution between Consolidated Freightways Corporation and CNF
Transportation Inc., (the former parent) and CNF Service Company, a
subsidiary of CNF Transportation Inc.
Page 10
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.
CONSOLIDATED FREIGHTWAYS CORPORATION
(Registrant)
March 26, 1997 /s/W. Roger Curry
W. Roger Curry
President and Chief Executive Officer
March 26, 1997 /s/David F. Morrison
David F. Morrison
Executive Vice President, Chief
Financial Officer and Treasurer
March 26, 1997 /s/Robert E. Wrightson
Robert E. Wrightson
Senior Vice President and Controller
Page 11
SIGNATURES
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.
March 26, 1997 /s/William D. Walsh
William D. Walsh, Chairman of the Board
March 26, 1997 /s/W. Roger Curry
W. Roger Curry
President, Chief Executive Officer
and Director
March 26, 1997 /s/G. Robert Evans
G. Robert Evans, Director
March 26, 1997 /s/Paul B. Guenther
Paul B. Guenther, Director
March 26, 1997 /s/John M. Lillie
John M. Lillie, Director
Page 12
CONSOLIDATED FREIGHTWAYS CORPORATION
FORM 10-K
Year Ended December 31, 1996
___________________________________________________________________________
INDEX TO FINANCIAL INFORMATION
Consolidated Freightways Corporation and Subsidiaries
The following Consolidated Financial Statements of Consolidated Freightways
Corporation and Subsidiaries appearing on pages 12 through 21, inclusive,
of the Company's 1996 Annual Report to Shareholders are incorporated herein
by reference:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1996 and 1995
Statements of Consolidated Operations - Years Ended December 31, 1996,
1995 and 1994
Statements of Consolidated Cash Flows - Years Ended December 31, 1996,
1995 and 1994
Statements of Consolidated Shareholders' Equity - Years Ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
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 14
Report of Independent Public Accountants 14
Schedule II - Valuation and Qualifying Accounts 15
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 13
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 the Company's previously filed Registration Statement File Nos. 333-
16851 and 333-16835.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Portland, Oregon
March 26, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Consolidated Freightways Corporation:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Consolidated Freightways
Corporation's 1996 Annual Report to Shareholders incorporated by reference
in this Form 10-K, and have issued our report thereon dated January 23,
1997. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedule on page 15 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
January 23, 1997
Page 14
SCHEDULE II
CONSOLIDATED FREIGHTWAYS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1996
(In thousands)
DESCRIPTION
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
1996 $ 9,349 $ 6,534 $ - $ (6,191)(a) $ 9,692
1995 $11,049 $ 2,326 $ - $ (4,026)(a) $ 9,349
1994 $12,274 $ 1,930 $ - $ (3,155)(a) $11,049
a) Accounts written off net of recoveries.
Page 15
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. (*)
(4) Articles of incorporation and bylaws:
4.1 Amended and Restated Certificate of Incorporation of Consolidated
Freightways Corporation. (*)
4.2 Amended and Restated Bylaws of Consolidated Freightways
Corporation. (*)
(10) Material Contracts:
10.1 Transition Services Agreement between Consolidated Freightways
Corporation and CNF Service Company, Inc., dated as of
December 2, 1996. (*)
10.2 Alternative Dispute Resolution Agreement Between Consolidated
Freightways Corporation and Consolidated Freightways, Inc.,
dated as of December 2, 1996. (*)
10.3 Employee Benefit Matters Agreement between Consolidated
Freightways Corporation and Consolidated Freightways, Inc.,
dated as of December 2, 1996. (*)
10.4 Tax Sharing Agreement between Consolidated Freightways
Corporation and Consolidated Freightways, Inc., dated as of
December 2, 1996. (*)
10.5 Reimbursement and Indemnification Agreement between Consolidated
Freightways Corporation of Delaware and Consolidated Freightways,
Inc., dated as of October 1, 1996. (*)
10.6 Consolidated Freightways Corporation 1996 Stock Option and
Incentive Plan. (*)(#)
10.7 Loan and Security Agreement among Consolidated Freightways
Corporation of Delaware, BankAmerica Business Credit Inc. and
various other financial institutions dated as of November 27, 1996.
10.8 Consolidated Freightways Corporation 1996 Restricted Stock Award
Agreements. (#)
10.9 Consolidated Freightways Corporation Senior Executive Incentive
Plan for 1997. (#)
10.10 Consolidated Freightways Corporation Deferred Compensation Plan
for Executives. (#)
10.11 Consolidated Freightways Corporation Supplemental Executive
Retirement Plan. (#)
10.12 Consolidated Freightways Inc. Executive Split-Dollar Life
Insurance Plan. (#)
(13) Annual Report to Security Holders:
Consolidated Freightways Corporation 1996 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.)
(*) Previously filed with the Securities and Exchange Commission and
incorporated by reference.
(#) Designates a contract or compensation plan for Management or Directors.
Page 16
INDEX TO EXHIBITS
ITEM 14(a)(3)
Exhibit No.
(21) Significant Subsidiaries of the Company
(27) Financial Data Schedule
(99) Additional Exhibits
99.1 Press Release dated December 3, 1996. (*)
(*) Previously filed with the Securities and Exchange Commission and
incorporated by reference.
Page 17