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<SEC-DOCUMENT>0000950134-00-001761.txt : 20000310
<SEC-HEADER>0000950134-00-001761.hdr.sgml : 20000310
ACCESSION NUMBER: 0000950134-00-001761
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 19991231
FILED AS OF DATE: 20000309
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ARKANSAS BEST CORP /DE/
CENTRAL INDEX KEY: 0000894405
STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213]
IRS NUMBER: 710673405
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 000-19969
FILM NUMBER: 564212
BUSINESS ADDRESS:
STREET 1: 3801 OLD GREENWOOD RD
CITY: FORT SMITH
STATE: AR
ZIP: 72903
BUSINESS PHONE: 5017856000
MAIL ADDRESS:
STREET 1: P O BOX 48
CITY: FORT SMITH
STATE: AR
ZIP: 72902
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<DESCRIPTION>FORM 10-K405 FOR YEAR ENDED DECEMBER 31, 1999
<TEXT>
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year December 31, 1999.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
---------- ----------
Commission file number 0-19969
ARKANSAS BEST CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 71-0673405
----------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3801 Old Greenwood Road, Fort Smith, Arkansas 72903
- ------------------------------------------------ ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 501-785-6000
Securities registered pursuant to Section 12(b) of the Act:
None
---------------------
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
- ----------------------------------------- -----------------------
<S> <C>
Common Stock, $.01 Par Value ......................... Nasdaq Stock Market/NMS
$2.875 Series A Cumulative Convertible
exchangeable Preferred Stock, $.01 Par Value ......... Nasdaq Stock Market/NMS
</TABLE>
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 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].
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of February 18, 2000, was $196,001,193.
The number of shares of Common Stock, $.01 par value, outstanding as of February
18, 2000, was 19,762,133.
Documents incorporated by reference into the Form 10-K
1) The following sections of the 1999 Annual Report to Shareholders:
- Market and Dividend Information
- Selected Financial Data
- Management's Discussion and Analysis of Financial Condition and
Results of Operations
- Quantitative and Qualitative Disclosures About Market Risk
- Consolidated Financial Statements
2) Proxy Statement for the Annual Shareholder's meeting to be held April 19,
2000 INTERNET:www.arkbest.com
1
<PAGE> 2
ARKANSAS BEST CORPORATION
FORM 10-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
NUMBER NUMBER
<S> <C> <C>
PART I
Item 1. Business .................................................................................... 3
Item 2. Properties .................................................................................. 11
Item 3. Legal Proceedings ........................................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders ......................................... 12
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters ....................... 13
Item 6. Selected Financial Data ..................................................................... 13
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................................................. 13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk................................... 13
Item 8. Financial Statements and Supplementary Data ................................................. 13
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ........................................................ 13
PART III
Item 10. Directors and Executive Officers of the Registrant .......................................... 14
Item 11. Executive Compensation ...................................................................... 14
Item 12. Security Ownership of Certain Beneficial Owners and Management .............................. 14
Item 13. Certain Relationships and Related Transactions .............................................. 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ............................. 15
</TABLE>
2
<PAGE> 3
PART I
Except for historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Arkansas Best Corporation's (the "Company") actual results could differ
materially from those discussed here. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in Item 1,
"Business."
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
CORPORATE PROFILE
Arkansas Best Corporation (the "Company") is a diversified holding company
engaged through its subsidiaries primarily in motor carrier transportation
operations, intermodal transportation operations and truck tire retreading and
new tire sales (see Note N of the Consolidated Financial Statements appearing on
pages 39 through 41 of the registrant's Annual Report). Principal subsidiaries
are ABF Freight System, Inc. ("ABF"); Treadco, Inc. ("Treadco"); Clipper
Express Company and related companies ("Clipper"); G.I. Trucking Company ("G.I.
Trucking"); and FleetNet America, LLC; and until July 15, 1997, Cardinal Freight
Carriers, Inc. ("Cardinal").
HISTORICAL BACKGROUND
The Company was publicly owned from 1969 until 1988, when
it was acquired in a leveraged buyout by a corporation organized by Kelso &
Company, L.P. ("Kelso").
In 1992, the Company completed an initial public offering of Common Stock par
value $.01 (the "Common Stock"). The Company also repurchased substantially all
the remaining shares of Common Stock beneficially owned by Kelso, thus ending
Kelso's investment in the Company.
In 1993, the Company completed a public offering of 1,495,000 shares of
preferred stock ("Preferred Stock").
In August 1995, pursuant to a tender offer, a wholly owned subsidiary of the
Company purchased the outstanding shares of common stock of WorldWay Corporation
("WorldWay"), at a price of $11 per share (the "Acquisition"). WorldWay was a
publicly-held company engaged through its subsidiaries in motor carrier
operations. The total purchase price of WorldWay amounted to approximately $76
million. Assets acquired had an estimated fair value of approximately $313.0
million and liabilities assumed had a fair value of approximately $252.0
million.
During the first half of 1999, the Company acquired 2,457,000 shares of Treadco
for $23.7 million via a cash tender offer pursuant to a definitive merger
agreement. As a result of the transaction, Treadco became a wholly owned
subsidiary of the Company (see Note R appearing on page 45 of the registrant's
Annual Report).
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The response to this portion of Item 1 is included in "Note N - Operating
Segment Data" appearing on pages 39 through 41 of the registrant's Annual Report
to Shareholders for the year ended December 31, 1999, and is incorporated herein
by reference under Item 14.
3
<PAGE> 4
ITEM 1. BUSINESS - continued
(c) NARRATIVE DESCRIPTION OF BUSINESS
GENERAL
During the periods being reported on, the Company operated in five defined
reportable operating segments: 1) ABF; 2) G.I. Trucking; 3) Cardinal, which was
sold in July 1997; 4) Clipper; and 5) Treadco. Note N to the Consolidated
Financial Statements contains additional information regarding the Company's
operating segments and appears on pages 39 through 41 of the registrant's Annual
Report to Shareholders for the year ended December 31, 1999, and is incorporated
herein by reference under Item 14.
DISCONTINUED OPERATIONS
As of June 30, 1997, and prior periods since 1995, the Company was engaged in
providing logistics services, including warehousing and distribution, through
two wholly owned subsidiaries, The Complete Logistics Company ("CLC") and
Integrated Distribution, Inc. ("IDI"). CLC was sold on August 8, 1997. In
September, 1997, the Company completed a formal plan to exit the logistics
segment by disposing of IDI. The Company closed the sale of IDI on October 31,
1997.
At December 31, 1998, the Company was engaged in international ocean freight
services through its subsidiary, CaroTrans International, Inc. ("Clipper
International"), a non-vessel operating common carrier (N.V.O.C.C.). On February
28, 1999, the Company completed a formal plan to exit its international ocean
freight N.V.O.C.C. services by disposing of the business and assets of Clipper
International. On April 17, 1999, the Company closed the sale of the business
and certain assets of Clipper International, including the trade name "CaroTrans
International, Inc." Remaining assets are being liquidated by the Company.
EMPLOYEES
At December 31, 1999, the Company and its subsidiaries had a total of 15,269
employees of which approximately 62% are members of a labor union.
MOTOR CARRIER OPERATIONS
LESS-THAN-TRUCKLOAD MOTOR CARRIER OPERATIONS
GENERAL
The Company's less-than-truckload ("LTL") motor carrier operations are conducted
through ABF, ABF Freight System (B.C.), Ltd. ("ABF-BC"), ABF Freight System
Canada, Ltd. ("ABF-Canada"), ABF Cartage, Inc. ("Cartage"), and Land-Marine
Cargo, Inc. ("Land-Marine") (collectively "ABF") and G.I. Trucking Company
("G.I. Trucking").
LTL carriers offer services to shippers transporting a wide variety of large and
small shipments to geographically dispersed destinations. LTL carriers pick up
small shipments throughout the vicinity of a local terminal and consolidate them
at the terminal. Shipments are consolidated by destination for transportation by
intercity units to their destination cities or to distribution centers.
Shipments from various locations can be reconsolidated for transportation to
distant destinations, other distribution centers or local terminals. Once
delivered to a local terminal, a shipment is delivered to the customer by local
trucks operating from the terminal. In some cases, when a sufficient number of
different shipments at one origin terminal are going to a common destination,
they can be combined to make a full trailerload. A trailer is then dispatched to
that destination without the freight having to be rehandled.
4
<PAGE> 5
ITEM 1. BUSINESS - continued
COMPETITION, PRICING AND INDUSTRY FACTORS
The trucking industry is highly competitive. The Company's LTL motor carrier
subsidiaries actively compete for freight business with other national, regional
and local motor carriers and, to a lesser extent, with private carriage, freight
forwarders, railroads and airlines. Competition is based primarily on personal
relationships, price and service. In general, most of the principal motor
carriers use similar tariffs to rate interstate shipments. Competition for
freight revenue, however, has resulted in discounting which effectively reduces
prices paid by shippers. In an effort to maintain and improve its market share,
the Company's LTL motor carrier subsidiaries offer and negotiate various
discounts.
The trucking industry, including the Company's LTL motor carrier subsidiaries,
is directly affected by the state of the overall economy. The trucking industry
faces rising costs including government regulations on safety, maintenance and
fuel economy. In addition, seasonal fluctuations also affect tonnage to be
transported. Freight shipments, operating costs and earnings also are affected
adversely by inclement weather conditions.
INSURANCE AND SAFETY
Generally, claims exposure in the motor carrier industry consists of cargo loss
and damage, auto liability, property damage and bodily injury and workers'
compensation. The Company's motor carrier subsidiaries are effectively
self-insured for the first $100,000 of each cargo loss, $300,000 of each
workers' compensation loss and $200,000 of each general and auto liability loss,
plus an aggregate of $750,000 of auto liability losses between $200,000 and
$500,000. The Company maintains insurance adequate to cover losses in excess of
such amounts. The Company has been able to obtain adequate coverage and is not
aware of problems in the foreseeable future which would significantly impair its
ability to obtain adequate coverage at comparable rates for its motor carrier
operations.
ABF FREIGHT SYSTEM, INC.
Headquartered in Fort Smith, Arkansas, ABF is the largest subsidiary of the
Company. ABF currently accounts for approximately 74% of the Company's
consolidated revenues. ABF is the fourth largest national LTL motor carrier in
the United States, based on revenues for 1999 as reported to the U.S. Department
of Transportation ("D.O.T."). ABF provides direct service to over 98.6% of the
cities in the United States having a population of 25,000 or more. ABF provides
interstate and intrastate direct service to more than 40,000 points through 311
terminals in all 50 states, Canada and Puerto Rico. Through an alliance and
relationships with trucking companies in Mexico, ABF provides motor carrier
services to customers in that country as well. ABF was incorporated in Delaware
in 1982 and is the successor to Arkansas Motor Freight, a business originally
organized in 1935.
ABF offers long-haul, interstate, regional and intrastate transportation of
general commodities through LTL, assured services and expedited shipments.
General commodities include all freight except hazardous waste, dangerous
explosives, commodities of exceptionally high value, commodities in bulk and
those requiring special equipment. ABF's general commodities shipments differ
from shipments of bulk raw materials which are commonly transported by railroad,
pipeline and water carrier.
General commodities transported by ABF include, among other things, food,
textiles, apparel, furniture, appliances, chemicals, non-bulk petroleum
products, rubber, plastics, metal and metal products, wood, glass, automotive
parts, machinery and miscellaneous manufactured products. During the year ended
December 31, 1999, no single customer accounted for more than 3% of ABF's
revenues, and the ten largest customers accounted for less than 9% of ABF's
revenues.
5
<PAGE> 6
ITEM 1. BUSINESS - continued
EMPLOYEES
At December 31, 1999, ABF employed 12,190 persons. Employee compensation and
related costs are the largest components of ABF's operating expenses. In 1999,
such costs amounted to 64.1% of ABF's revenues. Approximately 79% of ABF's
employees are covered under a collective bargaining agreement with the
International Brotherhood of Teamsters ("IBT"). The IBT voted in favor of a new
labor contract on April 9, 1998. The contract was effective April 1, 1998, and
is for a five-year term. The contract provides for an average annual wage and
benefit increase during its term of approximately 2.3%, including a lump-sum
payment of $750 for the first contract year for all active employees who are IBT
members. During 1997 employee wages and benefits increased an average of 3.9%.
Under the terms of the National Agreement, ABF is required to contribute to
various multiemployer pension plans maintained for the benefit of its employees
who are members of the IBT. Amendments to the Employee Retirement Income
Security Act of 1974 ("ERISA") pursuant to the Multiemployer Pension Plan
Amendments Act of 1980 (the "MPPA Act") substantially expanded the potential
liabilities of employers who participate in such plans. Under ERISA, as amended
by the MPPA Act, an employer who contributes to a multiemployer pension plan and
the members of such employer's controlled group are jointly and severally liable
for their proportionate share of the plan's unfunded liabilities in the event
the employer ceases to have an obligation to contribute to the plan or
substantially reduces its contributions to the plan (i.e., in the event of plan
termination or withdrawal by the Company from the multiemployer plans). Although
the Company has no current information regarding its potential liability under
ERISA in the event it wholly or partially ceases to have an obligation to
contribute or substantially reduces its contributions to the multiemployer plans
to which it currently contributes, management believes that such liability would
be material. The Company has no intention of ceasing to contribute or of
substantially reducing its contributions to such multiemployer plans.
Four of the five largest LTL carriers are unionized and generally pay comparable
amounts for wages and benefits. Non-union companies typically pay employees less
than union companies. Due to its national reputation and its high pay scale, ABF
has not historically experienced any significant difficulty in attracting or
retaining qualified drivers.
G.I. TRUCKING COMPANY
Headquartered in La Mirada, California, G.I. Trucking is one of the five largest
Western states-based non-union regional LTL motor carrier. G.I. Trucking offers
one to three-day regional service through a network of 33 terminals and 37 agent
partners in 15 Western and Southwestern states including Hawaii and Alaska. G.I.
Trucking accounted for approximately 8% of the Company's consolidated revenues
in 1999. During the year ended December 31, 1999, G.I. Trucking's largest
customer and its suppliers accounted for more than 23% of G.I. Trucking's
revenues.
G.I. Trucking provides transcontinental service through a partnership with three
other regional carriers through three major hub terminals located in the Midwest
and the East Coast. Customer service is enhanced through EDI communications
between the partners.
G.I. Trucking's linehaul structure utilizes company solo drivers, company
sleeper teams, contract carriers and one-way carriers, providing flexibility in
maintaining customer service and lane balance. G.I. Trucking's family of
electronic services include EDI information, customer FAX capabilities, tracing,
rating and reporting interface.
6
<PAGE> 7
ITEM 1. BUSINESS - continued
CARDINAL
The Company's truckload motor carrier operations were conducted primarily
through Cardinal. On July 15, 1997, the Company closed the sale of Cardinal.
INTERMODAL OPERATIONS
GENERAL
The Company's intermodal transportation operations are conducted through
Clipper, headquartered in Lemont, Illinois. Clipper operates through two
business units: Clipper LTL and Clipper Freight Management ("CFM"), and offers
domestic intermodal freight services, utilizing a variety of transportation
modes including rail, over-the-road and air.
COMPETITION, PRICING AND INDUSTRY FACTORS
Clipper operates in highly competitive environments. Competition is based on the
most consistent transit times, freight rates, damage-free shipments and on-time
delivery of freight. Clipper competes with other intermodal transportation
operations, freight forwarders, railroads and airlines, as well as with other
national and regional LTL and truckload motor carrier operations. Intermodal
transportation operations are akin to motor carrier operations in terms of
market conditions, with revenues being weaker in the first quarter and stronger
in the months of September and October. Freight shipments, operating costs and
earnings are also affected by inclement weather. The reliability of rail
services, a critical component of Clipper's ability to provide service to its
customers, was a significant problem during 1998, causing Clipper to experience
lost revenue and higher operating costs. In the fourth quarter of 1998, Clipper
experienced some improvements in the on-time service level of its rail
suppliers. In 1999, rail service continued to improve; however, in certain
lanes, rail service remained inconsistent. Clipper is aggressively trying to
regain this lost business but is faced with competition from truckload carriers
and other rail service providers. During the fourth quarter of 1999, Clipper
experienced some success in regaining intermodal customers lost.
CLIPPER
Clipper's revenues accounted for approximately 7% of consolidated revenues for
1999. During the year ended December 31, 1999, no single customer accounted for
more than 7% of Clipper's revenues.
CLIPPER LTL
Clipper LTL operates primarily through Clipper Exxpress Company ("Clipper
Exxpress"). Management believes Clipper Exxpress is one of the ten largest
intermodal consolidators and forwarders of LTL shipments in the United States.
Clipper LTL accounts for 36% of Clipper's 1999 revenues.
Clipper LTL's collection and distribution network consists of 32 service centers
geographically dispersed throughout the United States. Clipper LTL's selection
of markets depends on size (lane density), availability of quality rail service
and truck line-haul service, length of haul and competitor profile. Traffic
moving between its ten most significant market pairs generates approximately 33%
of Clipper's LTL revenue. A majority of Clipper's LTL revenue is derived from
long-haul, metro area-to-metro area transportation.
Although pickup and delivery and terminal handling is performed by agents,
Clipper LTL has an operations and customer service staff located at or near many
of its principal agents' terminals to monitor service levels and provide an
interface between customers and agents.
7
<PAGE> 8
ITEM 1. BUSINESS - continued
CFM
CFM provides services through Agricultural Express of America, Inc. (d/b/a/
Clipper Controlled Logistics), Agile Freight System, Inc. (d/b/a Clipper Highway
Services), and partially through Clipper Exxpress Company, accounting for
approximately 64% of Clipper's revenues during 1999.
CFM provides an extensive list of transportation services such as intermodal and
truck brokerage, warehousing, consolidation, transloading, repacking, and other
ancillary services. As an intermodal marketing operation, CFM arranges for loads
to be picked up by a drayage company, tenders them to a railroad, and then
arranges for a drayage company to deliver the shipment on the other end of the
move. CFM's role in this process is to select the most cost-effective means to
provide quality service, and to expedite movement of the loads at various
interface points to ensure seamless door-to-door transportation.
Clipper Controlled Logistics provides high quality, temperature-controlled
intermodal transportation service to fruit and produce brokers, growers,
shippers and receivers and supermarket chains, primarily from the West to the
Midwest, Canada, and the eastern United States. At December 31, 1999, Clipper
Controlled Logistics owns or leases 694 temperature-controlled trailers that it
deploys in the seasonal fruit and vegetable markets. These markets are carefully
selected in order to take advantage of various seasonally high rates, which peak
at different times of the year. By focusing on the spot market for produce
transport, Clipper Controlled Logistics is able to generate, on average, a
higher revenue per load compared to standard temperature-controlled carriers
that pursue more stable year-round temperature-controlled freight. Clipper
Controlled Logistics' services also include transportation of non-produce loads
requiring protective services and leasing trailers during non-peak produce
seasons.
Clipper Highway Services is a non-asset intensive, premium service, long-haul
truckload carrier that primarily utilizes two-person driver teams provided by
contractors and provides truck brokering. Clipper Highway Services provides
expedited truckload service in tightly focused long-haul lanes that originate or
terminate near a Clipper LTL market. Clipper Highway Services moves full
truckloads of consolidated LTL shipments for Clipper LTL, as well as for other
shippers.
TREADCO
GENERAL
The Company's tire operations are conducted by Treadco, the nation's largest
independent tire retreader for the trucking industry and the largest independent
commercial truck tire dealer. Treadco has 59 locations in the U.S. located
primarily in the south, southwest, lower midwest and west. Treadco's revenues
currently account for approximately 11% of the Company's consolidated revenues.
COMPETITION, PRICING AND INDUSTRY FACTORS
The trucking industry faces rising costs including government regulations on
safety, maintenance and fuel economy. As a result, trucking companies
continually seek ways to obtain more mileage from new tires and less expensive
ways to replace old tires. Retreading tires is significantly less expensive than
buying new tires. The retread tire market is highly competitive. No single
dealer dominates the retread market. While Treadco is the nation's largest
independent retreader for the trucking industry, Goodyear is the largest single
provider of retread services, which it offers through its dealers who also sell
new Goodyear tires. Historically, Treadco was a Bandag Incorporated ("Bandag")
franchisee and competed primarily against smaller independent dealers in a
highly fragmented market. Following the termination of the Bandag franchise
agreements in 1996, Treadco has seen increased competition as Bandag has granted
additional franchises in some locations currently being served by Treadco.
During the fourth quarter of 1997, Bandag acquired five multi-location
8
<PAGE> 9
ITEM 1. BUSINESS - continued
Bandag franchises, through a subsidiary, Tire Distribution Systems, Inc.
("TDS"). The combination of the five franchises made TDS the second largest
truck tire retreader and the second largest commercial truck tire dealer. New
tire manufacturers are also entering the retreading market. This competition has
led to increased pricing pressures in the marketplace. Treadco's ability to
offer excellent and reliable 24-hour service through its extensive coverage
network of 57 service facilities to its niche market customers, competitive
pricing, central administration and its inventory and other information
technology systems appeal to fleet customers and enable Treadco to compete
effectively.
The new truck tire business is also highly competitive and includes various
manufacturers, dealers and retailers. In addition, the new tire market is being
impacted by lower cost imports. As a result, new tire prices remain highly
competitive. Treadco effectively competes in the new tire market by offering
excellent service and competitive pricing. Generally, demand for new truck tires
is closely related to the strength of regional and, ultimately national
economies.
In addition to sales of new tires and retread tires, Treadco also provides
tire-related services, ranging from full scale tire management programs, which
customers have outsourced to Treadco, to wheel and alignment services provided
at specially equipped Treadco service centers to emergency roadside tire-related
services. The service portion of Treadco's business provided 11.6% of Treadco's
1999 revenue.
Treadco experiences reduced demand for retreads and new truck tires in the
winter months due to more difficult driving and tire maintenance conditions
resulting from the inclement weather. Treadco's operations are somewhat
seasonal, with the third quarter of the calendar year generally having the
highest sales.
INSURANCE AND SAFETY
Generally, claims exposure for Treadco consists of general and auto liability,
property damage and bodily injury and workers' compensation. Treadco is
effectively self-insured for the first $300,000 of each workers' compensation
loss and $200,000 of each general and auto liability loss. Treadco maintains
insurance adequate to cover losses in excess of such amounts. Treadco has been
able to obtain adequate coverage and is not aware of problems in the foreseeable
future which would significantly impair its ability to obtain adequate coverage
at comparable rates for its tire operations.
BUSINESS OPERATIONS
Treadco uses the precure process to retread tires at all of its locations. The
precure process uses a specific tread design measured from strips of tread
rubber, cut and applied to the casing. A flexible rubber envelope then seals
each tire which is placed in a bonding chamber. Air pressure in the chamber
creates uniform force, applying pressure on all points of the tire. The tread is
bonded to the casing by using a combination of heat and air pressure to cure the
encased tire in the bonding chamber.
The principal raw material in manufacturing retreaded truck tires is synthetic
rubber, which is comprised of styrene and butadiene, both petroleum derivatives.
Thus, the commodity price of oil directly affects the price of the Company's
principal raw materials. However, because retreading uses roughly one-third of
the amount of oil that the manufacture of new tires requires, retreads maintain
a competitive price advantage in comparison to new tires, particularly when oil
prices increase.
In October 1995, Treadco reached an agreement with Oliver Rubber Company
("Oliver") to be a supplier of equipment and related materials for Treadco's
truck tire precure retreading business. Under the Oliver license agreements,
Treadco purchases from Oliver precured tread rubber and bonding cushion gum and
PNEUFLEX tread rubber (collectively "Rubber Products"). Treadco's obligation to
purchase Rubber Products from Oliver is subject to (i) Oliver's continuing to
produce Rubber Products of no less quality and durability than it presently
produces, and (ii) Oliver's overall pricing program for Treadco.
9
<PAGE> 10
ITEM 1. BUSINESS - continued
Treadco's sales and marketing strategy is based on its service strengths,
network of production and sales facilities and strong regional reputation. None
of Treadco's customers for retreads and new tires, including ABF or other
affiliates, represent more than 2% of Treadco's revenues for 1999.
ENVIRONMENTAL AND OTHER GOVERNMENT REGULATIONS
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. In addition, the Company is
subject to significant regulations dealing with underground fuel storage tanks.
The Company's subsidiaries store some fuel for their tractors and trucks in
approximately 78 underground tanks located in 27 states. Maintenance of such
tanks is regulated at the federal and, in some cases, state levels. The Company
believes that it is in substantial compliance with all such regulations. The
Company is not aware of any leaks from such tanks that could reasonably be
expected to have a material adverse effect on the Company. Environmental
regulations were adopted by the United States Environmental Protection Agency
("EPA") that required the Company to upgrade its underground tank systems by
December 1998. The Company successfully completed the upgrades prior to December
31, 1998.
The Company has received notices from the EPA and others that it has been
identified as a potentially responsible party ("PRP") under the Comprehensive
Environmental Response Compensation and Liability Act or other federal or state
environmental statutes at several hazardous waste sites. After investigating the
Company's or its subsidiaries' involvement in waste disposal or waste generation
at such sites, the Company has either agreed to de minimis settlements
(aggregating approximately $300,000 over the last ten years), or believes its
obligations with respect to such sites would involve immaterial monetary
liability, although there can be no assurances in this regard.
Treadco is affected by a number of governmental regulations relating to the
development, production and sale of retreaded and new tires, the raw materials
used to manufacture such products (including petroleum, styrene and butadiene),
and to environmental and safety matters. In addition, the retreading process
creates rubber particulate, or "dust," which requires gathering and disposal,
and Treadco disposes of used and nonretreadable tire casings, both of which
require compliance with environmental and disposal laws. In some situations,
Treadco could be liable for disposal problems, even if the situation resulted
from previous conduct of Treadco that was lawful at the time or from improper
conduct of, or conditions caused by, persons engaged by Treadco to dispose of
particulate and discarded casings. Such cleanup costs or costs associated with
compliance with environmental laws applicable to the tire retreading process
could be substantial and have a material adverse effect on Treadco's financial
condition. Treadco believes that it is in substantial compliance with all laws
applicable to such operations, however, and is not aware of any situation or
condition that could reasonably be expected to have a material adverse effect on
Treadco's operations or financial condition.
As of December 31, 1999, the Company has accrued approximately $2.7 million to
provide for environmental-related liabilities. The Company's environmental
accrual is based on management's best estimate of the actual liability. The
Company's estimate is founded on management's experience in dealing with similar
environmental matters and on actual testing performed at some sites. Management
believes that the accrual is adequate to cover environmental liabilities based
on the present environmental regulations. Accruals for environmental liabilities
are included in the balance sheet as accrued expenses.
10
<PAGE> 11
ITEM 2. PROPERTIES
The Company owns its executive office building in Fort Smith, Arkansas which
contains approximately 196,000 square feet.
ABF
ABF currently operates out of 311 terminal facilities of which it owns 81,
leases 49 from an affiliate and leases the remainder from non-affiliates. ABF's
principal terminal facilities are as follows:
<TABLE>
<CAPTION>
No. of Doors Square Footage (1)
------------ ------------------
<S> <C> <C>
Owned:
Dayton, Ohio 330 252,940
Ellenwood, Georgia 228 153,209
South Chicago, Illinois 276 149,610
Carlisle, Pennsylvania (East) 101 72,497
Dallas, Texas 108 87,534
Leased from affiliate, Transport Realty:
North Little Rock, Arkansas 195 138,830
Albuquerque, New Mexico 85 67,700
Carlisle, Pennsylvania (West) 140 66,484
Pico Rivera, California 94 52,900
Leased from non-affiliate:
Winston-Salem, North Carolina 150 160,700
Salt Lake City, Utah 92 35,910
</TABLE>
(1) Includes shop and driver room square footage.
G.I. TRUCKING
G.I. Trucking currently operates out of 70 terminal facilities of which 33 are
company operated and 37 are agent terminals. G.I. Trucking owns 11 facilities,
leases 3 facilities from an affiliate and the remainder of the facilities are
leased from non-affiliates.
CLIPPER
Clipper operates from 32 service centers, geographically dispersed throughout
the United States. Clipper leases all of its facilities.
TREADCO
Treadco currently operates from 59 locations. Treadco owns 26 production and
sales facilities and leases the remainder of its production and sales facilities
from non-affiliates.
11
<PAGE> 12
ITEM 3. LEGAL PROCEEDINGS
Various legal actions, the majority of which arise in the normal course of
business, are pending. None of these legal actions is expected to have a
material adverse effect on the Company's financial condition or results of
operations. The Company maintains liability insurance against most risks arising
out of the normal course of its business.
On October 30, 1995, Treadco filed a lawsuit in Arkansas State Court, alleging
that Bandag Incorporated ("Bandag") and certain of its officers and employees
had violated Arkansas statutory and common law in attempting to solicit
Treadco's employees to work for Bandag or its competing franchisees and
attempting to divert customers from Treadco. The Federal District Court ruled
that under terms of Treadco's franchise agreements with Bandag, all of the
issues involved in Treadco's lawsuit against Bandag were to be decided by
arbitration. The arbitration hearing began September 21, 1998, and in December
1998, prior to the completion of the arbitration, to avoid the uncertainty, cost
and burden of continuing the arbitration action, Treadco entered into a
settlement with Bandag, and certain of Bandag's current and former employees,
resolving all disputes and liabilities arising between them. Under the
settlement terms, Treadco received a one-time payment of $9,995,000 in
settlement of all the Company's claims. The settlement agreement represented a
compromise in settlement of disputed liabilities, obligations and claims and did
not constitute an admission of liability by either Treadco or Bandag. The
settlement resulted in other income for Treadco of $9,124,000. The settlement
payment was used to reduce Treadco's outstanding borrowings under its Revolving
Credit Agreement, which was terminated on June 25, 1999.
Treadco has been, in 1999, and will continue to be impacted by a provision in
the settlement agreement that the terms of the settlement remain confidential,
except with respect to certain disclosure requirements. Other than the
confidentiality provisions of the settlement agreement, Bandag and Treadco's
relationship in the future will be governed by the various state and federal
laws applicable to competitors.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of shareholders during the fourth quarter
ended December 31, 1999.
12
<PAGE> 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information set forth under the Caption "Market and Dividend Information" on
page 7 of the registrant's Annual Report to Shareholders for the year ended
December 31, 1999, is incorporated by reference under Item 14 herein.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Selected Financial Data" on page 6
of the registrant's Annual Report to Shareholders for the year ended December
31, 1999, is incorporated by reference under Item 14 herein.
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," appearing on pages 8 through 16 of the registrant's Annual Report
to Shareholders for the year ended December 31, 1999, is incorporated by
reference under Item 14 herein.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
"Quantitative and Qualitative Disclosures About Market Risk," appearing on page
17 of the registrant's Annual Report to Shareholders for the year ended December
31, 1999, is incorporated by reference under Item 14 herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of independent auditors, consolidated financial statements and
supplementary information, appearing on pages 19 through 45 of the registrant's
Annual Report to Shareholders for the year ended December 31, 1999, are
incorporated by reference under Item 14 herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
13
<PAGE> 14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors," "Directors of the Company,"
"Board of Directors and Committees," "Executive Officers of the Company" and
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's Proxy
Statement for the Annual Meeting of Stockholders to be filed by the Company with
the Securities and Exchange Commission ("Definitive Proxy Statement"), set forth
certain information with respect to the directors, nominees for election as
directors and executive officers of the Company and are incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The sections entitled "Executive Compensation," "Aggregated Options/SAR
Exercises in Last Fiscal Year and Fiscal Year-End Options/SAR Values,"
"Options/SAR Grants Table," "Executive Compensation and Development Committee
Interlocks and Insider Participation," "Retirement and Savings Plan,"
"Employment Contracts and Termination of Employment and Change in Control
Arrangements" and the paragraph concerning directors' compensation in the
section entitled "Board of Directors and Committees" in the Company's Definitive
Proxy Statement, set forth certain information with respect to compensation of
management of the Company and are incorporated herein by reference, provided,
however, the information contained in the sections entitled "Report on Executive
Compensation by the Executive Compensation and Development Committee and Stock
Option Committee" and "Stock Performance Graph" are not incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Principal Shareholders and Management Ownership" in the
Company's Definitive Proxy Statement sets forth certain information with respect
to the ownership of the Company's voting securities and is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Certain Transactions and Relationships" in the Company's
Definitive Proxy Statement sets forth certain information with respect to
relations of and transactions by management of the Company and is incorporated
herein by reference.
14
<PAGE> 15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) FINANCIAL STATEMENTS
The following information appearing in the 1999 Annual Report to Shareholders is
incorporated by reference in this Form 10-K Annual Report as Exhibit (13):
<TABLE>
<CAPTION>
Page
<S> <C>
Market for Registrant's Common Equity and
Related Shareholder Matters 7
Selected Financial Data 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 16
Quantitative and Qualitative Disclosures About Market Risk 17
Consolidated Financial Statements 19 - 45
Report of Independent Auditors 19
Selected Quarterly Financial Data 44
</TABLE>
With the exception of the aforementioned information, the 1999 Annual Report to
Shareholders is not deemed filed as part of this report. Financial statements
other than those listed are omitted for the reason that they are not required or
are not applicable. The following additional financial data should be read in
conjunction with the consolidated financial statements in such 1999 Annual
Report to Shareholders.
(a)(2) FINANCIAL STATEMENT SCHEDULES
Page
For the years ended December 31, 1999, 1998 and 1997:
Schedule II - Valuation and Qualifying Accounts 18
Schedules other than those listed are omitted for the reason that they are not
required or are not applicable, or the required information is shown in the
financial statements or notes thereto.
(a)(3) EXHIBITS
The exhibits filed with this report are listed in the Exhibit Index which is
submitted as a separate section of this report.
(b) REPORTS ON FORM 8-K
None
(c) EXHIBITS
See Item 14(a)(3) above.
10.9 The Company's National Master Freight Agreement covering over-the-road
and local cartage employees of private, common, contract and local cartage
carriers for the period of April 1, 1998 through March 31, 2003.
(d) FINANCIAL STATEMENTS SCHEDULES
The response to this portion of Item 14 is submitted as a separate section
of this report.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ARKANSAS BEST CORPORATION
BY: /s/ David E. Loeffler
------------------------------------
David E. Loeffler
Vice President - Chief Financial
Officer and Treasurer
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William A. Marquard Chairman of the Board, Director March 7, 2000
- ------------------------------------- ---------------------------
William A. Marquard
/s/ Robert A. Young, III Director, Chief Executive Officer March 7, 2000
- ------------------------------------- and President (Principal ---------------------------
Robert A. Young, III Executive Officer)
/s/ David E. Loeffler Vice President - Chief Financial Officer March 7, 2000
- ------------------------------------- and Treasurer ---------------------------
David E. Loeffler
/s/ Frank Edelstein Director March 7, 2000
- ------------------------------------- ---------------------------
Frank Edelstein
/s/ Arthur J. Fritz Director March 7, 2000
- ------------------------------------- ---------------------------
Arthur J. Fritz
/s/ John H. Morris Director March 7, 2000
- ------------------------------------- ---------------------------
John H. Morris
/s/ Alan. J. Zakon Director March 7, 2000
- ------------------------------------- ---------------------------
Alan J. Zakon
</TABLE>
16
<PAGE> 17
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
ARKANSAS BEST CORPORATION
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER ACCOUNTS DEDUCTIONS - BALANCE AT
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE END OF PERIOD
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1999:
Deducted from asset accounts:
Allowance for doubtful
accounts receivable............ $ 7,051 $ 2,967 $ 2,664(A) $ 6,907(B) $ 5,775
==========================================================================================================================
Year Ended December 31, 1998:
Deducted from asset accounts:
Allowance for doubtful
accounts receivable............ $ 6,815 $ 4,275 $ 2,980(A) $ 7,019(B) $ 7,051
==========================================================================================================================
Year Ended December 31, 1997:
Deducted from asset accounts:
Allowance for doubtful ......... 7,926(B)
accounts receivable ............ $ 4,750 $ 6,819 $ 3,235(A) $ 63(C) $ 6,815
==========================================================================================================================
</TABLE>
Note A - Recoveries of amounts previously written off.
Note B - Uncollectible accounts written off.
Note C - The allowance for doubtful accounts for Cardinal Freight Carriers, Inc.
as of the date of sale.
NOTE: ALL INFORMATION REFLECTED IN THE ABOVE TABLE HAS BEEN RESTATED TO
EXCLUDE VALUATION ALLOWANCES OF DISCONTINUED OPERATIONS.
17
<PAGE> 18
FORM 10-K -- ITEM 14(c)
EXHIBIT INDEX
ARKANSAS BEST CORPORATION
The following exhibits are filed with this report or are incorporated by
reference to previously filed material.
<TABLE>
<CAPTION>
EXHIBIT
NO.
<S> <C>
3.1* Restated Certificate of Incorporation of the Company (previously
filed as Exhibit 3.1 to the Company's Registration Statement on Form
S-1 under the Securities Act of 1933 filed with the Commission on
March 17, 1992, Commission File No. 33-46483, and incorporated
herein by reference).
3.2* Amended and Restated Bylaws of the Company (previously filed as
Exhibit 3.2 to the Company's Registration Statement on Form S-1
under the Securities Act of 1933 filed with the Commission on March
17, 1992, Commission File No. 33-46483, and incorporated herein by
reference).
4.1* Form of Indenture, between the Company and Harris Trust and Savings
Bank, with respect to $2.875 Series A Cumulative Convertible
Exchangeable Preferred Stock (previously filed as Exhibit 4.4 to
Amendment No. 2 to the Company's Registration Statement on Form S-1
under the Securities Act of 1933 filed with the Commission on
January 26, 1993, Commission File No. 33-56184, and incorporated
herein by reference).
4.2* Indenture between Carolina Freight Corporation and First Union
National Bank, Trustee with respect to 6 1/4% Convertible
Subordinated Debentures Due 2011 (previously filed as Exhibit 4-A to
the Carolina Freight Corporation's Registration Statement on Form
S-3 filed with the Commission on April 11, 1986, Commission File No.
33-4742, and incorporated herein by reference).
10.1*# Stock Option Plan (previously filed as Exhibit 10.3 to the Company's
Registration Statement on Form S-1 under the Securities Act of 1933
filed with the Commission on March 17, 1992, Commission File No.
33-46483, and incorporated herein by reference).
10.2* First Amendment dated as of January 31, 1997 to the $346,971,321
Amended and Restated Credit Agreement dated as of February 21, 1996,
among the Company as Borrower, Societe Generale as Managing Agent
and Administrative Agent, NationsBank of Texas, N.A. as
Documentation Agent and the Banks named herein as the Banks
(previously filed as Exhibit 10.1 to the Company's Current Report on
Form 8-K, filed with the Commission on February 27, 1997, Commission
File No. 0-19969, and incorporated herein by reference).
10.3* First Amendment dated as of January 31, 1997, to the $30,000,000
Credit Agreement dated as of February 21, 1996, among the Company as
Borrower, Societe Generale as Agent, and the Banks named herein as
the Banks (previously filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K, filed with the Commission on February 27, 1997,
Commission File No. 0-19969, and incorporated herein by reference).
</TABLE>
18
<PAGE> 19
FORM 10-K -- ITEM 14(c)
EXHIBIT INDEX
ARKANSAS BEST CORPORATION
(CONTINUED)
<TABLE>
<CAPTION>
EXHIBIT
NO.
<S> <C>
10.4*# Arkansas Best Corporation Performance Award Unit Program effective
January 1, 1996 (previously filed as Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995, Commission File No. 0-19969, and incorporated herein by
reference).
10.5* Second Amendment, dated July 15, 1997, to the $346,971,312 Amended
and Restated Credit Agreement among the Company as Borrower, Societe
Generale as Managing Agent and Administrative Agent, NationsBank of
Texas, N.A., as Documentation Agent, and the Banks named herein as
the Banks (previously filed as Exhibit 10.3 to the Company's current
Report on Form 8-K, filed with the Commission on August 1, 1997,
Commission File No. 0-19969, and incorporated herein by reference).
10.6* Interest-Rate Swap Agreement effective April 1, 1998 on a notional
amount of $110,000,000 with Societe Generale (previously filed as
Exhibit 10.1 to the Company's Form 10-Q filed with the Commission on
May 13, 1998, Commission File No. 0-19969, and incorporated herein
by reference).
10.7* $250,000,000 Credit Agreement dated as of June 12, 1998 with Societe
Generale as Administrative Agent and Bank of America National Trust
Savings Association and Wells Fargo Bank (Texas), N.A., as
Co-Documentation Agents (previously filed as Exhibit 10.2 to the
Company's Form 10-Q filed with the Commission on August 6, 1998,
Commission File No. 0-19969, and incorporated herein by reference).
10.8*# The Company's Supplemental Benefit Plan (previously filed as Exhibit
4.1 to the Company's Registration Statement on Form S-8 filed with
the Commission on December 22, 1999, Commission File No. 333-93381,
and incorporated herein by reference).
10.9 The Company's National Master Freight Agreement covering
over-the-road and local cartage employees of private, common,
contract and local cartage carriers for the period of April 1, 1998
through March 31, 2003.
13 1999 Annual Report to Shareholders
21 List of Subsidiary Corporations
23 Consent of Ernst & Young LLP, Independent Auditors
27.1 Financial Data Schedule - For Year End - December 31, 1999
27.2 Restated Financial Data Schedule - For Year End - December 31, 1998
27.3 Restated Financial Data Schedule - For Year End - December 31, 1997
</TABLE>
* Previously filed with the Securities and Exchange Commission and incorporated
herein by reference.
# Designates a compensation plan for Directors or Executive
Officers.
19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>2
<DESCRIPTION>NATIONAL MASTER FREIGHT AGREEMENT
<TEXT>
<PAGE> 1
EXHIBIT 10.9
NATIONAL MASTER FREIGHT AGREEMENT
COVERING OVER-THE-ROAD AND LOCAL
CARTAGE EMPLOYEES OF PRIVATE,
COMMON, CONTRACT AND LOCAL
CARTAGE CARRIERS
for the period of
April 1, 1998 through March 31, 2003
covering:
operations in, between and over all of the states, territories and possessions
of the United States, and operations into and out of all contiguous territory.
The _____________________________ (Company or Association) hereinafter referred
to as the "EMPLOYER" and the TEAMSTERS NATIONAL FREIGHT INDUSTRY NEGOTIATING
COMMITTEE representing Local Unions affiliated with the INTERNATIONAL
BROTHERHOOD OF TEAMSTERS, and Local Union No. _____ which Local Union is an
affiliate of the INTERNATIONAL BROTHERHOOD OF TEAMSTERS, agree to be bound by
the terms and conditions of this Agreement.
ARTICLE 1.
PARTIES TO THE AGREEMENT
Section 1. Employers Covered
The Employer consists of Associations, members of Associations who have given
authorization to the Associations to represent them in the negotiation and/or
execution of this Agreement and Supplemental Agreements, and individual
Employers who become signator to this Agreement and Supplemental Agreements as
hereinafter set forth. The signator Associations enter into this Agreement and
Supplemental Agreements as hereinafter set forth. The signator Associations
represent that they are duly authorized to enter into this Agreement and
Supplemental Agreements on behalf of their members under and as limited by their
authorizations as submitted prior to negotiations.
Section 2. Unions Covered
The Union consists of any Local Union which may become a party to this Agreement
and any Supplemental Agreement as hereinafter set forth. Such Local Unions are
hereinafter designated as "Local Union." In addition to such Local Unions, the
Teamsters National Freight Industry Negotiating Committee representing Local
Unions affiliated with the International Brotherhood of Teamsters, hereinafter
referred to as the "National Union Committee," is also a party to this Agreement
and the agreements supplemental hereto.
Section 3. Transfer of Company Title or Interest
The Employer's obligations under this Agreement including Supplements shall be
binding upon its successors, administrators, executors and assigns. The Employer
agrees that the obligations of this Agreement shall be included in the agreement
of sale, transfer or assignment of the business. In the event an entire active
or inactive operation, or a portion thereof, or rights only, are sold, leased,
transferred or taken over by sale, transfer, lease, assignment, receivership or
bankruptcy proceedings, such operation or use of rights shall continue to be
subject to the terms and conditions of this Agreement for the life thereof.
Transactions covered by this provision include stock sales or exchanges,
mergers, consolidations, spin-offs or any other method by which a business is
transferred.
It is understood by this Section that the signator Employer shall not sell,
lease or transfer such run or runs or rights to a third party to evade this
Agreement. In the event the Employer fails to require the purchaser, transferee,
or lessee to assume the obligations of this Agreement, as set forth above, the
Employer (including partners thereof) shall be liable to the Local Union(s) and
to the employees covered for all damages sustained as a result of such failure
to require the assumption of the terms of this Agreement until its expiration
date, but shall not be liable after the purchaser, the transferee or lessee has
agreed to assume the obligations of this Agreement. The obligations set forth
above shall not apply in the event of the sale, lease or transfer of a portion
of the rights comprising less than all of the signator Employer's rights to a
non-signator company unless the purpose is to evade this Agreement. Corporate
reorganizations by a signatory Employer, occurring during the term of this
Agreement, shall not relieve the signatory Employer or the re-organized Employer
of the obligations of this Agreement during its term.
When a signator to this Agreement purchases rights from another signator, the
provisions of Article 5 shall apply. The applicable layoff provisions of this
Agreement shall apply.
The Employer shall give notice of the existence of this Agreement to any
purchaser, transferee, lessee, assignee, or other entity involved in the sale,
merger, consolidation, acquisition, transfer, spin-off, lease or other
transaction by which the operation covered by this Agreement or any part
thereof, including rights only, may be transferred. Such notice shall be in
writing, with a copy to the Local Union, at the time the seller, transferor or
lessor makes the purchase and
<PAGE> 2
sale negotiation known to the public or executes a contract or transaction as
herein described, whichever first occurs. The Local Union shall also be advised
of the exact nature of the transaction, not including financial details.
The term rights shall include routes and runs.
ARTICLE 2.
SCOPE OF AGREEMENT
Section 1. Master Agreement
The execution of this National Master Freight Agreement on the part of the
Employer shall apply to all operations of the Employer which are covered by this
Agreement and shall have application to the work performed within the
classifications defined and set forth in the Agreements supplemental hereto.
Section 2. Supplements to Master Agreement
(a) There are several segments of the trucking industry covered by this
Agreement and for this reason Supplemental Agreements are provided for each of
the specific types of work performed by the various classifications of employees
controlled by this Master Agreement.
All such Supplemental Agreements are subject to and controlled by the terms of
this Master Agreement and are sometimes referred to herein as "Supplemental
Agreements."
All such Supplemental Agreements are to be clearly limited to the specific
classifications of work as enumerated or described in each individual
Supplement.
In all cases involving the transfer of work and/or the merger of operations
subject to the provisions of Article 8, Section 6 or Article 5, Section 2, where
more than one Supplemental Agreement is involved and one or more of them
contains provisions contrary to those set forth in Article 8, Section 6 or
Article 5, Sections 2, the applicable terms and conditions of the NMFA shall
supersede those of the contrary Supplemental Agreements, including the
resolution of any seniority related grievances that may arise following approval
of the involved transfer of work and/or merger of operations.
(b) The parties shall establish four (4) Regional Area Iron and Steel and/or
Truckload Supplements to the National Master Freight Agreement.
The Employer and the Local Union, parties to this Agreement, may enter into an
agreement whereby road drivers working under an Over-The-Road Supplemental
Agreement have the opportunity to perform work covered by and subject to the
above Regional Area Supplements, under conditions agreed upon. Such Supplement
shall be submitted to the appropriate Regional Joint Area Committee.
(c) The jurisdiction covered by the National Master Freight Agreement and its
various Supplements thereto includes, without limitation, stuffing, stripping,
loading and discharging of cargo or containers. This does not include loading or
discharging of cargo or containers to or from vessels except in those instances
where such work is presently being performed. Existing practices, rules and
understandings, between the Employer and the Union, with respect to this work
shall continue except to the extent modified by mutual agreement.
Section 3. Non-covered Units
This Agreement shall not be applicable to those operations of the Employer where
the employees are covered by a collective bargaining agreement with a Union not
signatory to this Agreement, or to those employees who have not designated a
signatory Union as their collective bargaining agent.
Card Check
(a) When a majority of the eligible employees performing work covered by an
Agreement designated by the National Negotiating Committee to be Supplemental to
the National Master Freight Agreement execute a card authorizing a signatory
Local Union to represent them as their collective bargaining agent at the
terminal location, then, such employees shall automatically be covered by this
Agreement and the applicable Supplemental Agreements. If an Employer refuses to
recognize the Union as above set forth and the matter is submitted to the
National Labor Relations Board or any mutually agreed upon process for
determination, and such determination results in certification or recognition of
the Union, all benefits of this Agreement and applicable Supplements shall be
retroactive to the date of demand for recognition. In such cases the parties may
by mutual agreement negotiate wages and conditions, subject to Regional Joint
Area Committee approval.
The parties agree that a constructive bargaining relationship is essential to
efficient operations and sound employee relations. The parties recognize that
organizational campaigns occur in bargaining relationships and that both parties
are free to accurately state their respective positions concerning the
organization of certain groups of employees. However, the parties also recognize
that campaigns must be waged on the facts only. Accordingly, the parties will
not engage in any personal attacks against Union or Company representatives or
attacks against the Union or Company as an institution during the course of any
such campaign.
Additions to Operations: Over-The-Road and Local Cartage Supplemental Agreements
(b) Notwithstanding the foregoing paragraph, the provisions of the National
Master Freight Agreement and the applicable Over-the-Road and Local Cartage
Supplemental Agreements shall be applied without evidence of union
representation of the employees involved, to all subsequent additions to, and
extensions of, current operations which adjoin and are controlled and utilized
as a part of such current operation, and newly established terminals and
consolidations of terminals which are controlled and utilized as a part of such
current operation.
If an Employer refuses to recognize the Union as above set forth and the matter
is submitted to the National Labor Relations Board or any mutually agreed-upon
process for determination, and such determination results in certification or
recognition of the Union, all benefits of this Agreement and applicable
Supplements shall be retroactive to the date of demand for recognition.
The provisions of Article 32 - Subcontracting, shall apply to this paragraph.
Extensions or additions to current operations, etc., which adjoin and are
controlled and utilized as part of such current operation shall be subject to
the jurisdiction of the appropriate Change of Operations Committee for the
purpose of determining whether the provisions of Article 8, Section 6 - Change
of Operations, apply and, if so, to what extent.
<PAGE> 3
Section 4. Single Bargaining Unit
The employees, Unions, Employers and Associations covered under this Master
Agreement and the various Supplements thereto shall constitute one (1)
bargaining unit and contract. It is understood that the printing of this Master
Agreement and the aforesaid Supplements in separate Agreements is for
convenience only and is not intended to create separate bargaining units.
This National Master Freight Agreement applies to city and road operations, and
other classifications of employment authorized by the signatory Employers to be
represented by Employer Associations or Employers, where applicable,
participating in national collective bargaining. The common problems and
interest, with respect to basic terms and conditions of employment, have
resulted in the creation of the National Master Freight Agreement and the
respective Supplemental Agreements. Accordingly, the Associations and Employers,
parties to this Agreement, acknowledge that they constitute a single national
multi-employer collective bargaining unit, composed of the Associations named
hereinafter and those Employers authorizing such associations to represent them
for the purpose of collective bargaining, and solely to the extent of such
authorization, and such other individual employers which have, or may, become
parties to this Agreement.
Section 5. Riders
Upon the effective date of this Agreement, all existing or previously adopted
Riders which provide less than the wages, hours, and working conditions
specifically established by this Agreement and Supplemental Agreements shall
become null and void. Thereafter, the specific provisions of this Agreement and
applicable Supplemental Agreements shall apply without being subject to variance
by Riders. This Section shall not be applied or interpreted to eliminate
operational, dispatch, or working rules not specifically set forth in this
Agreement and Supplemental Agreements.
ARTICLE 3.
RECOGNITION, UNION SHOP AND
CHECKOFF
Section 1. Recognition
(a) The Employer recognizes and acknowledges that the Teamsters National
Freight Industry Negotiating Committee and Local Unions affiliated with the
International Brotherhood of Teamsters are the exclusive representatives of all
employees in the classifications of work covered by this National Master Freight
Agreement, and those Supplements thereto approved by the Joint National
Negotiating Committees for the purpose of collective bargaining as provided by
the National Labor Relations Act.
Subject to Article 2, Section 3 - Non-covered Units, this provision shall apply
to all present and subsequently acquired over-the-road and local cartage
operations and terminals of the Employer.
This provision shall not apply to wholly-owned and wholly independently operated
subsidiaries which are not under contract with local IBT unions. "Wholly
independently operated" means, among other things, that there shall be no
interchange of freight, equipment or personnel, or common use, in whole or in
part, of equipment, terminals, property, personnel or rights.
Union Shop
(b) All present employees who are members of the Local Union on the effective
date of this subsection or on the date of execution of this Agreement, whichever
is the later, shall remain members of the Local Union as a condition of
employment. Union membership for purposes of this Agreement, is required only to
the extent that employees must pay either (i) the Union's initiation fees and
periodic dues or (ii) service fees which in the case of a regular service fee
payer shall be equal to the Union's initiation fees and periodic dues, and in
the case of an objecting service fee payer shall be the proportion of the
initiation fees and dues corresponding to the portion of the Union's total
expenditures that support representational activities. All present employees who
are not members of the Local Union and all employees who are hired hereafter
shall become and remain members of the Local Union as a condition of employment
on and after the thirty-first (31st) calendar day following the beginning of
their employment or on and after the thirty-first (31st) calendar day following
the effective date of this subsection or the date of this Agreement, whichever
is the later. An employee who has failed to acquire, or thereafter maintain,
membership in the Union as herein provided, shall be terminated seventy-two (72)
hours after his/her Employer has received written notice from an authorized
representative of the Local Union, certifying that membership has been, and is
continuing to be, offered to such employee on the same basis as all other
members and, further, that the employee has had notice and opportunity to make
all dues or initiation fee payments. This provision shall be made and become
effective as of such time as it may be made and become effective under the
provisions of the National Labor Relations Act, but not retroactively.
For purposes of this Article, "present employees" and "employees who are hired
hereafter" shall include "casual employees" as defined in Article 3, Section 2
of this Agreement. Such "casual employees" will be required to join the Union
prior to their employment on or after the thirty-first (31st) calendar day
following their first (1st) day of employment for any Employer signatory to this
Agreement.
Hiring
(c) When the Employer needs additional employees, it shall give the Local
Union equal opportunity with all other sources to provide suitable applicants,
but the Employer shall not be required to hire those referred by the Local
Union. Violations of this subsection shall be subject to the Grievance
Committee.
Any employment examination for applicants must test skills or physical abilities
necessary for performance of the work in the job classification in which the
applicant will be employed. Violations of this subsection shall be subject to
the Grievance Committee.
State Law
(d) No provision of this Article shall apply in any state to the extent that
it may be prohibited by state law. If under applicable state law additional
requirements must be met before any such provisions may become effective, such
additional requirements shall be first met.
<PAGE> 4
Agency Shop
(e) If any agency shop clause is permissible in any state where the provisions
of this Article relating to the Union Shop cannot apply, the following Agency
Clause shall prevail:
(1) Membership in the Local Union is not compulsory. Employees have the right
to join, not join, maintain, or drop their membership in the Local Union, as
they see fit. Neither party shall exert any pressure on, or discriminate
against, an employee as regards such matters.
(2) Membership in the Local Union is separate, apart and distinct from the
assumption by one of his/her equal obligation to the extent that he/she receives
equal benefits. The Local Union is required under this Agreement to represent
all of the employees in the bargaining unit fairly and equally without regard to
whether or not an employee is a member of the Local Union. The terms of this
Agreement have been made for all employees in the bargaining unit and not only
for members in the Local Union, and this Agreement has been executed by the
Employer after it has satisfied itself that the Local Union is the choice of a
majority of the employees in the bargaining unit. Accordingly, it is fair that
each employee in the bargaining unit pay his/her own way and assume his/her fair
share of the obligations along with the grant of equal benefits contained in
this Agreement.
(3) In accordance with the policy set forth under subparagraphs (1) and (2) of
this Section, all employees shall, as a condition of continued employment, pay
to the Local Union, the employee's exclusive collective bargaining
representative, an amount of money equal to that paid by other employees in the
bargaining unit who are members of the Local Union, which shall be limited to an
amount of money equal to the Local Union's regular and usual initiation fees,
and its regular and usual dues. For present employees, such payments shall
commence thirty-one (31) days following the effective date or on the date of
execution of this Agreement, whichever is the later, and for new employees, the
payment shall start thirty-one (31) days following the date of employment.
Savings Clause
(f) If any provision of this Article is invalid under the law of any state
wherein this Agreement is executed, such provision shall be modified to comply
with the requirements of state law or shall be renegotiated for the purpose of
adequate replacement. If such negotiations shall not result in mutually
satisfactory agreement, either party shall be permitted all legal or economic
recourse.
Employer Recommendation
(g) In those instances where subsection (b) hereof may not be validly applied,
the Employer agrees to recommend to all employees that they become members of
the Local Union and maintain such membership during the life of this Agreement,
to refer new employees to the Local Union representative, and to recommend to
delinquent members that they pay their dues since they are receiving the
benefits of this Agreement.
Business agents shall be permitted to attend new employee orientations in
right-to-work states. The sole purpose of the business agent's attendance is to
encourage employees to join the Union.
Future Law
(h) To the extent such amendment may become permissible under applicable
federal and state law during the life of this Agreement as a result of
legislative, administrative or judicial determination, all of the provisions of
this Article shall be automatically amended to embody the greater Union security
provisions contained in the 1947-1949 Central States Area Over-The-Road Motor
Freight Agreement, or to apply or become effective in situations not now
permitted by law.
No Violation of Law
(i) Nothing contained in this Section shall be construed so as to require the
Employer to violate any applicable law.
Section 2. Probationary and Casual Employees
(a) Probationary Employees
(1) A probationary employee shall work under the provisions of this Agreement,
but shall be employed on a trial basis as provided for in each Supplement.
(2) During the probationary period, the employee may be terminated without
further recourse; provided, however, that the Employer may not terminate the
employee for the purpose of evading this Agreement or discriminating against
Union members. A probationary employee who is terminated by the Employer during
the probationary period and is then worked again at any time during the next
full twelve (12) months at any of that Employer's locations within the
jurisdiction of the Local Union covering the terminal where he/she first worked,
except in those jurisdictions where the Local Union maintains a hiring hall or
referral system, shall be added to the regular seniority list with a seniority
date as of the date that person is subsequently worked. The rules contained in
subsection (a)(2) are subject to provisions in the Supplements to the contrary.
(3) Probationary employees shall be paid at the new hire rate of pay during
the probationary period; however, if the employee is terminated by the Employer
during such period, he/she shall be compensated at the full contract rate of pay
for all hours worked retroactive to the first (1st) day worked in such period.
(4) The Union and the Employer may agree to extend the probationary period for
no more than thirty (30) days, but the probationary employee must agree to such
extension in writing.
(b) Casual Employees
(1) A casual employee is an individual who is not on the regular seniority
list and who is not serving a probationary period. A casual may be either a
replacement casual or a supplemental casual as hereinafter provided. Casuals
shall not have seniority status. Casuals shall not be discriminated against for
future employment.
<PAGE> 5
(2)a. Replacement casuals may be utilized by an Employer to replace regular
employees when such regular employees are off due to illness, vacation or other
absence, except when an absence of a regular employee continues beyond three (3)
consecutive months, a replacement casual shall not thereafter be used to fill
such absence, unless the Employer and the Local Union mutually agree to the
continued use of a replacement casual.
b. Where the Company is using casuals as vacation replacements for regular
employees, and the Area Supplemental Agreement does not provide a method to add
regular employees based on the use of casuals to replace vacation absence, the
vacation schedules shall be broken into yearly quarters beginning January 1st,
and subsequent vacation quarters shall begin on April 1st, July 1st, and October
1st thereafter.
Starting with the quarter beginning April, 1991, and continuing each quarter
thereafter, the Employer shall add one (1) additional employee to the regular
seniority list for each sixty-five (65) vacation replacement days worked by a
casual during each vacation quarter.
The application of this formula shall not result in pyramiding.
New employees shall be placed on the respective seniority lists on the first
(1st) day of the following quarter unless there are employees in layoff status,
in which case such new employees shall be placed on the respective seniority
list at the time the laid-off employees are recalled from layoff status.
Employees shall first be added to the regular seniority list from the
preferential list, if applicable. Thereafter, employees to be added to the
regular seniority list shall be determined by the respective Supplement and
shall be subject to the probationary provisions of that Supplement.
In the application of this formula, employees specifically designated under an
appropriate reporting procedure to replace absence other than vacations shall
not be included as vacation replacements. It is the intent of the parties, in
the application of this formula, to add regular employees to the seniority list
to replace employees on vacation where there is regular work opportunity for
such additional employees.
The implementation of this provision may raise issues particular to a respective
Supplemental Agreement. Failure to resolve the issues, such Supplemental
Negotiating Committee may agree to waive this provision, or submit the disputed
issues to the National Grievance Committee.
(3) Supplemental casuals may be used to supplement the regular work force as
provided for in each respective Supplement. Once the number of new employees to
be added as required in the Supplement is determined, the Employer must initiate
the processing of the new probationary employees immediately, and complete such
processing as provided for in the Supplements.
(4) Unless waived in writing by any Joint Supplemental Negotiating Committee,
all Supplements shall provide for a preferential casual hiring list and shall
provide the qualifications for placement on such list. Casuals on the
preferential hiring list shall be offered available extra work and future
regular employment in seniority order by classification as among themselves. A
preferential casual employee's seniority date shall be the date he/she becomes a
regular employee; and such employee shall not be subject to any probationary
period.
Casual employees on the preferential hiring list shall have full access to the
grievance procedure.
The provisions of Article 3, Section 3, shall apply to casual employees on the
preferential hiring list who are paid on the regular payroll.
Local Unions employing an exclusive hiring hall under the terms of the
Supplemental Agreement may petition the respective Joint Area Supplemental
Negotiating Committee for approval to waive this subparagraph (4).
(5) Casual road employees, where permitted by Supplemental Agreement, may only
be used within the jurisdiction of their respective Regional Area and shall gain
preferential status and/or regular seniority status as provided in the
respective Supplement.
(6) Any casual employee who declines regular employment shall be terminated
without recourse and will not be used by the Employer for any further work.
(7) a. Casual Employment
The Employer agrees to give first opportunity for work as a casual employee to
those employees on letter of layoff from an Employer member of the TMI
multi-employer unit. This obligation shall apply only at terminals located
within the jurisdiction of the employee's Local Union. The Local Union will
furnish each Employer with the names, addresses, and telephone numbers of those
laid off employees interested in casual work opportunity and the job each
employee is qualified to perform. Where applicable, casual employment may not be
offered to laid off employees under this provision ahead of preferential
casuals, nor shall this provision supersede an established order of call in a
supplemental agreement.
b. Regular Employment
The Employer agrees to offer regular employment to those employees on letter of
layoff from an Employer member of the TMI multi-employer unit at other terminals
located within the jurisdiction of the employees' Local Union who have made
application for regular employment at the terminal offering regular employment.
Employment shall be offered in accordance with the following order, unless the
Supplemental Agreement or an agreed to practice provides a different order of
call, in which case such other order of call shall prevail:
1. Preferential casuals, where applicable.
2. Employees of the Employer, on a seniority basis.
3. Employees of other TMI Employer members based on the date such employees made
application.
Employees hired into regular employment shall be paid in accordance with the new
hire rate set forth in Article 36, herein and shall establish seniority in
accordance with the applicable Supplemental Agreement. Employees who accrue
seniority under this provision who are on layoff from another Employer shall
forfeit all seniority rights at the terminal they are laid off from. Employees
who accrue seniority under this provision who are on layoff from another
terminal of the same Employer shall retain their seniority at the terminal they
are laid off from until such time as recalled to that terminal. At that time,
the employee must either accept recall and forfeit seniority at the new terminal
or refuse recall and forfeit seniority at the terminal he/she is being recalled
to.
In order to be eligible for either casual or regular employment opportunity
under this provision, the laid off employee must meet the minimum hiring
standards established by the Employer and be otherwise qualified to perform the
work available and must be able to report for work in compliance with the
Employer's established call-time procedures. The Employer's hiring standards and
examinations shall be applied uniformly to all applicants for employment. The
Employer shall provide the hiring standards and examinations upon written
request of the Local Union. Employees who are offered work opportunity under
this provision must be able to furnish proof of their qualification to perform
the work available.
Any employment examination for applicants must test skills or physical abilities
necessary for performance of the work in the job classification in which the
applicant will be employed. Violation of this subsection shall be subject to the
grievance procedure.
<PAGE> 6
(8) Fringe benefits will be paid on casuals in accordance with the terms of
the Supplemental Agreement. Minimum daily guarantees will be governed by the
respective Supplemental Agreement.
(9) A monthly list of all casual and/or probationary employees used during
that month shall be submitted to the Local Unions by the tenth (10th) day of the
following month. Such list shall show:
a. the employee's name, address, and social security number;
b. the date worked;
c. the classification of work performed each date, and the hours worked; and,
d. the name, if applicable, of the employee replaced.
This list shall be compiled on a daily basis and shall be available for
inspection by a Union representative and/or job shop steward.
(c) Employment Agency Fees
If employees are hired through an employment agency, the Employer is to pay the
employment agency fee. However, if the Local Union was given equal opportunity
to furnish employees under Article 3, Section ( 1) (c), and if the employee is
retained through the probationary period, the fee need not be paid until the
thirty-first (31st) day of employment.
Section 3. Checkoff
The Employer agrees to deduct from the pay of all employees covered by this
Agreement the dues, initiation fees and/or uniform assessments of the Local
Union having jurisdiction over such employees and agrees to remit to said Local
Union all such deductions. Where laws require written authorization by the
employee, the same is to be furnished in the form required. The Local Union
shall certify to the Employer in writing each month a list of its members
working for the Employer who have furnished to the Employer the required
authorization, together with an itemized statement of dues, initiation fees
(full or installment), or uniform assessments owed and to be deducted for such
month from the pay of such member. The Employer shall deduct such amount within
two (2) weeks following receipt of the statement of certification of the member
and remit to the Local Union in one (1) lump sum within three (3) weeks
following receipt of the statement of certification. The Employer shall add to
the list submitted by the Local Union the names and Social Security numbers of
all regular new employees hired since the last list was submitted and delete the
names of employees who are no longer employed. Checkoff shall be on a monthly or
quarterly basis at the option of the Union. The Local Union and Employer may
agree to an alternative option to deduct Union dues bi-monthly.
When an Employer actually makes a deduction for dues, initiation fees and
assessments, in accordance with the statement of certification received from an
appropriate Local Union, the Employer shall remit same no later than three (3)
weeks following receipt of the statement of certification and in the event the
Employer fails to do so, the Employer shall be assessed ten percent (10%)
liquidated damages. All monies required to be checked off shall become the
property of the entities for which it was intended at the time that such
checkoff is required to be made. All monies required to be checked off and paid
over to other entities under this Agreement shall become the property of those
entities for which it was intended at the time that such payment or checkoff is
required to be made.
Where an employee who is on checkoff is not on the payroll during the week in
which the deduction is to be made, or has no earnings or insufficient earnings
during that week, or is on leave of absence, the employee must make arrangements
with the Local Union and/or the Employer to pay such dues in advance.
The Employer agrees to deduct from the paycheck of all employees covered by this
Agreement voluntary contributions to DRIVE. DRIVE shall notify the Employer of
the amounts designated by each contributing employee that are to be deducted
from his/her paycheck on a weekly basis for all weeks worked. The phrase "weeks
worked" excludes any week other than a week in which the employee earned a wage.
The Employer shall transmit to DRIVE National Headquarters on a monthly basis,
in one (1) check, the total amount deducted along with the name of each employee
on whose behalf a deduction is made, the employee's social security number and
the amount deducted from that employee's paycheck. The International Brotherhood
of Teamsters shall reimburse the Employer annually for the Employer's actual
cost for the expenses incurred in administering the weekly payroll deduction
plan.
The Employer will recognize authorization for deductions from wages, if in
compliance with state law, to be transmitted to Local Union or to such other
organizations as the Union may request if mutually agreed to. No such
authorization shall be recognized if in violation of state or federal law. No
deduction shall be made which is prohibited by applicable law.
In the event that an Employer has been determined to be in violation of this
Article by the decision of an appropriate grievance committee, and if such
Employer subsequently is in violation thereof after receipt of seventy-two (72)
hours' written notice of specific delinquencies, the Local Union may strike to
enforce this Article. However, such strike shall be terminated upon the delivery
thereof. Errors or inadvertent omissions relating to individual employees shall
not constitute a violation.
Upon written request of an employee, the Employer shall make payroll deductions
for the purchasing of U. S. Savings Bonds.
The Employer hereby agrees to participate in the Teamsters National 401(k)
Savings Plan (the "Plan") on behalf of all employees represented for purposes of
collective bargaining under this agreement. The Employer is not required to
participate in the Teamsters National 401(k) if Teamsters employees were
eligible to participate in an Employer sponsored 401(k) as of January 1, 1998.
The Employer will make or cause to be made payroll deductions from participating
employees' wages, in accordance with each employee's salary deferral election
subject to compliance with ERISA and the relevant tax code provisions. The
Employer will forward withheld sum to State Street Bank or its successor at such
time, in such form and manner as required pursuant to the Plan and Declaration
of Trust (the "Trust").
The Employer will execute a Participation Agreement with TNFINC and the Trustees
of the Plan evidencing Employer participation in the Plan effective prior to any
employee deferral being received by the Plan.
Section 4. Work Assignments
The Employers agree to respect the jurisdictional rules of the Union and shall
not direct or require their employees or persons other than the employees in the
bargaining units here involved, to perform work which is recognized as the work
of the employees in said units. This is not to interfere with bona fide
contracts with bona fide unions.
<PAGE> 7
Section 5.
The term "Local Union" as used herein refers to the IBT Local Union which
represents the employees of the particular Employer for the purpose of
collective bargaining at the particular place or places of business to which
this Agreement and the Supplements thereto are applicable, unless by agreement
of the Local Union involved, or a Change of Operations Committee, or a
jurisdictional award under Article 30 herein, jurisdiction over such employees,
or any number of them, has been transferred to some other Local Union, in which
case the term Local Union as used herein shall refer to such other Local Unions.
Nothing herein contained shall be construed to alter the multi-employer,
multi-union unit or single contract status of this Agreement.
Section 6. Electronic Funds Transfer
If the Employer institutes an electronic funds transfer (EFT) system, employees
may participate.
ARTICLE 4.
STEWARDS
The Employer recognizes the right of the Local Union to designate job stewards
and alternates from the Employer's seniority list. The authority of job stewards
and alternates so designated by the Local Union shall be limited to, and shall
not exceed, the following duties and activities:
(a) The investigation and presentation of grievances with his/her Employer or
the designated company representative in accordance with the provisions of the
collective bargaining agreement;
(b) The collection of dues when authorized by appropriate Local Union action;
(c) The transmission of such messages and information, which shall originate
with and are authorized by the Local Union or its officers, provided such
message and information;
(1) have been reduced to writing; or,
(2) if not reduced to writing, are of a routine nature and do not involve work
stoppages, slowdowns, refusal to handle goods, or any other interference with
the Employer's business.
Unless waived in writing, there shall be a steward or available bargaining unit
member of the employee's choice present whenever the Employer meets with the
employee about grievances or discipline or to conduct investigatory interviews.
If a steward is unavailable, the employee may designate a bargaining unit member
who is available at the terminal at the time of the meeting to represent
him/her. Meetings or interviews shall not begin until the steward or designated
bargaining unit member is present. An employee who does not want a Union steward
or available bargaining unit member present at any meeting or interview where
the employee has a right to Union representation must waive Union representation
in writing. If the Union requests a copy of the waiver, the Employer shall
promptly furnish it.
Job stewards and alternates have no authority to take strike action, or any
other action interrupting the Employer's business, except as authorized by
official action of the Local Union. The Employer recognizes these limitations
upon the authority of job stewards and their alternates, and shall not hold the
Local Union liable for any unauthorized acts. The Employer in so recognizing
such limitations shall have the authority to impose proper discipline, including
discharge, in the event the job steward or his/her designated alternate has
taken unauthorized strike action, slowdown or work stoppage in violation of this
Agreement.
The job steward, or his/her designated alternate, shall be permitted reasonable
time to investigate, present and process grievances on the company property
without loss of time or pay during his/her regular working hours without
interruption of the Employer's operation by calling group meetings; and where
mutually agreed to by the Local Union and the Employer, off the property or
other than during his/her regular schedule without loss of time or pay. Such
time spent in handling grievances during the job steward's or his/her designated
alternate's regular working hours shall be considered working hours in computing
daily and/or weekly overtime if within the regular schedule of the "job
steward."
The job steward, or his/her designated alternate, shall be permitted reasonable
time off without pay to attend Union meetings called by the Local Union. The
Employer shall be given twenty-four (24) hours' prior notice by the Local Union.
ARTICLE 5.
Section 1. Seniority Rights
(a) The application of seniority which has been accrued herein shall be
established in the Supplemental Agreements.
(b) Seniority shall be broken only by discharge, voluntary quit, retirement,
or more than a five (5) - year layoff.
(c) This Section shall apply to all Supplemental Agreements.
Section 2. Mergers of Companies-General
(a) In the event the Employer is a party to a merger of lines, seniority of the
employees who are affected thereby shall be determined by mutual agreement
between the Employer and the Local Unions involved.
In the application of this Section, it is immaterial whether the transaction is
called a merger, purchase, acquisition, sale, etc. Further, it is also
immaterial whether the transaction involves merely the purchase of stock of one
(1) corporation by another, with two (2) separate corporations continuing in
existence.
(b) If such merger of companies results in the combination of terminals or
over-the-road operations, a change of operations shall be submitted to the
Co-Chairmen of the National Grievance Committee for assignment to an appropriate
Change of Operations Committee established pursuant to Article 8, Section 6. The
Change of Operations Committee shall retain jurisdiction for one (1) year after
the effective date of the Committee decision and shall have the authority to
amend its decision in the event of a substantial change in the amount of work to
be performed at the terminals or over-the-road operations which were combined.
<PAGE> 8
Combining of Terminals or Operations as a Result of Merger of Companies
(c) In the application of this Section, when terminals or operations of two (2)
or more companies are combined, as referred to above, the following general
rules shall be applied by the Employer and the Local Unions, which general rules
are subject to modification pursuant to the provisions of Section 4 of this
Article:
Active Seniority List
(1) The active employee seniority rosters (excluding those employees on letter
of layoff) shall be "dovetailed" by appropriate classification (i.e., road or
city) in the order of each employee's full continuous classification (road or
city) seniority date that the employee is currently exercising. (The term
"continuous classification seniority" as used herein is defined as that
seniority which the employee is currently exercising and has not been broken in
the manner provided in Section 1 of this Article or by voluntary changes in
domicile not directed, approved or ordered by a Change of Operations Committee.)
The active "dovetailed" seniority roster shall be utilized first and until
exhausted to provide employment at such combined terminal or operational
location.
Layoff Seniority list
(2) In addition, the inactive seniority rosters (employees who are on letter
of layoff) shall be similarly "dovetailed" by appropriate classification. If
additional employees are required after the active list is exhausted, they shall
be recalled from such inactive seniority roster and after recall such employees
shall be "dovetailed" into the active seniority roster with their continuous
classification (road or city) seniority dates they are currently exercising
which shall then be exercised for all purposes. Seniority rosters previously
combining job classifications shall be continued unless otherwise agreed.
Temporary Authority
(d) Where only temporary authority is granted in connection with any of the
transactions described above, then separate seniority lists shall continue only
when terminals or operations are not merged, unless otherwise agreed. The
Employer which is to survive will assume the obligations of both collective
bargaining agreements during the period of the temporary authority.
In the event of temporary merger of operations which are contingent upon
approval by regulatory agencies or on other stated conditions, the seniority of
the involved employees shall continue to accrue with their original Employer
during the period of temporary merger, so that if there is no final consummation
of the merger, the seniority of such employees shall be continued with their
respective employers. However, if, on the failure of final consummation and
dissolution of the merger, one of the parties to the proposed merger
discontinues the operations which were subject to such merger, the employees of
such Employer shall be granted seniority rights for all purposes with the other
Employer only for the period of time they were employed in such temporary merged
operations.
Purchase of Rights
(e) If a merger, purchase, acquisition, sale, etc., constitutes merely the
acquisition of permits or rights, without the purchase or acquisition of
equipment or terminals, and/or without the consolidation of terminals or
operations, or in the event of the purchase of rights during bankruptcy
proceedings, the following shall apply:
Where the purchasing company has a terminal operation at the domicile of the
employees of the seller, the employees of the selling company shall be placed on
a master seniority list, and the purchasing company or companies shall hire,
after recall of the purchasing company's employees from layoff, such employees
as needed for regular employment within the first twelve (12) calendar months
after purchase or acquisition of permits and/or rights, and they shall be
dovetailed with full seniority. If an employee refuses a bona fide offer of
regular work opportunity with any of the purchasing companies, his/her name
shall be removed from the list. No employee hired under this provision shall be
required to serve a probationary period. After the expiration of the
aforementioned twelve (12) calendar month period, the purchaser shall have no
further obligation to the employees of the seller.
However, if the purchasing or acquiring company does not have and/or continue a
terminal or operation at the domicile of the employees of the seller, resulting
in their layoff, such Employer shall place the laid-off employees on a master
seniority list and such Employer shall, if and when additional regular employees
are required, within a twelve (12) - calendar month period after purchase or
acquisition, and providing its employees on layoff have been recalled, offer
employment to such laid-off employees at the terminal locations or operations to
which the work has been transferred. Any such laid-off employees accepting
transfer shall be dovetailed in accordance with their terminal seniority for
work purposes, including layoff, and holding company seniority for all fringes.
If an employee refuses a bona fide offer of regular work opportunity with any of
the purchasing companies, his/her name shall be removed from the list. No
employee hired under this provision shall be required to serve a probationary
period. After the expiration date of the aforementioned twelve (12) - calendar
month period, the purchaser shall have no further obligation to the employees of
the seller. The transferring employee shall be responsible for lodging and
moving expenses.
Exclusive Cartage Operations
(f) If in connection with the transactions described in these rules the
successor Employer determines to discontinue the use of a local cartage company,
the employees of that local cartage company who have worked exclusively on the
pickup and delivery service which is retained by the successor Employer shall be
given the opportunity to continue to perform such service as an employee of such
successor Employer, and shall have their seniority "dovetailed" as described in
the above rules.
Committee Authority
(g) Area and/or State Committees created pursuant to Local Supplements which
have previously established rules of seniority, not contrary to the provisions
of such Supplements, and approved by the Joint Area Committee, may continue to
apply such rules if such rules are reduced to writing.
Section 3. Intent of Parties
(a) The parties acknowledge that the above rules are intended solely as
general standards and further that many factual situations will be presented
which necessitate different application, modification or amendment. Accordingly,
the parties acknowledge that questions of the application of seniority rights
may arise which require different treatment and it is anticipated and understood
that the Employers and Unions jointly involved and/or the respective grievance
committees may mutually agree to such disposition of questions of seniority
which in their judgment is appropriate under the circumstances.
<PAGE> 9
(b) In all instances, the disposition of questions involving the application
of seniority rights made by the parties pursuant to this Section may be
presented to the appropriate grievance committees provided herein whose
decisions shall be final and binding.
Section 4. Equipment Purchases
(a) The Employer shall not require as a condition of continued employment, that
an employee purchase truck, tractor and/or tractor and trailer or other
vehicular equipment, or that any employees purchase or assume any proprietary
interest or other obligation in the business, except as referred to in Article
6, Section 2. The requirements of this provision shall be maintained during the
renegotiation of this Agreement unless either party has terminated the Agreement
in the manner provided.
Highest Rates Prevail
(b) If the minimum wage, hours and working conditions in the Company absorbed
differ from those minimums set forth in this Agreement and Supplements thereto,
the higher of the two shall remain in effect for the employees so absorbed.
Cutting Seniority Board
(c) The Union reserves the right to cut the road seniority board when the
average weekly earnings fall to seven hundred dollars ($700.00) or less. This is
not to be construed as imposing a limitation on earnings. After the Union
notifies the Employer to cut the board and in the event that Employer refuses,
the Union shall immediately submit the matter to the grievance procedure. In
determining whether average weekly earnings will fall to seven hundred dollars
($700.00) or less, only the earnings of the lower twenty-five percent (25%) of
the drivers on the seniority board, counting from the bottom up, shall be
considered. The average shall be calculated for the thirty (30) day period
preceding the Union's original request. After such calculation is made, the
average earnings of the drivers for the top seventy-five percent (75%) of the
seniority board must also average more than seven hundred dollars ($700.00) per
week, or layoff shall be made in accordance with seniority. The above provisions
shall also apply to extra board for sleeper drivers exclusively.
Posting Seniority List
(d) The Employer shall give the Local Union a seniority list at least every
six (6) months. The Employer shall also post a seniority list at least once
every six (6) months and shall maintain a current seniority roster at the
terminal. Protest of any employee's seniority date or position on such list must
be made in writing to the Employer within thirty (30) days after such seniority
date or position first appears, and if no protests are timely made, the dates
and positions posted shall be deemed correct. Any such protest which is timely
made may be submitted to the grievance procedure.
Section 5. Work Opportunity
Over-the-road employees, who are on letter of layoff, shall be given an
opportunity to transfer to permanent over-the-road employment (prior to the
employment of new hires) occurring at other over-the-road domiciles of the
Employer located within the Regional area provided they notify the Employer in
writing of their interest in a transfer opportunity. The offer of transfer will
be made in the order of continuous over-the-road seniority of the laid-off
drivers domiciled within the Regional area. The Employer shall be required to
make additional offers of transfer to an employee who has previously rejected a
transfer opportunity provided the employee again notifies the Employer in
writing of his/her continued interest in additional transfer opportunities.
However, the Employer will only be required to make one transfer offer in any
six (6) calendar month period. Any employee accepting such offer shall be paid
at the employee's applicable rate of pay and shall be placed at the bottom of
the seniority board for bidding and layoff purposes, but shall retain company
seniority for fringe benefits only. A transferring employee shall pay his/her
own moving expenses and shall, upon reporting to such new domicile, be deemed to
have relinquished his/her right to return with seniority to the domicile from
which he/she transferred. The provisions of this Section shall not supersede an
established order of call/hiring in the Supplemental Agreement.
ARTICLE 6.
Section 1. Maintenance of Standards
The Employer agrees, subject to the following provisions, that all conditions of
employment in his/her individual operation relating to wages, hours of work,
overtime differentials and general working conditions shall be maintained at not
less than the highest standards in effect at the time of the signing of this
Agreement, and the conditions of employment shall be improved whenever specific
provisions for improvement are made elsewhere in this Agreement.
Local Standards
(a) The Local Unions and the Employer shall, within one hundred eighty (180)
days following ratification of this Agreement, identify and reduce to writing,
and submit to the appropriate Regional Joint Area Committee, those local
standards and conditions practiced under this Article. Such standards and
conditions when submitted in accordance with this Section shall be currently
dated. Those local standards and conditions previously practiced hereunder which
are not so submitted shall be deemed to have expired.
The appropriate Regional Joint Area Committee shall, not later than ninety (90)
days following ratification, adopt a procedure to consider the disposition of
the local standards and conditions submitted including the right to appoint a
subcommittee to make recommendations. The Regional Joint Area Committee shall
provide to the parties the opportunity to present their views. The Regional
Joint Area Committee shall have the sole discretion to determine the disposition
of the submitted local standards and conditions which determination shall be
final and binding.
Individual Employer Standards
(b) Individual Employers may during the life of this Agreement file with the
appropriate Regional Joint Area Committee and request review of those individual
standards and conditions claimed or practiced under this Article which exceed
the provisions of this Agreement and Supplemental Agreements.
The Regional Joint Area Committee shall develop a procedure to review the filing
including the right to appoint a subcommittee to make recommendations. The
Committee shall make every effort to adjust the matter. If the Committee reaches
agreement concerning the disposition of the individual standards or conditions,
the decision of the Committee shall be final and binding. In the event of
deadlock, the submitted standards and/or conditions shall continue as practiced.
<PAGE> 10
General
(c) It is agreed that the provisions of this Article shall not apply to
inadvertent or bona fide errors made by the Employer or the Union in applying
the terms and conditions of this Agreement. Such bona fide errors may be
corrected at any time.
No other Employer shall be bound by the voluntary acts of another Employer when
he/she may exceed the terms of this Agreement.
Any disagreement between the Local Union and the Employer with respect to this
matter shall be subject to the grievance procedure.
This provision does not give the Employer the right to impose or continue wages,
hours and working conditions less than those contained in this Agreement.
Section 2. Extra Contract Agreements
(a) The Employer agrees not to enter into any agreement or contract with its
employees, individually or collectively, which in any way conflicts with the
terms and provisions of this Agreement. Any such agreement shall be null and
void.
(b) Consistent with past interpretations made by the National Grievance
Committee, wage reduction-job security plans or other programs which comply with
guidelines established by the Teamsters National Freight Industry Negotiating
Committee are not violative of this Section.
Current wage reduction-job security plans established prior to April 1, 1998,
shall be subject to a revote of the unit employees as provided in this Section
within thirty (30) days of notice of ratification of the NMFA or as soon as is
legally permissible after having been approved by TNFINC to conform with the
guidelines established under this Section. Such current plans shall remain in
effect until the later of expiration of the plan or until a replacement plan is
approved by a unit employee vote as provided in this Section. Failure to obtain
the required unit employee vote under this Section will result in restoration of
full NMFA wages and wage related fringes effective April 1, 1998, or when
legally permissible.
Wage deduction under any Plan hereinafter adopted shall not exceed fifteen
percent (15%) of the applicable wage rates, and such Plan shall be adopted only
if approved by seventy-five percent (75%) of the employees voting by secret
ballot (in which case all unit employees shall be covered by such Plan).
See Wage Reduction-Job Security Plan Guidelines - Appendix A
The new hire rate provided for in Appendix A - Wage Reduction-Job Security Plan
shall be based on the designated percentage of the current wage rate.
(c) Every profit-sharing plan, condition, or incentive plan of any type,
whether or not it alters or amends the economic conditions contained in this
Agreement, must be negotiated and agreed to by TNFINC prior to implementation.
Nothing in this Section shall be construed to apply to existing safety programs
or other prizes or bonus items the receipt of which do not alter the economic
terms of this Agreement.
Section 3. Workweek Reduction
If either the Fair Labor Standards Act or the Hours of Service Regulations are
subsequently amended so as to result in substantial penalties to either the
employees or the Employer, a written notice shall be sent by either party
requesting negotiations to amend those provisions which are affected.
Thereafter, the parties shall enter into immediate negotiations for the purpose
of arriving at a mutually satisfactory solution. In the event the parties cannot
agree on a solution within sixty (60) days, or mutually agreed extensions
thereof, after receipt of the stated written notice, either party shall be
allowed economic recourse.
Section 4. New Equipment
Where new types of equipment and/or operations for which rates of pay are not
established by this Agreement are put into use after April 1, 1998, within
operations covered by this Agreement, rates governing such operations shall be
subject to negotiations between the parties.
In the event agreement cannot be reached within sixty (60) days after date such
equipment is put into use, the matter may be submitted to the National Grievance
Committee for final disposition. Rates agreed upon or awarded shall be effective
as of the date equipment is put into use.
The above provisions shall also apply in the event the law (state or federal) is
changed to permit longer combination vehicles or aggregate weight increases of
8,000 pounds or more in the weight limits that are currently provided in the
Surface Transportation Assistance Act of 1982.
Employees expected to use computers will be trained to use them and will be paid
for all training time. Employees expected to use computers will be given
sufficient time to learn to use them.
ARTICLE 7.
LOCAL AND AREA GRIEVANCE MACHINERY
Section 1.
(a) Provisions relating to local, state and area grievance machinery are set
forth in the applicable Supplements to this Agreement.
Each Supplemental Agreement shall provide for a Regional Joint Area Review
Committee. The Committee shall review and consider any case deadlocked by the
Regional Joint Area Committee except suspension and discharge cases. The
Regional Joint Area Review Committee shall consist of the Freight Coordinator
from the applicable Region or a designee of the TNFINC Chairman and a designee
of the Executive Director of TMI. The Committee shall have the authority to
resolve any such deadlocked case either by review of the evidence presented to
the Regional Joint Area Committee or by rehearing the case. The decisions of the
Committee shall be final and binding. In the event the Committee is unable to
resolve the deadlock, the case shall be referred to the National Grievance
Committee.
Unless otherwise provided in a Supplemental Agreement, discharge and suspension
cases deadlocked by a Regional Joint Area Committee shall be automatically
referred to the applicable Regional Arbitration Panel, whose decision shall be
final and binding. The Regional Arbitration Panel shall consist of a Union
representative designated by the Chairman of TNFINC and the Employer Chairman of
the Regional Joint Area Committee or his/her designee and an impartial
arbitrator. The procedures for selection of the arbitrator for the Regional
Arbitration Panel and the cost of arbitration shall be determined by the Rules
of Procedure of the Regional Joint Area Committee. Arbitration of discharge and
suspension deadlocks will take place during the Regional Joint Area Committee
session at which the cases were deadlocked. At the arbitration hearing before
the Regional Arbitration Panel, the Employer's case will be
<PAGE> 11
presented by a full-time employee of the Employer and the Union's case by a
full-time employee of the Local Union, and the Rules of Procedure of the
Regional Joint Area Committee shall apply. The Regional Arbitration Panel shall
issue a "bench decision" at the conclusion of the grievance hearing. Either
party, however, may request a clarification or further explanation of the
previous decision rendered by the Regional Arbitration Panel. Where Supplements
under the 1994-1998 NMFA provided for arbitration in discharge cases, the
procedures for such arbitration shall be maintained under the 1998-2003
Agreement.
(b) All grievances arising under the provisions of the Master Agreement
(Articles 1-39) shall be filed directly with the appropriate Regional Joint Area
Committee. The Regional Joint Area Committee shall have the authority to render
a final and binding decision or direct the grievance to the appropriate lower
level committee for hearing if the grievance is not properly claimed under the
provisions of the Master Agreement. The Regional Joint Area Committee must hear
and decide such cases within ninety (90) days of the filing of the grievance.
Grievances arising under Article 9 - Protection of Rights, Article 29, Sections
1 or 2(a) and (b) - Substitute Service and Article 32, Subcontracting shall be
expeditiously processed and may be heard at either regularly scheduled or
specially called hearings. A grievance may be filed by any Region whose members
are adversely affected by an alleged violation of Article 32, Section