Item 1. - Business. - ------- ---------
The registrant, Caliber System, Inc. (formerly Roadway Services, Inc.), is a corporation organized under the laws of the State of Ohio in 1982 and is engaged through its subsidiaries in a broad range of transportation, logistics, and related information services. On December 14, 1995, the shareholders of the registrant approved the spin-off to the registrant's shareholders of approximately 95% of the stock of its wholly-owned subsidiary, Roadway Express, Inc., the registrant's national long haul, less-than-truckload (LTL) motor freight carrier. The spin-off was completed at the beginning of 1996. On November 6, 1995 the registrant announced plans to exit the air freight business served by Roadway Global Air, Inc., its worldwide air freight carrier. Additional information concerning the above transactions is set forth in the discussion contained on pages 4, 5 and 19, and pages 30 through 33 of the registrant's Annual Report to Shareholders for the year ended December 31, 1995, and is incorporated herein by reference. The registrant's remaining operations include a small-package carrier, a superregional freight carrier, a surface expedited carrier and a contract logistics provider. These operations provide services and solutions to meet customer requirements based upon shipment size, distance, time in transit, and distribution needs. The registrant conducts these operations principally through RPS, Inc. ("RPS", formerly Roadway Package System, Inc.), Viking Freight, Inc. ("Viking", formerly Viking Freight System, Inc.), Roberts Express, Inc. ("Roberts") and Caliber Logistics, Inc. ("Caliber Logistics", formerly Roadway Logistics Systems, Inc.).
RPS serves customers in the small-package market throughout North America and between North America and Europe, focusing primarily on the business-to-business delivery of packages weighing up to 150 pounds. RPS provides service to 98% of the United States, and, through RPS, Ltd., its subsidiary, to 100% of Canada. RPS service extends to 27 European countries through a partnership with General Parcel Logistics GmbH. RPS also offers service offshore to Puerto Rico, Alaska and Hawaii via a ground/air network operation. RPS provides other specialized transportation services to meet specific customer requirements in the small-package market. RPS conducts its operations primarily with owner-operated vehicles and, in addition, owns over 7,000 trailers. United Parcel Service is the dominant carrier in the portion of the industry in which RPS competes. Competition focuses largely on providing economical pricing and dependable service.
Viking is a superregional freight carrier, formed early in 1996 by the consolidation of the businesses of four regional carrier subsidiaries, Central Freight Lines Inc., Coles Express, Inc., Spartan Express, Inc., and Viking Freight System, Inc., with regional coverage across the country. Viking's primary business consists of handling shipments weighing less than 10,000 pounds each. Most of their shipments require less than the full cargo and/or weight capacity of a trailer and are more efficiently transported by sharing trailer capacity with other shipments. Viking operates a dedicated trucking network principally serving its core geographic markets with next-day and second-day freight service. In addition, national service is provided
to meet specific customer requirements. With a fleet of over 20,000 trucks, tractors and trailers, Viking serves 91% of the U.S. population in all 50 states and Puerto Rico; it also serves Canada through an arrangement with Interlink Freight Systems, Inc. The freight industry is extremely competitive. High levels of competition and periodic industry overcapacity continue to result in aggressive discounting and narrow margins. Viking competes primarily with other regional freight carriers and, to a lesser extent, national freight and small-package carriers.
Roberts is the largest surface expedited carrier in North America, providing critical needs shipping and transportation for emergency shipments. Roberts also provides similar service in Europe. Utilizing over 2,000 vehicles, Roberts delivers shipments within 15 minutes of the promised delivery time in 96% of all cases. In addition to time-critical delivery, Roberts offers White Glove Services(R), requiring specially equipped vehicles and highly trained teams to handle such items as electronics, medical equipment, radioactive materials, pressurized gases, trade show exhibits and works of art. Roberts transports freight through independent owner-operators.
Caliber Logistics is a contract logistics provider with expertise across the entire supply chain, from inbound materials management through distribution to the final consumer. Services provided include transportation management, dedicated transportation, warehouse operations and management, just-in-time delivery programs (including light assembly and manufacturing), customer order processing, returnable container management, freight bill payment and auditing and other management services outsourced by its customers. Caliber Logistics operates in a relatively new business area and further vigorous competition is expected from existing competitors and new entrants.
At the end of 1995, the registrant and its affiliates employed approximately 25,700 persons (on a full time equivalent basis) and utilized the services of approximately 10,500 independent contractors.
All of the registrant's domestic motor carrier subsidiaries are subject to regulation by the United States Department of Transportation.
The freight transportation industry is affected directly by the state of the overall economy. Seasonal fluctuations affect tonnage, revenues, and earnings, with the fall of each year being the busiest shipping period and the months of December and January the slowest.
Item 2.
Item 2. - Properties. - ------- -----------
Caliber System, Inc. - --------------------
Corporate offices of the registrant and its information systems subsidiary, Caliber Technology, Inc. (formerly Roadway Information Technology, Inc.) are located in Akron, Ohio in leased facilities. Limited additional corporate office space is located in nearby leased facilities.
RPS, Inc. - ---------
As of December 31, 1995, RPS operated 339 terminals, including 23 hub facilities. Forty-six of the terminals, 19 of which are hub facilities, are owned; and 293 terminals, including the other four hub facilities, are leased, generally for terms of three years or less. Twelve of the terminals, including three hub facilities, are operated by RPS, Ltd., RPS' Canadian subsidiary. The 23 hub facilities are strategically located to cover the geographic area served by RPS. These facilities, averaging 97,500 square feet, range in size from 24,000 to 147,900 square feet.
RPS' corporate offices and information and data centers are located in an approximately 350,000 square foot building owned by a subsidiary of the registrant in the Pittsburgh, Pennsylvania area.
Viking Freight, Inc. - --------------------
As of December 31, 1995, Viking operated 221 terminals. Eighty-four of the terminals, with 4,450 loading spaces, are owned; and the remaining 137 terminals, with 3,128 loading spaces, are leased. The largest terminal facility, located in Dallas, Texas, has 525 loading spaces and is owned by the company. The company's general offices are located in leased facilities in San Jose, California.
Roberts Express, Inc. - -------------------------------------
Roberts' general offices are located in Akron, Ohio in owned facilities. Roberts does not use terminal facilities in its business.
Caliber Logistics, Inc. - -----------------------
Caliber Logistics' general offices are located in Hudson, Ohio in leased facilities.
Item 3.
Item 3. - Legal Proceedings. - ------- ------------------
The registrant is involved in various lawsuits arising in the ordinary course of its business. In the opinion of management, the outcome of these matters will not have a material adverse effect on the financial condition or results of operations of the registrant.
Item 4.
Item 4. - Submission of Matters to a Vote of Security Holders. - ------- ----------------------------------------------------
On December 14, 1995, the registrant held a special meeting of shareholders at 901 Lakeside Ave., Cleveland, Ohio. The purpose of the meeting was to vote on the proposals recommended by the Board of Directors to approve the following:
Proposal One: The distribution by the registrant of at least 95% of the outstanding shares of common stock of Roadway Express, Inc. ("REX"), a then wholly-owned subsidiary of the registrant to the shareholders of record on December 29, 1995, on the basis of one share of common stock of REX for each two shares of common stock of the registrant. The results of the vote on Proposal One were as follows:
Proposal Two: An amendment to the Amended Articles of Incorporation of the registrant changing the name of the registrant to "Caliber System, Inc." The results of the vote on Proposal Two were as follows:
Proposal Three: The adoption by REX, then a wholly-owned subsidiary of the registrant, of the REX Management Incentive Stock Plan. The results of the vote on Proposal Three were as follows:
Executive Officers of the Registrant. - -------------------------------------
Officers are elected to serve on a calendar year basis except for the Chairman, President, Treasurer and Secretary, who are elected for an annual term following the annual meeting of shareholders. No family relationships exist between any of the executive officers named above or between any executive officer and any director of the registrant.
PART II
Item 5.
Item 5. - Market for Registrant's Common Equity and Related Stockholder - ------- ------------------------------------------------------------- Matters. --------
In response to the information called for by this Item, the material set forth under the heading "Common Stock and Dividends" on page 39 of the registrant's Annual Report to Shareholders for the year ended December 31, 1995, is incorporated herein by reference.
Item 6.
Item 6. - Selected Financial Data. - ------- ------------------------
In response to the information called for by this Item, the historical data set forth for the years 1995, 1994, 1993, 1992 and 1991, and Notes (1), (2) and (3) on pages 42 and 43 of the registrant's Annual Report to Shareholders for the year ended December 31, 1995, are incorporated herein by reference.
Item 7.
Item 7. - Management's Discussion and Analysis of Financial Condition and - ------- --------------------------------------------------------------- Results of Operations. ----------------------
In response to the information called for by this Item, the material set forth on pages 19 through 22 of the registrant's Annual Report to Shareholders for the year ended December 31, 1995, is incorporated herein by reference.
Item 8.
Item 8. - Financial Statements and Supplementary Data. - ------- --------------------------------------------
The consolidated financial statements of the registrant and its subsidiaries set forth on pages 24 through 38 and the Report of Independent Auditors on page 23 of the registrant's Annual Report to Shareholders for the year ended December 31, 1995, are incorporated herein by reference.
The material set forth under the heading "Summary of Quarterly Results of Operations" on page 40 and 41 of the registrant's Annual Report to Shareholders for the year ended December 31, 1995, is incorporated herein by reference.
Item 9.
Item 9. - Changes in and Disagreements with Accountants on Accounting and - ------- --------------------------------------------------------------- Financial Disclosure. ---------------------
None.
PART III
Item 10.
Item 10. - Directors and Executive Officers of the Registrant. - -------- ---------------------------------------------------
In response to the information called for by Item 401 of Regulation S-K with respect to directors of the registrant, the material set forth under the heading "Information About Nominees for Directors" in the registrant's proxy statement for the annual meeting of shareholders to be held on May 8, 1996, which will be filed pursuant to Regulation 14A with the Securities and Exchange Commission, is incorporated herein by reference.
In response to the information called for by Item 401 of Regulation S-K with respect to executive officers of the registrant, the material set forth under the heading "Executive Officers of the Registrant" in Part I of this Form 10-K Annual Report for the year ended December 31, 1995, is incorporated herein by reference.
Item 11.
Item 11. - Executive Compensation. - -------- -----------------------
In response to the information called for by this Item with respect to directors of the registrant, the material set forth under the heading "Director Compensation" in the registrant's proxy statement for the annual meeting of shareholders to be held on May 8, 1996, which will be filed pursuant to Regulation 14A with the Securities and Exchange Commission, is incorporated herein by reference.
In response to the information called for by this Item with respect to executive officers of the registrant, the material set forth under the heading "Executive Compensation and Shareholdings by Executive Officers" in the registrant's proxy statement for the annual meeting of shareholders to be held on May 8, 1996, which will be filed pursuant to Regulation 14A with the Securities and Exchange Commission, is incorporated herein by reference.
Item 12.
Item 12. - Security Ownership of Certain Beneficial Owners and Management. - -------- ---------------------------------------------------------------
In response to the information called for by this Item, the material set forth under the heading "Principal Holders of Company Common Stock on February 29, 1996," including the notes thereto; the material set forth under the heading "Information About Nominees for Directors," including the notes thereto; and the material set forth under the heading "Ownership of Company Common Stock by Management," including the notes thereto, in the registrant's proxy statement for the annual meeting of shareholders to be held on May 8, 1996, which will be filed pursuant to Regulation 14A with the Securities and Exchange Commission, is incorporated herein by reference.
Item 13.
Item 13. - Certain Relationships and Related Transactions. - -------- -----------------------------------------------
None.
PART IV
Item 14.
Item 14. - Exhibits, Financial Statement Schedules, and Reports on Form 8-K. - -------- -----------------------------------------------------------------
(a)(1) and (2) List of Financial Statements and Financial Statement Schedules--The response to this portion of Item 14 is submitted as a separate section of this report.
(3) Exhibit Index--The response to this portion of Item 14 is submitted as a separate section of this report.
(b) Reports on Form 8-K Filed in the Fourth Quarter of 1995--A report on Form 8-K dated November 17, 1995 was filed under:
* Item 2, Acquisition or Disposal of Assets. - Announced plans to exit the air freight business served by its subsidiary Roadway Global Air, Inc. and to sell certain related assets.
* Item 7, Financial Statements, Pro Forma Financial Information and Exhibits.-
The following pro forma financial information was incorporated by reference to note (b) on page 32 and to pages 33 through 38 of the registrant's Proxy Statement for the Special Meeting of Shareholders held on December 14, 1995.
Roadway Services, Inc. Pro Forma Condensed Financial Statements:
* Unaudited Pro Forma Condensed Balance Sheet, September 9, 1995
* Unaudited Pro Forma Statement of Consolidated Income, Thirty-Six Weeks Ended September 9, 1995
* Unaudited Pro Forma Statement of Consolidated Income, Year Ended December 31, 1994
* Unaudited Pro Forma Statement of Consolidated Income, Thirty-Six Weeks Ended September 10, 1994
(c) Exhibits--The response to this portion of Item 14 is submitted as a separate section of this report.
(d) Financial Statement Schedules--The response to this portion of Item 14 is submitted as a separate section of this report.
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.
CALIBER SYSTEM, INC.
Date March 12, 1996 By /s/ Daniel J. Sullivan -------------- ------------------------------------- Daniel J. Sullivan, Chairman, President and Chief Executive Officer
Date March 12, 1996 By /s/ D. A. Wilson -------------- ------------------------------------- D. A. Wilson, Senior Vice President- Finance and Planning, Secretary and Chief Financial Officer
Date March 12, 1996 By /s/ Kathryn W. Dindo -------------- ------------------------------------- Kathryn W. Dindo, Vice President and Controller
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.
CALIBER SYSTEM, INC.
Date March 12, 1996 By /s/ G. B. Beitzel -------------- ------------------------------------- G. B. Beitzel, Director
Date March 12, 1996 By /s/ R. A. Chenoweth -------------- ------------------------------------- R. A. Chenoweth, Director
Date March 12, 1996 By /s/ Charles R. Longsworth -------------- ------------------------------------- Charles R. Longsworth, Director
Date March 12, 1996 By /s/ Daniel J. Sullivan -------------- ------------------------------------- Daniel J. Sullivan, Director
Date March 12, 1996 By H. Mitchell Watson, Jr. -------------- ------------------------------------- H. Mitchell Watson, Jr., Director
ANNUAL REPORT ON FORM 10-K
ITEM 14(a) (1) AND (2), AND 14(d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1995
CALIBER SYSTEM, INC.
AKRON, OHIO
FORM 10-K--ITEM 14(a) (1) AND (2)
CALIBER SYSTEM, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
The following consolidated financial statements, included in the registrant's Annual Report to Shareholders for the year ended December 31, 1995, are incorporated by reference in Item 8:
Consolidated Balance Sheets--December 31, 1995 and 1994--pages 24 and 25 Statements of Consolidated Income--Years ended December 31, 1995, 1994 and 1993--page 26 Statements of Consolidated Cash Flows--Years ended December 31, 1995, 1994 and 1993--page 27 Statements of Consolidated Shareholders' Equity--Years ended December 31, 1995, 1994 and 1993--pages 28 and 29 Notes to Consolidated Financial Statements--December 31, 1995--pages 30 through 38
The following consolidated financial statement schedule of Caliber System, Inc. and subsidiaries is included in Item 14(d):
Schedule II-Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
CALIBER SYSTEM, INC.
Years Ended December 31, 1995, 1994 and 1993
(dollars in thousands)