American Freightways

Operating revenue for 1997 was $870,319,000, up 19.4 percent from 1996. The growth in operating revenue was primarily the result of increased revenue per hundred weight and increased tonnage from new and existing customers.

Revenue per hundred weight for 1997 was up 6.8 percent from levels experienced in 1996. Factors contributing to the increase in revenue included a 5.9 percent general rate increase (effective Jan. 1, 1997) that initially affected about 45 percent of the company’s customers. The remaining customers’ rates are determined by contracts and guarantees and are negotiated throughout the year.

Also, a fuel surcharge imposed by the company Sept. 16, 1996, helped the company recover the increased costs of fuel.

The surcharge is tied to the Department of Energy’s National Diesel Fuel Index and was 0.7 percent for LTL shipments as of Dec. 31, 1997. The surcharge is suspended when the national index moves below $1.15 per gallon, which occurred Jan. 7, 1998.

In addition, the percentage of the company’s total revenue that was derived from truckload shipments (more than 10,000 pounds) declined to 5.7 percent during 1997 as compared to 6.7 percent during 1996.

The company increased tonnage of freight by 11.7 percent, mainly because of expanded service territories.

Management expects growth in operating revenue is sustainable in the near-term but planned expansions of service territory during 1998 are less aggressive than those initiated in recent years. The primary focus for growth in operating revenue in the near-term will be further penetration of existing markets. As a result, any near-term percentage growth in operating revenue will likely be less than that of recent years. Sustainability of revenue growth is subject to a number of factors, including LTL industry capacity, increased tonnage and general economic conditions.