The Company is a party to a $347 million credit agreement (the “Credit Agreement”) with Societe Generale, Southwest Agency as Managing and Administrative Agent and NationsBank of Texas, N.A., as Documentation Agent, and with 14 other participating banks. The Credit Agreement included a $72 million term loan and provides for up to $275 million of revolving credit loans (including letters of credit).

At December 31, 1996, there were $187 million of Revolver Advances, $40.9 million of Term Advances and approximately $71.9 million of letters of credit outstanding. The Revolver Advances are payable on August 11, 1998. The Term Loan is payable in installments through August 1998. The Credit Agreement requires that net proceeds received from certain asset sales be applied against the Term Loan balance. Outstanding revolving credit advances may not exceed a borrowing base calculated using the Company’s equipment and real estate, the Treadco common stock owned by the Company, and eligible receivables. The Company has pledged on the Credit Agreement substantially all revenue equipment and real property not already pledged under other debt obligations.

The Credit Agreement contains various covenants which limit, among other things, indebtedness, distributions, capital expenditures, asset sales, restricted payments, investments, loans and advances, as well as requiring the Company to meet certain financial tests. As of December 31, 1996, the Company was not in compliance with certain covenants relating to financial tests, and the Company obtained a waiver through January 31, 1997. On January 31, 1997, the Company obtained an amendment to the Credit Agreement which included revised financial covenants with which the Company is in compliance. The Credit Agreement had previously been amended in February, 1996, including a revision of term and financial covenants.

As a part of the February, 1996 amendment, the Company obtained an additional credit agreement which provides for borrowings of up to $30 million. Borrowings under this agreement bear interest at either an adjusted prime rate plus 2% or a maximum rate as defined in the agreement, or the Eurodollar rate plus 3% or a maximum rate as defined in the agreement. The maturity date of this agreement is March 31, 1997. In connection with the January, 1997 amendment, the available borrowings were reduced to $15 million, and by March 31, 1997, the Company may, at its option, extend the maturity date to September 30, 1997. As of December 31, 1996, and during the year then ended, there were no borrowings under this additional credit agreement. This agreement contains covenants that are substantially the same as the covenants contained in the primary Credit Agreement.

The Company assumed the Subordinated Debentures of WorldWay which were issued in April 1986. The debentures bear interest at 6.25% per annum, payable semi-annually, on a par value of $50,000,000. The debentures are payable April 15, 2011. The Company may redeem the debentures at a price of 100%. The Company is required to redeem through a mandatory sinking fund commencing before April 15, in each of the years from 1997 to 2010, an amount in cash sufficient to redeem $2,500,000 annually of the aggregate principal amount of the debentures issued.

Treadco is a party to a revolving credit facility with Societe Generale (the “Treadco Credit Agreement”), providing for borrowings of up to the lesser of $20 million or the applicable borrowing base. Borrowings under the Treadco Credit Agreement are collateralized by accounts receivable and inventory. Borrowings under the agreement bear interest, at Treadco’s option, at 3/4% above the bank’s LIBOR rate, or at the higher of the bank’s prime rate or the “federal funds rate” plus 1/2%. At December 31, 1995, the interest rate was 7.1%. At December 31, 1995, Treadco had $10 million outstanding under the Revolving Credit Agreement. The Treadco Credit Agreement is payable in September 1998. Treadco pays a commitment fee of 3/8% on the unused amount under the Treadco Credit Agreement.

The Treadco Credit Agreement contains various covenants which limit, among other things, dividends, disposition of receivables, indebtedness and investments, as well as requiring Treadco to meet certain financial tests. The Treadco Credit Agreement was amended in June 1996, restating certain financial test requirements through December 31, 1996.

The Company is a party to an interest rate cap arrangement to reduce the impact of increases in interest rates on its floating-rate long-term debt. The Company will be reimbursed for the difference in interest rates if the LIBOR rate exceeds a fixed rate of 9 3/4% applied to notional amounts, as defined in the contract, ranging from $40 million as of December 31, 1995 to $2.5 million as of October 1999. As of December 31, 1995 and 1994, the LIBOR rate was 5.5% and 6.5%, respectively; therefore, no amounts were due to the Company under this arrangement. In the event that amounts are due under this agreement in the future, the payments to be received would be recognized as a reduction of interest expense (the accrual accounting method). Fees totaling $385,000 were paid in 1994 to enter into this arrangement. These fees are included in other assets and are being amortized to interest expense over the life of the contract.

The following table sets forth the Company’s historical capital expenditures (net of equipment trade-ins) for the periods indicated below:

                                          Year Ended December 31
                                        1996       1995       1994 
                                                 ($ millions)

LTL motor carrier operations         $  13.0    $  75.0    $  44.2
Intermodal operations                    0.4        0.4          -
Truckload motor carrier operations       0.8        2.1          -
Logistics operations                     3.1        5.3          -
Tire operations                         23.0        4.5        4.3
Service and other                        1.3       12.1       15.6 
                                        41.6       99.4       64.1
  Less: Operating leases                   -      (24.6)         - 
Total                                $  41.6    $  74.8    $  64.1 

The amounts presented in the table under operating leases reflect the estimated purchase price of the equipment had the Company purchased the equipment versus financing through operating lease transactions.

In 1997, the Company anticipates spending approximately $49 million in total capital expenditures net of proceeds from equipment sales. Of the $49 million, ABF is budgeted for approximately $24.5 million to be used primarily for revenue equipment. Treadco is budgeted for $7.1 million of expenditures for retreading and service equipment and facilities, and Cardinal has $7.3 million budgeted for revenue equipment purchases.

Cash from operations and the sale of assets resulted in reduction of debt of approximately $70 million in 1996.

At December 31, 1996, the Company had approximately $16 million of availability under the Credit Agreement as well as $15 million under the additional credit agreement.

Management believes, based upon the Company’s current levels of operations and anticipated growth, the Company’s cash, capital resources, borrowings available under the Credit Agreement and cash flow from operations will be sufficient to finance current and future operations and meet all present and future debt service requirements.