CNF Inc. Doubles Second-Quarter Net Income.PALO ALTO Palo Alto, city, California Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif. -- CNF CNF Configuration (File Name Extension) CNF Conference CNF Conjunctive Normal Form CNF Could Not Find CNF Chin National Front (Burma) CNF Canadian Nature Federation CNF Cornell NanoScale Facility Inc. (NYSE NYSE See: New York Stock Exchange :CNF) today reported second-quarter net income for common shareholders of $35.5 million, or 64 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, more than double the $16.3 million, or 31 cents per diluted share, reported in the second quarter of 2003. Second-quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $73.4 million, up 97 percent from $37.3 million for the 2003 second quarter. Revenue for the second quarter of 2004 was $1.44 billion, an increase of 17 percent from $1.24 billion in second-quarter 2003. For the first six months of 2004, net income for common shareholders was $59.9 million, or $1.09 per diluted share, a gain of 86 percent from $32.2 million, or 61 cents per diluted share, in the first six months of 2003. The first quarter of 2003 included an after-tax net gain of $4.4 million (8 cents per diluted share) from a payment under the Air Transportation Safety and System Stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders Act. Operating income for the first six months of 2004 was $126.1 million, up 61 percent from $78.4 million in the same period a year ago, which included the Stabilization Act payment. Revenue for the first six months of 2004 was $2.79 billion, an increase of 14 percent from $2.44 billion in the first half of 2003. "The second quarter of 2004 was an outstanding quarter for CNF, driven by one of Con-Way's strongest quarters ever, as the company benefited from the strength of the U.S. economy and the continued consolidation of the LTL LTL - Linear Temporal Logic industry," said Keith Kennedy, CNF chairman and interim chief executive officer. "Menlo Worldwide Menlo Worldwide is a global supply chain company based in San Mateo, California which operates in approximately 14 countries worldwide. Its core business offerings include 3rd-party logistics and 4th-party supply chain management. Forwarding made a substantial improvement in its results, reducing its operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. to $2.4 million, a reduction of $11.5 million when compared to last year's second quarter. This improvement came from higher business levels worldwide and continued cost reductions." CNF's effective tax rate in the second quarter of 2004 was 39 percent. During the quarter, the company issued $300 million of 30-year debt and retired $128.9 million of convertible subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before . Con-Way Transportation Services For the second quarter of 2004, Con-Way Transportation Services reported: --record operating income of $67.1 million, up 54 percent from $43.6 million in the year-ago period, --revenue of $657.5 million, an increase of 21 percent from $541.4 million in the second quarter of 2003, --regional-carrier tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. per day was up 16 percent from the prior-year period, -- the regional carrier group achieved an operating ratio Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: of 88.8. On July 16, a federal appeals court in Washington, D.C. overturned the government's new, so-called "hours of service" regulations that govern the number of hours truck drivers work in a day. "The hours of service issue has been ongoing for several years and this latest development will have a minimal effect on Con-Way's operations," said Gerald L. Detter, president and chief executive officer of Con-Way Transportation Services. Menlo Worldwide For the second quarter of 2004, Menlo Worldwide reported: --operating income of $7.2 million compared with an operating loss of $3.9 million in the year-ago period, --revenue of $783.2 million, up 13 percent from $695.4 million in the second quarter of 2003. For the second quarter of 2004, Menlo Worldwide Forwarding reported: --an operating loss of $2.4 million compared with an operating loss of $13.8 million in the year-ago period, --revenue of $517.4 million, up 17 percent from $442.4 million a year ago, --international air freight air freight n → flete m por avión air freight n → fret aérien air freight air n → Luftfracht f revenue per day grew 23 percent from the prior-year period on a 21 percent increase in tonnage per day, --North American air freight revenue per day rose 7 percent on a 7 percent increase in tonnage per day. For the second quarter of 2004, Menlo Worldwide Logistics reported: --operating income of $6.5 million, up 4 percent from $6.3 million a year ago, --revenue of $265.9 million, an increase of 5 percent from $253.0 million in the prior-year period. For the second quarter of 2004, activities at Menlo Worldwide Other, which consists of the results of Vector SCM (1) (Software Configuration Management, Source Code Management) See configuration management. (2) See supply chain management. , generated a profit of $3.0 million compared with $3.6 million in the second quarter of 2003. Vector's results depend on GM's volumes and cost reduction targets. Other CNF's "Other" operations, which include the results of Road Systems and corporate activities, reported an operating loss of $0.9 million compared with an operating loss of $2.3 million in the second quarter of 2003, which included a $1.1 million loss on the sale of a property. Outlook Third-quarter diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the are expected to be between 71 cents and 81 cents. CNF's tax rate is expected to be 39 percent in the third quarter. Conference Call CNF will host a conference call for shareholders and the investment community to discuss second-quarter results at 11:00 a.m. Eastern Daylight Time (8:00 a.m. Pacific Daylight Time) on Wednesday, July 21. The call can be accessed by dialing (888) 428-4480 or (651) 291-5254 (for international callers only) and is expected to last approximately one hour. Callers are requested to dial in at least five minutes before the start of the call. The call will also be available through a live web cast at the investor relations Investor relations The process by which the corporation communicates with its investors. section of the CNF web site at www.cnf.com and at www.streetevents.com. An audio replay will be available for one week following the call at (800) 475-6701 or (320) 365-3844 (for international callers) using access code 734087. The replay will also be available for one week on demand at the web sites providing access to the live call. Investors may obtain additional operating data from CNF's Consolidated Financial Summaries, which will be posted on the investor relations section of the CNF web site at www.cnf.com later today. CNF (NYSE:CNF) is a $5.1 billion management company of global supply chain services with businesses in regional trucking, air freight, ocean freight, customs brokerage, global logistics management Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet and trailer manufacturing. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements in this press release constitute "forward-looking statements" and are subject to a number of risks and uncertainties and should not be relied upon as predictions of future events. All statements other than statements of historical fact are forward-looking statements, including any projections and objectives of management for future operations, any statements regarding contributions to pension plans, any statements as to the adequacy of reserves, any statements regarding the possible outcome of claims brought against CNF, any statements regarding future economic conditions or performance, any statements of estimates or belief and any statements or assumptions underlying the foregoing. Specific factors that could cause actual results and other matters to differ materially from those discussed in such forward-looking statements include: changes in general business and economic conditions, the creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of CNF's customers and their ability to pay for services rendered, increasing competition and pricing pressure, changes in fuel prices, the effects of the cessation cessation Vox populi The stopping of a thing. See Smoking cessation. of the air carrier operations of Emery Worldwide Emery Worldwide was a cargo airline, once was one of the leading carriers in the cargo airline world. Emery started in 1946 and was the first freight forwarder to receive a carrier certificate from the United States Government. Airlines, the possibility of additional unusual charges and other costs and expenses related to Menlo Worldwide's forwarding operations, the possibility that CNF may, from time to time, be required to record impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges for goodwill and other long-lived assets, the possibility of defaults under CNF's $385 million credit agreement and other debt instruments (including defaults resulting from additional unusual charges), and the possibility that CNF may be required to repay certain indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. in the event that the ratings assigned to its long-term senior debt by credit rating agencies Credit Rating Agencies Firms that compile information on and issue public credit ratings for a large number of companies. are reduced, labor matters, enforcement of and changes in governmental regulations, environmental and tax matters, the February 2000 crash of an EWA EWA Enterprise Wireless Alliance EWA Electronic Warfare Associates, Inc. EWA Energy from Waste Association (UK) EWA Engineered Wood Association EWA Edgewood Arsenal EWA Earl Walls Associates aircraft and related litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , matters relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc CNF's 1996 spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of Consolidated Freightways Consolidated Freight was the 3rd biggest trucking company in the US. In the 1930s they started their own truck manufacturing operation, Freightliner, now part of DaimlerChrysler. Corporation (CFC CFC See: Controlled foreign corporation ), including the possibility that CFC's multi-employer pension plans may assert claims against CNF, and matters relating to CNF's defined benefit pension plans. The factors included herein and in Item 7 of CNF's 2003 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. as well as other filings with the Securities and Exchange Commission could cause actual results and other matters to differ materially from those in such forward-looking statements. As a result, no assurance can be given as to future financial condition, cash flows, or results of operations.
CNF INC.
STATEMENTS OF CONSOLIDATED INCOME
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
REVENUES $1,441,726 $1,236,905 $2,790,131 $2,443,146
Costs and Expenses
Operating expenses 1,207,450 1,042,036 2,345,954 2,055,707
Selling, general and
administrative
expenses 128,853 124,053 253,927 242,343
Depreciation 32,031 33,496 64,116 66,728
----------- ----------- ----------- -----------
1,368,334 1,199,585 2,663,997 2,364,778
----------- ----------- ----------- -----------
OPERATING INCOME 73,392 37,320 126,134 78,368(b)
Other expense, net (11,908) (7,207) (21,324) (18,820)
----------- ----------- ----------- -----------
Income before Taxes 61,484 30,113 104,810 59,548
Income Tax Provision 23,979 11,744 40,876 23,224
----------- ----------- ----------- -----------
Net Income 37,505 18,369 63,934 36,324
Preferred Stock
Dividends 2,022 2,069 4,044 4,095
----------- ----------- ----------- -----------
NET INCOME AVAILABLE
TO COMMON
SHAREHOLDERS $35,483 $16,300 $59,890 $32,229
=========== =========== =========== ===========
Weighted-Average
Common Shares
Outstanding
Basic 50,319,659 49,494,145 50,075,246 49,445,348
Diluted (a) 56,883,738 57,127,187 56,981,429 54,004,772
Earnings Per Common
Share
Basic $0.71 $0.33 $1.20 $0.65
=========== =========== =========== ===========
Diluted (a) $0.64 $0.31 $1.09 $0.61
=========== =========== =========== ===========
OPERATING SEGMENTS
REVENUES
Con-Way
Transportation
Services $657,541 $541,446 $1,251,385 $1,060,554
Menlo Worldwide
Forwarding 517,376 442,421 1,018,893 888,043
Logistics 265,857 253,012 518,647 494,514
----------- ----------- ----------- -----------
783,233 695,433 1,537,540 1,382,557
----------- ----------- ----------- -----------
CNF Other 952 26 1,206 35
----------- ----------- ----------- -----------
$1,441,726 $1,236,905 $2,790,131 $2,443,146
=========== =========== =========== ===========
OPERATING INCOME (LOSS)
Con-Way
Transportation
Services $67,136 $43,575 $118,241 $80,767
Menlo Worldwide
Forwarding (2,355) (13,818) (8,764) (19,249)(b)
Logistics 6,549 6,303 13,055 12,339
Other 2,988 3,572 5,380 6,548
----------- ----------- ----------- -----------
7,182 (3,943) 9,671 (362)
----------- ----------- ----------- -----------
CNF Other (926) (2,312) (1,778) (2,037)
----------- ----------- ----------- -----------
$73,392 $37,320 $126,134 $78,368
=========== =========== =========== ===========
(a) The six months ended June 30, 2003 include the dilutive effect of
stock options and Series B preferred stock. All other periods
presented include the dilutive effect of stock options, Series B
preferred stock, and convertible subordinated debentures, which
were redeemed on June 1, 2004.
(b) Includes a $7.2 million net gain ($0.08 per diluted share) from a
payment under the Air Transportation Safety and System
Stabilization Act.
CNF INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2004 2003
------------ ------------
ASSETS
Current assets $1,683,659 $1,316,695
Property, plant and equipment, net 981,828 997,455
Other assets 375,456 439,584
------------ ------------
Total Assets $3,040,943 $2,753,734
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $875,446 $809,611
Long-term debt, guarantees and capital
leases 813,793 665,180
Other long-term liabilities and deferred
credits 453,312 460,135
Shareholders' equity 898,392 818,808
------------ ------------
Total Liabilities and Shareholders'
Equity $3,040,943 $2,753,734
============ ============
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