CNF Inc. Net Income from Continuing Operations Climbs 96 Percent in Second-Quarter 2005.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 2005 after-tax income 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 of $66.1 million (after preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends), or $1.19 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, up 96 percent from second-quarter 2004. This compares with second-quarter 2004 after-tax income from continuing operations of $33.8 million, or 61 cents per diluted share. Income from continuing operations includes a 12-cent-per-diluted-share tax benefit consisting of a $7.0 million tax adjustment from settlement with the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. of previous tax filings. Excluding the tax adjustment, the effective tax rate for the second quarter was 38 percent compared with 39 percent in the same quarter of 2004. 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. in the second quarter was a record $103.6 million, up 45 percent from $71.3 million in the same quarter a year ago. Revenue for the second quarter of 2005 was $1.03 billion, up 12 percent from $924.4 million in second-quarter 2004. Net income for common shareholders in the second quarter was $69.1 million, or $1.24 per diluted share, up 95 percent from second-quarter 2004. This compares with net income for common shareholders of $35.5 million, or 64 cents per diluted share in the second quarter a year ago. Net income for common shareholders included a $3.0 million gain (5 cents per diluted share) from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. consisting mostly of tax adjustments for 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. Commenting on the quarterly results and operations, Douglas Stotlar, CNF president and chief executive officer, said, "The company is realizing the benefits of operating as a single enterprise. Our growth in the second quarter was the result of our ability to leverage the resources of all of our companies while managing our businesses for the future. We did an excellent job in the second quarter of balancing revenues and profit growth by maintaining cost controls and winning new business. We are pleased with our growth in the second quarter and continue to experience strong support from our customers. We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the third quarter and the remainder of the year." The company said it had repurchased $42.3 million in company stock in the second quarter as part of a previously announced $300 million stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program to occur over two years. To date, CNF has repurchased $74.6 million in company stock under the program. The company expects to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. approximately $37.5 million in shares in the third quarter of 2005. CON-WAY TRANSPORTATION SERVICES For the second quarter of 2005, Con-Way Transportation Services reported: --Operating income of $95.3 million, up 49 percent from $63.9 million in the year-ago period. --Revenue of $713.9 million, an increase of 11 percent from last year's second-quarter revenue of $640.9 million. --Regional-carrier yield increased 6 percent from the prior-year quarter. --The regional-carrier group achieved an improved operating ratio Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: of 86.3 percent compared to 89.6 percent in the second quarter of 2004. 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. CNF's Menlo Worldwide operations include the combined results for Menlo Logistics and the former Con-Way Logistics, which were integrated in the second quarter, and Vector SCM (1) (Software Configuration Management, Source Code Management) See configuration management. (2) See supply chain management. . For the second quarter of 2005, Menlo Worldwide reported: --Total segment operating income of $10.6 million, up 27 percent, compared with $8.3 million in the second quarter of 2004. --Menlo Logistics' revenue of $317 million, up 12 percent from the prior-year quarter of $282.6 million. --Operating income for Menlo Logistics was $5.6 million in the second quarter, up 5 percent from $5.4 million in the second quarter of 2004. --Operating income at Vector SCM was $4.9 million in the second quarter, up 65 percent from $3.0 million in the prior-year quarter due to higher income from European operations for General Motors. OTHER CNF's "other" operations, which includes the results of Road Systems trailer In communications, a code or set of codes that make up the last part of a transmitted message. See trailer label. manufacturing and corporate activities, reported an 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. of $0.8 million compared to a loss of $0.9 million in the second quarter of 2004. THIRD-QUARTER 2005 OUTLOOK Third-quarter 2005 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 are expected to be between $1.00 and $1.08 cents. This compares with 72 cents per diluted share earned from continuing operations in the third quarter of 2004. CNF's tax rate is expected to be 38 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. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ) on Wednesday, July 20. The call can be accessed by dialing (866) 264-3634 or (706) 643-3632 (for international callers) and is expected to last approximately one hour. Callers are requested to dial in at least five minutes before the start of the call. Related financial and operating statistics to be discussed on the conference call are available on the company's website at www.cnf.com/investor relations/fin hilight.asp. 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 www.cnf.com and at www.streetevents.com. An audio replay will be available for one week following the call at (800) 642-1687 or (706) 645-9291 (for international callers), using access code 7127850. The replay will also be available for two weeks on demand at the same web casting sites providing access to the live call. CNF is a $4.0 billion transportation and logistics company with businesses in less-than-truckload motor carriage, truckload truck·load n. The quantity that a truck can hold. truckload n → camión m lleno carriage, air freight air freight n → flete m por avión air freight n → fret aérien air freight air n → Luftfracht f , logistics, warehousing, supply chain management 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 concerning proposed new products or services, any statements regarding CNF's estimated future contributions to pension plans, any statements as to the adequacy of reserves, any statements regarding the outcome of any claims that may be 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 Airlines, the possibility of defaults under CNF's $400 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 as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. 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, 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, matters relating to the sale of Menlo Worldwide Forwarding, Inc., including CNF's obligation to indemnify To compensate for loss or damage; to provide security for financial reimbursement to an individual in case of a specified loss incurred by the person. Insurance companies indemnify their policyholders against damage caused by such things as fire, theft, and flooding, which the buyer for certain losses in connection the sale, and matters relating to CNF's defined benefit pension plans. The factors included herein and in Item 7 of CNF's 2004 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 OPERATIONS
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
REVENUES $1,033,875 $924,382 $1,981,558 $1,771,302
Costs and Expenses
Operating expenses 818,567 748,028 1,587,300 1,439,845
Selling, general
and administrative
expenses 84,498 79,783 163,724 154,228
Depreciation 27,250 25,292 53,718 50,502
----------- ----------- ----------- -----------
930,315 853,103 1,804,742 1,644,575
----------- ----------- ----------- -----------
OPERATING INCOME 103,560 71,279 176,816 126,727
Other Expense, net (6,165) (12,560) (13,608) (19,737)
----------- ----------- ----------- -----------
Income Before
Taxes 97,395 58,719 163,208 106,990
Income Tax
Provision 29,239(b) 22,900 54,201(b) 41,726
----------- ----------- ----------- -----------
Income from
Continuing
Operations 68,156 35,819 109,007 65,264
----------- ----------- ----------- -----------
Discontinued
Operations, net
of tax
Gain (Loss) from
Disposal 2,951 - (6,825) -
Income (Loss) from
Discontinued
Operations - 1,686 - (1,330)
----------- ----------- ----------- -----------
2,951 1,686 (6,825) (1,330)
Net Income 71,107 37,505 102,182 63,934
Preferred Stock
Dividends 2,036 2,022 4,025 4,044
----------- ----------- ----------- -----------
NET INCOME AVAILABLE
TO COMMON
SHAREHOLDERS $69,071 $35,483 $98,157 $59,890
=========== =========== =========== ===========
Weighted-Average
Common Shares
Outstanding
Basic 52,166,814 50,319,659 52,257,396 50,075,246
Diluted (a) 56,016,513 56,883,738 56,333,732 56,981,429
Earnings (Loss)
Per Common Share
Basic
Net income
from Continuing
Operations $1.27 $0.67 $2.01 $1.22
Gain (Loss)
from Disposal,
net of tax 0.05 - (0.13) -
Income (Loss)
from Discontinued
Operations, net
of tax - 0.04 - (0.02)
----------- ----------- ----------- -----------
$1.32 $0.71 $1.88 $1.20
=========== =========== =========== ===========
Diluted (a)
Net income
from Continuing
Operations $1.19 $0.61 $1.87 $1.11
Gain (Loss) from
Disposal,
net of tax 0.05 - (0.12) -
Income (Loss)
from Discontinued
Operations,
net of tax - 0.03 - (0.02)
----------- ----------- ----------- -----------
$1.24 $0.64 $1.75 $1.09
=========== =========== =========== ===========
OPERATING SEGMENTS
REVENUES
Con-Way
Transportation
Services $713,939 $640,861 $1,354,264 $1,219,341
Menlo Worldwide
Logistics 317,036 282,569 618,985 550,755
CNF Other 2,900 952 8,309 1,206
----------- ----------- ----------- -----------
$1,033,875 $924,382 $1,981,558 $1,771,302
=========== =========== =========== ===========
OPERATING INCOME
(LOSS)
Con-Way
Transportation
Services $95,329 $63,859 $158,885 $112,790
Menlo Worldwide
Logistics 5,634 5,358 10,664 10,335
Vector 4,941 2,988 8,976 5,380
----------- ----------- ----------- -----------
10,575 8,346 19,640 15,715
----------- ----------- ----------- -----------
CNF Other (822) (926) (187) (1,778)
----------- ----------- ----------- -----------
105,082 71,279 178,338 126,727
----------- ----------- ----------- -----------
Reconciliation of
segments to
consolidated
amount:
Income tax related
to Vector, an
equity-method
investment (1,522) - (1,522) -
----------- ----------- ----------- -----------
$103,560 $71,279 $176,816 $126,727
=========== =========== =========== ===========
(a) The periods ended June 30, 2005 include the dilutive effect of
restricted stock, stock options and Series B preferred stock. The
periods ended June 30, 2004 also include the dilutive effect of
convertible subordinated debentures, which were redeemed on June 1,
2004.
(b) Includes a $7.0 million second-quarter tax benefit ($0.12 per
diluted share) from the reversal of accrued taxes related to the
settlement with the IRS of previous tax filings.
CNF INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, Dec. 31,
2005 2004
----------- -----------
ASSETS
Current assets $1,344,501 $1,509,767
Current assets of discontinued operations 6,411 5,128
Property, plant and equipment, net 894,830 859,321
Other assets 86,767 106,965
Non-current assets of discontinued operations 15,958 15,220
----------- -----------
Total Assets $2,348,467 $2,496,401
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $562,095 $678,126
Current liabilities of discontinued operations 25,644 34,705
Long-term debt and guarantees 583,939 601,344
Other long-term liabilities and deferred
credits 353,572 397,997
Long-term liabilities of discontinued
operations 729 6,862
Shareholders' equity 822,488 777,367
----------- -----------
Total Liabilities and Shareholders' Equity $2,348,467 $2,496,401
=========== ===========
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