CNF Inc. Reports 19 Percent Increase in Income From Continuing Operations; Company Authorizes $300 Million Share Repurchase.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 fourth-quarter 2004 after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. 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 $41.1 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 74 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, up 19 percent. This compares with fourth-quarter 2003 after-tax income from continuing operations of $34.5 million, or 63 cents per diluted share. The company also announced that its Board of Directors had approved a plan 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. up to $300 million in common stock within the next two years in open market purchases and privately negotiated transactions. In the fourth quarter, the company reported in discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. an after-tax loss of $18.3 million, or 33 cents per diluted share, consisting of $15.8 million related to the Dec. 19 sale of 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 and a $2.4 million after-tax charge related to insurance claims reserves. After-tax income from the discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: Menlo Worldwide Forwarding operations was $9.3 million, or 17 cents per diluted share. Including the discontinued operations, CNF reported fourth-quarter net income for shareholders of common stock of $32.2 million, or 58 cents per diluted share, compared with net income for common stock shareholders of $26.8 million, or 49 cents per diluted share in the same period a year ago. On Oct. 5, 2004, CNF announced an agreement to sell its Menlo Worldwide Forwarding unit to UPS for $150 million in cash and assumption of $110 million of debt. The transaction closed on Dec. 19, 2004. CNF is reporting the results of its Forwarding operations as discontinued operations in both 2003 and 2004. The 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. charge of $260.5 million recognized in the third quarter of 2004 increased by $15.8 million to a loss of $276.3 million as a result of adjustments at closing in the fourth quarter. The amount of these charges is subject to further adjustment pending audits by both parties. Income from continuing operations in the fourth quarter includes CNF corporate expense previously allocated to the Forwarding unit of $5.9 million. Total revenues in the fourth quarter were $967.5 million, up 16.5 percent from $830.4 million in the fourth quarter of 2003. 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. increased 21 percent to $79.0 million compared with operating income of $65.3 million in the same period of 2003. For the full-year 2004, CNF reported after-tax income from continuing operations of $142.2 million (after preferred stock dividends), or $2.57 per diluted share, up 27 percent, and after-tax income from discontinued operations of $12.4 million, or 22 cents per diluted share. This compares with 2003 after-tax income from continuing operations of $112.2 million, or $2.07 per diluted share, and an after-tax loss from discontinued operations of $28.5 million, or 50 cents per diluted share. The net loss for common stock shareholders for the full-year 2004 totaled $124.1 million, or $2.15 per diluted share, compared with net income of $83.8 million, or $1.57 per diluted share in 2003. For common stock shareholders, 2004 year-end results included after-tax charges of $278.7 million, or $4.94 per diluted share, primarily from the disposition of Menlo Worldwide Forwarding and, in the fourth quarter, adjustments to insurance claims reserves. Revenue from continuing operations in 2004 totaled $3.7 billion, up 15 percent from $3.2 billion in 2003. Operating income totaled $284.2 million, up 26 percent from $224.9 million in 2003. The company substantially improved its balance sheet in 2004, completing the year with $833 million in cash, from which the share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, scheduled debt retirement and general corporate purposes will be funded. CNF's effective tax rate for continuing operations was approximately 39 percent for both the fourth quarter and the full year. "The CNF organization had a very good year in 2004 because of the strengthened economy, our attention to costs and service, and the effort of our employees," said W. Keith Kennedy, chairman of the Board of Directors and interim chief executive officer. "The Con-Way less-than-truckload regional motor carriers had an exceptional year, helping Con-Way to increase its overall operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. by 34 percent. Menlo Logistics achieved a modest increase in earnings while Vector SCM (1) (Software Configuration Management, Source Code Management) See configuration management. (2) See supply chain management. , our supply chain service provider, reported a slight decline in profits. "The sale of Menlo Worldwide Forwarding in December was an important event that, along with cash flow increases from each of our profitable businesses, allowed the company to complete 2004 in its best financial condition in more than a decade," Kennedy said. CON-WAY TRANSPORTATION SERVICES For the fourth quarter of 2004, Con-Way Transportation Services reported: --Operating income of $63.8 million, up 18.4 percent from $53.9 million in the year-ago period and a record for a fourth quarter. Operating income in the quarter included an additional allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of CNF corporate expenses of $5.1 million that was previously allocated to Menlo Worldwide Forwarding. --Revenue of $667.8 million, up 15.6 percent compared to the prior-year quarter. --Regional carrier yield increased 5.6 percent from the prior-year quarter. --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 89.0 excluding the additional corporate expense, compared to 88.9 in fourth-quarter 2003. For the full-year 2004, Con-Way reported: --Record operating income of $245.5 million, up 34 percent from $183.1 million in 2003. --Record revenue of $2.6 billion, up 17.7 percent from $2.2 billion in 2003. --The regional carrier group achieved an operating ratio of 89.1 for 2004. MENLO WORLDWIDE For the fourth quarter of 2004, Menlo Worldwide Logistics reported: --Operating income of $6.6 million compared to $5.5 million in the fourth quarter of 2003. Operating income includes an additional allocation of CNF corporate expenses of $700,000 in the fourth quarters of 2004 and 2003 that was previously allocated to Menlo Worldwide Forwarding. --Revenue of $297.5 million, up 17.7 percent from fourth quarter of 2003. For the full-year 2004, Menlo Worldwide Logistics reported: --Operating income of $24.4 million, up 4 percent from $23.5 million in 2003. --Revenues of $1.1 billion, up 8.8 percent from $1.0 billion in 2003. Menlo Worldwide Other, which consists of the results of Vector SCM, reported operating income of $10.2 million compared with $5.4 million in the fourth quarter of 2003. Fourth-quarter results included $8.0 million of additional operating income due to attainment of contract performance goals. OTHER OPERATIONS CNF's "other" operations, which includes the results of Road Systems 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 $1.6 million in the fourth quarter 2004. FIRST QUARTER 2005 OUTLOOK First 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 57 cents and 65 cents. CNF's tax rate is expected to be 39 percent in the first quarter. Conference Call CNF will host a conference call for shareholders and the investment community to discuss fourth-quarter results at 12:00 p.m. Eastern time (9:00 a.m. Pacific) on Tuesday, Jan. 25. 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 web site at www.cnf.com/investor_relations/fin_hilight.asp. The call will also be available through a live webcast 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) 642-1687 or (706) 645-9291 (for international callers), using access code 2914419. The replay will also be available for one week on demand at the same web casting sites providing access to the live call. CNF is a $3.7 billion management company of supply chain service providers. It has 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 and supply chain management and trailer In communications, a code or set of codes that make up the last part of a transmitted message. See trailer label. 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 that CNF may, from time to time, be required to pay indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from claims in connection with the sale of Menlo Worldwide Forwarding, or to record impairment charges for 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 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 Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-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 OPERATIONS
(Dollars in thousands except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
REVENUES $ 967,458 $ 830,446 $ 3,712,379 $ 3,226,966
Costs and Expenses
Operating
expenses 767,947 649,145 2,953,665 2,549,467
Selling, general
and
administrative
expenses 95,032 91,202 372,122 351,507
Depreciation 25,474 24,804 102,425 101,044
------------ ------------ ------------ ------------
888,453 765,151 3,428,212 3,002,018
------------ ------------ ------------ ------------
OPERATING INCOME 79,005 65,295 284,167 224,948
Other Expense, net (7,884) (5,247) (37,344) (27,431)
------------ ------------ ------------ ------------
Income Before
Taxes 71,121 60,048 246,823 197,517
Income Tax
Provision 27,854 23,419 96,378 77,032
------------ ------------ ------------ ------------
Income from
Continuing
Operations 43,267 36,629 150,445 120,485
------------ ------------ ------------ ------------
Discontinued
Operations, net
of tax
Loss from
Disposal (18,259) - (278,749) -
Income (Loss)
from
Discontinued
Operations 9,301 (7,750) 12,415 (28,461)
------------ ------------ ------------ ------------
(8,958) (7,750) (266,334) (28,461)
Net Income (Loss) 34,309 28,879 (115,889) 92,024
Preferred Stock
Dividends 2,120 2,114 8,239 8,239
------------ ------------ ------------ ------------
NET INCOME (LOSS)
APPLICABLE TO
COMMON
SHAREHOLDERS $ 32,189 $ 26,765 $ (124,128) $ 83,785
============ ============ ============ ============
Weighted-Average
Common Shares
Outstanding
Basic 51,363,137 49,709,146 50,455,006 49,537,945
Diluted (a) 56,208,868 57,109,665 56,452,629 56,725,667
Earnings (Loss)
Per Common Share
Basic
Net income
from
Continuing
Operations $ 0.80 $ 0.69 $ 2.82 $ 2.27
Loss from
Disposal, net
of tax (0.35) - (5.53) -
Income (Loss)
from
Discontinued
Operations,
net of tax 0.18 (0.15) 0.25 (0.58)
------------ ------------ ------------ ------------
$ 0.63 $ 0.54 $ (2.46) $ 1.69
============ ============ ============ ============
Diluted (a)
Net income
from
Continuing
Operations $ 0.74 $ 0.63 $ 2.57 $ 2.07
Loss from
Disposal, net
of tax (0.33) - (4.94) -
Income (Loss)
from
Discontinued
Operations,
net of tax 0.17 (0.14) 0.22 (0.50)
------------ ------------ ------------ ------------
$ 0.58 $ 0.49 $ (2.15) $ 1.57
============ ============ ============ ============
OPERATING SEGMENTS
REVENUES
Con-Way
Transportation
Services $ 667,780 $ 577,509 $ 2,604,004 $ 2,212,692
Menlo Worldwide
Logistics 297,534 252,775 1,103,028 1,013,987
CNF Other 2,144 162 5,347 287
------------ ------------ ------------ ------------
$ 967,458 $ 830,446 $ 3,712,379 $ 3,226,966
============ ============ ============ ============
OPERATING INCOME
(LOSS)
Con-Way
Transportation
Services $ 63,786 $ 53,882 $ 245,488 $ 183,095
Menlo Worldwide
Logistics 6,605 5,488 24,399 23,492
Other 10,174 5,360 18,253 20,718
------------ ------------ ------------ ------------
16,779 10,848 42,652 44,210
------------ ------------ ------------ ------------
CNF Other (1,560) 565 (3,973) (2,357)
------------ ------------ ------------ ------------
$ 79,005 $ 65,295 $ 284,167 $ 224,948
============ ============ ============ ============
(a) The three months ended December 31, 2004 include the dilutive
effect of restricted stock, stock options and Series B preferred
stock. All other periods presented also include the dilutive
effect of convertible subordinated debentures, which were redeemed
on June 1, 2004.
CNF INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
December 31, December 31,
2004 2003
------------- -------------
ASSETS
Current assets $1,411,019 $ 850,846
Current assets of discontinued operations 105,497 478,388
Property, plant and equipment, net 859,321 817,951
Other assets 106,965 176,854
Non-current assets of discontinued
operations 3,609 442,234
------------- -------------
Total Assets $2,486,411 $2,766,273
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 671,593 $ 513,266
Current liabilities of discontinued
operations 38,804 308,884
Long-term debt and guarantees 601,344 554,981
Other long-term liabilities and deferred
credits 337,514 365,112
Long-term liabilities of discontinued
operations 59,789 205,222
Shareholders' equity 777,367 818,808
------------- -------------
Total Liabilities and Shareholders'
Equity $2,486,411 $2,766,273
============= =============
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