CNF Inc. Reports 53 Percent Increase in Net Income for Common Shareholders in First Quarter of 2004.Business Editors 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.--(BUSINESS WIRE)--April 19, 2004 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 first-quarter net income for common shareholders of $24.4 million, or 45 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 53 percent from the first quarter of 2003. Net income for common shareholders in the first quarter of 2003 was $15.9 million, or 30 cents per diluted share, and included a $4.4 million after-tax net gain (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 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. for the first quarter of 2004 was $52.7 million, up 28 percent from $41.0 million in the same quarter a year ago, which included the payment noted above. Revenue for the first quarter of 2004 was $1.35 billion, an increase of 12 percent from $1.21 billion in first-quarter 2003. CNF's effective tax rate was 39 percent in both periods. "With the operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. and strong productivity of our operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon , the improving U.S. economy is evident in our bottom line," said CNF President and Chief Executive Officer Gregory L. Quesnel. "Con-Way's operating income rose 37 percent from the first quarter of 2003 on revenue growth of 14 percent. Menlo Worldwide's forwarding and logistics units also produced improved operating results. We're pleased that the forwarding unit continued its double-digit international revenue growth and that North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. air freight air freight n → flete m por avión air freight n → fret aérien air freight air n → Luftfracht f revenue increased slightly for the first time in more than three years." Con-Way Transportation Services For the first quarter, Con-Way Transportation Services reported: -- operating income of $51.1 million, up 37 percent from $37.2 million in the year-ago period. -- revenue of $593.8 million, an increase of 14 percent from last year's first-quarter revenue of $519.1 million, -- regional carrier weight per day that was 11 percent higher than the prior-year period. 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. For the first quarter of 2004, Menlo Worldwide reported: -- operating income of $2.5 million compared with operating income of $3.6 million in the year-ago period, which included the $7.2 million (pre-tax) net gain from the payment under the Air Transportation Safety and System Stabilization Act, -- revenue of $754.3 million, up 10 percent from $687.1 million in the first quarter of 2003. For the first quarter of 2004, Menlo Worldwide Forwarding 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 $6.4 million compared with an operating loss of $5.4 million in the year-ago period, which included the $7.2 million (pre-tax) net gain from the payment noted above, -- revenue of $501.5 million, up 13 percent from $445.6 million a year ago, -- North American air freight revenue per day rose 1 percent on a 7 percent increase in weight per day, -- international air freight revenue per day grew 15 percent on a weight-per-day increase of 20 percent. For the first quarter of 2004, Menlo Worldwide Logistics reported: -- operating income of $6.5 million, up 8 percent from operating income of $6.0 million a year ago, -- revenue of $252.8 million, up 5 percent from $241.5 million in the prior-year period. For the first 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. , reported operating income of $2.4 million compared with operating income of $3.0 million in the first quarter of 2003. Vector's new contract with General Motors provides for a management fee with any additional amounts dependent on Vector's ability to help GM attain its annual cost reduction targets. Any additional amounts will therefore not be recognized until earned later in the year. Other CNF's "Other" operations, which include the results of Road Systems and corporate activities, reported an operating loss of $852,000 in the first quarter due to a property sale. Outlook Second-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 52 cents and 60 cents. Conference Call CNF will host a conference call for shareholders and the investment community to discuss first-quarter results at 10:00 a.m. Eastern time (7:00 a.m. Pacific) on Tuesday, April 20. The call can be accessed by dialing 888-423-3281 or 612-332-0228 (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. 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 800-475-6701, access code 723137. The replay will also be available for one week on demand at the web sites providing access to the live call. 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. The company is headquartered in Palo Alto, Calif. 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
March 31,
---------------------------
2004 2003
----------- -----------
REVENUES $ 1,348,405 $ 1,206,241
Costs and Expenses
Operating expenses 1,138,504 1,013,671
Selling, general and administrative
expenses 125,074 118,290
Depreciation 32,085 33,232
----------- -----------
1,295,663 1,165,193
----------- -----------
OPERATING INCOME 52,742 41,048 (b)
Other expense, net (9,416) (11,613)
----------- -----------
Income before Taxes 43,326 29,435
Income Tax Provision 16,897 11,480
----------- -----------
Net Income 26,429 17,955
Preferred Stock Dividends 2,022 2,026
----------- -----------
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS $ 24,407 $ 15,929
=========== ===========
Weighted-Average Common Shares
Outstanding
Basic 49,835,663 49,396,071
Diluted (a) 57,125,185 53,652,665
Earnings Per Common Share
Basic $ 0.49 $ 0.32
=========== ===========
Diluted $ 0.45 $ 0.30
=========== ===========
OPERATING SEGMENTS
REVENUES
Con-Way Transportation Services $ 593,844 $ 519,108
Menlo Worldwide
Forwarding 501,517 445,622
Logistics 252,790 241,502
----------- -----------
754,307 687,124
----------- -----------
CNF Other 254 9
----------- -----------
$ 1,348,405 $ 1,206,241
=========== ===========
OPERATING INCOME (LOSS)
Con-Way Transportation Services $ 51,105 $ 37,192
Menlo Worldwide
Forwarding (6,409) (5,431)(b)
Logistics 6,506 6,036
Other 2,392 2,976
----------- -----------
2,489 3,581
----------- -----------
CNF Other (852) 275
----------- -----------
$ 52,742 $ 41,048
=========== ===========
(a) 2004 includes the dilutive effect of stock options, Series B
("TASP") preferred stock, and convertible debentures. 2003
includes the dilutive effect of stock options
and Series B ("TASP") preferred stock.
(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)
March 31, December 31,
2004 2003
---------- ----------
ASSETS
Current assets $1,404,193 $1,316,695
Property, plant and equipment, net 975,586 997,455
Other assets 435,156 439,584
---------- ----------
Total Assets $2,814,935 $2,753,734
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 844,802 $ 809,611
Long-term debt, guarantees and
capital leases 651,272 665,180
Other long-term liabilities and
deferred credits 467,378 460,135
Shareholders' equity 851,483 818,808
---------- ----------
Total Liabilities and
Shareholders' Equity $2,814,935 $2,753,734
========== ==========
Reflects adoption of FASB Interpretation No. 46 ("FIN 46R") effective
in the first quarter of 2004, under which CNF deconsolidated a
subsidiary trust holding Term Convertible Securities ("TECONS"). As a
result, CNF's TECONS are no longer reported as a mezzanine security
while CNF's convertible subordinated debentures held by the subsidiary
trust are reported as long-term debt. The prior period was restated.
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