CNF Inc. Reports First-Quarter Results.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 21, 2003 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 $15.9 million, or 30 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. This compares with net income for common shareholders of $18.3 million, or 35 cents per diluted share, in the first quarter of 2002. Excluding special items in both periods, net income for common shareholders was $11.5 million, or 22 cents per diluted share, in first-quarter 2003 compared with $4.4 million, or 9 cents per diluted share, in first-quarter 2002. The first quarter of 2003 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. The first quarter of 2002 included a $6.0 million after-tax net gain (11 cents per diluted share) under the Act plus $6.7 million of after-tax gains (12 cents per diluted share) on the sale of excess properties and a $1.1 million after-tax net gain (2 cents per diluted share) from the early termination of a contract. First-quarter 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. was $41.0 million compared with $40.4 million in the same quarter a year ago. Revenue for the first quarter of 2003 was $1.21 billion compared with $1.07 billion in first-quarter 2002. The effective tax rate was 39.0 percent in both periods. Cash and cash equivalents were $238 million at the end of the quarter. "Excluding special items, all of CNF's operations improved their results from a year ago despite a weak economy, which was overshadowed by the war in Iraq," said CNF President and Chief Executive Officer Greg Quesnel. "Con-Way had a very good quarter with strong results relative to the macro economic environment as it increased profits on essentially flat 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. . This growth is due to an effective sales strategy and quality service that enables Con-Way to increase yields. 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. recorded its fourth quarter of year-over-year improvement in its results, which were fueled by strong international growth in all of its companies." Con-Way Transportation Services For the first quarter, Con-Way Transportation Services reported: -- operating income of $37.2 million, up 10 percent from $33.7 million in the year-ago period. Operating income in first-quarter 2002 included a net gain of $8.7 million from the sale of an excess property, -- revenue of $519.1 million, up 14 percent from last year's $454.7 million, -- regional carrier tonnage per day was up one percent from the prior-year period. "In addition to these strong operating results, Con-Way during the first quarter received an Enterprise Value Award (EVA Eva to marry winner of singing contest. [Ger. Opera: Wagner, Meistersinger, Westerman, 225–228] See : Prize 1. Eva - A toy ALGOL-like language used in "Formal Specification of Programming Languages: A Panoramic Primer", F.G. ) from CIO CIO: see American Federation of Labor and Congress of Industrial Organizations. (Chief Information Officer) The executive officer in charge of information processing in an organization. magazine for the company's automation of its linehaul system," Quesnel said. The automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. system optimizes personnel, equipment and individual routes for the nighttime movements of freight shipments throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada. Each evening the system takes in shipment data having tens of millions of alternate routing The ability to use another transmission line if the regular line is busy. options and provides an optimum solution in seven minutes. It began implementation in early 2002. "This system has been important to Con-Way as it continues to increase productivity, lower costs and improve customer service. It shows that Con-Way quality and leadership also applies to the information technology field," Quesnel added. Menlo Worldwide For the first quarter of 2003, Menlo Worldwide reported: -- operating income of $3.6 million, up 7 percent from operating income of $3.3 million in the year-ago period, -- revenue of $687.1 million, up 12 percent from $611.3 million in the first quarter of 2002. For the first quarter of 2003, 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 $5.4 million compared with an operating loss of $5.7 million in the year-ago period. Both periods included first-quarter net gains from payments under the Air Transportation Safety and System Stabilization Act of $7.2 million in 2003 and $9.9 million in 2002, -- revenue of $445.6 million, up 13 percent from $394.8 million a year ago, -- 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 per day fell 6 percent on an 8 percent decline in yield, which was due primarily to the planned product mix change, and a 2 percent increase in tonnage per day, -- international air freight revenue per day grew 26 percent on a tonnage per day increase of 15 percent. For the first quarter of 2003, Menlo Worldwide Logistics reported: -- operating income of $6.0 million compared to operating income of $7.8 million a year ago. The 2002 quarter included a $1.9 million net gain from the termination of a contract, -- revenue of $241.5 million, up 12 percent from $216.5 million in the prior-year period. For the first quarter of 2003, Menlo Worldwide Other, which primarily includes the results of Vector SCM (1) (Software Configuration Management, Source Code Management) See configuration management. (2) See supply chain management. , reported operating income of $3.0 million compared with operating income of $1.3 million in the first quarter of 2002. "Menlo Worldwide Forwarding continued its progress in making its international and economy products a larger percentage of its total. However, its premium service products declined more than anticipated due to the weak economy. Menlo Worldwide Logistics showed a slight increase in profits, excluding the prior-year contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). gain, and Vector SCM continues to grow year-over-year," said Quesnel. Other CNF's "Other" operations, which include the results of Road Systems and corporate activities, reported operating income of $275,000 in the first quarter, compared with $3.3 million in the first quarter of 2002, primarily due to a $2.4 million net gain on the sale of an excess property in the 2002 quarter. 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 42 cents and 49 cents. Full-year 2003 diluted earnings per share from continuing operations are expected to be between $1.90 and $2.05. Conference Call CNF will host a conference call for shareholders and the investing community to discuss first-quarter results at 11:00 a.m. Eastern time (8:00 a.m. Pacific) on Tuesday, April 22. The call can be accessed by dialing (888) 428-4474 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 charts and certain other information to be discussed on the conference call is available on the company's web site at www.cnf.com. 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, access code 678893. 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 $4.8 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 defaults under CNF's $385 million credit agreement and other debt instruments (including defaults resulting from additional unusual charges or from CNF's failure to perform in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with management's expectations), and the possibility that CNF may be required to pledge collateral to secure some of its indebtedness or to repay other indebtedness 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 ongoing investigation relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Emery emery: see corundum. emery Granular rock consisting of a mixture of the mineral corundum (aluminum oxide, Al2O3) and iron oxides such as magnetite (Fe3O4) or hematite (Fe2O3). Worldwide's handling of hazardous materials, 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 investigation and 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. , and matters relating to 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 CFC CFC See: Controlled foreign corporation , including the possibility that CFC's multi-employer pension plans may assert claims against CNF. The factors included herein and in Item 7 of our 2002 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,
-----------------------
2003 2002
----------- -----------
REVENUES $1,206,241 $1,067,074
Costs and Expenses
Operating expenses 1,013,671 881,090
General and administrative expenses 118,290 109,776
Depreciation 33,232 35,844
----------- -----------
1,165,193 1,026,710
----------- -----------
OPERATING INCOME 41,048 40,364
Other expense, net 11,613 7,142
----------- -----------
Income Before Taxes 29,435 33,222
Income tax provision 11,480 12,956
----------- -----------
Net Income 17,955 20,266
Preferred stock dividends 2,026 2,005
----------- -----------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $15,929 $18,261
=========== ===========
Weighted-Average Common Shares Outstanding
Basic 49,396,071 48,928,532
Diluted (a) 53,652,665 56,482,649
Earnings per Common Share
Basic $0.32 $0.37
=========== ===========
Diluted (a) $0.30 $0.35
=========== ===========
(a)2002 includes the dilutive effect of stock options, Series B
(TASP) preferred stock, and Series A "TECONS," convertible preferred
stock of subsidiary trust. 2003 includes the dilutive effect of stock
options and Series B (TASP) preferred stock.
OPERATING SEGMENTS
REVENUES
Con-Way Transportation Services $519,108 $454,731
Menlo Worldwide
Forwarding 445,622 394,761
Logistics 241,502 216,509
----------- -----------
687,124 611,270
----------- -----------
CNF Other 9 1,073
----------- -----------
$1,206,241 $1,067,074
=========== ===========
OPERATING INCOME (LOSS)
Con-Way Transportation Services $37,192 $33,721
Menlo Worldwide
Forwarding (5,431) (5,713)
Logistics 6,036 7,753
Other 2,976 1,309
----------- -----------
3,581 3,349
----------- -----------
CNF Other 275 3,294
----------- -----------
$41,048 $40,364
=========== ===========
SPECIAL ITEMS INCLUDED IN OPERATING INCOME (LOSS) FOR THE
PERIODS PRESENTED:
Con-Way Transportation Services -
Net gain from the sale of property $- $8,675
Menlo Worldwide -
Forwarding
Net gains from payments under the Air
Transportation Safety and
System Stabilization Act 7,230 9,895
Logistics
Net gain from a contract termination - 1,850
CNF Other -
Net gain from the sale of property - 2,367
CNF INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
2003 2002
----------- -----------
ASSETS
Current assets $1,232,045 $1,268,488
Property, plant and equipment, net 1,025,873 1,015,354
Other assets 443,775 455,919
----------- -----------
Total Assets $2,701,693 $2,739,761
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $831,340 $873,054
Long-term debt, guarantees and capital leases 544,584 557,610
Other long-term liabilities and deferred
credits 467,883 466,099
Preferred stock - subsidiary trust 125,000 125,000
Shareholders' equity 732,886 717,998
----------- -----------
Total Liabilities and Shareholders'
Equity $2,701,693 $2,739,761
=========== ===========
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