CNF Inc. Reports Improved Fourth-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)--Jan. 27, 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 fourth-quarter net 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 $24.2 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. This included a $5.7 million (6 cents per diluted share) pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta net gain from the settlement of the company's former Express Mail contract, which was terminated in August of 2001, and a $3.7 million pre-tax charge (4 cents per diluted share) for investment losses. Fourth-quarter net income for common shareholders was $22.0 million, or 41 cents per diluted share, including a net loss of $2.3 million (4 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. . In the fourth quarter a year ago, CNF reported a net loss for common shareholders of $217.1 million, or $4.45 per diluted share. 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 fourth quarter of 2002 was $54.0 million compared with 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 $337.0 million in the fourth quarter of 2001, which included $350.5 million of costs related to the closure of the company's airline. Revenue for the fourth quarter of 2002 was $1.28 billion compared with $1.14 billion in the fourth quarter of 2001. For the full year 2002, CNF reported net income from continuing operations of $106.0 million or $1.96 per diluted share. Full-year net income for common shareholders was $93.6 million or $1.74 per share, including a net loss of $12.4 million (22 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ) from discontinued operations. The net loss for common shareholders in 2001 was $402.9 million or $8.26 per share, including a net gain of $39.0 million or 80 cents per share from discontinued operations. Operating income for the full year 2002 was $181.8 million compared with an operating loss of $660.7 million in the same period a year ago. Revenue for the full year 2002 was $4.8 billion compared with $4.9 billion in 2001. "CNF's results this year were much improved from 2001," said CNF President and Chief Executive Officer Gregory L. Quesnel Quesnel or Quesnell may refer to: Places
emery Granular rock consisting of a mixture of the mineral corundum (aluminum oxide, Al2O3) and iron oxides such as magnetite (Fe3O4) or hematite (Fe2O3). Forwarding improved substantially and Vector SCM (1) (Software Configuration Management, Source Code Management) See configuration management. (2) See supply chain management. contributed significantly to earnings this year. "This was a year of many challenges for the company as we reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. and restructured Emery and launched Menlo Worldwide. These were huge tasks for our people and they performed admirably ad·mi·ra·ble adj. Deserving admiration. ad  mi·ra·ble·ness n.ad ," Quesnel said. CNF ended the year with a strong balance sheet including $270.4 million in cash. In December 2002, the company recorded a non-cash after-tax charge to equity of $19.5 million related to its pension plans. The charge was due to declining interest rates and lower than expected returns Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: on plan assets. CNF's tax rate is expected to be 39 percent in 2003. Con-Way Transportation Services For the fourth quarter of 2002, Con-Way Transportation Services reported: -- operating income of $36.7 million compared with $35.7 million in the year-ago period. -- revenue of $525.1 million, up 13 percent from last year's $463.0 million. -- regional carrier weight per day up slightly from the prior year. Menlo Worldwide For reporting purposes, Menlo Worldwide includes the results of Emery Forwarding, Menlo Worldwide Logistics, Menlo Worldwide Technologies and Vector SCM. "Menlo Worldwide Other" includes the results of Vector SCM and Menlo Worldwide Technologies. For the fourth quarter of 2002, Menlo Worldwide reported: -- operating income of $18.2 million compared with an operating loss of $372.4 million in the year-ago period. -- revenue of $753.3 million compared with $679.3 million in the fourth quarter of 2001. For the fourth quarter, Emery Forwarding reported: -- operating income of $4.6 million, which included $5.7 million from the settlement of the Express Mail contract. This compares with an operating loss of $366.4 million in the year-ago period, which included $350.5 million of costs related to the closure 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. -- revenue of $497.4 million, up 8 percent from $460 million in the fourth quarter of 2001 -- 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 19 percent compared with the prior-year period on a weight-per-day increase of 12 percent. -- North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. air freight revenue per day fell by 7 percent on a 5 percent increase in weight per day and an 11 percent decline in yield that was due primarily to a planned product mix change to more second-day and deferred freight. For the fourth quarter of 2002, Menlo Worldwide Logistics reported: -- operating income of $8.6 million compared to an operating loss of $2.7 million a year ago, which included a $9.5 million loss from the business failure of a customer. -- revenue of $255.9 million, up 17 percent from $219.4 million in the prior-year period. For the fourth quarter of 2002, activities at Menlo Worldwide Other, which primarily includes the results of Vector SCM, reported operating income of $4.9 million compared with an operating loss of $3.2 million in the fourth quarter of 2001. Other CNF's "Other" operations reported an operating loss of $863,000 in the fourth quarter. First-Quarter Outlook First-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 is expected to be between 24 cents and 30 cents. CNF's tax rate is expected to be 39 percent. Full-Year 2003 Outlook At the present time the company's management is comfortable with the current consensus estimate of Wall Street analysts that CNF's full-year earnings will be approximately $2.24 per diluted share. Conference Call CNF will host a conference call for shareholders and the investment community to discuss fourth-quarter results at 11:30 a.m. Eastern time (8:30 a.m. Pacific) tomorrow. The call can be accessed by dialing 800/230-1093 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, access code 664178. 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 $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 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 news 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 statements regarding future financial condition, results of operations or other future matters, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, any statements of belief, expectations or projections, and any statements or assumptions underlying the foregoing. Forward-looking statements are necessarily dependent on assumptions, estimates, data and methods that may be incorrect or imprecise im·pre·cise adj. Not precise. im  pre·cisely adv. and there can be no assurance that they will be
realized. Specific factors that could cause actual earnings, results of
operations and other matters to differ materially from those discussed
in such forward-looking statements include: changes in general business
and economic conditions, the creditworthiness CreditworthinessThe 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 the Company'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 Emery Worldwide Airlines' (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 ) air carrier operations, the possibility of defaults under CNF's $385 million credit agreement and other debt instruments, and the possibility that CNF may be required to pledge collateral to secure a substantial amount of its 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. or to repay other indebtedness 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 are reduced, labor matters, enforcement of and changes in governmental regulations, environmental and tax matters, the Department of Transportation investigation relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Emery Worldwide's handling of hazardous materials and aircraft maintenance, the February 2000 crash of an EWA 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 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 ") and the September 2002 bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most filing by CFC, including the possibility that trustees of CFC's multi-employer pension plans might assert claims that CNF is liable for material amounts owed by CFC under those plans. The factors discussed above and in our 2001 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 position 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,
-------------------------- --------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
REVENUES $1,278,625 $1,142,699 $4,762,119 $4,862,731
Costs and
Expenses
Operating
expenses 1,075,529 1,014,625 3,979,137 4,224,023
General and
administrative
expenses 115,974 115,618 461,807 481,916
Depreciation 33,100 37,768 139,355 165,202
Restructuring
charges - 311,710 - 652,241
---------- ---------- ---------- ----------
1,224,603 1,479,721 4,580,299 5,523,382
---------- ---------- ---------- ----------
OPERATING INCOME
(LOSS) 54,022 (337,022) 181,820 (660,651)
Other expense,
net (10,727) (11,964) (35,576) (35,282)
---------- ---------- ---------- ----------
Income (Loss)
before Taxes 43,295 (348,986) 146,244 (695,933)
Income Tax
Benefit
(Provision) (16,885) 133,997 (32,035)(b) 262,367
---------- ---------- ---------- ----------
Income (Loss)
from Continuing
Operations 26,410 (214,989) 114,209 (433,566)
Gain (Loss) from
discontinuance,
net of tax (2,259)(c) - (12,398)(c) 38,975
---------- ---------- ---------- ----------
Net Income (Loss) 24,151 (214,989) 101,811 (394,591)
Preferred Stock
Dividends 2,200 2,112 8,250 8,283
---------- ---------- ---------- ----------
NET INCOME (LOSS)
APPLICABLE TO
COMMON
SHAREHOLDERS $21,951 $(217,101) $93,561 $(402,874)
========== ========== ========== ==========
Weighted-Average
Common Shares
Outstanding
Basic 49,327,589 48,825,287 49,139,134 48,752,480
Diluted (a) 56,741,862 48,825,287 56,655,570 48,752,480
Earnings (Loss)
per Common Share
Basic
Income (Loss)
from continuing
operations $0.49 $(4.45) $2.16 $(9.06)
Gain (Loss) from
discontinuance,
net of tax (0.04) - (0.26) 0.80
---------- ---------- ---------- ----------
Net Income
(Loss)
Applicable to
Common
Shareholders $0.45 $(4.45) $1.90 $(8.26)
========== ========== ========== ==========
Diluted (a)
Income (Loss)
from continuing
operations $0.45 $(4.45) $1.96 $(9.06)
Gain (Loss) from
discontinuance,
net of tax (0.04) - (0.22) 0.80
---------- ---------- ---------- ----------
Net Income
(Loss)
Applicable to
Common
Shareholders $0.41 $(4.45) $1.74 $(8.26)
========== ========== ========== ==========
(a) 2002 includes the dilutive effect of stock options, Series B
(TASP) preferred stock, and Series A "TECONS," convertible
preferred stock of subsidiary trust.
(b) Includes tax provision of $58.2 million for the twelve months
ended December 31, 2002, offset by a $25.0 million third-quarter
reversal of accrued taxes related to the settlement with the IRS
of aircraft maintenance issues.
(c) 2002 includes a $2.9 million net-of-tax third-quarter gain on
final Priority Mail settlement and third-quarter and fourth-
quarter net-of-tax losses of $13.0 million and $2.3 million,
respectively, from the business failure of CFC. 2001 includes a
$39.0 million third-quarter net-of-tax gain from a partial
Priority Mail settlement.
OPERATING SEGMENTS
REVENUES
Con-Way
Transportation
Services $525,089 $462,999 $2,011,477 $1,912,313
Menlo Worldwide
Emery Forwarding 497,367 459,953 1,778,712 2,044,794
Menlo Worldwide
Logistics 255,947 219,366 969,089 898,182
Menlo Worldwide
Other - - - -
---------- ---------- ---------- ----------
753,314 679,319 2,747,801 2,942,976
---------- ---------- ---------- ----------
CNF Other 222 381 2,841 7,442
---------- ---------- ---------- ----------
$1,278,625 $1,142,699 $4,762,119 $4,862,731
========== ========== ========== ==========
OPERATING INCOME
(LOSS)
Con-Way
Transportation
Services $36,700 $35,684 $147,154 $157,467
Menlo Worldwide
Emery Forwarding 4,620 (366,381) (11,980) (790,345)
Menlo Worldwide
Logistics 8,644 (2,740) 31,827 (15,818)
Menlo Worldwide
Other 4,921 (3,237) 18,188 (9,415)
---------- ---------- ---------- ----------
18,185 (372,358) 38,035 (815,578)
---------- ---------- ---------- ----------
CNF Other (863) (348) (3,369) (2,540)
---------- ---------- ---------- ----------
$54,022 $(337,022) $181,820 $(660,651)
========== ========== ========== ==========
UNUSUAL AND/OR NON-RECURRING 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 -
Emery Forwarding
Net gain from a
payment under the
Air Transportation
Safety and System
Stabilization Act - - 9,895 -
Gain (Loss) from
restructuring
charge - (311,710) - (652,241)
Loss from a legal
settlement on
returned aircraft - - - (4,696)
Duplicate airhaul
costs - (38,800) - (55,800)
Goodwill
amortization - (2,155) - (10,210)
Express Mail
operating income - 891 - 6,324
Express Mail
settlement 5,715 - 5,715 -
Menlo Worldwide
Logistics
Net gain from a
contract
termination - - 1,850 -
Loss from the
business failure
of a customer - (9,549) - (47,454)
CNF Other
Loss from the
business failure
of a customer - - (3,595) -
Net gain from the
sale of property - - 2,367 -
CNF INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
December 31, December 31,
2002 2001
----------- -----------
ASSETS
Current assets $1,249,688 $1,327,846
Property, plant and equipment, net 1,015,354 1,070,529
Other assets 474,719 591,645
----------- -----------
Total Assets $2,739,761 $2,990,020
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 873,054 $ 884,136
Long-term debt, guarantees and
capital leases 557,610 565,815
Other long-term liabilities and
deferred credits 466,099 776,982
Preferred stock - Subsidiary Trust 125,000 125,000
Shareholders' equity 717,998 638,087
----------- -----------
Total Liabilities and
Shareholders' Equity $2,739,761 $2,990,020
=========== ===========
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