CNF Inc. Reports Improved Third-Quarter Operating Income and Revenue.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)--Oct. 20, 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 net income to common shareholders of $24.8 million, 46 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, including a charge of 11 cents per diluted share for the resolution of a hazardous materials violations case with the U.S. government. This compares with $33.5 million, 61 cents per diluted share, a year ago. The 2002 third quarter included a net benefit of 22 cents per diluted share consisting of a net loss of 18 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. and, in 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 , a tax benefit of 44 cents per diluted share and a 4 cents per diluted share charge for uncollectible non-trade receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed . Third-quarter 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 $57.1 million, up 31 percent from $43.5 million in the third quarter of 2002. Revenue was $1.3 billion, up six percent from $1.2 billion in the prior-year quarter. "Operating results were substantially improved from a year ago, reflecting 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. in each of our business units driven by an improving economy and excellent productivity from our seasoned work force," said CNF President and Chief Executive Officer Gregory L. Quesnel. "We expect this improvement to continue in the fourth quarter." CNF's tax provision rate was 44 percent in the third quarter of 2003 due to non-deductibility of the hazardous materials resolution, compared with a 35 percent tax benefit rate in the prior-year quarter due to the reversal of $25 million of accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. taxes. For the first nine months of 2003, net income to common shareholders was $57.0 million, $1.08 per diluted share, compared with $71.6 million, $1.33 per diluted share, in the same period of 2002. Revenue for the first nine months of 2003 was $3.7 billion compared with $3.5 billion in the first nine months of 2002. Con-Way Transportation Services For the third quarter of 2003, Con-Way Transportation Services reported: -- operating income of $56.6 million, up 36 percent compared to $41.6 million in the year-ago period. -- revenue of $574.6 million, up nine percent from last year's $527.7 million. -- regional carrier weight per day was up two percent compared to the prior year. -- regional carrier yield increased five percent from the prior year quarter. "In addition to a very good quarter in its core regional LTL LTL - Linear Temporal Logic operations, Con-Way also reported improvement in its air freight air freight n → flete m por avión air freight n → fret aérien air freight air n → Luftfracht f , logistics and expedited delivery businesses," Quesnel said. 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 third quarter of 2003, Menlo Worldwide reported: -- operating income of $1.4 million compared with $6.0 million in the year-ago period. -- revenue of $731.7 million compared with $701.8 million in the third quarter of 2002. For the third 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 $14.3 million, which included the $6.5 million charge for the hazardous materials resolution, compared with an operating loss of $5.0 million in the year-ago period. -- revenue of $469.0 million, up five percent from $446.8 million a year ago. -- international air freight revenue per day grew 14 percent compared with the prior-year period on a weight-per-day increase of 16 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 declined nine percent on a two percent decrease in weight per day and an eight percent decline in yield that was due primarily to a mix change to more second-day and deferred freight. For the third quarter of 2003, Menlo Worldwide Logistics reported: -- operating income of $6.9 million compared to operating income of $8.4 million a year ago. -- revenue of $262.7 million, up three percent from $255.0 million in the prior-year period. For the third quarter of 2003, 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 $8.8 million compared with operating income of $2.6 million in the third quarter of 2002. The 2003 quarter included $3.5 million of additional revenue and operating income due to finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of outstanding issues. "Menlo Worldwide Forwarding's performance in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. continues to be weak compared with its robust international growth. However, an improved economy and sustained cost control efforts enabled Menlo Worldwide Forwarding to improve its core operating results for each month in the third quarter excluding the hazardous materials resolution in September. We are encouraged by the trend." Quesnel said. Other CNF's "Other" operations, which include the results of Road Systems and corporate activities, reported an operating loss of $885,000 in the third quarter. Fourth-Quarter Outlook Fourth-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 are expected to be between 42 cents and 50 cents. CNF's tax rate is expected to be 39 percent in the fourth quarter. Conference Call CNF will host a conference call for shareholders and the investment community to discuss third-quarter results at 11:00 a.m. Eastern time (8:00 a.m. Pacific) tomorrow, October 21. The call can be accessed by dialing (800) 230-1074 or (612) 288-0318 (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. 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 698160. 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 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 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 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 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 Emery Worldwide Airlines 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 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 Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
REVENUES $1,306,372 $1,230,147 $3,749,518 $3,483,494
Costs and
Expenses
Operating
expenses 1,091,296 1,030,236 3,147,003 2,903,608
General and
administrative
expenses 124,568 121,612 366,911 345,833
Depreciation 33,450 34,774 100,178 106,255
----------- ----------- ----------- -----------
1,249,314 1,186,622 3,614,092 3,355,696
----------- ----------- ----------- -----------
OPERATING INCOME 57,058 43,525 135,426 127,798
Other expense,
net (8,933) (9,682) (27,753) (24,849)
----------- ----------- ----------- -----------
Income before
Taxes 48,125 33,843 107,673 102,949
Income Tax
Benefit
(Provision) (21,304)/b 11,801/c (44,528)/b (15,150)/c
----------- ----------- ----------- -----------
Income from
Continuing
Operations 26,821 45,644 63,145 87,799
Loss from
discontinuance,
net of tax - (10,139)/d - (10,139)/d
----------- ----------- ----------- -----------
Net Income 26,821 35,505 63,145 77,660
Preferred Stock
Dividends 2,030 2,002 6,125 6,050
----------- ----------- ----------- -----------
NET INCOME
AVAILABLE TO
COMMON
SHAREHOLDERS $24,791 $33,503 $57,020 $71,610
=========== =========== =========== ===========
Weighted-Average
Common Shares
Outstanding
Basic 49,549,338 49,226,241 49,480,305 49,077,089
Diluted/a 56,641,421 56,755,010 56,634,040 56,700,280
Earnings per
Common Share
Basic
Income from
continuing
operations $0.50 $0.89 $1.15 $1.67
Loss from
discontinuance,
net of tax - (0.21) - (0.21)
----------- ----------- ----------- -----------
Net Income
Available to
Common
Shareholders $0.50 $0.68 $1.15 $1.46
=========== =========== =========== ===========
Diluted/a
Income from
continuing
operations $0.46 $0.79 $1.08 $1.51
Loss from
discontinuance,
net of tax - (0.18) - (0.18)
----------- ----------- ----------- -----------
Net Income
Available to
Common
Shareholders $0.46 $0.61 $1.08 $1.33
=========== =========== =========== ===========
/a Includes the dilutive effect of stock options, Series B (TASP)
preferred stock, and Series A "TECONs" convertible preferred stock
of subsidiary trust.
/b Excludes tax impact on non-deductible loss for the resolution of a
hazardous materials violation case with the U.S. government.
/c Includes tax provision of $13.2 million for the three months ended
September 30, 2002 and tax provision of $40.2 million for the nine
months ended September 30, 2002, offset by a $25.0 million
third-quarter reversal of accrued taxes related to the settlement
with the IRS of aircraft maintenance issues.
/d Includes a $2.9 million net-of-tax gain on final Priority Mail
settlement and a $13.0 million net-of-tax loss related to the
business failure of CFC.
OPERATING SEGMENTS
REVENUES
Con-Way
Transportation
Services $574,571 $527,689 $1,635,125 $1,486,388
Menlo Worldwide
Forwarding 469,048 446,797 1,357,091 1,281,345
Logistics 262,663 255,022 757,177 713,142
----------- ----------- ----------- -----------
731,711 701,819 2,114,268 1,994,487
----------- ----------- ----------- -----------
CNF Other 90 639 125 2,619
----------- ----------- ----------- -----------
$1,306,372 $1,230,147 $3,749,518 $3,483,494
=========== =========== =========== ===========
OPERATING INCOME
(LOSS)
Con-Way
Transportation
Services $56,565 $41,618 $137,332 $110,454
Menlo Worldwide
Forwarding (14,304) (4,979) (33,553) (16,600)
Logistics 6,872 8,371 19,211 23,183
Other 8,810 2,638 15,358 13,267
----------- ----------- ----------- -----------
1,378 6,030 1,016 19,850
----------- ----------- ----------- -----------
CNF Other (885) (4,123) (2,922) (2,506)
----------- ----------- ----------- -----------
$57,058 $43,525 $135,426 $127,798
=========== =========== =========== ===========
ITEMS AFFECTING COMPARABILITY OF 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
Loss for the
resolution of
a hazardous
materials
violation case (6,500) - (6,500) -
Logistics -
Net gain from a
contract
termination - - - 1,850
CNF Other -
Loss from the
business
failure of CFC - (3,595) - (3,595)
Net gain from
the sale of
property - - - 2,367
CNF INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
Sept. 30, Dec. 31,
2003 2002
----------- -----------
ASSETS
Current assets $1,308,250 $1,268,488
Property, plant and equipment, net 990,605 1,015,354
Other assets 429,581 455,919
----------- -----------
Total Assets $2,728,436 $2,739,761
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $838,050 $873,054
Long-term debt, guarantees and capital
leases 542,300 557,610
Other long-term liabilities and deferred
credits 451,537 466,099
Preferred stock - subsidiary trust 125,000 125,000
Shareholders' equity 771,549 717,998
----------- -----------
Total Liabilities and Shareholders'
Equity $2,728,436 $2,739,761
=========== ===========
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