CNF Inc. Reports Second-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)--July 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 second-quarter net income for common shareholders of $16.3 million, or 31 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 $19.8 million, or 37 cents per diluted share, in the second quarter of 2002. Second-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 $37.3 million compared with $43.9 million for the 2002 second quarter. Revenue for the second quarter of 2003 was $1.24 billion compared with $1.19 billion in second-quarter 2002. For the first six months of 2003, net income for common shareholders was $32.2 million, or 61 cents per diluted share. This compares with $38.1 million, or 72 cents per diluted share, in the same period of 2002. The first quarters of both years included after-tax net gains from special items: $4.4 million (8 cents per diluted share) in 2003 and $13.9 million (25 cents per diluted share) in 2002. The 2003 first-quarter after-tax gain was 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 2002 first quarter included a $6.0 million after-tax net gain (11 cents per diluted share) under the Act plus $6.7 million of after-tax net 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. Operating income for the first six months of 2003 was $78.4 million compared with $84.3 million in the same period a year ago. Revenue for the first six months of 2003 was $2.44 billion compared with $2.25 billion in the first half of 2002. "Revenue growth continued in the second quarter despite weakness in our primary markets," said Gregory L. Quesnel, CNF president and chief executive officer. "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. levels were flat in our trucking operations and 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 volumes declined. "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's quarterly losses have increased due to a steep fall-off in demand for next-day heavy air freight services 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. . Accordingly, we have broadened our efforts to fix the problem and are aggressively pursuing a variety of alternatives. We do not accept the status quo [Latin, The existing state of things at any given date.] Status quo ante bellum means the state of things before the war. The status quo to be preserved by a preliminary injunction is the last actual, peaceable, uncontested status which preceded the pending controversy. in regard to these losses," Quesnel said. "Results at Menlo Worldwide Logistics are driven to a large extent by transaction volumes at its customers, who are also seeing reduced demand during this lingering lin·ger v. lin·gered, lin·ger·ing, lin·gers v.intr. 1. To be slow in leaving, especially out of reluctance; tarry. See Synonyms at stay1. 2. economic cycle. Vector remains on track and is meeting our expectations in a period of dampened automotive activity. "Con-Way continues to perform well in this economic cycle. It has achieved five consecutive quarters of year-over-year revenue growth and operating income increased 24 percent this quarter from a year ago," Quesnel said. Con-Way Transportation Services For the second quarter of 2003, Con-Way Transportation Services reported: -- operating income of $43.6 million, up 24 percent from $35.1 million in the year-ago period, -- revenue of $541.4 million, up 7 percent from $504.0 million in the second quarter of 2002, -- regional carrier tonnage per day was essentially flat with the prior-year period. Menlo Worldwide For the second quarter of 2003, Menlo Worldwide 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 $3.9 million compared with operating income of $10.5 million in the year-ago period, -- revenue of $695.4 million, up 2 percent from $681.4 million in the second quarter of 2002. For the second quarter of 2003, Menlo Worldwide Forwarding (formerly known as 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). Forwarding) reported: -- an operating loss of $13.8 million compared with an operating loss of $5.9 million in the year-ago period, -- revenue of $442.4 million, compared with $439.8 million a year ago, -- North American air freight revenue per day declined 13 percent on a 3 percent drop in tonnage 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, -- international air freight revenue per day grew 10 percent from the prior-year period on a 4 percent increase in tonnage-per-day. For the second quarter of 2003, Menlo Worldwide Logistics reported: -- operating income of $6.3 million compared to $7.1 million a year ago, -- revenue of $253 million compared to $241.6 million in the prior-year period. For the second quarter of 2003, activities at Menlo Worldwide Other, which includes the results of Vector SCM (1) (Software Configuration Management, Source Code Management) See configuration management. (2) See supply chain management. , resulted in a profit of $3.6 million compared with $9.3 million in the second quarter of 2002. Vector's 2002 second-quarter profits were higher because it was the last quarter in which CNF was entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive all of Vector's profits as repayment of its startup costs. In subsequent quarters, profits began to be split with Vector's joint-venture partner, General Motors. Other CNF's "Other" operations, which include the results of Road Systems and corporate activities, reported an operating loss of $2.3 million in the second quarter primarily due to a $1.1 million loss on the sale of a property. Outlook Third-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 25 cents and 30 cents. At this time, the company is providing no guidance for the full year due to lack of visibility in the current economic environment. CNF's tax rate is expected to be 40 percent in the third quarter compared to 39 percent in the first and second quarters of 2003. Conference Call CNF will host a conference call for shareholders and the investment community to discuss second-quarter results at 12:00 p.m. Eastern Daylight Time (9:00 a.m. Pacific Daylight Time) on Tuesday, July 22. The call can be accessed by dialing (800) 230-1059 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 687408. 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 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 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 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 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 Six Months Ended
June 30, June 30,
------------------------ -----------------------
2003 2002 2003 2002
------------ ----------- ----------- -----------
REVENUES $1,236,905 $1,186,273 $2,443,146 $2,253,347
Costs and Expenses
Operating expenses 1,042,036 993,667 2,055,707 1,873,372
General and
administrative
expenses 124,053 113,060 242,343 224,221
Depreciation 33,496 35,637 66,728 71,481
------------ ----------- ----------- -----------
1,199,585 1,142,364 2,364,778 2,169,074
------------ ----------- ----------- -----------
OPERATING INCOME 37,320 43,909 78,368 84,273
Other expense, net (7,207) (8,025) (18,820) (15,167)
------------ ----------- ----------- -----------
Income before Taxes 30,113 35,884 59,548 69,106
Income Tax Provision (11,744) (13,995) (23,224) (26,951)
------------ ----------- ----------- -----------
Net Income 18,369 21,889 36,324 42,155
Preferred Stock
Dividends 2,069 2,043 4,095 4,048
------------ ----------- ----------- -----------
NET INCOME AVAILABLE
TO COMMON
SHAREHOLDERS $16,300 $19,846 $32,229 $38,107
============ =========== =========== ===========
Weighted-Average
Common Shares
Outstanding
Basic 49,494,145 49,074,627 49,445,348 49,001,489
Diluted (a) 57,127,187 56,713,022 54,004,772 56,610,935
Earnings per Common
Share
Basic $0.33 $0.40 $0.65 $0.78
============ =========== =========== ===========
Diluted (a) $0.31 $0.37 $0.61 $0.72
============ =========== =========== ===========
(a) The three months ended June 30, 2003 and the three and six
months ended June 30, 2002 included the dilutive effect of stock
options, Series B (TASP) preferred stock, and Series A "TECONs"
convertible preferred stock of subsidiary trust. The six months ended
June 30, 2003 included the dilutive effect of stock options and Series
B preferred stock.
OPERATING SEGMENTS
REVENUES
Con-Way Transportation
Services $541,446 $503,968 $1,060,554 $958,699
Menlo Worldwide
Forwarding 442,421 439,787 888,043 834,548
Logistics 253,012 241,611 494,514 458,120
----------- ----------- ----------- -----------
695,433 681,398 1,382,557 1,292,668
----------- ----------- ----------- -----------
CNF Other 26 907 35 1,980
----------- ----------- ----------- -----------
$1,236,905 $1,186,273 $2,443,146 $2,253,347
=========== =========== =========== ===========
OPERATING INCOME (LOSS)
Con-Way Transportation
Services $43,575 $35,115 $80,767 $68,836
Menlo Worldwide
Forwarding (13,818) (5,908) (19,249) (11,621)
Logistics 6,303 7,059 12,339 14,812
Other 3,572 9,320 6,548 10,629
----------- ----------- ----------- -----------
(3,943) 10,471 (362) 13,820
----------- ----------- ----------- -----------
CNF Other (2,312) (1,677) (2,037) 1,617
----------- ----------- ----------- -----------
$37,320 $43,909 $78,368 $84,273
=========== =========== =========== ===========
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 -
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)
June 30, Dec. 31,
2003 2002
----------- -----------
ASSETS
Current assets $1,250,676 $1,268,488
Property, plant and equipment, net 1,007,700 1,015,354
Other assets 430,147 455,919
----------- -----------
Total Assets $2,688,523 $2,739,761
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $806,076 $873,054
Long-term debt, guarantees and capital leases 543,450 557,610
Other long-term liabilities and deferred
credits 463,252 466,099
Preferred stock - Subsidiary Trust 125,000 125,000
Shareholders' equity 750,745 717,998
----------- -----------
Total Liabilities and Shareholders' Equity $2,688,523 $2,739,761
=========== ===========
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