CNF Transportation Inc. Reports Fourth Quarter and Full-Year Earnings Record Annual Operating Income.

PALO ALTO, Calif.--(BUSINESS WIRE)--Jan. 27, 1997--CNF Transportation Inc. today reported 1996 net income from continuing operations of $80.2 million, or $1.59 per share ($1.47 fully diluted) compared with earnings of $86.2 million, or $1.75 per share ($1.63 fully diluted) in 1995.

The 1996 full year financial results include a loss of $36.4 million, or 81 cents per share (73 cents fully diluted) from the discontinued operations of CF MotorFreight, the company's nationwide less-than-truckload motor carrier, and a $16.2 million, or 36 cents per share (32 cents fully diluted) charge in the fourth quarter related to the costs of the CF MotorFreight spin-off in December. Including the loss and charge against earnings, net income for common shareholders was $19.0 million, or 42 cents per share.

The company, formerly Consolidated Freightways, Inc., spun off to shareholders CF MotorFreight and its related Canadian subsidiaries on Dec. 2, 1996. Consolidated Freightways, Inc. has changed its name to CNF Transportation (pending shareholder approval in April 1997) and includes Emery Worldwide, Con-Way Transportation Services, Menlo Logistics, VantageParts and Road Systems.

On a continuing operations basis the company set all-time record highs in both revenues and operating profits. Revenues at $3.66 billion were up 11.3 percent and operating income was $192.1 million.

The effective tax rate for continuing operations in 1996 was 45.5 percent.

In the fourth quarter, the company reported net income from continuing operations of $19.5 million, or 38 cents per share (35 cents fully diluted), compared with net income from continuing operations of $21.4 million, or 43 cents per share (40 cents fully diluted) in the fourth quarter of 1995. After the charge for expenses related to the CF MotorFreight spin off, and a $9.5 million loss from discontinued operations for October and November, the net loss for common shareholders was $8.4 million, or 19 cents per share (16 cents fully diluted).

Revenues from continuing operations in the fourth quarter were $984.2 million, up 12.0 percent from revenues in the fourth quarter of 1995, while operating income was up marginally at $49.9 million.

Donald E. Moffitt, chairman, president and chief executive officer, said earnings were in the range reported in a Jan. 2 interim release.

"Our strategy of providing shareholders with a group of companies that are leaders in their respective industries -- regional LTL trucking, air freight and logistics -- is now in place. For the first time in nearly 10 years, all of our components are undisputed profit leaders, market leaders and growth leaders in their respective industries," Moffitt said.

Regarding 1996 earnings, Moffitt said business conditions were generally good, but that it was a difficult year in which to operate. "Operating income, at an all-time high from continued operations, points to the potential of the organization. Last year our operations were affected by record-breaking storms early in the year, unrecovered fuel price increases and strikes in the automobile sector. Net income was affected by the loss from the discontinued operations of CF MotorFreight and the costs related to spinning off that unit."

Moffitt said that fuel price increases that equaled 19 cents a share in 1996 are now being recovered through fuel index fees.

CON-WAY TRANSPORTATION SERVICES

Con-Way Transportation Services, the company's regional LTL carrier and truckload operations, had fourth quarter operating income of $21.5 million, up 31.3 percent from a year ago. For 1996, CTS operating income was $101.0 million, up 4.6 percent from 1995.

Revenues for Con-Way Transportation Services in the fourth quarter were $342.5 million, up 16.3 percent from the same period a year ago. Revenues for 1996 were $1.3 billion, up 12.1 percent from 1995 revenues of $1.15 billion.

"This has been the best overall performance by any company in the less-than-truckload industry," Moffitt said. "That effort is achieved by 15,000 Con-Way employees who moved more than 11 billion pounds of freight in 1996, handling more than 10 million individual shipments from more than 200,000 different customers at better than 95 percent on-time delivery."

Moffitt said that Con-Way's geographic expansion has been completed and that the company is concentrating on its core LTL business and growth in its truckload and Con-Way NOW expedited services.

"Con-Way's commitment has always been to excel through service excellence rather than plant size. Expansion was a necessary strategic goal and that has been achieved," Moffitt said.

Total Con-Way Transportation Services tonnage increased 7.6 percent in the fourth quarter while LTL traffic rose 4.2 percent. For the year, total tonnage increased 7.8 percent and LTL tonnage increased 5.9 percent.

EMERY WORLDWIDE

Emery Worldwide reported fourth quarter operating income of $26.7 million, down 14.5 percent from the same quarter a year ago. For the full year, operating income was $78.4 million, down 4.1 percent from 1995 income of $81.7 million.

Revenue in the fourth quarter increased 12.6 percent to $547.3 million. For 1996, Emery revenues increased 11.4 percent to $1.97 billion.

"Emery in 1996 completed its fourth consecutive year of successful growth in both its domestic and international markets. Profits declined for the first time in that period because of fuel prices that increased more than 25 percent in 1996. Those fuel increases are now being recovered through fuel index fees. Overall, Emery had a good year and we are particularly pleased with its continued profit growth in its international air freight forwarding operations," Moffitt said.

"Emery is an excellent growth company with substantial market share leadership in its heavy-weight business segment. The company in the past three years has diversified into services such as ocean forwarding, customs brokerage, logistics management and expedited freight delivery that offer customers an aggressive array of transportation services," he said.

North American revenue increased 11.9 percent in the fourth quarter and international revenue increased 15.2 percent. North American tonnage increased 11.5 percent in the quarter while international tonnage increased 8.5 percent.

OTHER OPERATIONS

With the spin off of CF MotorFreight, the company is reporting results of Menlo Logistics, Road Systems and VantageParts as other operations. For the fourth quarter, those operations had operating income of $1.7 million on revenues of $94.4 million compared with operating income of $927,000 on revenues of $98.2 million for the same quarter in 1995. For the full year, operating income from other operations was $12.7 million and revenue was $402.0 million compared with operating income of $8.4 million and revenue of $371.6 million in 1995.

CNF Transportation is a diversified holding company with businesses in regional trucking, domestic and international air freight, global logistics management, trailer manufacturing and wholesale truck parts sales. -0-

             CNF TRANSPORTATION INC. AND SUBSIDIARIES

          CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
          (Dollars in thousands except per share amounts)

                                            Three Months Ended
                                                 Dec. 31,
                                           1996            1995
REVENUES
  Con-Way Transportation services       $ 342,498       $ 294,401
  Emery Worldwide                         547,270         485,839
  Other                                    94,416          98,184
                                         --------        --------
                                        $ 984,184       $ 878,424

OPERATING INCOME
  Con-Way Transportation Services       $  21,475       $  16,359
  Emery Worldwide                          26,735          31,282
  Other                                     1,651             927
                                         --------        --------
                                           49,861          48,568

OTHER EXPENSE, NET                        (11,800)        (10,506)

Income from continuing operations before
 income taxes                              38,061          38,062
Income taxes                               18,560          16,635
Net income from continuing operations      19,501          21,427

Loss from discontinued operations net of
 income tax benefits                       (9,496)        (25,970)
Loss from disposal of discontinued
 operations net of income tax benefits    (16,247)             --
                                         --------        --------
                                          (25,743)        (25,970)

Preferred stock dividends                   2,134           2,179

NET LOSS APPLICABLE TO COMMON
 SHAREHOLDERS                          $   (8,376)      $  (6,722)

Average Common Shares Outstanding
   Primary(1)                          45,333,202      44,659,107
   Fully Diluted(2)                    49,979,975      48,918,697

PRIMARY EARNINGS (LOSS) PER COMMON SHARE:
  Continuing Operations                $     0.38       $    0.43
  Discontinued Operations
    Loss from operations                    (0.21)          (0.58)
    Loss from disposal                      (0.36)             --
     Total                             $    (0.19)      $   (0.15)

FULLY DILUTED EARNINGS (LOSS) PER COMMON SHARE:
  Continuing Operations                $     0.35       $    0.40
  Discontinued Operations
    Loss from operations                    (0.19)          (0.53)
    Loss from disposal                      (0.32)             --
     Total                             $    (0.16)      $   (0.13)


                                          Twelve Months Ended
                                                Dec. 31,
                                          1996            1995
REVENUES
  Con-Way Transportation Services      $1,292,082       $1,152,164
  Emery Worldwide                       1,968,058        1,766,301
  Other                                   402,043          371,612
                                       ----------       ----------
                                       $3,662,183       $3,290,077
OPERATING INCOME
  Con-Way Transportation Services      $  101,049       $   96,573
  Emery Worldwide                          78,415           81,734
  Other                                    12,684            8,380
                                       ----------       ----------
                                          192,148          186,687

OTHER EXPENSE, NET                        (45,016)         (33,745)

Income from continuing operations
 before income taxes                      147,132          152,942
Income taxes                               66,951           66,723
Net income from continuing operations      80,181           86,219

Loss from discontinued operations net
 of income tax benefits                   (36,386)         (28,854)
Loss from disposal of discontinued
 operations net of income tax benefits    (16,247)              --
                                       ----------        ---------
                                          (52,633)         (28,854)

Preferred stock dividends                   8,592           10,799

NET INCOME AVAILABLE TO COMMON
 SHAREHOLDERS                          $   18,956       $   46,566

Average Common Shares Outstanding
   Primary(1)                          45,062,576       44,362,485
   Fully Diluted(2)                    49,833,947       48,723,790

PRIMARY EARNINGS (LOSS) PER COMMON SHARE:
  Continuing Operations                $     1.59       $     1.75
  Discontinued Operations
    Loss from operations                    (0.81)           (0.65)
    Loss from disposal                      (0.36)              --
     Total                             $     0.42       $     1.10

FULLY DILUTED EARNINGS (LOSS) PER
 COMMON SHARE:
  Continuing Operations                $     1.47       $     1.63
  Discontinued Operations
    Loss from operations                    (0.73)           (0.59)
    Loss from disposal                      (0.32)              --
     Total                             $     0.42       $     1.04

(1)  Includes the dilutive effect of stock options.
(2)  Includes the dilutive effect of stock options and Series B
     (TASP) preferred shares.

CONTACT: CNF Transportation Inc.

J.R. Allen, 415/494-2900