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CAROLINA FREIGHT ANNOUNCES RESULTS

 CAROLINA FREIGHT ANNOUNCES RESULTS
 CHERRYVILLE, N.C., April 6 /PRNewswire/ -- The following is a letter


to shareholders from Kenneth E. Mayhew, Jr., President and Chief Executive Officer of Carolina Freight Corporation (NYSE: CAO):
 April 6, 1992


Letter to Shareholders
 Revenue for the 12 weeks ended March 21, 1992 increased 3.0 percent to $172,117,000 compared with revenue of $167,075,000 in the first quarter of 1991. A net loss of $2,397,000, or $.37 per share, was incurred for the quarter compared with a net loss of $1,284,000, or $.20 per share in the first quarter of 1991. Excluding the effect of the accounting change described below, the net loss in the first quarter of 1992 was 600,000, or $.09 per share. Our fiscal year consists of three 12-week quarters and a final 16-week quarter.
 The cumulative effect of a change in our revenue recognition method generated an after-tax charge to earnings of $1,797,000. This accounted for 75 percent of the net loss in the first quarter. This accounting change resulted from a review by the Emergings Issues Task Force (EITF) of the Financial Accounting Standards Board of the various methods used by transportation companies to recognize revenue and expense. The EITF concluded that the accounting policy of recognizing revenue when the shipment is picked up from the customer and expenses when incurred is no longer acceptable. Carolina had been recording revenue and expenses on this basis since before it became a public company. The EITF decision, which applies to all transportation companies, affected a number of motor carriers besides Carolina.
 Profit margins in the first quarter were negatively affected by several factors. Continuing effects of the recession caused combined tonnage at our three less-than-truckload (LTL) subsidiaries to be up only .4 percent compared with the first quarter of 1991. Employee compensation costs were higher than the first quarter of 1991 due to increased wage rates and escalating fringe benefit costs.
 A general rate increase of approximately 5 percent, effective Jan. 2, 1992, improved prices at our LTL subsidiaries by approximately 1.1 percent compared with the first quarter of 1991, during which time prices were inflated by 1.9 percent due to the fuel surcharge to cover high diesel fuel prices. The fuel surcharge was terminated on April 1, 1991 after fuel prices returned to normal levels. On April 1, 1992 an increase of approximately 3.5 percent in wages and benefits became effective under the terms of a labor agreement which primarily covers drivers, dockworkers, and mechanics of Carolina Freight Carriers and Red Arrow Freight Lines.
 During our third accounting period, our LTL operations experienced their highest level of on-time service to our customers in the history of the company. We see this as a positive indication that the restructuring of our linehaul operations has placed your company in an excellent competitive position to perform in an improving economy.
 The Carolina Freight family was saddened by the death of C. Grier Beam, founder of the company, on March 20, 1992. Beam had an illustrious career in truck transportation. He began this company in 1932 at the height of The Great Depression and built it into one of America's largest and most successful transportation companies. Employees, shareholders, and customers of Carolina will continue to share Beam's legacy of commitment to purpose and achievement of goals. He was our teacher, leader, and friend and we shall miss him greatly.
 Although first quarter operating results were not satisfactory, we experienced improving profits during the last eight weeks of the first quarter. Your management team is committed to provide service that meets our customers' requirements, to aggressively market that service, and to minimize all costs without compromising our commitment to excellent service.
 We continue to project revenue growth in 1992 to $820 million with a significant improvement in net earnings.
 Kenneth E. Mayhew, Jr.
 President and Chief Executive Officer
 Carolina Freight Corporation
 Consolidated Statements of Earnings
 (Unaudited)
 (Dollars in thousands except per share amounts)
 Twelve Weeks Ended
 March 21, March 23,
 1992 1991
 Operating revenue $ 172,117 $ 167,075
 Operating expenses:
 Employee compensation 108,568 104,923
 Purchased transportation 17,319 15,850
 Fuel and fuel taxes 9,040 10,704
 Tires, repair parts and
 other operating expenses 7,839 8,423
 Depreciation and amortization 8,937 8,411
 Insurance premiums and claims 5,560 5,162
 Communications and utilities 2,874 2,668
 Operating taxes and licenses 2,774 2,331
 Equipment and building rents 1,178 1,417
 (Gain) Loss on disposition of
 operating assets 137 (373)
 General supplies 6,928 7,399
 Total operating expenses 171,154 166,915
 Earnings from operations 963 160
 Interest and other expense, net 2,100 2,244
 Loss before income taxes (1,137) (2,084)
 Income tax benefit (537) (800)
 Net loss before cumulative effect of
 change in accounting principle (600) (1,284)
 Change in revenue recognition
 method (1,797) --
 Net loss $ (2,397) $ (1,284)
 Loss per share before cumulative
 effect of change in accounting
 principle: $(.09) $(.20)
 Cumulative effect of change in
 accounting principle $(.28) --
 Loss per share $(.37) $(.20)
 Average common stock and
 common stock equivalent
 shares outstanding 6,563,496 6,559,769
 Operating ratio 99.4 percent 99.9 percent
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 (Dollars in Thousands)
 March 21, March 23,
 Assets 1992 1991
 Current assets $ 110,376 $ 107,374
 Operating property 268,740 257,606
 Other assets 6,020 5,917
 $ 385,136 $ 370,897
 Liabilities and March 21, March, 23
 Stockholders' Equity 1992 1991
 Current liabilities $ 99,759 $ 94,183
 Long-term debt 102,534 92,748
 Reserves and deferred credits 59,334 56,954
 Stockholders' equity 123,509 127,012
 $ 385,136 $ 370,897
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (Dollars in thousands)
 12 Weeks ended
 March 21, March 23,
 1992 1991
 Cash flows from operating activities:
 Net earnings $ (2,397) $ (1,284)
 Noncash items included in income:
 Depreciation and amortization 8,937 8,411
 Deferred income taxes (356) (8)
 Amortized investment tax credit (62) (145)
 Increase in customer and
 interline receivables (6,369) (4,200)
 Increase in accounts payable 2,189 3,047
 Increase (Decrease) in claims payable
 and insurance accruals (516) 2,356
 Net increase (Decrease) in other
 working capital items 5,979 (3,780)
 Other, net (1,073) 183
 Net cash provided by operating
 activities $6,332 $4,580
 Cash flows from investing activities:
 Acquisition of plant and equipment:
 Revenue and service equipment $(4,247) $(6,358)
 Land and structures (3,231) (1,174)
 Other equipment and leasehold
 improvements (904) (1,003)
 Proceeds from disposal of plant and
 equipment 273 1,011
 Net cash used for investing activities $(8,109) $(7,524)
 Cash flows from financing activities:
 Proceeds from issuance of long-term debt $8 $12
 Repayment of long-term debt (564) (759)
 Net proceeds from revolving credit
 agreements 3,500 4,500
 Common stock issued 0 0
 Dividends on common and preferred stock (1,006) (1,006)
 Net cash provided by financing
 activities $1,938 $2,747
 Net increase (decrease)
 in cash and
 temporary investments $161 $(197)
 Cash and temporary investments at
 beginning of quarter 16,441 18,602
 Cash and temporary investments at end
 of quarter $ 16,602 $ 18,405
 -0- 4/6/92
 /CONTACT: Shawn Poole, Carolina Freight Corporation, 704-435-6811/
 (CAO) CO: Carolina Freight Corporation ST: North Carolina IN: TRN SU: ERN


DF-JZ -- CH009 -- 5579 04/06/92 17:34 EDT
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