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CAROLINA FREIGHT CORPORATION ANNOUNCES EARNINGS

 CAROLINA FREIGHT CORPORATION ANNOUNCES EARNINGS
 CHERRYVILLE, N.C., Sept. 21 /PRNewswire/ -- The following is a


letter to shareholders of Carolina Freight Corporation (NYSE: CAO) from Company President and Chief Executive Officer Kenneth E. Mayhew, Jr.: Letter to Shareholders:
 Revenue for the twelve weeks ended Sept. 5, 1992 was $185,862,000, an increase of 4.1 percent over the third quarter of 1991. Net earnings for the quarter were $76,000, or $.01 per share, compared with $1,367,000, or $.21 per share, for the third quarter of 1991.
 The fiscal year of the company consists of three 12-week quarters and a 16-week fourth quarter. The third quarter had one more workday than 1991 since the Labor Day holiday is in the fourth quarter of 1992. Because the first quarter had one less workday than in 1991, the year- to-date workdays are equal for the two years.
 Revenues for the first thirty-six weeks of 1992 increased 3.7 percent over the comparable period in 1991 to $541,877,000. We incurred a net loss of $2,030,000 compared with net earnings of $2,080,000 for 1991. The year-to-date results reflect the cumulative effect of a change in revenue recognition made in the first quarter. This change resulted from a review by the Emerging Issues Task Force of the Financial Accounting Standards Board of the various methods used by transportation companies to recognize revenue and expense. The accounting change generated an after-tax charge to earnings of $1,797,000 effective Jan. 1, 1992 and accounted for 88.5 percent of our year-to-date loss.
 The continued effects of the sluggish economy have limited the amount of growth in our less-than-truckload operations. The resultant low volumes of freight have restrained our ability to improve productivity in these operations to levels necessary to offset our increased labor cost.
 The operating companies continued to emphasize control of all costs during the third quarter. As a result cargo claims costs and bad debt expense were reduced during the quarter.
 On Sept. 1, 1992 the Company announced a retirement incentive program. This early retirement program is being offered to eligible employees at Carolina Freight Carriers Corporation, Red Arrow Freight Lines, and Carrier Computer Services, Inc. Approximately 180 individuals are eligible for the program. The objective is to reduce the number of salaried and clerical jobs. Until the total level of participation is determined, it is not possible to calculate costs and benefits of the program. Most of the costs associated with the program will be recognized as a one-time charge in the fourth quarter of 1992, while the benefits will be spread over future years.
 For the second consecutive year, Carolina Freight Carriers Corporation was named as one of only five service companies to receive a site visit in the 1992 Malcolm Baldrige National Quality Award competition. Six examiners and a site monitor visited Carolina's general office and selected terminals during the week of Sept. 14 to evaluate the deployment and effectiveness of quality principles.
 Up to two service companies can be selected to receive the 1992 Malcolm Baldrige National Quality Award. However, only one service company has received the award in its four-year history. Final decisions are made by the Secretary of Commerce based on recommendations of Baldrige judges.
 During the month of September, Carolina Freight Carriers Corporation formed a strategic alliance with Daily Transport of Canada. This arrangement will allow us to provide substantially improved service to our customers as a result of direct operations in the provinces of Ontario and Quebec.
 Your management team remains committed to improving results in spite of slow economic conditions. We continue to seek new markets and to explore additional opportunities in existing markets. Finally, as discussed earlier in this report, we are determined to control all costs that do not impair service to our customers.
 We continue to project revenue growth in 1992 to $800 million.
 Sincerely,
 (Sig)
 Kenneth E. Mayhew, Jr.
 President & Chief
 Executive Officer
 CAROLINA FREIGHT CORPORATION
 CONSOLIDATED STATEMENTS OF EARNINGS
 (Unaudited)
 (Dollars in thousands except per share amounts)
 12 Weeks Ended 36 Weeks Ended
 Sept. 5, Sept. 7, Sept. 5, Sept. 7
 1992 1991 1992 1991
 Operating revenue $185,862 $178,626 $541,877 $522,506
 Operating expenses:
 Employee compensation 118,242 112,905 342,495 329,534
 Purchased trans-
 portation 20,401 17,591 56,791 49,546
 Fuel and fuel taxes 9,246 8,941 27,216 28,480
 Tires, repair parts
 and other operating
 expenses 7,975 7,713 24,031 23,748
 Depreciation and
 amortization 9,252 9,021 27,272 26,482
 Insurance premiums
 and claims 5,185 4,333 17,032 13,961
 Communications and
 utilities 2,589 2,391 8,146 7,512
 Operating taxes and
 licenses 2,699 2,402 8,289 7,137
 Equipment and building
 rents 1,135 1,263 3,503 3,929
 Loss on disposition of
 operating assets 362 272 618 349
 General supplies and
 expenses 6,725 7,029 20,989 21,067
 Total operating
 expenses 183,811 173,861 536,382 511,745
 Earnings from
 operations 2,051 4,765 5,495 10,761
 Interest and other
 expense, net 2,098 2,562 6,362 7,423
 Earnings (Loss) before
 income taxes (47) 2,203 (867) 3,338
 Income tax provision
 (benefit) (123) 836 (634) 1,258
 Net earnings (loss)
 before cumulative effect
 of change in accounting
 principle 76 1,367 (233) 2,080
 Change in revenue
 recognition method -- -- (1,797) --
 Net earnings (loss) $ 76 $ 1,367 $ (2,030) $ 2,080
 Earnings (Loss) per share
 before cumulative effect
 of change in accounting
 principle $ .01 $ .21 $ (.04) $ .31
 Cumulative effect of
 change in accounting
 principle -- -- $ (.28) --
 Earnings (Loss) per
 share $ .01 $ .21 $ (.32) $ .31
 Average common stock
 and common stock
 equivalent shares
 outstanding 6,561,546 6,561,392 6,562,148 6,560,481
 Operating ratio 98.9pct. 97.3pct. 99.0pct. 97.9pct.
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 (Dollars in thousands)
 Sept. 5, Sept. 7,
 1992 1991
 Assets
 Current assets $117,989 $113,088
 Operating property 270,657 276,202
 Other assets 5,681 5,873
 $394,327 $395,163
 Liabilities and Stockholders'
 Equity
 Current liabilities $110,982 $101,073
 Long-term debt 102,411 107,056
 Reserves and deferred
 credits 59,071 58,648
 Stockholders' equity 121,863 128,386
 $394,327 $395,163
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (Dollars in Thousands)
 36 Weeks Ended
 Sept. 5, Sept. 7,
 CASH FLOWS FROM OPERATING ACTIVITIES: 1992 1991
 Net earnings (loss) $ (2,030) $ 2,080
 Noncash items included in income:
 Depreciation and amortization 27,272 26,482
 Deferred income taxes (905) 882
 Amortized investment tax credit (189) (434)
 Increase in customer and interline
 receivables (10,762) (9,449)
 Increase in accounts payable 10,368 8,572
 Increase (Decrease) in claims payable
 and insurance accruals 193 (811)
 Net increase (decrease) in other
 working capital items 7,830 (2,042)
 Other, net (1,814) 899
 Net cash provided by operating activities 29,963 26,179
 CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of plant and equipment:
 Revenue and service equipment (17,334) (28,235)
 Land and structures (8,549) (5,330)
 Other equipment and leasehold
 improvements (3,222) (3,174)
 Proceeds from disposal of plant and
 equipment 1,129 2,566
 Net cash used for investing activities (27,976) (34,173)
 CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt 70 99
 Repayment of long-term debt (1,584) (2,059)
 Net proceeds from revolving
 credit agreements 5,000 11,500
 Common stock issued 0 0
 Dividends on common and
 preferred stock (2,997) (2,996)
 Net cash provided by financing activities 489 6,544
 NET INCREASE (DECREASE) IN CASH AND TEMPORARY
 INVESTMENTS 2,476 (1,450)
 CASH AND TEMPORARY INVESTMENTS AT BEGINNING
 OF YEAR 16,441 18,602
 CASH AND TEMPORARY INVESTMENTS AT
 END OF QUARTER $18,917 $17,152
 -0- 9/21/92
 /CONTACT: Shawn Poole, Carolina Freight Corporation, 704-435-6811/
 (CAO) CO: Carolina Freight Corporation ST: North Carolina IN: TRN SU: ERN


CM -- CH008 -- 1895 09/21/92 17:35 EDT
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