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CAROLINA FREIGHT CORPORATION ANNOUNCES EARNINGS

 CHERRYVILLE, N.C., Feb. 1 /PRNewswire/ -- The following is a letter to shareholders of Carolina Freight Corporation (NYSE: CAO) from Company Chief Executive Officer Kenneth G. Younger and President Palmer E. Huffstetler:


Letter to Shareholders:
 Record revenue was attained in 1992 for the seventeenth consecutive year. Revenue increased 4.2 percent to $801,138,000 compared with $769,150,000 in 1991. Net earnings were $3,648,000, or $.54 per share, compared with $1,575,000, or $.23 per share, in 1991.
 Revenue for the sixteen weeks ended December 31, 1992 was $259,261,000, an increase of 5.1 percent over 1991. A net loss of $5,955,000 was incurred for the fourth quarter compared with a net loss of $505,000 in the fourth quarter of 1991. The fourth quarter of 1992 had one additional workday compared with the fourth quarter of 1991. The fiscal year of the Company consists of three twelve-week quarters and a sixteen-week fourth quarter.
 The Company experienced several nonrecurring adjustments that affected year-end results. If the impact of these unusual items were excluded from the full year results, the Corporation's operating income would have been $3,793,000, or an operating ratio of 99.5 percent.
 During the fourth quarter of 1992 the Company adopted Financial Accounting Standards Board (FASB) statements that relate to accounting for post-retirement benefits other than pensions (FASB 106) and accounting for income taxes (FASB 109). FASB 106 created a $570,000 after-tax charge in the first quarter of 1992 on a restated basis and a $3,331,000 nonrecurring charge in the fourth quarter. The FASB 106 charges relate to the provision of benefits to employees who have retired under the Company's early retirement plans and who continue to receive health and welfare, insurance and other benefits. FASB 109 generated after-tax earnings of $12,200,000 that are also included in the first quarter of 1992 on a restated basis. This adjustment reflects the restatement of our deferred tax liabilities to current income tax rates.
 During the fourth quarter, the Retirement Incentive Program announced by the Company on September 1, 1992 was completed. Of the 172 individuals eligible to participate, 112 accepted the program. This large number of retirees created additional pension cost of $1,077,000 in the fourth quarter that is included as a nonrecurring charge. All participants in this program retired effective December 31, 1992.
 The results for the year also 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 January 1, 1992.
 Although revenue growth among our three less-than-truckload (LTL) companies -- Carolina Freight Carriers, G.I. Trucking Company, and Red Arrow Freight Lines -- kept pace with their primary competitors, their overall rate of growth has been lower than expected. The growth rate combined with increased employee benefit and insurance costs adversely affected the profitability of our less-than-truckload operations. We have developed new approaches to marketing techniques which we believe will build toward revenue growth as they are implemented in the coming year. One such approach is the introduction of two-day transit standards in more than 200 lanes where the service standard previously had been three days.
 Cardinal Freight Carriers, our truckload carrier, generated record revenue during 1992 of $30,189,000, an increase of 8.8 percent over 1991 revenue. Record net earnings were also obtained of $814,000 compared to $284,000 in 1991. Complete Leasing Concepts, a California based company specializing in the leasing of drivers and equipment, also achieved record revenue of $15,195,000, an increase of 11.7 percent. Net earnings for this operation were $391,000 compared to $555,000 in 1991.
 Kenneth E. Mayhew, Jr., president and chief executive officer, retired from service with the Company on January 31, 1993. Kenneth G. Younger, who retired as president and chief executive officer of the Company on August 10, 1989, has returned to serve as chairman of the board and chief executive officer. Palmer E. Huffstetler, who previously held the position of executive vice president and general counsel, has been elected president. It is anticipated that Younger will act as chief executive officer on an interim basis until proper consideration is given to filling the position on a permanent basis.
 A general rate increase of approximately 4.6 percent was instituted by the Company's LTL subsidiaries effective January 1, 1993. This increase is applicable to revenue of our LTL subsidiaries not covered by contracts. In addition, we are negotiating with contractual customers to increase prices as their contracts expire.
 The regular dividend on common stock of $.05 per share is payable on February 5, 1993 to shareholders of record on January 22, 1993.
 For the full year 1992, our LTL companies recorded their highest level of on-time service in the history of our operations. This continued improvement in service combined with our aggressive marketing efforts demonstrate the determination of your management team to improve results during 1993.
 We are projecting revenue of $850 million for 1993 with an improvement in net earnings.
 Sincerely,
 Sig.
 Kenneth G. Younger
 Chief Executive Officer
 sig.
 Palmer E. Huffstetler
 President
 CAROLINA FREIGHT CORPORATION
 CONSOLIDATED STATEMENTS OF EARNINGS
 (Dollars in thousands except per share amounts)
 16 Weeks Ended 52 Weeks Ended
 Dec. 31, Dec. 31, Dec. 31, Dec. 31,
 1992 1991 1992 1991
 Operating revenue $259,261 $246,644 $801,138 $769,150
 Operating expenses:
 Employee compensation 163,500 157,216 505,995 486,750
 Purchased transportation 31,442 26,505 88,233 76,051
 Fuel and fuel taxes 13,819 13,314 41,035 41,794
 Tires, repair parts and
 other operating expenses 11,493 10,752 35,524 34,500
 Depreciation and amortization 12,512 12,044 39,784 38,526
 Insurance premiums and claims 9,381 6,083 26,413 20,044
 Communications and utilities 3,399 3,422 11,545 10,934
 Operating taxes and licenses 3,673 3,524 11,962 10,661
 Equipment and building rents 1,560 2,128 5,063 6,057
 Loss on disposition of
 operating assets 268 195 886 544
 General supplies and expenses 9,916 9,525 30,905 30,592
 Nonrecurring charges 4,408 - 4,408 -
 Total operating expenses 265,371 244,708 801,753 756,453
 Earnings (Loss) from operations (6,110) 1,936 (615) 12,697
 Interest and other expense, net 2,923 2,739 9,285 10,162
 Earnings (Loss) before
 income taxes (9,033) (803) (9,900) 2,535
 Income tax provision (benefit) (3,078) (298) (3,712) 960
 Net earnings (loss) before
 cumulative effect of change
 in accounting principle ($5,955) ($505) ($6,188) $1,575
 Cumulative effect of change in
 accounting principle - - 9,836 -
 Net earnings (loss) ($5,955) ($505) $3,648 $1,575
 Earnings (Loss) per share before
 cumulative effect of change in
 accounting principle $(.91) $(.08) $(.96) $.23
 Cumulative effect of change in
 accounting principle $ - $ - $1.50 $ -
 Earnings (Loss) per share $(.91) $(.08) $ .54 $.23
 Average common stock and common
 stock equivalent shares
 outstanding 6,561,672 6,564,759 6,561,634 6,560,788
 -0- 2/1/93
 /CONTACT: Shawn W. Poole, Carolina Freight Corporation, 704-435-6811/
 (CAO)


CO: Carolina Freight Corporation ST: North Carolina IN: TRN SU: ERN

SB-JM -- CH017 -- 1575 02/01/93 17:55 EST
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Date:Feb 1, 1993
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