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CAROLINA FREIGHT CORPORATION ANNOUNCES EARNINGS

 CHERRYVILLE, N.C., April 12 /PRNewswire/ -- The following is a letter to shareholders of Carolina Freight Corporation (NYSE: CAO) from Company Chief Executive Officer Kenneth G. Younger:
 Letter to Shareholders:
 Revenue for the twelve weeks ended March 27, 1993 increased 8.8 percent to $187,331,000 compared with revenue of $172,117,000 in the first quarter of 1992. Due to the major snowstorm which struck the eastern part of the United states during the weekend of March 13, the Company sustained a net loss of $390,000, or $.06 per share, for the quarter compared to a net loss before accounting changes of $600,000, or $.10 per share, for the first quarter of 1992. Including the effect of the accounting changes described below, the net earnings in the first quarter of 1992 were $9,236,000, or $1.40 per share. The Company's fiscal year consists of three twelve-week quarters and a final sixteen-week quarter. The first quarter of 1993 contained 60 workdays versus 57 workdays in the first quarter of 1992.
 While it is difficult to quantify the total impact of what has been called the Storm of the Century on our company's operations, we have measured the effects of reduced shipment volume, lower productivity, and increased direct cost related to the storm. Based on our data, the impact on our operations was to reduce pre-tax earnings by approximately $1.5 million for the first quarter of 1993, or $.14 per share.
 In addition, other factors adversely affected profit margins in the first quarter. Employee compensation costs were higher than the first quarter of 1992 due to increased wage rates and escalating fringe benefit costs. Also, purchased transportation costs continued to increase as the level of intercompany business expanded. Railroad and other transportation services are purchased to augment the primary transportation services offered by our less-than-truckload (LTL) companies (Carolina Freight Carriers Corporation, G.I. Trucking Company, and Red Arrow Freight Lines).
 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). The FASB 106 after-tax charge of $570,000 relates 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 $12,203,000 that are included in the first quarter of 1992 on a restated basis. This adjustment reflects the restatement of deferred tax liabilities to current income tax rates. First quarter 1992 results also reflect the cumulative effect of a change in revenue recognition methodology. This change resulted from a review by the Emerging Issues Task Force of FASB of 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.
 A general rate increase of approximately 4.6 percent effective January 4, 1993 improved the prices at our LTL subsidiaries. However, because of continued price competition among major LTL carriers, prices are only .7 percent higher than those of the first quarter of 1992. On April 1, 1993 an increase of approximately 3.5 percent in wages and benefits became effective under the terms of a labor agreement which primarily covers drivers, dock workers, and mechanics at Carolina Freight Carriers and Red Arrow Freight Lines.
 During the first quarter the Company's LTL carriers increased the number of terminal-to-terminal lanes in which two-day transit service is offered from 180 to 720. These service improvements to literally thousands of cities, coupled with the LTL operations record on-time performance for the first quarter, exemplify the Company's commitment to meet customer requirements.
 On March 22, 1993 Lary R. Scott joined the Company as Chief Executive Officer of Carolina Freight Carriers Corporation. At the May 5, 1993 annual Board of Directors' meeting, Mr. Scott will become Chief Executive Officer and Vice Chairman of Carolina Freight Corporation.
 We are not pleased with the operating results of the first quarter. The good news is that the operational initiatives and marketing programs which were implemented in the first quarter are beginning to show positive results.
 We are committed to having a successful 1993 with revenue growing to $850 million and a return to positive earnings.
 Kenneth G. Younger
 Chief Executive Officer
 CAROLINA FREIGHT CORPORATION
 CONSOLIDATED STATEMENTS OF EARNINGS
 (Unaudited)
 (Dollars in thousands except per share amounts)
 Twelve Weeks Ended
 March 27, $172,117
 Operating expenses:
 Employee compensation 119,183 108,568
 Purchased transportation 20,430 17,319
 Fuel and fuel taxes 9,757 9,040
 Tires, repair parts and other
 operating expenses 8,674 7,839
 Depreciation and amortization 8,348 8,937
 Insurance premiums and claims 5,811 5,560
 Communications and utilities 2,636 2,874
 Operating taxes and licenses 2,708 2,774
 Equipment and building rents 1,140 1,178
 (Gain) Loss on disposition of
 operating assets (19) 137
 General supplies and expenses 7,306 6,928
 Total operating expenses 185,974 171,154
 Earnings from operations 1,357 963
 Interest and other expense, net 2,013 2,100
 Loss before income taxes (656) (1,137)
 Income tax benefit (266) (537)
 Net loss before cumulative effect
 of change in accounting principle ($390) ($600)
 Cumulative effect of changes in
 accounting principle -- 9,836
 Net earnings (loss) ($390) $9,236
 Loss per share before cumulative
 effect of changes in accounting
 principles $(.06) $(.10)
 Cumulative effect of changes in
 accounting principle $ -- $ 1.50
 Earnings (Loss) per share $(.06) $ 1.40
 Average common stock and common
 stock equivalent shares
 outstanding 6,561,672 6,563,496
 CAROLINA FREIGHT CORPORATION
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 (Dollars in thousands)
 March 27, March 21,
 1993 1992
 Assets
 Current assets $126,530 $110,406
 Operating property 257,002 268,740
 Other assets 5,897 6,020
 $389,429 $385,166
 Liabilities and March 27, March 21,
 Stockholders' Equity 1993 1992
 Current Liabilities $116,260 $106,420
 Long-term debt 99,345 102,534
 Reserves and deferred credits 47,367 41,071
 Stockholders' equity 126,457 135,141
 $389,429 $385,166
 CAROLINA FREIGHT CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (Dollars in Thousands)
 Twelve Weeks Ended
 March 27, March 21,
 1993 1992
 CASH FLOWS FROM OPERATING ACTIVITIES:
 Net earnings ($390) $9,236
 Noncash items included in income:
 Depreciation and amortization 8,348 8,937
 Deferred income taxes (1,004) (418)
 Cumulative effect of accounting
 principle change on deferred
 tax accounts -- (12,203)
 Increase in customer and
 interline receivables (7,753) (6,369)
 Increase (Decrease) in accounts
 payable (1,598) 2,189
 Increase (Decrease) in claims
 payable and insurance
 accruals (18) 404
 Net increase in other working
 capital items 3,162 2,315
 Other, net 549 2,241
 Net cash provided by operating
 activities 1,296 6,332
 CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of plant and equipment:
 Revenue and service equipment (3,612) (4,247)
 Land and structures (275) (3,231)
 Other equipment and leasehold
 improvements (701) (904)
 Proceeds from disposal of plant
 and equipment 2,348 273
 Net cash used for investing
 activities (2,240) (8,109)
 CASH FLOWS FROM FINANCING ACTIVITES:
 Proceeds from issuance of
 long-term debt 8 8
 Repayment of long-term debt (573) (564)
 Net proceeds from revolving
 credit agreements 4,500 3,500
 Common stock issued -- --
 Dividends on common and
 preferred stock (350) (1,006)
 Net cash provided by financing
 activities 3,585 1,938
 NET INCREASE IN CASH AND
 TEMPORARY INVESTMENTS 2,641 161
 CASH AND TEMPORARY INVESTMENTS
 AT BEGINNING OF YEAR 16,441 16,441
 CASH AND TEMPORARY INVESTMENTS
 AT END OF QUARTER $19,082 $16,602
 -0- 4/12/93
 /CONTACT: Shawn W. Poole, Carolina Freight Corporation, 704-435-6811/
 (CAO)


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

SB-MM -- CH009 -- 4951 04/12/93 17:49 EDT
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Date:Apr 12, 1993
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