-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JJahDJK503rTMKf6XqOrq6nwGez0EJhBPhCRfn8ASnxbVZnXwnuNOCOENcgJN40d crydK49yxifjEZAeHcHilw== 0000023675-03-000024.txt : 20030722 0000023675-03-000024.hdr.sgml : 20030722 20030721201036 ACCESSION NUMBER: 0000023675-03-000024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030630 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CNF INC CENTRAL INDEX KEY: 0000023675 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 941444798 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05046 FILM NUMBER: 03795168 BUSINESS ADDRESS: STREET 1: 3240 HILLVIEW AVE CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 6504942900 MAIL ADDRESS: STREET 1: 1717 NW 21ST AVE CITY: PORTLAND STATE: OR ZIP: 97209 FORMER COMPANY: FORMER CONFORMED NAME: CNF TRANSPORTATION INC DATE OF NAME CHANGE: 19970509 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED FREIGHTWAYS INC DATE OF NAME CHANGE: 19920703 8-K 1 q2_8k.txt PAGE 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 July 21, 2003 ----------------------------------- (Date of earliest event reported) CNF Inc. ----------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-5046 94-1444798 ---------- ------ ---------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation or Number) organization) 3240 Hillview Avenue, Palo Alto, California 94304 --------------------------------------------------- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (650) 494-2900 ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On July 21, 2003 CNF Inc. issued the press release attached hereto, which is being furnished to the U.S. Securities and Exchange Commission. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CNF Inc. ------------ (Registrant) July 21, 2003 /s/Chutta Ratnathicam ----------------------- Chutta Ratnathicam Chief Financial Officer EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99 Earnings release issued on July 21, 2003. EX-99 3 q28k99.txt EXHIBIT 99 Page 1 of 6 CNF 3240 HILLVIEW AVENUE PALO ALTO, CA 94304-1297 (650) 494-2900 NEWS RELEASE Contacts: Investors - Patrick Fossenier (650) 813-5353 Press -- Nancy Colvert (650) 813-5336 CNF INC. REPORTS SECOND-QUARTER RESULTS PALO ALTO, Calif. - July 21, 2003 -- CNF Inc. (NYSE:CNF) today reported second-quarter net income for common shareholders of $16.3 million, or 31 cents per diluted share. This compares with $19.8 million, or 37 cents per diluted share, in the second quarter of 2002. Second-quarter operating income was $37.3 million compared with $43.9 million for the 2002 second quarter. Revenue for the second quarter of 2003 was $1.24 billion compared with $1.19 billion in second-quarter 2002. For the first six months of 2003, net income for common shareholders was $32.2 million, or 61 cents per diluted share. This compares with $38.1 million, or 72 cents per diluted share, in the same period of 2002. The first quarters of both years included after-tax net gains from special items: $4.4 million (8 cents per diluted share) in 2003 and $13.9 million (25 cents per diluted share) in 2002. The 2003 first-quarter after-tax gain was from a payment under the Air Transportation Safety and System Stabilization Act. The 2002 first quarter included a $6.0 million after-tax net gain (11 cents per diluted share) under the Act plus $6.7 million of after-tax net gains (12 cents per diluted share) on the sale of excess properties and a $1.1 million after-tax net gain (2 cents per diluted share) from the early termination of a contract. Operating income for the first six months of 2003 was $78.4 million compared with $84.3 million in the same period a year ago. Revenue for the first six months of 2003 was $2.44 billion compared with $2.25 billion in the first half of 2002. "Revenue growth continued in the second quarter despite weakness in our primary markets," said Gregory L. Quesnel, CNF president and chief executive officer. "Tonnage levels were flat in our trucking operations and North American air freight volumes declined. Page 2 of 6 "Menlo Worldwide Forwarding's quarterly losses have increased due to a steep fall-off in demand for next-day heavy air freight services in North America. Accordingly, we have broadened our efforts to fix the problem and are aggressively pursuing a variety of alternatives. We do not accept the status quo in regard to these losses," Quesnel said. "Results at Menlo Worldwide Logistics are driven to a large extent by transaction volumes at its customers, who are also seeing reduced demand during this lingering economic cycle. Vector remains on track and is meeting our expectations in a period of dampened automotive activity. "Con-Way continues to perform well in this economic cycle. It has achieved five consecutive quarters of year-over-year revenue growth and operating income increased 24 percent this quarter from a year ago," Quesnel said. Con-Way Transportation Services - ------------------------------- For the second quarter of 2003, Con-Way Transportation Services reported: - operating income of $43.6 million, up 24 percent from $35.1 million in the year-ago period, - revenue of $541.4 million, up 7 percent from $504.0 million in the second quarter of 2002, - regional carrier tonnage per day was essentially flat with the prior-year period. Menlo Worldwide - --------------- For the second quarter of 2003, Menlo Worldwide reported: - an operating loss of $3.9 million compared with operating income of $10.5 million in the year-ago period, - revenue of $695.4 million, up 2 percent from $681.4 million in the second quarter of 2002. For the second quarter of 2003, Menlo Worldwide Forwarding (formerly known as Emery Forwarding) reported: - an operating loss of $13.8 million compared with an operating loss of $5.9 million in the year-ago period, - revenue of $442.4 million, compared with $439.8 million a year ago, - North American air freight revenue per day declined 13 percent on a 3 percent drop in tonnage per day and an 11 percent decline in yield that was due primarily to a planned product mix change to more second-day and deferred freight, - international air freight revenue per day grew 10 percent from the prior-year period on a 4 percent increase in tonnage-per-day. Page 3 of 6 For the second quarter of 2003, Menlo Worldwide Logistics reported: - operating income of $6.3 million compared to $7.1 million a year ago, - revenue of $253 million compared to $241.6 million in the prior-year period. For the second quarter of 2003, activities at Menlo Worldwide Other, which includes the results of Vector SCM, resulted in a profit of $3.6 million compared with $9.3 million in the second quarter of 2002. Vector's 2002 second-quarter profits were higher because it was the last quarter in which CNF was entitled to receive all of Vector's profits as repayment of its startup costs. In subsequent quarters, profits began to be split with Vector's joint-venture partner, General Motors. Other - ----- CNF's "Other" operations, which include the results of Road Systems and corporate activities, reported an operating loss of $2.3 million in the second quarter primarily due to a $1.1 million loss on the sale of a property. Outlook - ------- Third-quarter diluted earnings per share from continuing operations are expected to be between 25 cents and 30 cents. At this time, the company is providing no guidance for the full year due to lack of visibility in the current economic environment. CNF's tax rate is expected to be 40 percent in the third quarter compared to 39 percent in the first and second quarters of 2003. Conference Call - --------------- CNF will host a conference call for shareholders and the investment community to discuss second-quarter results at 12:00 p.m. Eastern Daylight Time (9:00 a.m. Pacific Daylight Time) on Tuesday, July 22. The call can be accessed by dialing (800) 230-1059 and is expected to last approximately one hour. Callers are requested to dial in at least five minutes before the start of the call. The call will also be available through a live web cast at the investor relations section of the CNF web site at www.cnf.com and at www.streetevents.com. An audio replay will be available for one week following the call at (800) 475-6701, access code 687408. The replay will also be available for one week on demand at the web sites providing access to the live call. Investors may obtain additional operating data from CNF's Consolidated Financial Summaries, which will be posted on the investor relations section of the CNF web site at www.cnf.com later today. Page 4 of 6 CNF (NYSE:CNF) is a $4.8 billion management company of global supply chain services with businesses in regional trucking, air freight, ocean freight, customs brokerage, global logistics management and trailer manufacturing. # # # Forward-Looking Statements - -------------------------- Certain statements in this press release constitute "forward-looking statements" and are subject to a number of risks and uncertainties and should not be relied upon as predictions of future events. All statements other than statements of historical fact are forward- looking statements, including any projections and objectives of management for future operations, any statements regarding contributions to pension plans, any statements as to the adequacy of reserves, any statements regarding the possible outcome of claims brought against CNF, any statements regarding future economic conditions or performance, any statements of estimates or belief and any statements or assumptions underlying the foregoing. Specific factors that could cause actual results and other matters to differ materially from those discussed in such forward-looking statements include: changes in general business and economic conditions, the creditworthiness of CNF's customers and their ability to pay for services rendered, increasing competition and pricing pressure, changes in fuel prices, the effects of the cessation of the air carrier operations of Emery Worldwide Airlines, the possibility of defaults under CNF's $385 million credit agreement and other debt instruments (including defaults resulting from additional unusual charges or from CNF's failure to perform in accordance with management's expectations), and the possibility that CNF may be required to pledge collateral to secure some of its indebtedness or to repay other indebtedness in the event that the ratings assigned to its long-term senior debt by credit rating agencies are reduced, labor matters, enforcement of and changes in governmental regulations, environmental and tax matters, the ongoing investigation relating to Emery Worldwide's handling of hazardous materials, the February 2000 crash of an EWA aircraft and related investigation and litigation, and matters relating to CNF's 1996 spin-off of CFC, including the possibility that CFC's multi-employer pension plans may assert claims against CNF. The factors included herein and in Item 7 of our 2002 Annual Report on Form 10-K as well as other filings with the Securities and Exchange Commission could cause actual results and other matters to differ materially from those in such forward-looking statements. As a result, no assurance can be given as to future financial condition, cash flows, or results of operations. ### Page 5 of 6 CNF INC. STATEMENTS OF CONSOLIDATED INCOME (Dollars in thousands except per share amounts) Three Months Ended Six Months Ended June 30, June 30, ----------------------- ----------------------- 2003 2002 2003 2002 ----------- ----------- ----------- ----------- REVENUES $1,236,905 $1,186,273 $2,443,146 $2,253,347 Costs and Expenses Operating expenses 1,042,036 993,667 2,055,707 1,873,372 General and administrative expenses 124,053 113,060 242,343 224,221 Depreciation 33,496 35,637 66,728 71,481 ----------- ----------- ----------- ----------- 1,199,585 1,142,364 2,364,778 2,169,074 ----------- ----------- ----------- ----------- OPERATING INCOME 37,320 43,909 78,368 84,273 Other expense, net (7,207) (8,025) (18,820) (15,167) ----------- ----------- ----------- ----------- Income before Taxes 30,113 35,884 59,548 69,106 Income Tax Provision (11,744) (13,995) (23,224) (26,951) ----------- ----------- ----------- ----------- Net Income 18,369 21,889 36,324 42,155 Preferred Stock Dividends 2,069 2,043 4,095 4,048 ----------- ----------- ----------- ----------- NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $16,300 $19,846 $32,229 $38,107 =========== =========== =========== =========== Weighted-Average Common Shares Outstanding Basic 49,494,145 49,074,627 49,445,348 49,001,489 Diluted [a] 57,127,187 56,713,022 54,004,772 56,610,935 Earnings per Common Share Basic $0.33 $0.40 $0.65 $0.78 =========== =========== =========== =========== Diluted [a] $0.31 $0.37 $0.61 $0.72 =========== =========== =========== =========== [a] The three months ended June 30, 2003 and the three and six months ended June 30, 2002 included the dilutive effect of stock options, Series B (TASP) preferred stock, and Series A "TECONs" convertible preferred stock of subsidiary trust. The six months ended June 30, 2003 included the dilutive effect of stock options and Series B preferred stock. OPERATING SEGMENTS REVENUES Con-Way Transportation Services $541,446 $503,968 $1,060,554 $958,699 Menlo Worldwide Forwarding 442,421 439,787 888,043 834,548 Logistics 253,012 241,611 494,514 458,120 ----------- ----------- ----------- ----------- 695,433 681,398 1,382,557 1,292,668 ----------- ----------- ----------- ----------- CNF Other 26 907 35 1,980 ----------- ----------- ----------- ----------- $1,236,905 $1,186,273 $2,443,146 $2,253,347 =========== =========== =========== =========== OPERATING INCOME (LOSS) Con-Way Transportation Services $43,575 $35,115 $80,767 $68,836 Menlo Worldwide Forwarding (13,818) (5,908) (19,249) (11,621) Logistics 6,303 7,059 12,339 14,812 Other 3,572 9,320 6,548 10,629 ----------- ----------- ----------- ----------- (3,943) 10,471 (362) 13,820 ----------- ----------- ----------- ----------- CNF Other (2,312) (1,677) (2,037) 1,617 ----------- ----------- ----------- ----------- $37,320 $43,909 $78,368 $84,273 =========== =========== =========== =========== UNUSUAL AND/OR NON-RECURRING ITEMS INCLUDED IN OPERATING INCOME (LOSS) FOR THE PERIODS PRESENTED: Con-Way Transportation Services - Net gain from the sale of property $ - $ - $ - $8,675 Menlo Worldwide - Forwarding - Net gains from payments under the Air Transportation Safety and System Stabilization Act - - 7,230 9,895 Logistics - Net gain from a contract termination - - - 1,850 CNF Other - Net gain from the sale of property - - - 2,367 Page 6 of 6 CNF INC. CONDENSED BALANCE SHEETS (Dollars in thousands) June 30, December 31, 2003 2002 ASSETS ------------ ------------ Current assets $1,250,676 $1,268,488 Property, plant and equipment, net 1,007,700 1,015,354 Other assets 430,147 455,919 ------------ ------------ Total Assets $2,688,523 $2,739,761 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $806,076 $873,054 Long-term debt, guarantees and capital leases 543,450 557,610 Other long-term liabilities and deferred credits 463,252 466,099 Preferred stock - Subsidiary Trust 125,000 125,000 Shareholders' equity 750,745 717,998 Total Liabilities and ------------ ------------ Shareholders' Equity $2,688,523 $2,739,761 ============ ============ -----END PRIVACY-ENHANCED MESSAGE-----