-----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, PFVQ7uazi3BX9J3MNHYwj3bQTAfI4Ym8PlyTNy2izZyXoHKwg96oxA6gQHILGm7J AfucmCnMXQxnvEzg2wU1nQ== 0000881791-01-500003.txt : 20010516 0000881791-01-500003.hdr.sgml : 20010516 ACCESSION NUMBER: 0000881791-01-500003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: USFREIGHTWAYS CORP CENTRAL INDEX KEY: 0000881791 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 363790696 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19791 FILM NUMBER: 1636759 BUSINESS ADDRESS: STREET 1: 8550 W BRYN MAWR AVE STREET 2: SUITE 700 CITY: CHICAGO STATE: IL ZIP: 60631 BUSINESS PHONE: 8476960200 MAIL ADDRESS: STREET 1: 9700 HIGGINS ROAD SUITE 570 CITY: ROSEMONT STATE: IL ZIP: 60018 FORMER COMPANY: FORMER CONFORMED NAME: TNT FREIGHTWAYS CORP DATE OF NAME CHANGE: 19930328 10-Q 1 f10-q.txt FIRST QUARTER REPORT SECURITIES AND EXCHANGE COMMISSION Washington D. C. 20549 Form 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001, OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO _______________ Commission File Number 0-19791 USFREIGHTWAYS CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-3790696 (State of Incorporation) (IRS Employer Identification No.) 8550 W. Bryn Mawr Ave., Chicago, Illinois 60631 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (773) 824-1000 Not applicable (Former name or former address, if changed since the last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of May 7, 2001, 26,262,153 shares of common stock were outstanding. PART I: FINANCIAL INFORMATION Item 1. Financial Statements. USFreightways Corporation Condensed Consolidated Balance Sheets Unaudited (Dollars in thousands)
March 31, December 31, 2001 2000 - ----------------------------------------------------------------------------------------------------- Assets Current assets: Cash $ 4,822 $ 6,862 Accounts receivable, net 334,252 293,989 Other 69,085 62,077 ----------------- ------------------- Total current assets 408,159 362,928 ----------------- ------------------- Net property and equipment 741,835 660,510 Net intangible assets 185,972 174,538 Other assets 23,053 14,191 ----------------- ------------------- Total assets $ 1,359,019 $ 1,212,167 ----------------- ------------------- Liabilities and Stockholders' Equity Current liabilities: Current bank debt $ 23,024 $ 20,561 Notes payable - 100,000 Accounts payable 92,243 89,193 Other current liabilities 201,459 160,590 ----------------- ------------------ Total current liabilities 316,726 370,344 ----------------- ------------------ Long-term liabilities: Long-term bank debt 10,730 33,137 Notes payable 250,000 100,000 Other long-term liabilities 164,055 149,827 ----------------- ------------------ Total long-term liabilities 424,785 282,964 ----------------- ------------------ Minority interest 642 - Common stockholders' equity 616,866 558,859 ----------------- ------------------ Total liabilities and stockholders' equity $ 1,359,019 $ 1,212,167 ----------------- ------------------
USFreightways Corporation Consolidated Statements of Income Unaudited (Dollars in thousands, except per-share amounts)
Three months ended ------------------------------------- March 31, April 1, 2001 2000 - ----------------------------------------------------------------------------- Operating revenue LTL Trucking $ 468,741 $ 448,710 TL Trucking 21,076 12,338 Logistics 69,802 53,410 Freight Forwarding 66,428 57,488 ----------------- ---------------- Total operating revenue $ 626,047 $ 571,946 Operating expenses: LTL Trucking 423,499 401,249 TL Trucking 19,962 11,267 Logistics 65,647 48,605 Freight Forwarding 68,113 55,177 Corporate and other 3,138 2,344 ----------------- ---------------- Total operating expenses 580,359 518,642 ----------------- ---------------- Income from operations 45,688 53,304 ----------------- ---------------- Non-operating income (expense): Interest expense (5,632) (3,706) Interest income 203 372 Other, net (4) - ---------------- --------------- Total non-operating expense (5,433) (3,334) ---------------- --------------- Net income before income taxes 40,255 49,970 Income tax expense (16,410) (20,247) Minority interest 502 - ----------------- --------------- Net income $ 24,347 $ 29,723 ----------------- --------------- Average shares outstanding - basic 26,286,058 26,462,497 Average shares outstanding - diluted 26,520,231 27,810,822 Basic earnings per common share: $ 0.93 $ 1.12 Diluted earnings per common share: $ 0.92 $ 1.07 ----------------- ------------------
USFreightways Corporation Condensed Consolidated Statements of Cash Flows Unaudited (Dollars in thousands)
Three months ended ---------------------------- March 31, April 1, 2001 2000 - -------------------------------------------------------------------------------------- Cash flows from operating activities: Net Income $ 74,161 $ 73,502 Adjustments to net income: Depreciation and amortization 82,313 70,161 Other items affecting cash (12,332) (10,856) from operating activities -------------- ------------- Net cash provided by operating activities 144,142 132,807 -------------- ------------- Cash flows from investing activities: Capital expenditures (151,869) (140,134) Proceeds on sales 9,198 3,864 Acquisitions (16,419) (49,377) -------------- ------------- Net cash used in investing activities (159,090) (185,647) -------------- ------------- Cash flows from financing activities: Dividends paid (7,393) (7,378) Proceeds from sale of Notes 149,025 98,452 Payments on Notes (100,000) - Proceeds from sale/(repurchase) of treasury stock (8,778) 4,623 Proceeds from long-term debt 70,000 30,206 Payments on long-term debt (92,409) (77,908) Net change in short-term debt 2,463 5,580 -------------- ------------- Net cash provided by (used in) financing activities 12,908 53,575 -------------- ------------- Net increase/(decrease) in cash (2,040) 735 -------------- ------------- Cash at beginning of period 6,862 5,548 -------------- ------------- Cash at end of period $ 4,822 $ 6,283 -------------- -------------
USFreightways Corporation Condensed Consolidated Statements of Changes in Common Stockholders Equity Unaudited (Dollars in thousands)
Three Months Ended ----------------- March 31, April 1, 2001 2000 Balance as of December 31 1999 and 1998 respectively $ 558,859 $ 459,134 Net income 74,161 73,502 Common shares repurchased ( 14,520) - Employee stock transactions 5,740 4,623 Dividends declared ( 7,374) ( 7,397) Comprehensive income - - __________ __________ Balance as of March 31, 2001 and April 1, 2000 $ 616,866 $ 529,862 respectively ========== ==========
Notes to Condensed Consolidated Financial Statements (Dollars in thousands, except per share amounts) (Unaudited) 1. Summary of significant accounting policies General - The consolidated financial statements include the accounts of USFreightways and its wholly owned subsidiaries (the Company). The financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The statements are unaudited but, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Company's results of operations are affected by the seasonal aspects of the trucking and air freight industries. Therefore, operating results for the three and nine months ended Sept. 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1999. Foreign Currency Translation - The financial statements of the Company's foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet date. Revenue and expenses are translated at average rates of exchange during the period. The resulting cumulative translation adjustments, at present, are immaterial. 2. Earnings per share Basic earnings per share are calculated on net income divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share are calculated by dividing net income by this weighted-average number of common shares outstanding plus the shares that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares. Unexercised stock options, calculated under the treasury stock method, is the only reconciling item between the Company's basic and diluted earnings per share. The number of options included in the denominator, used to calculate diluted earnings per share are 234,173 and 1,348,325 for the third quarters of 2000 and 1999 respectively and 624,740 and 1,004,119 for year to date 2000 and 1999 respectively. 3. Acquisitions None 4. Debt The Company's debt includes $100 million of guaranteed notes due May 1, 2009 and $150 million of guaranteed notes due April 15, 2010. On January 31, 2000, the Company filed a Form S-3 registration statement that allowed for the sale of up to $400 million in additional guaranteed notes. The guaranteed notes are fully and unconditionally guaranteed, on a joint and several basis, on an unsecured senior basis, by all of the Company's direct and indirect domestic subsidiaries (the "Subsidiary Guarantors"). The Company is a holding company and during the period presented substantially all of the assets were the stock of the Subsidiary Guarantors, and substantially all of the operations were conducted by the Subsidiary Guarantors. Accordingly, the aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors were substantially equivalent to the assets, liabilities, earnings and equity of the Company on a consolidated basis. Management of the Company believes that separate financial statements of, and other disclosures with respect to, the Subsidiary Guarantors are not meaningful or material to investors. On April 19, 2000, the Company sold $150 million in 8 1/2% guaranteed notes due April 15, 2010 as part of the $400 million Form S-3 registration statement filed on January 31, 2000. 5. Other On July 24, 2000, the Company announced the authorized buyback of up to 1 million additional shares of its common stock in either public market or private transactions. This repurchase program is not yet completed. As of March 31, 2001, the Company had repurchased 454 thousand shares. 6. Subsequent events None
6. Segment Reporting Three Months Ended Unaudited (dollars in thousands) Sept. 30, Oct. 2, 2000 1999 - ------------------------------------------------------------------------------- Revenue LTL Group: USF Holland $ 243,862 $ 231,620 USF Reddaway 70,362 63,768 USF Red Star 67,085 66,610 USF Dugan 49,211 49,035 USF Bestway 38,221 37,677 - ------------------------------------------------------------------------------- Sub total LTL Group 468,741 448,710 Truckload - Glen Moore 21,076 12,338 Logistics subsidiaries 69,802 53,410 Freight forwarding 66,428 57,488 Corporate and other - - - ------------------------------------------------------------------------------- Total Revenue $ 626,047 $ 571,946 Income From Operations LTL Group: USF Holland $ 27,437 $ 29,792 USF Reddaway 9,399 8,268 USF Red Star 2,661 2,781 USF Dugan 2,504 2,338 USF Bestway 3,241 4,282 - ------------------------------------------------------------------------------- Sub total LTL Group 45,242 47,461 Truckload - Glen Moore 1,114 1,071 Logistics subsidiaries 4,155 4,805 Freight forwarding (1,685) 2,311 Corporate and other (1,391) (620) Amortization of intangibles (1,747) (1,724) - ------------------------------------------------------------------------------- Total Income from Operations $ 45,688 $ 53,304 - ------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations. Results of Operations USFreightways Corporation ("the Company") reported net income for the thirteen weeks ended Sept. 30, 2000 of $24.3 million, an 18% decrease compared to $29.7 that was reported for the thirteen weeks that ended Oct. 2, 1999. There were 63 working days in the current and previous year's quarter. Net income per share for the current year's quarter was equivalent to 92 cents diluted earnings per share. Net income per share for the 1999 quarter amounted to $1.07 diluted earnings per share. Net income for the current year's quarter was negatively impacted (as announced by a press release dated September 22, 2000) by evidence of a slowing economy that affected results in the regional trucking subsidiaries and an operating loss at USF Worldwide, the Company's domestic and international freight forwarding business. Revenue for the 2000 quarter increased by 9.5% to $626.0 million from $571.9 for the third quarter of 1999. Revenue increases in new return logistics business, new distribution service centers, new revenue from Ultimex and additional truckload revenue from an acquisition in early January 2000 accounted for approximately $23 million of the revenue increase. Less-than-truckload (LTL) revenue for the current quarter at the regional trucking subsidiaries increased 4.9%, excluding the fuel surcharges, over the 1999 third quarter; LTL shipments increased 2.4% and LTL tonnage increased 1.8%. LTL revenue per shipment increased from $109.47 to $112.10 and the weight per shipment decreased from 1,144 pounds to 1,137 pounds. Volume levels in last year's quarter benefited from the Y2K build up and USF Holland, USF Red Star and USF Reddaway gained additional revenue as a result of the closure of Preston Trucking and Nationsway. Year to date revenue increased by 8.2% to $1.4 billion from $1.3 billion last year. Operating earnings for the regional trucking subsidiaries, in the current year's quarter, decreased 4.7% to $45.2 million compared to $47.5 million for the same period of 1999. The consolidated operating ratio for the LTL group deteriorated to 90.3 from 89.4 last year. USF Reddaway and USF Dugan continued to improve their operating ratios and USF Red Star reported only a slight deterioration in its operating ratio to 96.0 compared to 95.8 last year. Improvements in costs occurred in Purchased Transportation and Fuel (net of surcharge recoveries), but were offset by increases in Labor, Maintenance, Workers Compensation and Insurance and Claims. Year to date operating earnings increased by 7.6% to $130.8 million from $121.5 million last year. Fuel costs, net of surcharge recoveries, in the first nine months have improved slightly when compared to the same period of 1999. USF Glen Moore, the Company's truckload (TL) carrier reported operating earnings of $1.1 million at an operating ratio of 94.7 compared to $1.1 and an operating ratio of 91.3 in 1999. Improvements in Purchased Transportation, and Operating costs were offset by increases in Labor, Insurance and Claims, Workers' Compensation and depreciation costs. Glen Moore's recent acquisition contributed the majority of the $8.7 million revenue increase compared to last year's quarter. Revenue in the Logistics group increased by 30.7% to $69.8 million in the current quarter from $53.4 million in the prior year. USF Processors contributed revenue in the 2000 quarter amounting to approximately $17.4 million compared to approximately $11.8 million in last year's quarter. USF Distribution Services increased revenue by approximately $6.7 million of which expansion into its centers in Baltimore, Kansas City, Montgomery, and Oklahoma City (that were not open in the 1999 third quarter) contributed approximately $2.6 million while other existing distribution centers increased revenue by $4.1 million. Earnings in the Logistics group decreased by 13.5% compared to the prior year's quarter to $4.2 million from $4.8 million as USF Processors, despite a 47% increase in revenue, reported earnings of $0.9 million compared to $1.3 million in the 1999 quarter. The addition of several new accounts and the resultant opening of new facilities to process this business resulted in additional costs. Cost reductions that became effective in the early part of the third quarter have helped to improve earnings. Operating earnings in the Logistics group, excluding Processors, decreased by 7.6% to $3.2 million from $3.5 million last year due mainly to continuing increases in information technology costs. Year to date earnings in the Logistics group increased by 3.4% to $12.5 million from $12.0 million last year. Revenue in the Freight Forwarding group increased 15.5% to $66.4 million from $57.5 million in the prior year's quarter. Year to date revenue increased by 17.9% to $190.4 million from $161.5 million last year. The group reported an operating loss of $1.7 million compared to an operating profit of $2.3 million in the 1999 quarter.Results in the Freight Forwarding group include USF Asia, the trading name given to a joint venture formed in October 1999 of which USF Worldwide(a wholly owned subisidiary in the Freight Forwarding group) is a partner and the first month's results from its acquisition of Ultimex. USF Asia recorded third quarter revenue of approximately $4.0 million and an operating loss before reduction for minority interest of $1.0 million (due to network expansion and infrastructure solidification costs). Ultimex recorded revenue in the last third of the quarter, since its acquisition, of approximately $2 million and an operating profit of $0.1 million. Additionally, in the third quarter, USF Worldwide reported an operating loss of $0.7 million as its gross margins deteriorated and it also incurred significant information technology costs related to the installation of a new freight management system. Year to date losses for the Freight Forwarding group amounted to $0.8 million compared to an operating profit of $5.3 million last year. Liquidity and Capital Resources Cash flows from operating activities contributed $144.1 million during the nine months compared to $132.8 million during the same period last year. Net capital expenditures for the 2000 nine months amounted to approximately $159.1 million including $110.6 million for revenue equipment, $22.2 million for terminal facilities, and the balance for other capital items plus the acquistion of Tri-Star Transportation and Ultimex. Last year for the same period, net capital expenditures amounted to approximately $185.6 million, including $84.7 million for revenue equipment, $36.8 million for terminal facilities, $49.4 million for the acquisitions of USF Processors, CBL and eight freight forwarding companies and the balance for other capital items. Total borrowings increased by $30.1 million during the first nine months of 2000. $100 million of notes, due May 1, 2000, were paid as scheduled. They were replaced by $150 million of guaranteed notes that were floated in late April, 2000 and are due on April 15, 2010. In addition to the $150 million in notes, the Company's debt includes $100 million of guaranteed notes due May 1, 2009. Net bank borrowings decreased by $19.9 million during the first nine months. On January 31, 2000, the Company filed a Form S-3 registration statement that allowed for the sale of up to $400 million in additional guaranteed notes. On April 19, 2000, the Company sold $150 million in 8 1/2% guaranteed notes due April 15, 2010 as part of the $400 million Form S-3 registration statement filed on January 31, 2000. The net proceeds from the sale of the guaranteed notes, after deducting underwriting fees and other expenses was approximately $149 million, was used to repay $100 million in 6 5/8% notes that matured May 1, 2000, to reduce other unsecured lines of credit and to purchase an interest rate hedge. The guaranteed notes are fully and unconditionally guaranteed, on a joint and several basis, on an unsecured senior basis, by all of the Company's direct and indirect domestic subsidiaries (the "Subsidiary Guarantors"). The Company is a holding company and during the period presented substantially all of the assets were the stock of the Subsidiary Guarantors, and substantially all of the operations were conducted by the Subsidiary Guarantors. Accordingly, the aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors were substantially equivalent to the assets, liabilities, earnings and equity of the Company on a consolidated basis. Management of the Company believes that separate financial statements of, and other disclosures with respect to, the Subsidiary Guarantors are not meaningful or material to investors. On June 7, 2000, the Company announced the authorized repurchase of up to 500 thousand shares of its common stock. This buyback program was completed on June 30, 2000. On July 24, 2000, the Company announced the authorized buyback of up to 1 million additional shares of its common stock in either public market or private transactions. This repurchase program is not yet completed. At September 30, 2000, the Company had repurchased 75 thousand shares. A dividend of 9 1/3 cents per share equivalent to $2.5 million was paid on October 6, 2000 to shareholders of record on September 22, 2000. Market Risk The Company is exposed to the impact of interest rate changes. The Company's exposure to changes in interest rates is limited to borrowings under a line of credit agreement which has variable interest rates tied to the LIBOR rate. The average annual interest rates on borrowings under this credit agreement were approximately 6.1% in the first nine months of 2000. In addition, the Company had $100 million of unsecured notes with a 6 5/8% fixed annual interest rate (these notes were paid in full on May 1, 2000), $100 million of guaranteed notes with a 6 1/2% fixed annual interest rate and $150 million of guaranteed notes with an 8 1/2% interest rate at September 30, 2000. The Company estimates that the carrying value of the notes approximated their market value at September 30, 2000. The Company has no hedging instruments outstanding. From time to time, the Company invests excess cash in overnight money market accounts. Recent Accounting Pronouncements In June 1998, the Financial Accounting Standards Board (FASB), issued SFAS No. 133. In June 2000, FASB further clarified SFAS No. 133 through issuance of SFAS No. 138. SFAS No. 133 and 138 establish accounting and reporting standards for derivative instruments and for hedging activities. The effective date for SFAS Nos. 133 and 138 was January 1, 2001. The Company adopted SFAS Nos. 133 and 138 on January 1, 2001 Adoption of SFAS Nos. 133 and 138 had no effect on the Company's financial statements as it has no derivatives or hedging instruments. PART II: OTHER INFORMATION Item 1. Legal Proceedings. The Company is a party to a number of proceedings brought under the Comprehensive Environmental Response, Compensation and Liability Act, (CERCLA). The Company has been made a party to these proceedings as an alleged generator of waste disposed of at hazardous waste disposal sites. In each case, the Government alleges that the parties are jointly and severally liable for the cleanup costs. Although joint and several liability is alleged, these proceedings are frequently resolved on the basis of the quantity of waste disposed of at the site by the generator. The Company's potential liability varies greatly from site to site. For some sites the potential liability is de minimis and for others the costs of cleanup have not yet been determined. While it is not feasible to predict or determine the outcome of these proceedings or similar proceedings brought by state agencies or private litigants, in the opinion of management, the ultimate recovery or liability, if any, resulting from such litigation, individually or in the aggregate, will not materially adversely affect the Company's financial condition or results of operations and, to the Company's best knowledge, such liability, if any, will represent less than 1% of its revenues. Also, the Company is involved in other litigation arising in the ordinary course of business, primarily involving claims for bodily injuries and property damage. In the opinion of management, the ultimate recovery or liability, if any, resulting from such litigation, individually or in the aggregate, will not materially adversely affect the Company's financial condition or results of operations. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 1. Exhibit 3.1- Bylaws of USFreightways Corporation, as restated August 17, 2000. 2. Exhibit 27-Financial Data Schedule. (b) Current Reports on Form 8-K were filed: 1. A Current Report on Form 8-K was filed on July 24, 2000 announcing that the Board of Directors of USFreightways Corporation had authorized a stock repurchase program of up to 1,000,000 shares of its common stock in addition to the 500,000 shares of common stock authorized for repurchase on June 7, 2000. Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated the 7th day of May, 2001. USFREIGHTWAYS CORPORATION By: /s/ Christopher L. Ellis ____________________ Christopher L. Ellis Senior Vice President, Finance and Chief Financial Officer By: /s/ Robert S. Owen ______________ Robert S. Owen Controller and Principal Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----