-----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, WG26owXX+C3Ldq2JNGDZyfqkGCDzJJOk0IrjPuI0tCB/twz29Rthbcy6QPTRqxCP lN+2YL+Xv0kVfnryKn8YYw== 0000881791-97-000015.txt : 19970805 0000881791-97-000015.hdr.sgml : 19970805 ACCESSION NUMBER: 0000881791-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970628 FILED AS OF DATE: 19970804 SROS: NASD 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: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19791 FILM NUMBER: 97650830 BUSINESS ADDRESS: STREET 1: 9700 HIGGINS RD STE 570 CITY: ROSEMONT STATE: IL ZIP: 60018 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 SECOND 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 JUNE 28, 1997, 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.) 9700 Higgins Road, Rosemont, Illinois 60018 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (847) 696-0200 (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 July 31, 1997, 25,985,246 shares of common stock were outstanding. PART I: FINANCIAL INFORMATION Item 1. Financial Statements. USFreightways Corporation Condensed Consolidated Balance Sheets Unaudited (Dollars in thousands)
June 28, December 28, 1997 1996 - ----------------------------------------------------------------------------------------------- Assets Current assets: Cash $ 11,987 $ 4,090 Accounts receivable, net 175,510 157,874 Other 45,394 41,613 ----------------- ------------------- Total current assets 232,891 203,577 ----------------- ------------------- Net property and equipment 410,002 395,500 Net intangible assets 78,724 79,559 Other assets 9,068 9,872 ----------------- ------------------- Total assets $ 730,685 $ 688,508 ----------------- ------------------- Liabilities and Stockholders' Equity Current liabilities: Current bank debt $ 194 $ 333 Accounts payable 44,539 41,734 Other current liabilities 128,134 102,281 ----------------- ------------------- Total current liabilities 172,867 144,348 ----------------- ------------------- Long-term liabilities: Long-term bank debt -0- 78,000 Notes payable 100,000 100,000 Other long-term liabilities 96,789 96,900 ----------------- ------------------- Total long-term liabilities 196,789 274,900 ----------------- ------------------- Common stockholders' equity 361,029 269,260 ----------------- ------------------- Total liabilities and stockholders' equity $ 730,685 $ 688,508 ----------------- -------------------
USFreightways Corporation Consolidated Statements of Income Unaudited (Dollars in thousands, except per-share amounts)
Three months ended Six months ended ------------------------------------- ----------------------------------------- June 28, June 29, June 28, June 29, 1997 1996 1997 1996 - -------------------------------------------------------------------------------- ----------------------------------------- Operating revenue $ 380,763 $ 332,089 $ 736,580 $ 645,794 Operating expenses: Salaries, wages and benefits 240,114 210,097 467,070 413,581 Purchased transportation 13,502 12,647 25,844 23,629 Operating expenses and supplies 47,782 45,666 94,815 89,158 Operating taxes and licenses 15,186 13,967 30,159 27,907 Insurance and claims 7,881 5,997 14,950 11,437 Communications and utilities 4,399 3,994 8,772 7,685 Depreciation and equipment leases 17,276 15,785 33,969 31,322 Building and office equipment rents 4,367 3,707 8,660 7,508 Amortization of intangible assets 658 597 1,311 1,177 Other operating expenses 2,683 2,401 5,044 4,747 ----------------- ----------------- ------------------- -------------------- Total operating expenses 353,848 314,858 690,594 618,151 ----------------- ----------------- ------------------- -------------------- Income from operations 26,915 17,231 45,986 27,643 ----------------- ----------------- ------------------- -------------------- Non-operating income (expense): Interest expense (2,016) (2,834) (4,598) (5,750) Interest income 226 159 390 333 Other, net (54) (280) 45 (320) ----------------- ----------------- ------------------- -------------------- Total non-operating expense (1,844) (2,955) (4,163) (5,737) ----------------- ----------------- ------------------- -------------------- Income from operations before income taxes 25,071 14,276 41,823 21,906 Income tax expense 10,530 6,139 17,532 9,420 ----------------- ----------------- ------------------- -------------------- Net income $ 14,541 $ 8,137 $ 24,291 $ 12,486 ----------------- ----------------- ------------------- -------------------- Average shares outstanding 26,129,479 22,216,893 25,351,923 22,174,060 Earnings per common share: Net income $ 0.56 $ 0.37 $ 0.96 $ 0.56 ----------------- ----------------- ------------------- --------------------
USFreightways Corporation Condensed Consolidated Statements of Cash Flows Unaudited (Dollars in thousands)
Six months ended -------------------------------------- June 28, June 29, 1997 1996 - --------------------------------------------------------------------------------------------- Cash flows from operating activities: Net Income $ 24,291 $ 12,486 Adjustments to net income: Depreciation and amortization 34,279 30,702 Other items affecting cash 6,431 (12,969) from operating activities ----------------- ------------------ Net cash provided by operating activities 65,001 30,219 ----------------- ------------------ Cash flows from investing activities: Capital expenditures, net of proceeds on sales (46,747) (45,499) Acquisition of Transus - (27,265) ----------------- ------------------ Net cash used in investing activities (46,747) (72,764) ----------------- ------------------ Cash flows from financing activities: Dividends paid (4,514) (4,095) Proceeds from sale of common stock 69,760 - Proceeds from sale of treasury stock 2,536 1,921 Proceeds from long-term debt - 48,000 Payments on long-term debt (78,139) (139) ----------------- ------------------ Net cash provided by (used in) financing activities (10,357) 45,687 ----------------- ------------------ Net increase in cash 7,897 3,142 ----------------- ------------------ Cash at beginning of period 4,090 1,707 ----------------- ------------------ Cash at end of period $ 11,987 $ 4,849 ----------------- ------------------
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 regional LTL trucking business. Therefore, operating results for the three months and six months ended June 28, 1997 are not necessarily indicative of the results that may be expected for the year ending January 3, 1998. For further information, refer to consolidated financial statements and footnotes thereto included in the registrant's annual report on Form 10-K for the year ended December 28, 1996. REVENUE AND OPERATING RATIOS Unaudited (Dollars in thousands)
Quarter ended Six months ended June 28, 1997 June 28, 1997 and June 29, 1996 and June 29, 1996 ------------------------------------------------------------------------------ Company (Region) Revenue Operating Ratio (b) Revenue Operating Ratio (b) - ------------------------------------------------------------------------------------------------------------------------- Holland (Midwest) 97 $ 176,220 89.9 % $ 339,950 91.1 % 96 147,855 91.0 287,075 91.9 Red Star (Northeast) 97 48,588 99.7 94,983 99.8 96 50,307 102.3 99,391 103.4 Reddaway (West Coast, Northwest) 97 48,397 92.9 93,383 94.8 96 44,257 94.1 86,123 95.9 Bestway (Southwest) 97 33,512 86.0 63,932 87.2 96 28,380 89.3 55,905 89.6 Dugan (Plains, South) 97 42,597 95.4 83,165 95.6 96 37,927 97.7 73,212 98.8 Logistics Operations 97 26,144 95.2 51,309 95.0 96 20,266 99.5 39,105 98.8
b) Operating ratio is direct operating costs as a percentage of revenue. Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operation. USFreightways Corporation ("the Company") reported net income for the thirteen weeks ended June 28, 1997 of $14,541,000, a 79% increase over the $8,137,000 which was reported for the thirteen weeks ended June 29, 1996. Net income per share for the 1997 quarter, on an average of 26,129,479 shares, was equivalent to 56 cents per share, a 51% increase, compared to the 37 cents per share on 22,216,893 average shares outstanding in the second quarter of 1996. Revenue for the 1997 quarter increased by 14.7% to $380,763,000 from $332,089,000 for the same period in 1996. In the regional trucking group, LTL revenue increased 13.8% and truckload revenue increased 9.3%. LTL shipments in the 1997 quarter increased 10.1%, average weight per shipment increased 2.5%, and the average revenue per LTL shipment increased 3.3% compared to last year. Revenue for the thirteen weeks of the current year in the logistics group amounted to $26,144,000, an increase of 29.0%, and the operating ratio improved from 99.5% in the second quarter of 1996 to 95.2% for the current year's quarter. Revenue for the six months ended June 28, 1997 amounted to $736,580,000, an increase of 14.1% over the same period of the previous year. Net income for the six month period ended in 1997 amounted to $24,291,000, equivalent to 96 cents per share compared to 56 cents per share for the 1996 six month period. The significant improvement in earnings per share, both in the current year's quarter and for the 1997 six month period is attributable to a strong U.S. economy, a stable pricing environment, and a continuing emphasis on cost reduction in all business units of the Company. During the 1997 second quarter, the combined operating ratio of the regional trucking group improved to 92% from 94% for the same period of the 1996 calendar year. USF Holland and USF Bestway led the improvement in operating ratio. Both of these units had an outstanding quarter as USF Bestway improved its operating ratio from 89.3% in 1996 to 86% in the current year's quarter on a revenue increase of 18.1%. USF Holland improved its operating ratio from 91% in the 1996 quarter to 89.9% in the current year's quarter on a 19.2% increase in revenue. USF Dugan and USF Reddaway continued the profit improvement reported in the first quarter of the current year. USF Reddaway's operating ratio improved to 92.9% from 94.1% for the same quarter of 1996 on a revenue increase of 9.4%. USF Dugan improved its operating ratio to 95.4% in the current year's quarter from 97.7% for the same period of last year on a revenue increase of 12.3%. The Company is encouraged with the continuing progress at USF Red Star where modest profitability was achieved for the third straight quarter, the Company is, nevertheless, disappointed that the contemplated acquisition of a small regional carrier in the Northeastern United States which would have been merged with Red Star, did not materialize. Despite this, management at Red Star did an excellent job in achieving an improvement in the operating ratio from 102.3% in the 1996 quarter to 99.7% in the 1997 quarter. Although overall revenue at USF Red Star declined 3.4% compared to the previous year, the continued emphasis on yield resulted in an increase in the LTL revenue per shipment of 5.4%. Management at Red Star is committed to the continuing improvement in the operating results of this subsidiary and the Company is aggressively seeking out opportunities to increase USF Red Star's revenue and density in its Northeastern service area. The significant improvement in both net income and earnings per share in the current year, both for the second quarter and the six months to the end of June, is encouraging. The outlook for the balance of 1997 is positive and the Company expects to continue to see an improvement in its profitability, assuming no material change in the stable pricing environment and level of economic activity. Capital expenditures for the current year's quarter amounted to approximately $27 million of which $20 million was for revenue equipment and $7 million for terminal facilities and miscellaneous equipment, which compares to capital expenditures of $25 million for the 1996 quarter. For the six months ended June 28, 1997, capital expenditures approximated $48 million, which compares to total capital expenditures for the 1996 six month period of approximately $74 million (which included $27 million for the acquisition of Transus). A dividend of 9 1/3 cents per share was paid July 3, 1997 to shareholders of record on April 20, 1997. This release contains forward looking statements that is subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission including forms 8K, 10Q and 10K. 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. Steven Mark Whitworth v. TNT Bestway Transportation, Inc. f/k/a TNT Bestway Inc. and William Orr, Case No. 96-3935-A, 14th Judicial District Court, Dallas County, Texas. As previously reported on Form 8-K filed January 7,1997, on or about November 1, 1996, a judgment was entered against the Company's subsidiary, USF Bestway Inc. for $3,500,000 in actual damages and $1,750,000 in attorneys fees together with court costs and interest. USF Bestway Inc. has appealed the judgment to the Dallas Court of Appeals. Management of the Company believes that it has good grounds for obtaining a reversal of the judgment on appeal because it believes, among other reasons, that the judgment entered on the basis of the procedural technicality of counsel's failure to comply with the requirements of Texas law concerning the signature of pleadings by counsel will not be sustained by a reviewing court. The Company further believes the judgment will be vacated and the matter remanded for a trial on the merits and that, in any event, the judgment, if sustained, will not have a material adverse effect on the Company's financial condition. In the event the judgment is sustained on appeal, management of the Company's subsidiary, USF Bestway Inc. intends to pursue potential causes of action against all appropriate parties. Also, the Company is involved in other litigation arising in the ordinary course of business, primarily involving claims for bodily injuries and property damages. The Company maintains insurance coverage to insure against these types of claims. Accordingly, 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 4 Submission of Matters to a Vote of Security Holders. (a) On May 2, 1997, the annual meeting of stockholders of USFreightways Corporation was held pursuant to notice. (b) N/A (c)(1) Election of Directors Robert V. Delaney FOR: 22,161,974 WITHHOLD: 79,474 Robert P. Neuschel FOR: 22,160,988 WITHHOLD: 80,460 (c)(2) Amendment to Stock Option Plan for Non-Employee Directors FOR: 19,879,774 AGAINST: 1,286,818 ABSTENTIONS: 1,074,855 (c)(3) Approval of the USFreightways Corporation Long-Term Incentive Plan FOR: 15,191,603 AGAINST: 5,985,325 ABSTENTIONS: 1,064,519 (d) N/A Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 1. Exhibit 10.1-USFreightways Long-Term Incentive Plan (incorporated by reference from Exhibit 4.4 to Registration Statement No. 333-28357 filed on Form S-8 on June 3, 1997). 2. Exhibit 10.2- Stock Option Plan for Non-Employee Directors amended and restated as of January 1, 1997 (incorporated by reference from Exhibit 4.4 to Post-Effective Amendment No. 1 to Registration Statement No. 33-79150 filed on Form S-8 on May 9, 1997). . (b) Current Reports on Form 8-K were filed: 1. No current reports on Form 8-K were filed during the quarter. 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 31st day of July, 1997. 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 EX-27 2 FDS --
5 1000 6-MOS JAN-03-1998 DEC-29-1997 JUN-28-1997 11,987 0 175,510 0 0 232,891 410,002 0 730,685 172,867 0 0 0 0 361,029 730,685 0 736,580 0 690,594 (435) 0 4,598 41,823 17,532 24,291 0 0 0 24,291 0 0.96
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