-----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, I0STcmfI+3YyK5B6jyofHEurbS5FQXu/EtkPLr9APBprJgCczBb84EUv1LVS351B XHU8B+rZcrRD0+LOdEjxog== 0000881791-97-000019.txt : 19971110 0000881791-97-000019.hdr.sgml : 19971110 ACCESSION NUMBER: 0000881791-97-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971107 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: SEC FILE NUMBER: 000-19791 FILM NUMBER: 97710005 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 THIRD 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 SEPTEMBER 27, 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 November 5, 1997, 26,055,339 shares of common stock were outstanding. PART I: FINANCIAL INFORMATION Item 1. Financial Statements. USFreightways Corporation Condensed Consolidated Balance Sheets Unaudited (Dollars in thousands)
September 27, December 28, 1997 1996 - ----------------------------------------------------------------------------------------------- Assets Current assets: Cash $ 28,704 $ 4,090 Accounts receivable, net 189,804 157,874 Other 40,950 41,613 ----------------- ------------------- Total current assets 259,458 203,577 ----------------- ------------------- Net property and equipment 425,443 395,500 Net intangible assets 78,429 79,559 Other assets 9,780 9,872 ----------------- ------------------- Total assets $ 773,110 $ 688,508 ----------------- ------------------- Liabilities and Stockholders' Equity Current liabilities: Current bank debt $ 110 $ 333 Accounts payable 55,465 41,734 Other current liabilities 137,986 102,281 ----------------- ------------------- Total current liabilities 193,561 144,348 ----------------- ------------------- Long-term liabilities: Long-term bank debt -0- 78,000 Notes payable 100,000 100,000 Other long-term liabilities 100,347 96,900 ----------------- ------------------- Total long-term liabilities 200,347 274,900 ----------------- ------------------- Common stockholders' equity 379,202 269,260 ----------------- ------------------- Total liabilities and stockholders' equity $ 773,110 $ 688,508 ----------------- -------------------
USFreightways Corporation Consolidated Statements of Income Unaudited (Dollars in thousands, except per-share amounts)
Three months ended Nine months ended ------------------------------------- ----------------------------------------- September 27, September 28, September 27, September 28, 1997 1996 1997 1996 - -------------------------------------------------------------------------------- ----------------------------------------- Operating revenue $ 393,462 $ 343,203 $ 1,130,042 $ 988,997 Operating expenses: Salaries, wages and benefits 246,288 216,932 713,358 630,513 Purchased transportation 14,548 12,234 40,392 35,863 Operating expenses and supplies 48,404 44,434 143,219 133,592 Operating taxes and licenses 15,342 14,025 45,501 41,932 Insurance and claims 7,357 5,573 22,307 17,010 Communications and utilities 4,256 3,790 13,028 11,475 Depreciation and equipment leases 17,432 16,777 51,401 48,099 Building and office equipment rents 4,460 4,046 13,120 11,554 Amortization of intangible assets 660 644 1,971 1,821 Other operating expenses 2,810 2,220 7,854 6,967 ----------------- ----------------- ------------------- -------------------- Total operating expenses 361,557 320,675 1,052,151 938,826 ----------------- ----------------- ------------------- -------------------- Income from operations 31,905 22,528 77,891 50,171 ----------------- ----------------- ------------------- -------------------- Non-operating income (expense): Interest expense (1,956) (3,322) (6,554) (9,072) Interest income 380 155 770 488 Other, net (85) (196) (40) (516) ----------------- ----------------- ------------------- -------------------- Total non-operating expense (1,661) (3,363) (5,824) (9,100) ----------------- ----------------- ------------------- -------------------- Income from operations before income taxes 30,244 19,165 72,067 41,071 Income tax expense 12,702 8,141 30,234 17,561 ----------------- ----------------- ------------------- -------------------- Net income $ 17,542 $ 11,024 $ 41,833 $ 23,510 ----------------- ----------------- ------------------- -------------------- Average shares outstanding 26,298,153 22,655,243 25,625,642 22,311,770 Earnings per common share: Net income $ 0.67 $ 0.49 $ 1.63 $ 1.05 ----------------- ----------------- ------------------- --------------------
USFreightways Corporation Condensed Consolidated Statements of Cash Flows Unaudited (Dollars in thousands)
Nine months ended -------------------------------------- September 27, September 28, 1997 1996 - --------------------------------------------------------------------------------------------- Cash flows from operating activities: Net Income $ 41,833 $ 23,510 Adjustments to net income: Depreciation and amortization 52,120 47,179 Other items affecting cash 19,210 (16,917) from operating activities ----------------- ------------------ Net cash provided by operating activities 113,163 53,772 ----------------- ------------------ Cash flows from investing activities: Capital expenditures, net of proceeds on sales (78,758) (70,711) Acquisition of Transus and Interamerican - (31,265) ----------------- ------------------ Net cash used in investing activities (78,758) (101,976) ----------------- ------------------ Cash flows from financing activities: Dividends paid (6,926) (6,149) Proceeds from sale of common stock 69,431 - Proceeds from sale of treasury stock 5,927 2,407 Proceeds from long-term debt - 52,000 Payments on long-term debt (78,223) 428 ----------------- ------------------ Net cash provided by (used in) financing activities (9,791) 48,686 ----------------- ------------------ Net increase in cash 24,614 482 ----------------- ------------------ Cash at beginning of period 4,090 1,707 ----------------- ------------------ Cash at end of period $ 28,704 $ 2,189 ----------------- ------------------
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 nine months ended September 27, 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 Nine months ended September 27, 1997 September 27, 1997 and September 28, 1996 and September 28, 1996 ------------------------------------------------------------------------------ Company (Region) Revenue Operating Ratio (b) Revenue Operating Ratio (b) - ------------------------------------------------------------------------------------------------------------------------- Holland (Midwest) 97 $ 180,758 89.8 % $ 520,708 90.7 % 96 153,725 90.6 440,800 91.4 Red Star (Northeast) 97 50,001 98.9 144,984 99.5 96 48,571 101.6 147,961 102.8 Reddaway (West Coast, Northwest) 97 53,072 89.7 146,455 93.0 96 46,383 92.2 132,506 94.6 Bestway (Southwest) 97 34,533 85.7 98,465 86.6 96 28,416 88.9 84,321 89.4 Dugan (Plains, South) 97 44,041 95.2 127,206 95.5 96 38,543 96.1 111,755 97.8 Logistics Operations 97 26,455 92.8 77,764 94.3 96 22,969 94.7 62,073 97.3
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 record net income for the 13 weeks ended September 27, 1997 of $17,542,000, a 59% increase over the $11,024,000 which was reported for the thirteen weeks ended September 28,1996. Net income per share of 67 cents for the 1997 quarter, on an average of 26,298,153 shares, is the highest ever earnings per share in the Company's history and represents a 37% increase over the 49 cents per share on 22,655,243 average shares outstanding for the third quarter of 1996. Record revenue for the 1997 quarter of $393,462,000 increased 14.6% when compared to the $343,203,000 for the same quarter of 1996. In the regional trucking group, LTL revenue increased 15.5% and truckload revenue increased 7.8%. LTL shipments in the 1997 quarter increased by 9.8% and the average revenue per LTL shipment increased 3.4% compared to last year, after estimating the impact of the unusual increase in shipments of less than two hundred pounds, which resulted from the sixteen day UPS strike in August. Revenue in the current year's quarter in the logistics group amounted to $26,455,000, an increase of 15.2%. Operating income improved 56.2% and the operating ratio improved to 92.8% in the current year's quarter, compared to 94.7% for the same period of 1996. Revenue for the nine months ended September 27th amounted to $1,130,042,000, an increase of 14.3% over the same period of the previous year. Net income for the nine month period in 1997 amounted to $41,833,000, equivalent to $1.63 per share, compared to $1.05 per share for the 1996 nine month period. The Company is extremely pleased with the record results achieved in the third quarter of the current year, which is directly attributable to a relatively strong US economy, a stable pricing environment, an ability to increase market share in the Company's various business enterprises, and a continuing emphasis on cost reduction in all units of the Company. During the third quarter of the current year, all of the Company's regional trucking companies improved their operating ratios compared to the same period of the previous year and, overall as a group, the operating ratio improved to 91.3 from 93.1 in the same quarter of the previous year. The reduction in operating ratios and corresponding improvement in operating income was led by excellent performance at USF Bestway, USF Reddaway and USF Holland, where operating ratios of 85.7, 89.7 and 89.8 respectively, were achieved. USF Dugan continued to improve, attaining a 14.3% increase in revenue, a 38.9% increase in operating income, with a moderate improvement in the operating ratio. USF Red Star achieved modest profitability for the fourth straight quarter. On September 12th, substantially all of the assets of Comet Transport, the Company's truckload subsidiary, were sold to CRST, a longhaul truckload trucking company. On the same date, the Company also entered into a 3 year agreement with CRST to provide longhaul truckload service for each of the Company's regional trucking subsidiaries for their partnership freight. Proceeds from the sale were slightly above book value and, therefore, no loss was incurred on the disposal of this business. Subsequent to the end of the fiscal quarter, the Company concluded an agreement to acquire all of the issued and outstanding shares of SEKO Worldwide and subsidiary companies. SEKO Worldwide is a domestic and international freight forwarder with forty-eight facilities in the United States, and provides service to seventy countries through both exclusive and non-exclusive agent facilities. Consolidated revenue for SEKO Worldwide for the year ended December 31, 1996 amounted to $105,000,000, and for the 1997 year, is annualizing at approximately $120,000,000. The Company is enthusiastic about the acquisition of SEKO Worldwide which will permit the USFreightways group of companies to accelerate its 1998 growth rate, and to provide both international and domestic freight forwarding services to the Company's customers. The outlook for the last quarter of this year is positive and the Company expects to continue to see an improvement in its profitability over the same period of the previous year, assuming there is no material change in the stable pricing environment or the level of economic activity. Capital expenditures for the current year's quarter amounted to approximately $42 million, of which $30 million was for revenue equipment and $12 million was for terminal facilities and miscellaneous equipment, which compares to capital expenditures of $27 million for the third quarter of 1996. Year-to-date capital expenditures through September were $90 million, which compares to 1996 capital expenditures for the nine month period of $101 million (which included $27 million for the acquisition of Transus). On February 10, 1997, the Company sold an additional 3,105,000 shares of its common stock through a public offering. The sale generated approximately $69,000,000, net of expenses, in new equity. A dividend of 9 1/3 cents per share was paid October 3, 1997 to shareholders of record on September 19, 1997. This release contains forward looking statements that are 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. 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 27-Financial Data Schedule. (b) Current Reports on Form 8-K were filed: 1. On September 19, 1997, the Company filed a Current Report on Form 8-K. 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 27th day of October, 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 9-MOS JAN-03-1998 DEC-29-1996 SEP-27-1997 28,704 0 189,804 0 0 259,458 425,443 0 773,110 193,561 0 0 0 0 379,202 773,110 0 1,130,042 0 1,052,151 (730) 0 6,554 72,067 30,234 41,833 0 0 0 41,833 0 1.63
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