Exhibit 99
CNF
3240 HILLVIEW AVENUE
PALO ALTO, CA 94304-1297
(650) 494-2900 NEWS RELEASE
Contacts:
Media - James R. Allen
(650) 813-5335
Investors - Patrick Fossenier
(650)- 813 -5353
CNF INC. REPORTS 19 PERCENT INCREASE IN
INCOME FROM CONTINUING OPERATIONS
COMPANY AUTHORIZES $300 MILLION SHARE REPURCHASE
PALO ALTO, Calif. - Jan. 24, 2005 -- CNF Inc. (NYSE:CNF) today reported
fourth-quarter 2004 after-tax income from continuing operations of $41.1
million (after preferred stock dividends), or 74 cents per diluted share, up
19 percent. This compares with fourth-quarter 2003 after-tax income from
continuing operations of $34.5 million, or 63 cents per diluted share.
The company also announced that its Board of Directors had approved a
plan to repurchase up to $300 million in common stock within the next two
years in open market purchases and privately negotiated transactions.
In the fourth quarter, the company reported in discontinued operations
an after-tax loss of $18.3 million, or 33 cents per diluted share, consisting
of $15.8 million related to the Dec. 19 sale of Menlo Worldwide Forwarding
and a $2.4 million after-tax charge related to insurance claims reserves.
After-tax income from the discontinued Menlo Worldwide Forwarding operations
was $9.3 million, or 17 cents per diluted share.
Including the discontinued operations, CNF reported fourth-quarter net
income for shareholders of common stock of $32.2 million, or 58 cents per
diluted share, compared with net income for common stock shareholders of
$26.8 million, or 49 cents per diluted share in the same period a year ago.
On Oct. 5, 2004, CNF announced an agreement to sell its Menlo Worldwide
Forwarding unit to UPS for $150 million in cash and assumption of $110
million of debt. The transaction closed on Dec. 19, 2004. CNF is reporting
the results of its Forwarding operations as discontinued operations in both
2003 and 2004. The impairment charge of $260.5 million recognized in the
third quarter of 2004 increased by $15.8 million to a loss of $276.3 million
as a result of adjustments at closing in the fourth quarter. The amount of
these charges is subject to further adjustment pending audits by both
parties.
Income from continuing operations in the fourth quarter includes CNF
corporate expense previously allocated to the Forwarding unit of $5.9
million.
Total revenues in the fourth quarter were $967.5 million, up 16.5
percent from $830.4 million in the fourth quarter of 2003. Operating income
increased 21 percent to $79.0 million compared with operating income of $65.3
million in the same period of 2003.
For the full-year 2004, CNF reported after-tax income from continuing
operations of $142.2 million (after preferred stock dividends), or $2.57 per
diluted share, up 27 percent, and after-tax income from discontinued
operations of $12.4 million, or 22 cents per diluted share. This compares
with 2003 after-tax income from continuing operations of $112.2 million, or
$2.07 per diluted share, and an after-tax loss from discontinued operations
of $28.5 million, or 50 cents per diluted share.
The net loss for common stock shareholders for the full-year 2004
totaled $124.1 million, or $2.15 per diluted share, compared with net income
of $83.8 million, or $1.57 per diluted share in 2003. For common stock
shareholders, 2004 year-end results included after-tax charges of $278.7
million, or $4.94 per diluted share, primarily from the disposition of Menlo
Worldwide Forwarding and, in the fourth quarter, adjustments to insurance
claims reserves.
Revenue from continuing operations in 2004 totaled $3.7 billion, up 15
percent from $3.2 billion in 2003. Operating income totaled $284.2 million,
up 26 percent from $224.9 million in 2003.
The company substantially improved its balance sheet in 2004, completing
the year with $833 million in cash, from which the share repurchase program,
scheduled debt retirement and general corporate purposes will be funded.
CNF's effective tax rate for continuing operations was approximately 39
percent for both the fourth quarter and the full year.
"The CNF organization had a very good year in 2004 because of the
strengthened economy, our attention to costs and service, and the effort of
our employees," said W. Keith Kennedy, chairman of the Board of Directors and
interim chief executive officer. "The Con-Way less-than-truckload regional
motor carriers had an exceptional year, helping Con-Way to increase its
overall operating profits by 34 percent. Menlo Logistics achieved a modest
increase in earnings while Vector SCM, our supply chain service provider,
reported a slight decline in profits.
"The sale of Menlo Worldwide Forwarding in December was an important
event that, along with cash flow increases from each of our profitable
businesses, allowed the company to complete 2004 in its best financial
condition in more than a decade," Kennedy said.
CON-WAY TRANSPORTATION SERVICES
For the fourth quarter of 2004, Con-Way Transportation Services
reported:
* Operating income of $63.8 million, up 18.4 percent from $53.9 million in
the year-ago period and a record for a fourth quarter. Operating income
in the quarter included an additional allocation of CNF corporate
expenses of $5.1 million that was previously allocated to Menlo
Worldwide Forwarding.
* Revenue of $667.8 million, up 15.6 percent compared to the prior-year
quarter.
* Regional carrier yield increased 5.6 percent from the prior-year
quarter.
* The regional carrier group achieved an operating ratio of 89.0 excluding
the additional corporate expense, compared to 88.9 in fourth-quarter
2003.
For the full -year 2004, Con-Way reported:
* Record operating income of $245.5 million, up 34 percent from $183.1
million in 2003.
* Record revenue of $2.6 billion, up 17.7 percent from $2.2 billion in
2003.
* The regional carrier group achieved an operating ratio of 89.1 for 2004.
MENLO WORLDWIDE
For the fourth quarter of 2004, Menlo Worldwide Logistics reported:
* Operating income of $6.6 million compared to $5.5 million in the
fourth quarter of 2003. Operating income includes an additional
allocation of CNF corporate expenses of $700,000 in the fourth
quarters of 2004 and 2003 that was previously allocated to Menlo
Worldwide Forwarding.
* Revenue of $297.5 million, up 17.7 percent from fourth quarter of
2003.
For the full-year 2004, Menlo Worldwide Logistics reported:
* Operating income of $24.4 million, up 4 percent from $23.5 million in
2003.
* Revenues of $1.1 billion, up 8.8 percent from $1.0 billion in 2003.
Menlo Worldwide Other, which consists of the results of Vector SCM,
reported operating income of $10.2 million compared with $5.4 million in the
fourth quarter of 2003. Fourth-quarter results included $8.0 million of
additional operating income due to attainment of contract performance goals.
OTHER OPERATIONS
CNF's "other" operations, which includes the results of Road Systems and
corporate activities, reported an operating loss of $1.6 million in the
fourth quarter 2004.
FIRST QUARTER 2005 OUTLOOK
First quarter 2005 diluted earnings per share from continuing operations
are expected to be between 57 cents and 65 cents. CNF's tax rate is expected
to be 39 percent in the first quarter.
Conference Call
CNF will host a conference call for shareholders and the investment community
to discuss fourth-quarter results at 12:00 p.m. Eastern time (9:00 a.m.
Pacific) on Tuesday, Jan. 25. The call can be accessed by dialing (866) 264-
3634 or (706) 643-3632 (for international callers) and is expected to last
approximately one hour. Callers are requested to dial in at least five
minutes before the start of the call. Related financial and operating
statistics to be discussed on the conference call are available on the
company's web site at www.cnf.com/investor_relations/fin_hilight.asp. The
call will also be available through a live webcast 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) 642-
1687 or (706) 645-9291 (for international callers), using access code
2914419. The replay will also be available for one week on demand at the
same web casting sites providing access to the live call.
CNF is a $3.7 billion management company of supply chain service
providers. It has businesses in less-than-truckload motor carriage, truckload
carriage, air freight, logistics and supply chain 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 that CNF may,
from time to time, be required to pay indemnification claims in connection
with the sale of Menlo Worldwide Forwarding, or to record impairment charges
for long-lived assets, the possibility of defaults under CNF's $385 million
credit agreement and other debt instruments (including defaults resulting
from additional unusual charges), and the possibility that CNF may be
required to repay certain 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 February 2000 crash of an EWA aircraft and
related litigation, matters relating to CNF's 1996 spin-off of Consolidated
Freightways Corporation (CFC), including the possibility that CFC's multi-
employer pension plans may assert claims against CNF, and matters relating to
CNF's defined benefit pension plans. The factors included herein and in Item
7 of CNF's 2003 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.
CNF INC.
STATEMENTS OF CONSOLIDATED OPERATIONS
(Dollars in thousands except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
REVENUES $967,458 $830,446 $3,712,379 $3,226,966
Costs and Expenses
Operating expenses 767,947 649,145 2,953,665 2,549,467
Selling, general and
administrative expenses 95,032 91,202 372,122 351,507
Depreciation 25,474 24,804 102,425 101,044
----------- ----------- ----------- -----------
888,453 765,151 3,428,212 3,002,018
----------- ----------- ----------- -----------
OPERATING INCOME 79,005 65,295 284,167 224,948
Other Expense, net (7,884) (5,247) (37,344) (27,431)
----------- ----------- ----------- -----------
Income Before Taxes 71,121 60,048 246,823 197,517
Income Tax Provision 27,854 23,419 96,378 77,032
----------- ----------- ----------- -----------
Income from Continuing
Operations 43,267 36,629 150,445 120,485
----------- ----------- ----------- -----------
Discontinued Operations,
net of tax
Loss from Disposal (18,259) - (278,749) -
Income (Loss) from
Discontinued Operations 9,301 (7,750) 12,415 (28,461)
----------- ----------- ----------- -----------
(8,958) (7,750) (266,334) (28,461)
Net Income (Loss) 34,309 28,879 (115,889) 92,024
Preferred Stock Dividends 2,120 2,114 8,239 8,239
----------- ----------- ----------- -----------
NET INCOME (LOSS)
APPLICABLE TO COMMON
SHAREHOLDERS $32,189 $26,765 $(124,128) $83,785
=========== =========== =========== ===========
Weighted-Average Common
Shares Outstanding
Basic 51,363,137 49,709,146 50,455,006 49,537,945
Diluted [a] 56,208,868 57,109,665 56,452,629 56,725,667
Earnings (Loss)
Per Common Share
Basic
Net income from
Continuing
Operations $0.80 $0.69 $2.82 $2.27
Loss from Disposal,
net of tax (0.35) - (5.53) -
Income (Loss) from
Discontinued
Operations, net of tax 0.18 (0.15) 0.25 (0.58)
----------- ----------- ----------- -----------
$0.63 $0.54 $(2.46) $1.69
=========== =========== =========== ===========
Diluted [a]
Net income from
Continuing
Operations $0.74 $0.63 $2.57 $2.07
Loss from Disposal,
net of tax (0.33) - (4.94) -
Income (Loss) from
Discontinued Operations,
net of tax 0.17 (0.14) 0.22 (0.50)
----------- ----------- ----------- -----------
$0.58 $0.49 $(2.15) $1.57
=========== =========== =========== ===========
OPERATING SEGMENTS
REVENUES
Con-Way Transportation
Services $667,780 $577,509 $2,604,004 $2,212,692
Menlo Worldwide Logistics
Logistics 297,534 252,775 1,103,028 1,013,987
CNF Other 2,144 162 5,347 287
----------- ----------- ----------- -----------
$967,458 $830,446 $3,712,379 $3,226,966
=========== =========== =========== ===========
OPERATING INCOME (LOSS)
Con-Way Transportation
Services $63,786 $53,882 $245,488 $183,095
Menlo Worldwide
Logistics 6,605 5,488 24,399 23,492
Other 10,174 5,360 18,253 20,718
----------- ----------- ----------- -----------
16,779 10,848 42,652 44,210
----------- ----------- ----------- -----------
CNF Other (1,560) 565 (3,973) (2,357)
----------- ----------- ----------- -----------
$79,005 $65,295 $284,167 $224,948
=========== =========== =========== ===========
[a] The three months ended December 31, 2004 include the dilutive effect of
restricted stock, stock options and Series B preferred stock. All other
periods presented also include the dilutive effect of convertible
subordinated debentures, which were redeemed on June 1, 2004.
CNF INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
December 31, December 31,
2004 2003
------------ ------------
ASSETS
Current assets $1,411,019 $850,846
Current assets of discontinued
operations 105,497 478,388
Property, plant and
equipment, net 859,321 817,951
Other assets 106,965 176,854
Non-current assets of
discontinued operations 3,609 442,234
------------ ------------
Total Assets $2,486,411 $2,766,273
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $671,593 $513,266
Current liabilities of
discontinued operations 38,804 308,884
Long-term debt and guarantees 601,344 554,981
Other long-term liabilities and
deferred credits 337,514 365,112
Long-term liabilities of
discontinued operations 59,789 205,222
Shareholders' equity 777,367 818,808
------------ ------------
Total Liabilities and
Shareholders' Equity $2,486,411 $2,766,273
============ ============