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
Date of Report: April 29, 2003
(Date of earliest event reported)
USFREIGHTWAYS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-19791 36-3790696
(State or other jurisdiction of
incorporation or organization) (Commission File No.) (IRS Employer
Identification Number)
8550 West Bryn Mawr Avenue, Suite 700, Chicago, Illinois 60631
(Address of principal executive offices) (Zip Code)
(773) 824-1000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 7. Exhibits.
The following is furnished under Items 9 and 12 of Form 8-K as an exhibit to
this Current Report.
Exhibit Index
Exhibit Description
Number
99 News Release, dated April 29, 2003.
Exhibits (furnished pursuant to Item 9)
Item 9.Information being provided under Item 12.
On April 29, 2003, USFreightways Corporation ("the Company") reported its
results for the first quarter of 2003 ending April 5, 2003. The Company issued a
press release, the text of which is set forth in Exhibit 99 hereto. This
information is being furnished pursuant to Item 12 "Disclosure of Results of
Operations and Financial Condition" of Form 8-K and is being presented under
Item 9 of Form 8-K as provided in the Securities and Exchange Commission's final
rule; interim guidance regarding Form 8-K, Item 11 and 12 filing requirements
(Release No. 34-47583).
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
USFREIGHTWAYS CORPORATION
By:/s/ Christopher L. Ellis
________________________
Christopher L. Ellis
Senior Vice President, Finance
& Chief Financial Officer
Date:April 29, 2003
EXHIBIT 99
USFreightways News Release
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
TUESDAY, APRIL 29, 2003 CHRIS ELLIS 773.824.2205
USFreightways Reports $.16 per Share from Continuing Operations
Chicago.. USFreightways Corporation (NASDAQ: USFC) reported income of $4.2
million from continuing operations for the first quarter ended April 5, 2003,
compared to a $6.8 million loss from continuing operations reported for the
first quarter ended March 30, 2002. Diluted earnings per share from continuing
operations for the first quarter of 2003 were 16 cents per share compared to a
25-cent loss per share from continuing operations for the first quarter of 2002.
Included in the 2002 first quarter loss from continuing operations was a $12.8
million charge (equivalent to 47 cents diluted earnings per share) to relinquish
interest in a non-core Asian joint venture. Before this charge, diluted earnings
per share from continuing core operations were 22 cents.
Revenue from continuing operations in the first quarter was $593.7 million, a
14.1% increase over the $520.2 million reported for the first quarter of 2002.
This year's quarter included 67 working days compared to 62.5 in the 2002 first
quarter. Total operating revenue per working day increased 6.5% over last year's
quarter.
Samuel K. Skinner, Chairman, President and Chief Executive Officer of
USFreightways, commented, "The Company posted a solid performance in spite of a
very difficult economic environment and record level adverse weather conditions.
The Company's two largest business units, USF Reddaway and USF Holland increased
their operating income by 52% and 15% respectively compared to the first quarter
of 2002."
Items Affecting Results
_______________________
First quarter operating results were affected by three significant items:
o USF Red Star and USF Dugan's operating earnings were impacted by severe
weather in their service territories, affecting earnings by approximately
three cents per share.
o The Company recorded a charge of approximately four cents per share at its
Logistics segment for the write-down of accounts receivable from
Fleming Companies, Inc., which recently filed for bankruptcy.
o The restructuring underway at USF Red Star as outlined below.
"While we cannot be exact in our calculation of the effect of these three items
on our operating results, we estimate the negative impact to be in the range of
10 to 12 cents per share," said Skinner.
USF Red Star
____________
Since late last year USF Red Star, under the leadership of its new CEO, Steve
Caddy, has taken major efforts to return the company to profitability. These
steps include the elimination of approximately $30 million of low yield revenue
from its biggest customer and the elimination of the costs associated with that
business. This business, the revenue of which declined gradually over the first
quarter, required a separate network of vehicles and employees. The costs
associated with this arrangement could not be removed until late in the first
quarter.
Replacement revenue was acquired when USF Red Star entered into a transaction
with Plymouth Rock Transportation in early April. "Plymouth Rock had
approximately $37 million of annual revenue in Fiscal 2002," said Skinner."We
anticipate retaining a majority of this revenue and that it will yield
significant operating income. The transition has gone smoothly. The effect of
this revenue is not reflected in the first quarter results as reported in this
release."
Skinner continued, "In addition, USF Red Star has made several operational
changes. These include the closure of terminal operations in North and South
Carolina, as well as consolidation of two terminals in the Boston area. Per the
Master Freight Agreement, our intent to make these changes was presented to the
International Brotherhood of Teamsters on April 28th. Implementation will begin
on May 29th. We anticipate these changes will result in annual savings of nearly
$4 million.
"Furthermore, we have made significant management and operational changes
throughout the USF Red Star system and anticipate the company will return to
profitability in the fourth quarter of this year."
PremierPlusSM
_____________
Revenue generated by the Company's PremierPlusSM service continues to expand and
accounted for 12.7% of the LTL group's revenue compared to 9.8% in the first
quarter of 2002. PremierPlusSM revenue grew 46% in the first quarter of 2003
compared to the first quarter of 2002. This increased the average length of haul
for the LTL companies by 5.3%.
Revenue Recognition
___________________
On January 1, 2003, the Company changed the method of accounting for revenue
recognition in its Less-Than-Truckload ("LTL") and Truckload ("TL") business
segments. Instead of recognizing revenue and direct transportation costs at pick
up, revenue is now recognized by the allocation of revenue between reporting
periods based on the relative transit time in each reporting period with
expenses recognized as incurred. As a result, the Company incurred an after-tax
cumulative charge on change of accounting principle of $1.5 million (equivalent
to six cents diluted earnings per share). After this charge, and a small loss
from the Company's former discontinued freight forwarding segment, the Company
reported net income to shareholders of $2.8 million (equivalent to 10 cents
diluted earnings per share). This compares to a net loss of $77.7 million
(equivalent to a loss of $2.89 diluted earnings per share) in last year's first
quarter.
Less-Than-Truckload
___________________
Operating earnings for the LTL group were $16.8 million in the quarter, compared
to $16.9 million for the first quarter of 2002. The LTL group's operating ratio
("OR") in the first quarter was 96.6, compared to 96.1 in the first quarter of
last year. First quarter revenue in the LTL group amounted to $488.8 million, a
13.6% increase over last year's first quarter. Per working day revenue increased
6.0% over last year.
Fuel surcharges, which are included in the reported revenue, increased as a
percent of revenue in the quarter compared to last year's first quarter. As a
result, the LTL trucking group's first quarter revenue before fuel surcharges
increased approximately 9.8% compared to the 13.6% increase reported above,
which includes fuel surcharges.
LTL shipments increased 6.9% over last year's first quarter and LTL tonnage
increased 7.7%. Billed LTL revenue per shipment increased 7.5% from $118.95 to
$127.84, including fuel surcharges. Billed LTL revenue per hundredweight also
increased by 6.7%, from $10.57 to $11.27. Average weight per LTL shipment was
1,134 pounds in the current quarter compared to 1,126 pounds in the 2002 first
quarter. Per working day LTL shipments and LTL tons were essentially flat
compared to last year.
USF Reddaway reported improved first quarter results, growing revenue by 15.6%
and improving its OR in the current quarter to 92.1 compared to last year's 94.0
as it continued to improve operating efficiencies and labor costs. USF Bestway
grew revenue by 15.4%, but its OR increased to 96.6 in the quarter compared to
95.9 last year, primarily from higher purchased transportation expenses. USF
Holland increased revenue by 15.3% and reported an OR of 93.9, the same as last
year's. As previously stated, USF Red Star's results were adversely impacted by
severe winter weather in the current quarter and also the phase out of low yield
business from one of its largest customers. As a result, USF Red Star reported a
first quarter OR of 108.8 compared to 104.0 last year on virtually the same
revenue. USF Dugan's revenue grew 18.4% and the company reported an OR of 100.8
compared to 98.7 in 2002 as labor and purchased transportation expenses
increased due in part to the severe winter weather.
Truckload
_________
USF Glen Moore, the Company's truckload carrier, recorded a 25.4% revenue
increase to $31.7 million in the current quarter over last year's $25.3 million.
USF Glen Moore's operating earnings were $0.5 million and it had an OR of 98.3,
compared to $0.9 million profit and an OR of 96.5 in last year's first quarter.
This year's OR was impacted by approximately 2.0 points by rising fuel costs. In
late February, USF Glen Moore acquired System 81, a small truckload company
based in Tennessee, which contributed approximately $1.3 million in revenue in
March.
Logistics
________
Revenue for the logistics group was $75.7 million, a 13.8% increase compared to
last year's first quarter of $66.5 million. Its ocean forwarding division that
was acquired late in 2002 generated $7.1 million of the revenue increase. The
group recorded an operating profit of $0.6 million compared to $2.3 million last
year. Included in this year's first quarter results was a charge of $2.0 million
relating to the bankruptcy filing of one of its customers - Fleming Companies,
Inc.
Capital Expenditures and Balance Sheet
______________________________________
Capital expenditures for the quarter amounted to approximately $37 million: $12
million for revenue equipment, $12 million for terminal facilities, $10 million
for Information Technology and $3 million in other areas. Last year's first
quarter capital expenditures were $26 million: $10 million for revenue
equipment, $8 million for terminals, $2 million for Information Technology, and
$6 million in other areas
Quarter Highlights
__________________
o Fortune recognized USFreightways as one of the most admired companies in the
trucking industry
o The Company's service-product lines were standardized across all five LTL
carriers
o USF Logistics Services expanded distribution activity for specialty retailer
Williams-Sonoma, Inc.
o New five-year National Master Freight Agreement (NMFA)
was negotiated and ratified
Information Technology
______________________
The Company recently announced it has successfully completed the third
generation deployment of its USF Net extranet for its LTL (less-than-truckload)
customers. The new USF Net Web site (www.usfnet.com) features functional
restructuring and a number of usability enhancements, based on intensive
research into customer utilization patterns and responses.
Earnings Guidance
_________________
Given the uncertainties in the current economic climate, the Company is not
prepared to give earnings guidance for the entire year 2003. Second quarter
diluted earnings per share for continuing operations are estimated to be between
40 and 50 cents per share.
Leadership Transition
_____________________
The search for a new Chief Executive Officer is underway and a selection is
expected this summer. In order to ensure a smooth changeover, a transition
committee has been formed consisting of Mr. Skinner; Neil Springer, the
Company's lead director; Chris Ellis, the Company's Chief Financial Officer;
Gerard Klaisle, the Company's Senior Vice President, Human Resources; Pete
Neydon, President of the Eastern Carrier Group and Jared McArthur, President of
the Western Carrier Group. The committee will meet on a regular basis to ensure
continuity in the Company's multiple initiatives.
Summary
______
Skinner concluded, "Over the past several years the Company has implemented a
number of initiatives in the area of cost reduction, productivity improvements
and marketing. These programs have allowed the Company to achieve significant
results in spite of slow economic conditions. These efforts are continuing and
are expected to provide significant additional benefits for the remainder of
this year and beyond.
The Company is sound and focused on future growth. The Company maintains a very
strong financial position with over $47 million in cash and a debt to capital
ratio of 29.1%. New products such as PremierPlusSM have proven successful and
marketing initiatives will continue. Standardization of products across our LTL
carrier line and advances in Information Technology will enhance customer
service. Logistics operations continue to grow and develop. The management
organization of the Company is the best in the industry and is well positioned
to move forward under new leadership."
Operating Statistics
____________________
Beginning this quarter, the Company is supplying on its Web site LTL operating
statistics in a new format which, we believe, more accurately reflects shipment
and pricing details. Specifically, PremierPlusSM shipments (long haul shipments
that are handled by two USFreightways regional companies) are now presented as a
single shipment in the statistics, with the revenue and shipment being
attributed to the originating trucking company. Additionally, these statistics
are presented on an as-billed basis and not as presented in the financial
statements. Differences between the operating statistics data and reported
revenue in the financial statements result from, among other items, revenue
recognition between accounting periods, adjustments for volume discounts that
are not attributable to specific invoices and other adjustments to invoices that
occur during later periods.
In prior quarters, the operating statistics presented PremierPlusSM shipments in
each USFreightways LTL company that handled the shipment and attributed each
company its portion of the revenue. While this prior treatment was consistent
throughout all reporting periods and also consistent with statistics as filed
with the U.S. Department of Transportation, the total shipment count for the
overall LTL trucking group was greater than the actual shipments handled as seen
by the customer. This revised presentation eliminates this double counting of
PremierPlusSM shipments.
Copies of the Company's Operating Statistics are available on the USFreightways
home page at www.usfc.com under the heading, "Recent Headlines". After a period
of time, these will be archived at www.ir.usfc.com.
Conference Call
_______________
A conference call will be held at 2:00 p.m. CDT on Wednesday, April 30th to
discuss the results. Those wishing to participate should dial 1-888-689-4786.
Callers should dial in 5 to 10 minutes prior to the start of the call. A
telephone replay will also be available. To use the dial-in access, call (800)
642-1687, conference ID 56931 after 4:00p.m. (CDT). The telephone replay will be
available for seven days. After that time a transcript of the call will be
available at www.ir.usfc.com.
A live broadcast of the conference call will be available through the Company's
Web site at www.usfc.com and also www.streetevents.com. To listen to the call,
please go to one of the Web sites at least fifteen minutes early to download and
install any necessary software. For those who cannot listen to the live
broadcast, a replay will be available shortly after the call at both Web sites.
The conference call is the sole property of USFreightways and any rebroadcast or
transcription of the event without prior written consent of the Company is
prohibited. The Company assumes no responsibility to update any information
posted on its Web site.
Company Description
___________________
USFreightways Corporation (NASDAQ: USFC) provides a full range of supply chain
management services, offering high-value transportation solutions across North
America through a network of independently operated companies that compete
collectively. USF's five regional trucking companies - USF Bestway, USF Dugan,
USF Holland, USF Red Star, and USF Reddaway - provide industry-leading next-day,
regional (USF PremierSM) and national (USF PremierPlusSM) less-than-truckload
services. USF Glen Moore is one of the fastest growing providers of premium
regional and national truckload services. USF Logistics Services is a
full-service provider of transportation management, contract warehousing,
dedicated fleet, cross docking, domestic ocean services and reverse logistics.
USF Technology Services is a provider of information integration and support
services to USF and its customers, including USF Net Web-based services. For
more information, visit www.usfc.com.
Forward-Looking Statements
__________________________
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 SEC including forms 8K, 10Q and 10K.
Condensed Consolidated Statements of Operations
Unaudited (Dollars in Thousands, Except Per-Share Amounts)
Quarter Ended
April 5, March 30,
2003 2002
Operating revenue:
LTL Trucking 488,863 430,218
TL Trucking 31,750 25,317
Logistics 75,675 66,552
Intercompany eliminations (2,586) (1,922)
_______ _______
Total operating revenue 593,702 520,165
Operating income:
LTL Trucking 16,812 16,865
TL Trucking 523 889
Logistics 553 2,290
Freight forwarding - Asia exit costs - (12,760) (a)
Corporate and other (5,236) (b) (6,033) (b)
______ _______
Total income from operations 12,652 1,251
______ _______
Non-operating expenses
Interest expense (5,292) (5,111)
Interest income 211 347
Other, net (255) (209)
______ ______
Total non-operating expenses (5,336) (4,973)
______ ______
Income/ (loss) from continuing operations 7,316 (3,722)
before income taxes and cumulative effects
of accounting changes
Income tax expense (3,076) (3,079)
______ _____
Income/ (loss) from continuing operations before 4,240 (6,801)
cumulative effects of accounting changes
______ ______
Discontinued operations
Continuing expenses, net of tax benefits (7) (862)
of $5 and loss from operations net of
tax benefits of $484, respectively
_______ ______
Loss on discontinued operations (7) (862)
_______ ______
Income/ (loss) before cumulative effects of 4,233 (7,663)
accounting changes
Cumulative effect of change in accounting (1,467) -
for revenue recognition, net of tax
benefit of $1,064
Cumulative effect of change in accounting - (70,022)
for goodwill
_______ _______
Net income/ (loss) 2,766 (77,685)
======= =======
Income/ (loss) per share from
continuing operations - Basic 0.16 (0.25)
- Diluted 0.16 (0.25)
Loss per share from
discontinued operations - Basic (0.00) (0.03)
- Diluted (0.00) (0.03)
Loss per share - cumulative effects of
changes in accounting - Basic (0.06) (2.61)
- Diluted (0.06) (2.61)
Net income/ (loss) per share - Basic 0.10 (2.89)
Net income/ (loss) per share - Diluted 0.10 (2.89)
Average shares outstanding - Basic 27,005,067 26,798,022
Average shares outstanding - Diluted 27,124,223 26,798,022
(a) Charges related to relinquishing our interest in Asia.
(b) After deduction for amortization of intangibles of $259 and $312 in the
first quarters of 2003 and 2002 respectively.
REVENUE and OPERATING RATIOS
Unaudited (Dollars in thousands)
Quarter Ended
April 5, 2003 and
March 30, 2002
Operating
Company (Region) Revenue Ratio (a)
Holland (Midwest) 03 $258,575 93.9%
02 $224,275 93.9%
Bestway (Southwest) 03 39,427 96.6%
02 34,158 95.9%
Red Star (Northeast) 03 60,297 108.8%
02 60,090 104.0%
Reddaway (West Coast, Northwest)03 71,349 92.1%
02 61,705 94.0%
Dugan (Plains, South) 03 59,215 100.8%
02 49,990 98.7%
(a) Operating ratio is direct operating costs as a percentage of revenue.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Condensed Consolidated Statements of Income
Unaudited (Dollars in thousands)
Quarters Ended
April 5, March 30,
2003 2002
Income / (loss) from continuing operations before $ 4,240 $ (6,801)
cumulative effects of accounting changes -Per GAAP
Freight forwarding - Asia exit costs - 12,760
_______ _______
Income from continuing core operations $ 4,240 $ 5,959
======= =======
Income / (loss) per share from continuing operations $ 0.16 $ (0.25)
- diluted per GAAP
Loss per share from Asia exit costs - diluted - (0.47)
_______ _______
Income per share from continuing core operations $ 0.16 $ 0.22
======= =======