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: July 29, 2003
(Date of earliest event reported)
0-19791 (Commission File No.)
USF CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction ofincorporation or organization)
36-3790696
(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)
USFreightways Corporation
(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following is furnished under Item 12 of Form 8-K as an exhibit to this
Current Report.
(c) Exhibits:
Exhibit Number Description
99
News Release, dated July 29, 2003.
Exhibits (furnished pursuant to Item 12)
Item 12.Information being provided under Item 12.
On July 29, 2003, USF Corporation ("the Company") reported its results for the
Second Quarter of 2003 ending July 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". This information shall not be deemed "filed" for purposes of Section
18 f the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933 or the Exchange Act,
except as expressly set forth by specific reference in such a filing.
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.
USF CORPORATION
By:/s/ Christopher L. Ellis
Christopher L. Ellis
Senior Vice President, Finance & Chief Financial Officer
Date:July 29, 2003
EXHIBIT 99
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
TUESDAY, July 29, 2003 CHRIS ELLIS 773.824.2205
USF Corporation Reports Net Income of $.30 per Share
Chicago... USF Corporation (NASDAQ: USFC) reported net income of $8.1 million
for the second quarter ended July 5, 2003, compared to $5.9 million reported for
the second quarter ended June 29, 2002. Included in the 2002 net income was a
$7.0 million charge related to discontinued operations. Diluted earnings per
share were 30 cents for the quarter compared to 22 cents per share for the
second quarter of 2002. Included in the 2003 second quarter results was an after
tax charge of $1.2 million (equivalent to 4 cents diluted earnings per share)
related to retirement costs for the Company's former CEO.
Net income from continuing operations for the second quarter was also $8.1
million or 30 cents diluted earnings per share, compared to $13.0 million for
the second quarter of 2002, equivalent to 47 cents per share.
Operating revenue for the second quarter was $567.1 million, a 0.7% decrease
from the $571.2 million reported for the second quarter of 2002. This year's
quarter included 62.5 working days compared to 64.0 in the 2002 second quarter.
Operating revenue per working day increased 1.7% over last year's quarter.
The elements contributing to the relatively flat revenue were decreases in
revenue at USF Red Star and USF Logistics. USF Red Star is being restructured to
its core business markets in the Northeast. This strategy requires exiting
certain terminals and shedding unprofitable business.
At USF Logistics there was a significant reduction of business with major
customers, primarily with Fleming Companies following their bankruptcy in April.
Less-Than-Truckload
Operating earnings for the LTL group were $25.3 million in the quarter, compared
to $28.5 million for the second quarter of 2002. The LTL group's operating ratio
("OR") in the second quarter was 94.6%, compared to 94.0% in the second quarter
of last year. Second quarter revenue in the LTL group amounted to $472.5
million, a 0.6% decrease from last year's second quarter. Per working day
revenue increased 1.8% over last year (fuel surcharge included, 0.4% with
surcharge removed).
A General Rate Increase of 5.9% was implemented on June 2nd, approximately three
weeks earlier than last year's increase.
LTL revenue generated by the Company's PremierPlusSM service continues to expand
and accounted for 12.8% of the group's LTL revenue compared to 10.4% in the
second quarter of 2002. PremierPlusSM LTL revenue grew 23.4% in the second
quarter of 2003 compared to the second quarter of 2002.
Both LTL shipments and tonnage decreased 6.2% from last year's second quarter.
On a per day basis, shipments and tonnage both decreased 4.0%. Billed LTL
revenue per shipment increased 6.7% from $119.59 to $127.66, including fuel
surcharges. Billed LTL revenue per hundredweight increased by 6.8%, from $10.58
to $11.30. Average weight per LTL shipment was 1,130 pounds in both the current
quarter and the 2002 second quarter.
Included in these statistics is USF Red Star, who's second quarter revenue was
$57.9 million compared to last year's $69.6 million, a 16.9% decrease. When
compared to this year's first quarter their revenue declined 4.0%. Excluding USF
Red Star, the remaining companies in the LTL group posted a 4.7% increase in
revenue per day with a combined OR of 93.4% this year compared to 92.7% in last
year's quarter.
USF Red Star's OR of 103.6% in the second quarter this year was significantly
better than the 108.8% reported in the first quarter of 2003. Since late last
year USF Red Star has taken major steps to return the company to profitability.
These include the elimination of approximately $30 million of low yield revenue
from its largest customer and the elimination of the costs associated with that
business. Additionally, USF Red Star has made several operational changes. These
include the closure of terminal operations in Atlanta at the end of 2002, and in
North and South Carolina at the end of May. With these significant operational
changes throughout the USF Red Star system, it is anticipated that the company
will return to profitability by the fourth quarter of this year.
USF Holland's daily revenue increased by 1.8% over last year's second quarter,
with an OR of 93.5% compared to 92.1% last year. Contributing to the flat
revenue is the continuing soft economy, especially in the Midwest, which is
heavily dependent on the automotive market. Further, competitive pricing has put
pressure on margins.
USF Reddaway reported improved second quarter results, growing daily revenue by
9.8% and improving its OR in the current quarter to 87.9% compared to last
year's 89.4% on improved operating efficiencies and profit on the sale of a
terminal. USF Dugan also improved revenue and profits, with daily revenue
increasing 11.5% in the current quarter with an OR of 98.4%, the same as the
second quarter of 2002. USF Bestway grew daily revenue by 4.3%, but its OR
increased to 95.5% in the quarter compared to 93.8% last year, primarily from
higher health care and workers' compensation expenses and increased pricing
pressures in the intra California/Texas markets.
Truckload
USF Glen Moore recorded a 9.6% revenue increase to $31.2 million in the current
quarter over last year's $28.5 million. USF Glen Moore's operating earnings were
$1.0 million and it had an OR of 96.9%, compared to $1.5 million profit and an
OR of 94.6% in last year's second quarter. This year's OR was impacted by higher
claims and, to a lesser extent, higher empty miles.
Logistics
Revenue for the logistics group was $65.7 million, a 5.5% decrease compared to
last year's second quarter of $69.6 million. The group recorded an operating
profit of $1.8 million compared to $2.1 million last year, reflecting lower
revenue.
Capital Expenditures and Balance Sheet
Capital expenditures for the quarter amounted to approximately $32 million: $12
million for revenue equipment, $7 million for terminal facilities, $9 million
for Information Technology and $4 million in other areas. Last year's second
quarter capital expenditures were $27 million: $14 million for revenue
equipment, $5 million for terminals, $3 million for Information Technology, and
$5 million in other areas.
Quarter Highlights
* Company name officially changed to USF Corporation
* Company completed agreements with four companies to be primary parts suppliers
* USF Red Star acquired business of Plymouth Rock Transportation
* USF Reddaway expanded service to the Denver area with a new terminal
* USF Processors began processing unsaleable products for Associated Grocers of
New England
* USF Logistics Services began pool distribution services for Tuesday Morning
Corporation
Earnings Guidance
Given the uncertainties in the current economic climate, the Company is not
prepared to give earnings guidance for the entire year 2003. Third quarter
diluted earnings per share from continuing operations are estimated to be
between 45 and 60 cents per share.
Leadership Transition
The Company presently contemplates that the search for a new CEO will be
concluded by early September.
Operating Statistics
Copies of the Company's Operating Statistics are available on the USF 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 10:00 a.m. CDT on Wednesday, July 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 1810352 after 1:00p.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 USF 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
USF 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 amount)
Condensed Consolidated Statements of Operations
Unaudited (Dollars in Thousands, Except Per-Share Amounts)
Quarter Ended Six Months Ended
July 5, June 29, July 5, June 29,
2003 2002 2003 2002
Operating revenue:
LTL Trucking $ 472,472 $ 475,173 $ 961,335 $ 905,391
TL Trucking 31,244 28,518 62,994 53,835
Logistics 65,738 69,593 141,413 136,145
Intercompany eliminations (2,369) (2,097) (4,955) (4,019)
Total operating revenue 567,085 571,187 1,160,787 1,091,352
Operating income:
LTL Trucking 25,300 28,513 42,112 45,378
TL Trucking 962 1,529 1,485 2,418
Logistics 1,785 2,076 2,338 4,366
Freight forwarding - Asia exit costs - - - (12,760)(a)
Corporate and other (8,682) (7,100) (13,918) (13,133)
Total income from operations 19,365 25,018 32,017 26,269
Non-operating expenses:
Interest expense (5,191) (5,119) (10,483) (10,230)
Interest income 207 1,051 418 1,398
Other, net (171) (172) (426) (381)
Total non-operating expenses (5,155) (4,240) (10,491) (9,213)
Income/ (loss) from continuing operations before income
taxes and cumulative effects of accounting changes 14,210 20,778 21,526 17,056
Income tax expense (6,096) (7,797) (9,172) (10,876)
Income from continuing operations before cumulative
effects of accounting changes 8,114 12,981 12,354 6,180
Discontinued operations:
Loss from operations, net of tax benefits of $29, $3,961,
$34 and $4,445 respectively (38) (7,041) (45) (7,903)
Income/ (loss) before cumulative effects of 8,076 5,940 12,309 (1,723)
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) $ 8,076 $ 5,940 $ 10,842 $ (71,745)
Income/ (loss) per share from
continuing operations - Basic $ 0.30 $ 0.48 $ 0.46 $ 0.23
- Diluted 0.30 0.47 0.45 0.23
Loss per share fro
discontinued operations - Basic - (0.26) - (0.29)
- Diluted - (0.26) - (0.29)
Loss per share - cumulative effects of changes
in accounting - Basic - - (0.05) (2.61)
- Diluted - - (0.05) (2.56)
Net income/ (loss) per share - Basic 0.30 0.22 0.40 (2.67)
- Diluted 0.30 0.22 0.40 (2.62)
Average shares outstanding - Basic 27,105,724 26,892,426 27,054,311 26,845,749
- Diluted 27,235,970 27,469,968 27,167,674 27,385,140
(a) Charges related to relinquishing our interest in Asia.
REVENUE and OPERATING RATIOS
Unaudited (Dollars in thousands)
Quarter Ended Six Months Ended
July 5, 2003 and July 5, 2003 and
June 29, 2002 June 29, 2002
Operating Operating
Company (Region) Revenue Ratio (a) Revenue Ratio (a)
Holland (Midwest) 03 $243,775 93.5% $502,350 93.7%
02 $245,125 92.1% $469,400 93.0%
Bestway (Southwest) 03 38,617 95.5% 78,044 96.1%
02 37,924 93.8% 72,082 94.8%
Red Star (Northeast) 03 57,900 103.6% 118,197 106.2%
02 69,641 101.8% 129,731 102.8%
Reddaway (West Coast, Northwest) 03 73,826 87.9% 145,175 89.9%
02 68,878 89.4% 130,583 91.6%
Dugan (Plains, South) 03 58,354 98.4% 117,569 99.6%
02 53,605 98.4% 103,595 98.6%
(a) Operating ratio is direct operating costs as a percentage of revenue.