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NEWS RELEASE
CONTACT: D. A. WILSON
CALIBER SYSTEM, INC.
(330) 665-8808 FOR IMMEDIATE RELEASE
CALIBER SYSTEM ANNOUNCES SECOND QUARTER RESULTS
AKRON, OHIO, JULY 1, 1996 -- Caliber System, Inc. (NYSE: CBB) reported
revenue today of $615.9 million for the second quarter ended June 15, 1996
(Note 1), an 11.8% increase over second quarter 1995 revenue of $550.8 million.
Income from continuing operations for the second quarter of 1996 amounted to
$0.2 million or $0.01 per share compared to $22.4 million, or $0.57 per share
in 1995.
For the 24 weeks constituting the company's first half, revenue was
$1,198.0 million, an increase of 9.5% from $1,094.2 million for the first half
of 1995. Income from continuing operations for the 1996 first half was $9.8
million, or $0.25 per share, compared to $43.9 million, or $1.11 per share, for
the first half of 1995.
"The second quarter results were adversely affected by increased
operating losses at Viking Freight, the company's emerging superregional
carrier, and lower than expected growth at RPS, Caliber's small package
carrier," said Daniel J. Sullivan, Chairman of the Board, President and CEO.
"Given the company's first half operating results and expectations for the rest
of the year, earnings from continuing operations for 1996 will be significantly
below those of 1995."
Revenue at Viking for the second quarter of 1996 was up 17.8% over the
second quarter of 1995. Viking's operating loss for the quarter was $31.2
million as compared to an operating loss of $5.5 million in the same quarter
last year. Viking's loss for the first half of 1996 amounted to $43.1 million
versus $10.3 million in the first half of 1995. The greater second quarter
loss is due to aggressive discounting within the industry, a significant
increase in expenses related to operating inefficiencies associated with volume
growth, and the consolidation of the company's regional carriers. Fuel prices
were also up substantially during the quarter. The company announced in late
1995, the integration of its four regional carriers into the "new" Viking. The
merging of facilities, equipment and operating systems is expected to be
completed during 1996.
"Marketplace acceptance of the "new" Viking has resulted in rapid
revenue growth. Unfortunately, we have not been able to keep pace with the
demand, resulting in increased operating costs. The higher volume has caused
additional expenses for training of new hires, purchased transportation,
equipment rentals, overtime and lower productivity. When the consolidation is
completed later this year, we expect to achieve operating efficiencies which
will lead to significant cost reductions," commented Sullivan.
Viking's 1996 operating expenses include substantial nonrecurring
consolidation costs from the integration of multiple information systems,
re-identification of equipment, merging of adminsitrative operating systems and
the closing of three regional corporate headquarters.
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"Although we are extremely disappointed with the quarter's results at
Viking, we continue to be optimistic about the "new" Viking strategy, as are
our customers," said Sullivan. "We are convinced that the consolidation is
consistent with our vision for the future and we will continue to put in place
the resources and systems to meet customer expectations. The initiatives
currently under way are structured to streamline operations, improve
productivity and reduce costs. While tactical plans for managing the rapid
growth and associated expenses are being implemented, it is expected that
operating losses as Viking will significantly exceed the company's earlier
estimate for 1996."
Revenues at RPS increased 3.7% in the second quarter. However,
continuing economic pressure in the retail segment and an aggressive pricing
environment have resulted in lower than expected operating profits at RPS.
Operating income amounted to $24.5 million in the second quarter compared to
$33.8 million in the second quarter of 1995. As a result, RPS will not realize
targeted goals for double digit growth in revenue or improved year-over-year
operating income during 1996. RPS reached its goal of opening 32 new terminals
by the end of June, allowing it to effectively serve 100% of the U.S.
population.
Second quarter revenues for Roberts Express, the company's carrier,
were up 9.2% over the second quarter last year. Roberts continues to maintain
excellent margins with second quarter operating income up 22% from 1995 levels.
Caliber Logistics continues to demonstrate strong revenue improvement and is
expected to meet profit objectives for 1996.
"We are strategically focusing our efforts at Caliber and selectively
investing in market segments that offer the greatest growth potential,
consistent with our vision for the future but at the expense of short term
profits. We are currently seeking to reduce all operating costs while enhancing
service for our customers. During 1996, we have made major strides towards
meeting our long term strategic objectives and are committed in our efforts to
grow our business and deliver value to our customers and shareholders," said
Sullivan.
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Unaudited revenue and earnings for the second quarter of 1996 and first
half 1996, with comparable figures for 1995, are as follows:
Twelve Weeks Ended
(Second Quarter)
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June 15, 1996 June 17, 1995
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(dollars in thousands, except per share data)
Revenue $ 615,901 $ 550,779
=========== ===========
Operating Income $ 1,414 $ 31,739
Other (Expense) Income, Net (1,370) 2,449
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Income from Continuing
Operations Before Income Taxes 44 34,188
Provision (Benefit) for Income Taxes (176) 11,831
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Income from Continuing Operations 220 22,357
Loss from Discontinued Operations -- (24,359)
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Net Income (Loss) $ 220 $ (2,002)
=========== ===========
Earnings (Loss) Per Share:
Continuing Operations $ .01 $ 0.57
Discontinued Operations -- (0.62)
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Net Income (Loss) $ .01 $ (0.05)
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Average Shares Outstanding 39,525 39,467
Twenty-Four Weeks Ended
(First Half)
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June 15, 1996 June 17, 1995
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(dollars in thousands, except per share data)
Revenue $ 1,197,975 $ 1,094,248
=========== ===========
Operating Income $ 19,595 $ 65,211
Other (Expense) Income, Net (2,602) 4,158
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Income from Continuing
Operations Before Income Taxes 16,993 69,369
Provision for Income Taxes 7,152 25,482
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Income from Continuing Operations 9,841 43,887
Loss from Discontinued Operations -- (40,058)
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Net Income $ 9,841 $ 3,849
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Earnings (Loss) Per Share:
Continuing Operations $ .25 $ 1.11
Discontinued Operations -- (1.01)
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Net Income $ .25 $ 0.10
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Average Shares Outstanding 39,515 39,451
<FN>
Note 1: The Company operates on a 13 four-week period calendar with 12
weeks in each of the first three quarters and 16 weeks in the fourth quarter.
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Caliber System, Inc. is a leading, value added provider of
transportation, logistics and related information services. Its operating units
include RPS, a business-to-business small package carrier; Viking Freight, a
superregional freight carrier; Caliber Logistics, a supplier of contract
logistics services; Roberts Express, a critical-shipment carrier; and Caliber
Technology, a provider of computer-based solutions for customers.