UNITED STATES
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 (Date of earliest event reported):
May 12, 2005
CENTRAL FREIGHT LINES, INC.
(Exact name of registrant as specified in its charter)
Nevada 000-50485 74-2914331
State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5601 West Waco Drive, Waco, TX 76710
(Address of principal executive offices) Zip Code)
(254) 772-2120
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On May 12, 2005, Central Freight Lines, Inc. (the "Company") issued a press
release announcing the financial results of the Company for the three months
ended April 2, 2005. A copy of the press release is attached to this report as
Exhibit 99.1.
Item 7.01 Regulation FD Disclosure.
See Item 2.02 above, and the press release attached to this report as Exhibit
99.1.
The information contained in this report and the exhibit hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such a filing.
The information in this report and the exhibit hereto may contain
"forward-looking statements" that are made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995 and otherwise
may be protected. Such statements are made based on the current beliefs and
expectations of the Company's management and are subject to significant risks
and uncertainties. Actual results or events may differ from those anticipated by
forward-looking statements. Please refer to the Company's Annual Report on Form
10-K and other filings with the Securities and Exchange Commission for
information concerning risks, uncertainties and other factors that may affect
future results.
Item 9.01 Financial Statements and Exhibits.
(c)Exhibits:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
99.1 Press release dated May 12, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRAL FREIGHT LINES, INC.
Date: May 12, 2005 By: /s/ Jeff Hale
Jeff Hale
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
99.1 Press release dated May 12, 2005.
CENTRAL FREIGHT LINES, INC. REPORTS
FIRST QUARTER RESULTS
AND PENDING FINANCING PACKAGE
Waco, TX (PR Newswire) - May 12, 2005 - Central Freight Lines, Inc. (Nasdaq/NMS:
CENF) announced today its financial and operating results for the quarter ended
April 2, 2005.
Overview
Central's President and Chief Executive Officer, Bob Fasso, commented on the
Company's results, "We have three positive announcements today. First, we
achieved a 240 basis point improvement in our operating ratio versus the fourth
quarter of 2004, an achievement that is notable given the seasonal freight
slowdown that affects our industry during the first quarter.
"Second, we have significantly improved our liquidity prospects by agreeing in
principle to transactions involving an estimated $15.0 million to $16.0 million
in real estate proceeds and financing that we expect to have funded within the
next 60 days. We have $79.4 million in stockholders' equity. Together with our
available credit, the transactions listed above and an additional $6.0 million
of assets held for sale, we expect to have the financial resources and liquidity
to execute our plan and provide customers and employees with sufficient
stability.
"Third, our April results indicate further sequential improvement with LTL tons
handled per day up 8.3% over the first quarter. In addition, our major service
indicators such as bills per hour and on-time and damage free delivery continue
to hold at levels that are among the best the Company has achieved in the past
seven years.
"With momentum from these accomplishments, our goal for the second quarter is to
lower the operating ratio from the first quarter of 2005 by 200 to 350 basis
points, making the expected progress from the third quarter of 2004, 610 to 760
basis points."
First Quarter Financial Results
For the first quarter of 2005, Central's operating revenue was $89.3 million on
65 working days, compared to operating revenue of $97.0 million on 66 working
days for the first quarter of 2004. Revenue per working day decreased 6.5% and
total tons hauled per working day decreased 7.4% for the first quarter of 2005
compared to the same period in 2004. LTL revenue per hundredweight increased
0.5% from $11.45 in the 2004 quarter to $11.51 in the 2005 quarter, due to an
increase in fuel surcharge revenue. Excluding fuel surcharge revenue, LTL
revenue per hundredweight was down 5.0% in the 2005 quarter compared to the 2004
quarter, partially due to a 4.5% increase in average weight per LTL shipment.
A net loss of $8.3 million, or $0.45 per diluted share, was realized in the
first quarter of 2005. The $8.3 million pretax net loss in the first quarter of
2005 generated a tax benefit of $3.2 million, or $0.17 per diluted share, which
was offset by the increase in the valuation allowance for deferred tax assets.
This resulted in no tax benefit being recorded in the first quarter of 2005. The
pretax net loss in the first quarter of 2004 was $1.8 million.
Sequential Improvement Continues
LTL tons handled per working day increased 2.3% from the fourth quarter of 2004
to the first quarter of 2005 while wages and purchased transportation declined
by 0.2% and 2.0% per working day. Meanwhile, cargo claims expenses dropped over
33% per day due to the improved processes and procedures we implemented during
the second half of 2004. We also realized benefits from the investment in our
fleet during 2004 as repair and maintenance expense declined, and our
Sarbanes-Oxley related expenses decreased significantly. In the first quarter of
2005 the Company reserved $1 million (our maximum deductible) for a January 2005
injury to one of our employees. Despite this accident, the average number of
injuries reported per 200,000 hours worked in the first quarter of 2005, was 27%
lower than the average for 2004.
"Service continues to remain strong, providing Central's customers with service
levels that we believe are competitive with any LTL carrier in our regions.
Effective May 2, 2005, we implemented a 6.0% general rate increase for customers
on our non-contract rate base."
Balance Sheet and Liquidity
At April 2, 2005, the Company had $79.4 million in stockholders' equity and
$68.6 million of total debt and capital leases, including current maturities.
The debt and capital leases include $13.4 million of borrowing under the Bank of
America credit facility that matures in the first quarter of 2009.
Notwithstanding the maturity date, borrowings under the facility are categorized
as short-term debt to be consistent with the evolving interpretations of
Emerging Issues Task Force 95-22 Balance Sheet Classifications, Borrowings
Outstanding Under Revolving Credit Agreements that include both a Subjective
Acceleration Clause and a Lock-Box Arrangement ("EITF 95-22"). Based on the
current interpretations of EITF 95-22, we understand that most revolving credit
agreements with a required lock-box arrangement are required to be classified as
current liabilities.
At April 2, 2005, the Company had approximately $18.8 million of borrowing
availability under the Bank of America facility, reduced by a $5.0 million
minimum availability restriction. Based on an amendment in May 2005 to the
Company's credit facility, the Company has no financial covenants through August
15, 2005. In lieu of financial covenants, the $5.0 million availability
restriction remains in place. After August 15, 2005, the $5.0 million
restriction is eliminated and no financial covenants exist as long as excess
availability on the line remains above $15.0 million. If excess availability
drops below $15.0 million, the Company is required to maintain minimum EBITDA
(earnings before interest, income taxes, depreciation and amortization) levels.
Please see the Company's Quarterly Report on Form 10-Q for a more detailed
description of the amended credit facility and EITF 95-22.
In May 2005 the Company contracted to sell approximately 14 excess acres in
Phoenix for $1.3 million and expects to recognize a gain on the sale. In
addition, the Company entered into agreements in principle covering an estimated
$14.0 million to $15.0 million in sale-leaseback and mortgage financing
transactions on five terminal properties. The Company signed a letter of intent
concerning a sale-leaseback on one of its terminals and is negotiating the
definitive agreements concerning the transaction. It is expected that the
transaction will generate approximately $6.0 million in net proceeds and the
Company will sign a ten-year lease with a ten-year option. The Company also
signed a commitment letter concerning mortgage financing on four other terminal
properties that is expected to generate approximately $9.0 million in net
proceeds. Both transactions are subject to customary closing conditions. The
transactions are expected to close within 45 to 60 days.
In addition to the liquidity expected from financing, at April 2, 2005, Central
had approximately $6.0 million in assets held for sale that may be disposed of
in 2005. In the quarter ended April 2, 2005, the Company had net capital
expenditures of $0.6 million. Gross capital expenditures for the remainder of
2005 are expected to be $3.0 million to $9.0 million. Included in this range is
roughly $6.0 million for replacing revenue equipment. If the decision is made to
purchase the $6.0 million in replacement equipment, the Company expects to
obtain financing independent from the Bank of America credit facility. Our goal
is to achieve positive EBITDA levels (earnings before interest, income taxes,
depreciation and amortization) in the third and fourth quarters of 2005.
Central Freight Lines, Inc. is a non-union less-than-truckload carrier
specializing in regional overnight and second day markets. One of the 10 largest
regional LTL carriers in the nation, Central provides regional, interregional,
and expedited services, as well as value-added supply chain management,
throughout the Midwest, Southwest, West Coast and Pacific Northwest. Utilizing
marketing alliances, Central provides service solutions to the Great Lakes,
Northeast, Southeast, Mexico and Canada.
This press release contains forward-looking statements that involve risk,
assumptions, and uncertainties that are difficult to predict. Statements that
constitute forward-looking statements are usually identified by words such as
"anticipates," "believes," "estimates," "projects," "expects," "plans,"
"intends," or similar expressions. These statements are made pursuant to the
safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. Such
statements are based upon the current beliefs and expectations of our management
and are subject to significant risks and uncertainties. Actual results may
differ from those set forth in the forward-looking statements. With respect to
statements regarding the Company's goals for the second quarter of 2005, those
goals are based upon the Company's expectation of a freight environment similar
to the current environment; the Company's continuing ability to add quality
customers and freight without any significant losses; and the Company's ability
to raise its revenue yields by market increase levels. The Company's goals also
are based upon expectations that it will continue to execute its operating plan
and will not suffer any material management, employee relations, customer or
other disruptions; that the Company is able to complete the planned real estate
financing at the indicated values and maintains adequate liquidity; and that the
Company does not suffer any material uninsured losses. These expectations are
subject to risks, including but not limited to the risk that the conditions to
closing the real estate financing do not occur; the risk that the properties are
appraised for lower values than we anticipate; the risk that customers will
resist the Company's general rate increase; the risk of loss of customer freight
based on rate increases, contract non-renewal, or other factors; the risk that
uninsured losses will exceed expectations; and the risk that the Company fails
to continue to obtain efficiencies to allow margin improvements in excess of
revenue growth. With respect to the Company's business generally, the following
factors, among others, could cause actual results to differ materially from
those in forward-looking statements: the risk that revenue growth may be delayed
or not occur at all; the risk that improvements in revenue yield and tonnage
growth may be delayed or not occur at all; the risk that service, safety, and
productivity measures will be further delayed or will not be successfully
implemented throughout our operations; the risk that our cost-cutting measures
may have unintended and unforeseen consequences that adversely affect our
business; the risk that geographic expansion has produced or may produce freight
imbalances, customer service issues, operational issues, or other consequences
that we cannot manage successfully on a timely basis or at all; the risk that
our insurance and claims costs will continue to exceed our expectations and will
not return to acceptable levels on a timely basis or at all; the risk that we
will be unable to obtain the financing we are seeking or that it will not be
available on acceptable terms; the risk that operating losses and negative cash
flows will continue and will have a material and adverse result including but no
limited to the termination of our line of credit; and the risks detailed from
time to time in reports filed by the Company with the Securities and Exchange
Commission, including forms 8-K, 10-Q, 10-K, and our registration statement on
Form S-1.
Corporate Contact:
Jeff Hale, Chief Financial Officer
(480) 361-5295
jhale@centralfreight.com
CENTRAL FREIGHT LINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, dollars in thousands, except per share data)
Three months ended
April 2, April 3,
2005 2004
---- ----
Working Days 65 66
-- --
Operating revenues $ 89,322 $ 97,038
------------- ------------
Operating expenses:
Salaries, wages and benefits 50,964 55,656
Purchased transportation 8,818 11,305
Purchased transportation - related parties 3,471 2,277
Operating and general supplies and expenses 20,605 18,580
Operating and general supplies and expenses - related parties 162 95
Insurance and claims 5,025 3,744
Building and equipment rentals 1,019 929
Building and equipment rentals - related parties 449 520
Deprecation and amortization 4,877 3,919
------------- ------------
Total operating expenses 95,390 97,025
------------- ------------
(Loss) income from operations (6,068) 13
Other expense:
Interest expense (615) (205)
Interest expense - related parties (1,581) (1,605)
------------- -------------
Loss before income taxes (8,264) (1,797)
Income taxes:
Income tax benefit - 668
-------------- --------------
Net loss $ (8,264) $ (1,129)
=============== ==============
Net loss per share:
Basic (0.45) (0.06)
Diluted (0.45) (0.06)
Weighted average outstanding shares (in thousands):
Basic 18,192 17,714
Diluted 18,192 17,714
CENTRAL FREIGHT LINES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 2, 2005 and December 31, 2004
(Dollars in thousands)
2005 2004
Assets (Unaudited)
-----------------------------------
Cash and cash equivalents $ 1,202 $ 2,144
Restricted cash --- 20,825
Accounts receivable, net 53,042 51,582
Other current assets 11,337 8,655
Deferred income taxes 8,959 6,689
-----------------------------------
Total current assets 74,540 89,895
Property and equipment, net 131,198 135,274
Goodwill 4,324 4,324
Other assets 8,994 7,761
-----------------------------------
Total assets $ 219,056 $ 237,254
===================================
Liabilities and stockholders' equity
Current maturities of long-term debt $ 10,538 $ 10,958
Short-term notes payable 14,337 28,108
Trade accounts payable 18,463 23,835
Payables for related party transportation services 1,537 988
Accrued expenses 29,799 23,050
-----------------------------------
Total current liabilities 74,674 86,939
Long-term debt, excluding current maturities 20,869 21,884
Related party financing 22,852 22,852
Deferred income taxes 10,645 8,375
Claims and insurance accruals 10,644 9,646
-----------------------------------
Total liabilities 139,684 149,696
-----------------------------------
Stockholders' equity:
Total stockholders' equity 79,372 87,558
-------------------------------------
Total liabilities and stockholders' equity $ 219,056 $ 237,254
=====================================
CENTRAL FREIGHT LINES, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(Amounts in thousands except where indicated by *)
Three months ended
April 2, April 3,
2005 2004 % Change
---- ---- ---------
Operating Ratio 106.8% 100.0%
Working days* 65 66 -1.5%
LTL bills 793.09 912.24 -13.1%
Total bills 802.20 920.98 -12.9%
LTL tons 365.03 401.97 -9.2%
Total tons 439.93 482.24 -8.8%
LTL revenue per hundredweight* 11.51 11.45 0.5%
LTL weight per bill (in pounds)* 921 881 4.5%
Average length of haul (in miles)* 490 466 5.1%
Fuel surcharge as a % of total revenue* 8.3% 3.0%