Con-way Inc. on Monday, Jan. 26, reported a net loss from continuing operations for the fourth quarter of 2008 of $49.7 million compared with fourth-quarter 2007 net income from continuing operations of $36.9 million.
Both the 2008 and 2007 fourth-quarter results from continuing operations included special charges. Without the charges, on a non-GAAP basis, Con-way net income from continuing operations was $4.5 million compared to $41.8 million. Special charges affecting both periods included the following: $21.3 million for restructuring charges from network re-engineering and work force reduction at Con-way Freight;
$37.8 million for an impairment charge related to goodwill and other intangible assets at Menlo Worldwide Logistics’ China-based entity, Chic Holdings;
$4.9 million for the write-down of a receivable related to the acquisition of Chic; and
$7.7 million comprising a charge for business transformation and management office consolidations at Con-way Freight.
The net loss to common shareholders was $43.0 million compared to net income of $34.5 million. Net income to common shareholders for both the 2008 and 2007 fourth quarters included the above mentioned special charges.
Net income for both periods also included the effect of discontinued operations: 2008 fourth quarter: A net gain of $6.7 million representing the cash proceeds received from resolution of an insurance matter and a claims issue, less the amount of a payment made for settlement of a legal matter; and
2007 fourth quarter: A charge of $2.5 million representing a loss from various other activities classified as discontinued operations.
Revenue was $1.13 billion, a decrease of 6.2 percent from revenue of $1.20 billion. The operating loss of $35.2 million compared to operating income of $70.0 million.
For the full-year 2008, Con-way reported net income from continuing operations of $58.6 million compared with $146.8 million in 2007; both years included the effect of special charges. Excluding special charges in both years, on a non-GAAP basis, net income from continuing operations was $116.0 million compared to $155.2 million. Including the effect of discontinued operations and special charges, net income to common shareholders was $67.0 million compared to $146.0 million.
Revenues rose to $5.04 billion from $4.39 billion, a 14.8 percent increase. Operating income was $192.6 million compared with $264.5 million.
“The deteriorating economy in the fourth quarter foreshadowed an extraordinary decline in demand for freight services,” said Douglas W. Stotlar, president and chief executive officer of San Mateo, Calif.-based Con-way. “As this decline accelerated through November and December, our freight business volumes fell at an unprecedented rate, with a corresponding effect on earnings.”
Stotlar noted that the company has taken a number of steps to reduce costs and conserve cash, including work force reductions, aggressive expense controls, lower capital expenditures and a freeze on pay levels for management and administrative employees for 2009. “These were difficult decisions, necessary to align our costs for the current environment, and to help position us to weather what looks to be an extremely tough recessionary economy,” he said.
Stotlar emphasized, however, that while Con-way is actively pursuing continuous cost reduction and efficiency improvement measures throughout the enterprise, the company is not compromising on service. “Even more so in challenging economic times, customers want secure, financially stable service providers who they can trust to provide consistent, reliable everyday performance,” he said. “We have excellent franchises with reputations for superior service. Our employees are putting in tremendous effort to take care of our customers, delivering some of the highest productivity and service levels in our history. All of our business units are operating from positions of strength in their markets and remain focused on delivering the premium value for which we are known.”
For the 2008 fourth quarter, Con-way Freight, the company’s regional less-than-truckload operations, reported: An operating loss of $9.4 million compared to profit of $55.2 million. The 2008 fourth quarter included a pre-tax restructuring charge of $21.3 million for network re-engineering and work force reduction costs. Without the restructuring charge, Con-way Freight earned $11.9 million. The 2007 fourth quarter included a $7.7 million restructuring charge; and
Revenues of $640.3 million, a 13.4 percent decrease from 739.2 million.
For the fourth quarter of 2008, Menlo Worldwide Logistics, the company’s global logistics and supply chain management operations, reported: