CNF Inc., Palo Alto, Calif., reported third-quarter net income of $28.6 million compared with $11.8 million in the third quarter of 2000, but that's a distorted picture.

The 2001 third quarter included a $39 million gain from discontinued operations following a $235 million partial cash settlement with the U.S. Postal Service of claims under the former Priority Mail contract, which has been moved to FedEx. The 2000 third quarter included a $13.5 million loss, or 24 cents per diluted share, on the discontinuance of the Priority Mail operations. Also included in continuing operations in third-quarter 2000 were a non-recurring charge of 6 cents per diluted share on the sale of certain assets of Con-Way Truckload Services, and 12 cents per diluted share for losses on terminated aircraft leases at Emery Worldwide Airlines.
CNF reported a $10.4 million loss from continuing operations in the third quarter of 2001, resulting in part from lost revenue from the grounding of all commercial airline flights in the U.S. following the Sept. 11 terrorist attacks. The loss included, as expected, an additional after-tax writeoff of $3.8 million, or 8 cents per share, from the business failure of Homelife, a former customer of Menlo Logistics. In the third quarter of 2000, CNF reported income from continuing operations of $25.4 million, or 47 cents per diluted share. Revenue for the third quarter of 2001 was $1.2 billion, down 16 percent from 2000.
The net loss for the first nine months of 2001 was $185.8 million, or $3.81 per share, including special charges and discontinued operations. In addition to the Priority Mail settlement, special items included in the nine-month period were after-tax charges of $207.7 million for an operational restructuring at Emery Worldwide Airlines, $2.9 million for a legal settlement, and $23.1 million for unrealizable accounts receivable due to the business failure of Homelife. When special items and discontinued operations are excluded, CNF reported nine-month net income for common shareholders of $9 million, or 18 cents per diluted share.
"Revenue, which was down year over year in the third quarter prior to September 11, has not yet recovered, " said Gregory L. Quesnel, CNF president and chief executive officer.
Con-Way Transportation Services reported third-quarter 2001 operating income of $42.6 million, down 18 percent from $51.8 million in the same quarter a year ago, which included a $5.5 million loss from the sale of Con-Way's truckload operation in August 2000. Revenue was $491.2 million, down 5 percent from $517.6 million in third-quarter 2000, which included $12.6 million of revenue from the truckload operation.
Total CTS regional carrier tonnage per day declined 4 percent in the third quarter and LTL tonnage per day decreased 3 percent.
"While Con-Way continues to be affected by the weak economy, we are pleased that it is maintaining its productivity and efficiency at record levels," said Quesnel.
Menlo Logistics reported third-quarter operating income of $7.3 million before the Homelife writeoff of $6.3 million. This compares with operating income of $8.6 million in the year-ago quarter. Including the writeoff, Menlo reported operating income of $1 million. Menlo's revenue in the third quarter was $221.7 million, down 2 percent from $225.6 million.
Menlo recently announced that so far in 2001 it has signed contracts with six major new customers that it anticipates will provide the company with an additional $100 million in annual revenue.