Overnite Hits $1 Billion Mark in '98

Overnite Transportation Co. said its revenue was above $1 billion in 1998 and its profits were the highest since 1994.

Overnite, a Richmond, Va.-based, subsidiary of Union Pacific Corp., attributed much of this gain to the fourth period, which it said was its best quarter in the last four years.

Annual revenue was $1.03 billion compared with $946 million in 1997. Net income before an accounting adjustment rose 70.2% to $40.5 million from $23.8 million, and the operating ratio improved to 94.8 from 96.8.

Revenue for the three months ended Dec. 31 was $258 million vs. $245 million in the same 1997 quarter. Net income before accounting adjustment increased 110.9% to $11.6 million from $5.5 million, with an operating ratio of 93.6 vs. 97.4.

In previous years, such significant gains, especially in the traditionally slow fourth quarter, would have been attributed to outside factors such as a competitor closing, said Chairman Leo H. Suggs. But the 1998 results reflected "years of improving service and operations" and shippers’ recognition that Overnite "is all the way back as a consistent, reliable performer in the trucking industry," he said.

The accounting adjustment was a one-time, after-tax charge of $547 million to remove the remaining goodwill on Overnite’s books associated with its acquisition by Union Pacific for $1.2 billion in 1986. Goodwill refers to the amount Union Pacific paid that was above Overnite’s book value at the time of the purchase.

Union Pacific had been amortizing the goodwill over a multiyear period. Overnite said the final write-down is consistent with a similar accounting treatment that Union Pacific initiated earlier in 1998 with the planned divestiture of Overnite through a public stock offering. The stock sale was canceled because of market conditions (8-10, p. 1).