EX-99.1 3 l95352aexv99w1.txt EX-99.1 Exhibit 99.1 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Roadway Express, Inc. and Subsidiaries Quarters ended June 15, 2002 and June 16, 2001 1 ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 15, 2002 December 31, 2001 ----------------------------------------------------------------------- (in thousands) Assets Current assets: Cash and cash equivalents $ 52,162 $ 46,087 Accounts receivable, including retained interest in securitized receivables, net 162,054 165,465 Other current assets 32,172 24,412 ----------------------------------------------------------------------- Total current assets 246,388 235,964 Carrier operating property, at cost 1,422,539 1,435,931 Less allowance for depreciation 1,010,343 1,011,280 ----------------------------------------------------------------------- Net carrier operating property 412,196 424,651 Goodwill, net 15,006 14,722 Other assets 40,242 36,050 ----------------------------------------------------------------------- Total assets $ 713,832 $ 711,387 ======================================================================= Liabilities and parent company investment Current liabilities: Accounts payable $ 157,342 $ 166,197 Salaries and wages 104,672 112,099 Other current liabilities 46,955 49,492 ----------------------------------------------------------------------- Total current liabilities 308,969 327,788 Long-term liabilities: Casualty claims and other 58,488 63,536 Accrued pension and retiree medical 125,365 119,145 ----------------------------------------------------------------------- Total long-term liabilities 183,853 182,681 Parent company investment 221,010 200,918 ----------------------------------------------------------------------- Total liabilities and parent company investment $ 713,832 $ 711,387 =======================================================================
Note: The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to condensed consolidated financial statements. 2 ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
Twelve Weeks Ended (Second Quarter) June 15, 2002 June 16, 2001 ---------------------------------------------------- (in thousands) Revenue $ 606,409 $ 642,109 Operating expenses: Salaries, wages and benefits 392,635 412,185 Operating supplies and expenses 103,488 115,925 Purchased transportation 57,317 63,707 Operating taxes and licenses 16,043 15,948 Insurance and claims expense 11,964 12,087 Provision for depreciation 15,416 15,678 Net loss on disposal of operating property 303 436 ---------------------------------------------------- Total operating expenses 597,166 635,966 ---------------------------------------------------- Operating income 9,243 6,143 Other (expense) income, net (914) 858 ---------------------------------------------------- Income before income taxes 8,329 7,001 Provision for income taxes 2,766 2,978 ---------------------------------------------------- Net income $ 5,563 $ 4,023 ====================================================
Twenty-Four Weeks Ended (Two Quarters) June 15, 2002 June 16, 2001 ---------------------------------------------------- (in thousands) Revenue $1,159,967 $1,292,594 Operating expenses: Salaries, wages and benefits 758,970 824,311 Operating supplies and expenses 198,987 229,634 Purchased transportation 108,443 128,088 Operating taxes and licenses 30,231 33,487 Insurance and claims expense 22,352 25,267 Provision for depreciation 30,685 30,939 Net loss on disposal of operating property 649 622 ---------------------------------------------------- Total operating expenses 1,150,317 1,272,348 ---------------------------------------------------- Operating income 9,650 20,246 Other (expense), net (1,939) (4,571) ---------------------------------------------------- Income before income taxes 7,711 15,675 Provision for income taxes 2,823 6,662 ---------------------------------------------------- Net income $ 4,888 $ 9,013 ====================================================
See notes to condensed consolidated financial statements. 3 ROADWAY EXPRESS INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Twenty-four Weeks Ended (Two Quarters) June 15, 2002 June 16, 2001 ---------------------------------------------------- (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,888 $ 9,013 Depreciation 30,685 30,939 Other operating adjustments (10,527) 5,463 ---------------------------------------------------- Net cash provided by operating activities 25,046 45,415 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of carrier operating property (20,401) (33,358) Sales of carrier operating property 1,521 440 ---------------------------------------------------- Net cash (used) by investing activities (18,880) (32,918) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid - (1,937) Treasury stock activity, net - (337) ---------------------------------------------------- Net cash (used) by financing activities - (2,274) Effect of exchange rate on cash (91) 200 ---------------------------------------------------- Net increase in cash and cash equivalents 6,075 10,423 Cash and cash equivalents at beginning of period 46,087 64,939 ---------------------------------------------------- Cash and cash equivalents at end of period $ 52,162 $ 75,362 ====================================================
See notes to condensed consolidated financial statements. Roadway Express, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Note 1--Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the twelve weeks ending June 15, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. For further information, refer to the consolidated financial statements and footnotes thereto included in the Roadway Corporation Annual Report on Form 10-K for the year ended December 31, 2001. 4 Note 2--Accounting Period Roadway Express, Inc. (Roadway, or Company) operates on 13 four-week accounting periods with 12 weeks in each of the first three quarters and 16 weeks in the fourth quarter. Note 3--Segment information The Company provides freight services in one business segment, long haul LTL freight services in North America, and offers services to an additional 66 countries worldwide. Note 4--Comprehensive Income Comprehensive income differs from net income due to foreign currency translation adjustments as shown below:
Twelve Weeks Ended Twenty-four Weeks Ended (Second Quarter) (Two Quarters) June 15, 2002 June 16, 2001 June 15, 2002 June 16 2001 ------------------ ------------------ ----------------- ------------------ (in thousands) Net income $ 5,563 $ 4,023 $ 4,888 $ 9,013 Foreign currency translation adjustments 1,122 1,529 (56) 565 --------------------------------------------------------------------------- Comprehensive (loss) income $ 6,685 $ 5,552 $ 4,832 $ 9,578 ===========================================================================
Note 5--Contingent Matter The Company's former parent is currently under examination by the Internal Revenue Service for tax years 1994 and 1995, years prior to the spin-off of the Company. The IRS has proposed substantial adjustments for these tax years for multiemployer pension plan deductions. The IRS is challenging the timing, not the validity of these deductions. The Company is unable to predict the ultimate outcome of this matter, however, its former parent intends to vigorously contest these proposed adjustments. Under a tax sharing agreement entered into by the Company and its former parent at the time of the spin-off, the Company is obligated to reimburse the former parent for any additional taxes and interest which relate to the Company's business prior to the spin-off. The amount and timing of such payments, if any, is dependent on the ultimate resolution of the former parent's disputes with the IRS and the determination of the nature and extent of the obligations under the tax sharing agreement. The Company has established certain reserves with respect to these proposed adjustments. There can be no assurance, however, that the amount or timing of any liability of the Company to the former parent will not have a material adverse effect on the Company's results of operations and financial position. 5 Note 6--Guarantor and Non-Guarantor Subsidiaries The credit facility borrowings and the senior notes issued by Roadway Corporation in connection with its acquisition of Arnold Industries, Inc. are secured by a first-priority-perfected lien on all of the capital stock of the Company's direct subsidiaries. They are also supported by guarantees provided by all of the Company's material subsidiaries, which are wholly owned. These guarantees are full and unconditional, joint and several. The following condensed consolidating financial statements set forth the Company's balance sheets, statements of income, and statements of cash flows for the same time periods as the financial statements presented in Item 1 above. In the following schedules, "Guarantor Subsidiaries" refers to non-minor domestic subsidiaries, and "Non-Guarantor subsidiaries" refers to foreign and minor domestic subsidiaries and "Eliminations" represent the adjustments necessary to (a) eliminate intercompany transactions and (b) eliminate the investments in the Company's subsidiaries.
Condensed Consolidating Balance Sheets June 15, 2002 Guarantor Non-Guarantor Subsidiaries Subsidiaries Eliminations Consolidated ------------------------------------------------------------------ (in millions) Cash and cash equivalents $ 47 $ 5 $ - $ 52 Accounts receivable, including retained interest in securitized receivables, net 140 15 - 155 Due from affiliates 46 - (39) 7 Prepaid expenses and supplies 21 - - 21 Deferred income taxes 11 - - 11 ------------------------------------------------------------------ Total current assets 265 20 (39) 246 Carrier operating property, at cost 1,396 27 - 1,423 Less allowance for depreciation 997 14 - 1,011 ------------------------------------------------------------------ Net carrier operating property 399 13 - 412 Goodwill, net - 15 - 15 Investment in subsidiaries (2) - 2 - Long-term assets 6 - - 6 Deferred income taxes 34 - 1 35 ------------------------------------------------------------------ Total assets $ 702 $ 48 $ (36) $ 714 ================================================================== Accounts payable $ 149 $ 8 $ - $ 157 Due to affiliates - 39 (39) - Salaries and wages 103 2 - 105 Freight and casualty claims payable 46 1 - 47 ------------------------------------------------------------------ Total current liabilities 298 50 (39) 309 Casualty claims and other 58 - 1 59 Accrued pension and retiree medical 125 - - 125 Parent company investment 221 (2) 2 221 ------------------------------------------------------------------ Total liabilities and parent company investment $ 702 $ 48 $ (36) $ 714 ==================================================================
6 Note 6--Guarantor and Non-Guarantor Subsidiaries (continued)
Condensed Consolidating Balance Sheets December 31, 2001 Guarantor Non-Guarantor Subsidiaries Subsidiaries Eliminations Consolidated ------------------------------------------------------------------ (in millions) Cash and cash equivalents $ 45 $ 1 $ - $ 46 Accounts receivable, including retained interest in securitized receivables, net 150 15 - 165 Due from affiliates 36 1 (37) - Prepaid expenses and supplies 11 - - 11 Deferred income taxes 13 - - 13 ------------------------------------------------------------------ Total current assets 255 17 (37) 235 Carrier operating property, at cost 1,410 26 - 1,436 Less allowance for depreciation 998 13 - 1,011 ------------------------------------------------------------------ Net carrier operating property 412 13 - 425 Goodwill, net - 15 - 15 Investment in subsidiaries (4) - 4 - Deferred income taxes 31 - - 31 Long-term assets 5 - - 5 ------------------------------------------------------------------ Total assets $ 699 $ 45 $ (33) $ 711 ================================================================== Accounts payable $ 157 $ 9 $ - $ 166 Due to affiliates 1 36 (37) - Salaries and wages 109 3 - 112 Freight and casualty claims payable 48 1 - 49 ------------------------------------------------------------------ Total current liabilities 315 49 (37) 327 Casualty claims and other 64 - - 64 Accrued pension and retiree medical 119 - - 119 Parent company investment 201 (4) 4 201 ------------------------------------------------------------------ Total liabilities and parent company investment $ 699 $ 45 $ (33) $ 711 ==================================================================
7 Note 6--Guarantor and Non-Guarantor Subsidiaries (continued)
Condensed Consolidating Statements of Income Twelve weeks ended June 15, 2002 Guarantor Non-Guarantor (Second Quarter) Subsidiaries Subsidiaries Eliminations Consolidated ------------------------------------------------------------------ (in millions) Revenue $ 578 $ 30 $ (1) $ 607 Operating expenses: Salaries, wages and benefits 383 9 - 392 Operating supplies and expenses 98 7 (1) 104 Purchased transportation 48 9 - 57 Operating taxes and licenses 15 - - 15 Insurance and claims expenses 12 - - 12 Provision for depreciation 15 1 - 16 Net loss on disposal of operating property 1 - - 1 Results of affiliates (2) - 2 - ------------------------------------------------------------------ Total operating expenses 570 26 1 597 ------------------------------------------------------------------ Operating income 8 4 (2) 10 Other (expense), net (1) - - (1) ------------------------------------------------------------------ Income before income taxes 7 4 (2) 9 Provision for income taxes 1 2 - 3 ------------------------------------------------------------------ Net income $ 6 $ 2 $ (2) $ 6 ==================================================================
Twelve weeks ended June 16, 2001 Guarantor Non-Guarantor (Second Quarter) Subsidiaries Subsidiaries Eliminations Consolidated ------------------------------------------------------------------ (in millions) Revenue $ 615 $ 28 $ - $ 643 Operating expenses: Salaries, wages and benefits 403 9 - 412 Operating supplies and expenses 109 7 - 116 Purchased transportation 54 10 - 64 Operating taxes and licenses 16 - - 16 Insurance and claims expenses 12 - - 12 Provision for depreciation 15 1 - 16 Net loss on disposal of operating property 1 - - 1 Results of affiliates - - - - ------------------------------------------------------------------ Total operating expenses 610 27 - 637 ------------------------------------------------------------------ Operating income 5 1 - 6 Other income, net 1 - - 1 ------------------------------------------------------------------ Income before income taxes 6 1 - 7 Provision for income taxes 2 1 - 3 ------------------------------------------------------------------ Net income $ 4 $ - $ - $ 4 ==================================================================
8 Note 6--Guarantor and Non-Guarantor Subsidiaries (continued)
Condensed Consolidating Statements of Income Twenty-four weeks ended June 15, 2002 Guarantor Non-Guarantor (Two Quarters) Subsidiaries Subsidiaries Eliminations Consolidated ------------------------------------------------------------------ (in millions) Revenue $ 1,107 $ 54 $ (1) $ 1,160 Operating expenses: Salaries, wages and benefits 742 17 - 759 Operating supplies and expenses 187 13 (1) 199 Purchased transportation 91 17 - 108 Operating taxes and licenses 29 1 - 30 Insurance and claims expenses 22 - - 22 Provision for depreciation 29 2 - 31 Net loss on disposal of operating property 1 - - 1 Results of affiliates (2) - 2 - ------------------------------------------------------------------ Total operating expenses 1,099 50 1 1,150 ------------------------------------------------------------------ Operating income 8 4 (2) 10 Other (expense), net (2) - - (2) ------------------------------------------------------------------ Income before income taxes 6 4 (2) 8 Provision for income taxes 1 2 - 3 ------------------------------------------------------------------ Net income $ 5 $ 2 $ (2) $ 5 ==================================================================
Twenty-four weeks ended June 16, 2001 Guarantor Non-Guarantor (Two Quarters) Subsidiaries Subsidiaries Eliminations Consolidated ------------------------------------------------------------------ (in millions) Revenue $ 1,240 $ 54 $ (1) $ 1,293 Operating expenses: Salaries, wages and benefits 805 19 - 824 Operating supplies and expenses 216 14 - 230 Purchased transportation 110 19 (1) 128 Operating taxes and licenses 33 1 - 34 Insurance and claims expenses 25 - - 25 Provision for depreciation 29 2 - 31 Net loss on disposal of operating property 1 - - 1 Results of affiliates 3 - (3) - ------------------------------------------------------------------ Total operating expenses 1,222 55 (4) 1,273 ------------------------------------------------------------------ Operating income (loss) 18 (1) 3 20 Other (expense), net (3) (1) - (4) ------------------------------------------------------------------ Income (loss) before income taxes 15 (2) 3 16 Provision for income taxes 6 1 - 7 ------------------------------------------------------------------ Net income (loss) $ 9 $ (3) $ 3 $ 9 ==================================================================
9 Note 6--Guarantor and Non-Guarantor Subsidiaries (continued)
Condensed Consolidating Statement of Cash Flows Twenty-four Weeks Ended June 15, 2002 Guarantor Non-Guarantor (Two Quarters) Subsidiaries Subsidiaries Eliminations Consolidated ------------------------------------------------------------------ (in millions) Net cash provided by operating activities $ 20 $ 5 $ - $ 25 Cash flows from investing activities Purchases of carrier operating property, net (18) (1) - (19) ------------------------------------------------------------------ Net cash (used) in investing activities (18) (1) - (19) Net cash (used) in financing activities - - - - Net increase in cash and cash equivalents 2 4 - 6 Cash and cash equivalents at beginning of year 45 1 - 46 ------------------------------------------------------------------ Cash and cash equivalents at end of year $ 47 $ 5 $ - $ 52 ==================================================================
Twenty-four Weeks Ended June 16, 2001 Guarantor Non-Guarantor (Two Quarters) Subsidiaries Subsidiaries Eliminations Consolidated ------------------------------------------------------------------ (in millions) Net cash provided by operating activities $ 42 $ 3 $ - $ 45 Cash flows from investing activities Purchases of carrier operating property, net (31) (2) - (33) ------------------------------------------------------------------ Net cash (used) in investing activities (31) (2) - (33) Cash flows from financing activities Dividends paid (2) - - (2) Treasury stock activity - net - - - - ------------------------------------------------------------------ Net cash (used) in financing activities (2) - - (2) Net increase in cash and cash equivalents 9 1 - 10 Cash and cash equivalents at beginning of year 61 4 - 65 ------------------------------------------------------------------ Cash and cash equivalents at end of year $ 70 $ 5 $ - $ 75 ==================================================================
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