-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TS3mFgvvnLtPbHTb+BGYKD9K7wOAOOqZJv9kVD/H+CqVmf1erG6GmsqaExSbeIgx tM1fZDyD11GgdKU9hit70g== 0000950152-97-005548.txt : 19970804 0000950152-97-005548.hdr.sgml : 19970804 ACCESSION NUMBER: 0000950152-97-005548 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970621 FILED AS OF DATE: 19970801 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROADWAY EXPRESS INC CENTRAL INDEX KEY: 0000084271 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING & COURIER SERVICES (NO AIR) [4210] IRS NUMBER: 340492670 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00600 FILM NUMBER: 97650310 BUSINESS ADDRESS: STREET 1: 1077 GORGE BOULEVARD STREET 2: PO BOX 471 CITY: AKRON STATE: OH ZIP: 44310 BUSINESS PHONE: 2163841717 MAIL ADDRESS: STREET 1: 1077 GEORGE BOULEVARD STREET 2: P O BOX 471 CITY: AKRON STATE: OH ZIP: 44310 10-Q 1 ROADWAY EXPRESS FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the Period ended June 21, 1997. OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from ______ to ______. Commission file number 0-600 ROADWAY EXPRESS, INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 34-0492670 - -------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No) incorporation or organization) 1077 Gorge Boulevard Akron, OH 44310 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (330) 384-1717 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]. The number of shares of common stock ($.01 par value) outstanding as of July 18, 1997 was 20,554,423. 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 21, 1997 December 31, 1996 ------------------------------------------------------ (dollars in thousands) Assets Current assets: Cash and cash equivalents $ 41,022 $ 36,243 Accounts receivable, net 275,740 260,789 Other current assets 20,689 16,847 ----------------------------------------------------- Total current assets 337,451 313,879 Carrier operating property at cost 1,379,252 1,392,048 Allowance for depreciation 1,015,907 1,013,954 Net carrier operating property 363,345 378,094 Deferred income taxes 18,428 17,651 ----------------------------------------------------- Total assets $ 719,224 $ 709,624 ===================================================== Liabilities and shareholders' equity Current liabilities Accounts payable $ 134,825 $ 135,248 Salaries and wages payable 111,989 110,124 Other current liabilities 51,809 52,545 ----------------------------------------------------- Total current liabilities 298,623 297,917 Long-term liabilities Casualty claims payable 65,590 66,674 Future equipment repairs 22,407 24,281 Accrued pension and retiree medical 100,416 96,156 ----------------------------------------------------- Total long-term liabilities 188,413 187,111 Shareholders' equity Common Stock - $.01 par value Authorized - 100,000,000 shares Issued - 20,556,714 shares 206 206 Other shareholders' equity 231,982 224,390 ----------------------------------------------------- Total shareholders' equity 232,188 224,596 ----------------------------------------------------- Total liabilities and equity $ 719,224 $ 709,624 ===================================================== Note: The balance sheet at December 31, 1996 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. 1 3
ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) Twelve Weeks Ended (Second Quarter) June 21, 1997 June 15, 1996 ----------------------------------------------------------------- (amounts in thousands, except per share data) Revenue $ 609,374 $ 532,749 Operating expenses: Salaries, wages and benefits 387,427 351,621 Operating supplies and expenses 105,259 90,070 Purchased transportation 60,759 40,537 Operating taxes and licenses 17,549 18,070 Insurance and claims expense 13,963 10,517 Provision for depreciation 11,807 15,298 Net (gain) on disposal of operating property (1,307) (687) ------------------------------------------------------------------ Total operating expenses 595,457 525,426 ------------------------------------------------------------------ Operating income 13,917 7,323 Other income (expense), net 69 (178) ------------------------------------------------------------------ Income before income taxes 13,986 7,145 Provision for income taxes 6,219 3,092 ------------------------------------------------------------------ Net income $ 7,767 $ 4,053 ================================================================== Net income per share $ 0.38 $ 0.20 Average shares outstanding 20,536 20,484 Twenty-four Weeks Ended (Two Quarters) June 21, 1997 June 15, 1996 ----------------------------------------------------------------- (amounts in thousands, except per share data) Revenue $ 1,200,049 $ 1,049,712 Operating expenses: Salaries, wages and benefits 769,708 697,195 Operating supplies and expenses 207,206 177,152 Purchased transportation 108,977 79,895 Operating taxes and licenses 36,393 35,686 Insurance and claims expense 30,862 20,006 Provision for depreciation 24,435 30,834 Net (gain) on disposal of operating property (1,891) (3,321) ------------------------------------------------------------------ Total operating expenses 1,175,690 1,037,447 ------------------------------------------------------------------ Operating income 24,359 12,265 Other income (expense), net (152) (510) ------------------------------------------------------------------ Income before income taxes 24,207 11,755 Provision for income taxes 10,918 5,079 ------------------------------------------------------------------ Net income $ 13,289 $ 6,676 ================================================================== Net income per share $ 0.65 $ 0.33 Average shares outstanding 20,542 20,520
See notes to condensed consolidated financial statements. 2 4 ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Twenty-four Weeks Ended (Two Quarters) June 21, 1997 June 15, 1996 ---------------------------------------------- (dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 13,289 $ 6,676 Depreciation and amortization 24,319 30,854 Other operating adjustments (14,454) (30,324) ----------------------------------------------------------- Net cash provided by operating activities 23,154 7,206 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of carrier operating property (9,548) (13,068) Sales of carrier operating property 8,220 6,205 Business acquisition (15,000) - ----------------------------------------------------------- Net cash used by investing activities (16,328) (6,863) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (2,047) (1,027) ----------------------------------------------------------- Net cash used by financing activities (2,047) (1,027) Net increase (decrease) in cash and cash equivalents 4,779 (684) Cash and cash equivalents at beginning of period 36,243 23,341 ----------------------------------------------------------- Cash and cash equivalents at end of period $ 41,022 $ 22,657 ===========================================================
See notes to condensed consolidated financial statements. 3 5 Roadway Express, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements Note A--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 twenty-four weeks ended June 21, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the registrant's annual report on Form 10-K for the year ended December 31, 1996. Note B--Accounting Period The registrant 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 C--Provision for Income Taxes Taxes provided exceed the U.S. statutory rate primarily due to non-deductible operating costs, and foreign and state taxes.
Twenty-four Weeks Ended (Two Quarters) June 21, 1997 June 15, 1996 ------------------------------------------ (amounts in thousands) U.S. Federal $ 8,129 $ 1,901 U.S. State 1,289 647 Foreign 1,500 2,531 ------------------------------------------ Total $ 10,918 $ 5,079 ==========================================
Note D-Impact of Recently Issued Accounting Standards The Company will adopt the provisions of Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share", as of December 31, 1997. The adoption of SFAS 128 is expected to have no impact on the Company's calculation of earnings per share. Note E-Acquisition of Reimer Express Lines, Ltd. On April 30, 1997, the Company acquired all of the outstanding shares of Reimer Express Lines, Ltd., a privately held common carrier in Winnipeg, Manitoba, Canada for $15 million in cash. The purchase agreement also contains provisions for additional payments of up to $10 million, subject to Reimer achieving defined performance criteria over a five year period. Reimer provides truckload and LTL service throughout Canada, and international service to and from Canada. 4 6 Note E-Acquisition of Reimer Express Lines, Ltd. (continued) The acquisition was funded with existing cash, and was recorded under the purchase method of accounting. The results of Reimer's operations subsequent to the date of acquisition are included in the Company's consolidated financial statements. The excess of the purchase price over the net assets acquired has been recorded as goodwill, which will be amortized on a straight-line basis over 20 years. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company had net income of $7,767,000, or $0.38 per share, for the second quarter ended June 21, 1997, compared to income of $4,053,000, or $0.20 per share, in the same quarter last year. This improvement in earnings is primarily the result of revenue growth, stable prices, and cost controls relating to our nearly completed network improvements. Revenues were $609,374,000 for the second quarter of 1997, a 14.4% improvement over second quarter 1996 revenue of $532,749,000. On April 30, Roadway finalized its acquisition of Reimer Express Lines, Ltd., a Canadian carrier. Reimer became a wholly-owned subsidiary which provides both domestic Canadian and international service to and from Canada. As a result of this acquisition, Roadway closed its former Canadian operating company, resulting in a pre-tax charge to operations of $1,053,000 and reducing earnings by $0.03 per share for the second quarter. The primary costs attributable to that closure include severance compensation for displaced employees and fulfillment of ongoing lease commitments. Total tonnage was up 11.6% in the second quarter compared to the prior year quarter. The addition of Reimer accounted for 42% of this increase. Less-than-truckload (LTL) tons were up 10.1% and truckload tonnage was up 18.3%. Net revenue per ton has increased 2.5% above the second quarter 1996 (5.0% excluding Reimer). This increase reflects the impact of the January 1 price increase and the variable fuel surcharge which was instituted at the end of the third quarter, 1996. Operating expenses per ton (excluding gain on sale of operating property) were up 1.6% compared to second quarter 1996. Purchased transportation and insurance costs increased faster than business levels this quarter. Purchased transportation costs increased 49.9%, reflecting the Company's increasing use of railroads in certain linehaul operations, the increased use of commission agents for pickup and delivery service, and Reimer's use of union owner-operators for linehaul service. Salaries and wages were impacted by the tonnage growth and the 3.8% wage and benefit increase on April 1, 1997, under the terms of the Teamster contract, as well as by an increase in workers' compensation expenses. Despite these increases, salaries and wages per ton declined by 1.3% compared to second quarter 1996. This reflects increased use of purchased transportation mentioned above, and the impact of continued savings from the Company's network refinement efforts, which have reduced freight handling and eliminated certain administrative costs. Insurance and claims expense increased $3.4 million over second quarter 1996, primarily due to an intensive review to settle existing claims in 1996, which resulted in non-recurring cost reductions related to liability insurance. Depreciation expense continues to decline as more revenue equipment becomes fully depreciated and as we reduce the number of terminal facilities. The Company's system count has been reduced to 413 terminals, compared to 451 terminals at the end of the second quarter 1996. The tax expense attributable to the operating income for the first two quarters of 1997 and 1996 differs from the Federal statutory rate due to the impact of state taxes, taxes on profitable foreign operations, and non-deductible operating expenses as described in Note C to the Condensed Consolidated Financial Statements. 5 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) At the end of the quarter, there were no borrowings against the credit facilities; cash flow from operations has been sufficient to meet working capital needs and to purchase Reimer. The Company entered into a second operating lease agreement to replace an additional 3,250 linehaul trailers during 1997 (11% of the fleet). Under these agreements, we have replaced approximately 5,200 aging trailers with new leased units. The National Master Freight Agreement, our Contract with the International Brotherhood of Teamsters, expires on March 31, 1998. There was an announcement during the quarter that the Teamsters and Trucking Management, Inc., the multi-employer bargaining agent for our industry, formed a Joint Industry Development Committee. The Committee will conduct studies to help labor and management representatives make joint recommendations to the negotiators of the Contract. The portions of narrative set forth in this discussion that are not historical in nature are forward-looking statements. The Company's actual future performance and operating and financial results may differ from those described in the forward-looking statements as a result of a variety of factors that, besides those mentioned, include the condition of the industry and the economy and the success of the Company's operating plans. PART II -- OTHER INFORMATION ITEM 5. OTHER INFORMATION On July 9, 1997, the Board of Directors announced a cash dividend of $0.05 per share on the Company's common stock payable on September 2, 1997, to shareholders of record on August 15, 1997. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit No. - ----------- 27 Financial Data Schedule. List of the Current Reports on Form 8-K which were filed during the current quarter--none. 6 8 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ROADWAY EXPRESS, INC. Date: July 31, 1997 By: /s/ J. Dawson Cunningham ------------- ------------------------------------------- J. Dawson Cunningham, Vice President-Finance and Administration, and Treasurer (Principal Financial and Accounting Officer) 7 EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWO QUARTERS ENDED JUNE 21, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-21-1997 41,022 0 275,740 0 0 337,451 1,379,252 1,015,907 719,224 298,623 0 206 0 0 231,982 719,224 0 1,200,049 0 1,175,690 152 0 0 24,207 10,918 13,289 0 0 0 13,289 0.65 0.65
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