-----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, L6qfVd+uctVwENeIKjvb/pTHc5VN/8vIzW+mlMi3MvyMJl6KrEwT5kCdOvW4NMe4 C48oYqixl1VPUe/FlQ2O7g== 0000950152-97-003540.txt : 19970506 0000950152-97-003540.hdr.sgml : 19970506 ACCESSION NUMBER: 0000950152-97-003540 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970505 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: 97595485 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, INC. 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 March 29, 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 incorporation (I.R.S. Employer or organization) Identification No) 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 April 17, 1997 was 20,528,251. 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 29, 1997 December 31, 1996 ---------------------------------------------------------------------- (dollars in thousands) Assets Current assets: Cash and cash equivalents $ 39,205 $ 36,243 Accounts receivable, net 262,949 260,789 Other current assets 16,388 16,847 ---------------------------------------------------------------------- Total current assets 318,542 313,879 Carrier operating property at cost 1,379,772 1,392,048 Allowance for depreciation 1,010,215 1,013,954 ---------------------------------------------------------------------- Net carrier operating property 369,557 378,094 Deferred income taxes 17,275 17,651 ---------------------------------------------------------------------- Total assets $ 705,374 $ 709,624 ====================================================================== Liabilities and shareholders' equity Current liabilities Accounts payable $ 131,584 $ 135,248 Salaries and wages payable 110,458 110,124 Other current liabilities 52,949 52,545 ---------------------------------------------------------------------- Total current liabilities 294,991 297,917 Long-term liabilities Casualty claims payable 63,586 66,674 Future equipment repairs 23,256 24,281 Accrued pension and retiree medical 98,631 96,156 ---------------------------------------------------------------------- Total long-term liabilities 185,473 187,111 Shareholders' equity Common Stock - $.01 par value Authorized - 100,000,000 shares Issued - 20,556,714 shares 206 206 Other shareholders' equity 224,704 224,390 ---------------------------------------------------------------------- Total shareholders' equity 224,910 224,596 ---------------------------------------------------------------------- Total liabilities and equity $ 705,374 $ 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 (First Quarter) March 29, 1997 March 23, 1996 ---------------------------------------------------- (amounts in thousands, except per share data) Revenue $ 590,675 $ 516,963 Operating expenses: Salaries, wages and benefits 382,281 345,574 Operating supplies and expenses 101,947 87,082 Purchased transportation 48,218 39,358 Operating taxes and licenses 18,844 17,616 Insurance and claims expense 16,899 9,489 Provision for depreciation 12,628 15,536 Net (gain) on disposal of operating property (584) (2,634) ---------------------------------------------------- Total operating expenses 580,233 512,021 ---------------------------------------------------- Operating income 10,442 4,942 Other (expense), net (221) (332) ---------------------------------------------------- Income before income taxes 10,221 4,610 Provision for income taxes 4,699 1,987 ---------------------------------------------------- Net income $ 5,522 $ 2,623 ==================================================== Net income per share $ 0.27 $ 0.13 Average shares outstanding 20,548 20,557
See notes to condensed consolidated financial statements. 2 4 ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Twelve Weeks Ended (First Quarter) March 29, 1997 March 23, 1996 ---------------------------------------------------- (dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 5,522 $ 2,623 Depreciation and amortization 12,646 15,543 Other operating adjustments (10,674) (14,309) ---------------------------------------------------- Net cash provided by operating activities 7,494 3,857 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of carrier operating property (6,222) (7,319) Sales of carrier operating property 2,716 3,976 ---------------------------------------------------- Net cash used by investing activities (3,506) (3,343) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (1,026) - Net borrowings - - ---------------------------------------------------- Net cash used by financing activities (1,026) - Net increase in cash and cash equivalents 2,962 514 Cash and cash equivalents at beginning of period 36,243 23,341 ---------------------------------------------------- Cash and cash equivalents at end of period $ 39,205 $ 23,855 ====================================================
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 12 weeks ended March 29, 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 a 13 four-week period calendar 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.
Twelve Weeks Ended (First Quarter) March 29, 1997 March 23, 1996 ----------------------- ----------------------- (amounts in thousands) U.S. Federal $ 3,216 $ 871 U.S. State 625 239 Foreign 858 877 ----------------------- ----------------------- Total $ 4,699 $ 1,987 ======================= =======================
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. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company had net income of $5,522,000, or $0.27 per share, for the first quarter ended March 29, 1997, compared to income of $2,623,000, or $0.13 per share, in the first quarter of last year. This improvement in earnings is primarily the result of revenue growth and cost controls relating to our nearly completed network improvements. Revenues were $590,675,000 for the first quarter of 1997, a 14.3% improvement over first quarter 1996 revenue of $516,963,000. 4 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) The Company's tonnage was up 8.7% in the first quarter compared to the prior year quarter. This increase was partly attributable to the inclusion of three extra working days in the first quarter this year. Less-than-truckload (LTL) tons were up 9.3% and truckload tonnage was up 6.4% compared to first quarter 1996. Net revenue per ton has increased 5.1% above the first quarter 1996. 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 3.8% compared to first quarter 1996. Fuel, purchased transportation, and insurance costs increased faster than business levels this quarter. Purchased transportation costs increased 22.5%, reflecting the Company's increasing use of railroads in certain linehaul operations, and our expanding use of freight containers for overseas operations. Higher fuel prices added $4.0 million to operating expenses in the current quarter compared to first quarter 1996. Salaries and wages were impacted by the tonnage growth and the 3.8% wage and benefit increase on April 1, 1996, under the terms of the Teamster contract, as well as by an increase in workers' compensation expenses. Freight, workers' compensation, and casualty claims payable declined during 1996 primarily due to new safety and risk management programs and an intensive review to settle existing claims, which was essentially completed by the end of 1996. Despite the new safety programs, insurance and claims expense increased by $7.4 million during the first quarter of 1997 due to the reduced expense in 1996, and a higher than expected settlement on a claim in 1997. 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 415 terminals, compared to 468 terminals at the end of the first quarter 1996. The tax expense attributable to the operating income for the first quarters of 1996 and 1995 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. 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. The Company entered into a second operating lease agreement to replace an additional 3,250 (approximately 11%) of our linehaul trailers during 1997. Under these agreements, we have replaced approximately 4,300 aging trailers with new leased units. On February 7, 1997, Roadway announced that it had reached agreement for the friendly acquisition of Reimer Express Lines, Ltd. of Winnipeg, Manitoba, Canada, for $15 million in cash. The agreement also contains provisions for additional payments of up to $10 million, subject to Reimer achieving defined performance criteria over a five year period. The purchase is subject to Canadian federal and provincial approvals, and is expected to be completed during the second quarter of 1997. This acquisition will immediately and vastly expand Roadway's Canadian coverage. The Company's current Canadian subsidiary will be closed upon completion of the purchase of Reimer. The Company does not expect to incur material expenses in relation to the shut-down of the existing Canadian subsidiary. 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. 5 7 PART II -- OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's Annual Meeting of Shareholders was held on March 26, 1997. Two matters were voted upon at this meeting: (i) the election of seven members to the Board of Directors and (ii) ratification of the appointment of Ernst & Young LLP as the independent auditors. There were 18,358,612 shares voted and 2,176,691 shares not voted. The following table shows the results of the vote.
PROPOSAL FOR AGAINST WITHHELD Election of Directors Frank P. Doyle 18,210,135 148,477 Phillip J. Meek 18,221,207 137,405 Robert E. Mercer 18,183,070 175,542 Carl W. Schafer 18,211,229 147,383 William Sword 18,209,855 148,756 Sarah Roush Werner 18,215,105 143,507 Michael W. Wickham 18,121,073 237,538 Appointment of Ernst & Young LLP as auditors 18,161,618 114,036 82,958
ITEM 5. OTHER INFORMATION On April 16, 1997, the Board of Directors announced a cash dividend of $0.05 per share on the Company's common stock payable on June 2, 1997, to shareholders of record on May 16, 1997. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit No. - ----------- 10.20 Amendment to the $25,000,000 Credit Agreements between Roadway Express, Inc., Morgan Guaranty Trust Company of New York, and Bank One of Akron, N.A. 10.21 Schedule of documents not filed which are substantially identical in all material respects to previously filed documents. 27 Financial Data Schedule. List of the Current Reports on Form 8-K which were filed during the current quarter: Date of Form 8-K Items reported - ---------------- -------------- February 18, 1997 Announcement of the agreement between the Company and the shareholders of Reimer for the friendly acquisition of Reimer Express Lines, Ltd of Winnipeg, Manitoba, Canada. 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: May 1, 1997 By: /s/ J. Dawson Cunningham ----------- --------------------------- J. Dawson Cunningham, Vice President- Finance and Administration, and Treasurer (Principal Financial and Accounting Officer) 7 EX-10.20 2 EXHIBIT 10.20 1 Exhibit 10.20 FIRST AMENDMENT TO CREDIT AGREEMENT This First Amendment to Credit Agreement ("FIRST AMENDMENT") is dated as of January 7, 1997 and is by and between ROADWAY EXPRESS, INC., a Delaware corporation (the "BORROWER") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "BANK"). WITNESSETH: WHEREAS, the Borrower and the Bank executed and delivered a Credit Agreement dated as of July 15, 1996 pursuant to which, inter alia, the Bank has agreed to make various loans to the Borrower upon the terms and conditions set forth therein (as the same may be amended, modified or supplemented from time to time, the "CREDIT AGREEMENT"); and WHEREAS, the Borrower has requested that certain revisions be made to the Credit Agreement; and WHEREAS, as a condition to the Bank consenting and approving the amendments requested by Borrower, the Bank has required that the Borrower execute and deliver this First Amendment. NOW THEREFORE, each of the parties hereto for valid consideration, the sufficiency of which is hereby acknowledged, agrees as follows: I. AMENDMENTS ---------- A. DEFINITIONS 1. The definition of "ACCOUNT" is deleted in its entirety. 2. The definition of "ACCOUNT DEBTOR" is deleted in its entirety. 3. The definition of "BORROWING BASE" is deleted in its entirety. 4. The definition of "BORROWING BASE CERTIFICATE" is deleted in its entirety. 5. The definition of "CASH COLLATERAL ACCOUNT" is deleted in its entirety. 1 2 6. The definition of "COLLATERAL" is deleted in it entirety. 7. The definition of "EURO-DOLLAR MARGIN" is deleted in its entirety and the following is substituted therefor: "The term "Euro-Dollar Margin" means 0.25%." 8. The definition of "INDEBTEDNESS" is amended by deleting subsection (i) thereof. 9. The definition of "NET AMOUNT OF QUALIFIED ACCOUNTS" is deleted in its entirety. 10. The definition of "QUALIFIED ACCOUNT" is deleted in its entirety. 11. The definition of "SECURITY DOCUMENTS" is deleted in its entirety and the following is substituted therefor: "The term "SECURITY DOCUMENTS" means this Agreement, the Note and any other documents or agreements at any time executed in connection therewith." B. SECURITY Sections 4.1 and 4.2 are deleted in their entirety and the following is substituted therefor: "Section 4. Intentionally Left Blank." C. BORROWER'S REPORTS Sections 5.1 and 5.2 are deleted in their entirety and the following is substituted therefor: "Section 5. Intentionally Left Blank." D. BORROWER'S RECORDS Section 6 is deleted in its entirety and the following is substituted therefor: "Section 6. Intentionally Left Blank." E. COLLECTIONS BY BORROWERS 2 3 Section 7 is deleted in its entirety and the following is substituted therefor: "Section 7. Intentionally Left Blank." F. COLLECTIONS BY THE BANK Sections 8.1, 8.2, 8.3 and 8.4 are deleted in their entirety and the following is substituted therefor: "Section 8. Intentionally Left Blank." G. ADDITIONAL PROVISIONS CONCERNING COLLATERAL Sections 9.1, 9.2, 9.3 and 9.4 are deleted in their entirety and the following is substituted therefor: "Section 9. Intentionally Left Blank." H. POWER OF ATTORNEY Section 10 is deleted in its entirety and the following is substituted therefor: "Section 10. Intentionally Left Blank." I. LIMITATIONS OF LIABILITY OF THE BANK; INDEMNIFICATION BY BORROWER Section 11.1 is deleted in its entirety and the following is substituted therefor: "Section 11.1. Intentionally Left Blank." J. AFFIRMATIVE COVENANTS 1. Section 12.2(2) is amended to delete clause (b) thereof and clause (c) is relettered as clause (b). 2. Section 12.2(5) is deleted in its entirety and the following is substituted therefor: "Section 12.2(5). Intentionally Left Blank." 3 4 3. The last sentence of the second paragraph of Section 12.3 is deleted in its entirety. 4. Section 12.5 is amended by deleting the second paragraph thereof in its entirety and substituting the following therefor: "In the event the Borrower fails to secure and keep in force and effect insurance as hereinabove provided, the Bank is authorized at its election upon five (5) Business Day's prior notice to the Borrower to pay the cost of insurance and the Borrower agrees to repay all sums so paid on demand with interest at the rate provided for in this Agreement. The Bank is irrevocably appointed attorney-in-fact of the Borrower to endorse any draft or check which may be payable to the Borrower in order to collect the proceeds of such insurance." 5. Section 12.6 is amended by deleting the first paragraph thereof and substituting the following therefor: "The Borrower will maintain, or cause to be maintained, its properties and assets used or useful in its business in good condition, repair and working order (normal wear and tear excepted)." 6. Section 12.10 is amended by deleting 12.10(ii) thereof. 7. Section 12.13 is deleted in its entirety, and the following is substituted therefor: "Section 12.13. Intentionally Left Blank." K. NEGATIVE COVENANTS 1. Section 13.2 is amended to delete subsections 13.2(iii)(A) and (B) and subsections 13.2(iii) (C) and (D) are renumbered as 13.2(iii) (A) and (B). 2. Section 13.3 is amended by deleting subsection 13.3(ii) and substituting the following therefor: "(ii) the Borrower may sell properties and assets so long as (i) all sales are made in the ordinary course of business and such sales do not constitute a sale of all or a substantial part of the Borrower's properties and assets." 3. Section 13.4 is amended by deleting it in its entirety and substituting the following therefor: 13.4 LIENS. Subject to the Intercreditor Agreement, the Borrower will not create, incur, assume or suffer to exist any lien, charge or other encumbrance on or security interest in ("Liens") any of its properties or assets in which the Bank now or hereafter may have a security 4 5 interest, whether such properties or assets are now owned or existing or hereafter acquired or arising, except (i) Liens for taxes, assessments or other governmental charges or levies which at the particular time are not due, or remain payable without penalty or interest or are being contested in good faith by appropriate proceedings diligently conducted, provided adequate reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made therefor; (ii) mechanic's, carrier's, worker's, employee's, repairmen's, warehousemen's, vendor's or other similar Liens arising in the ordinary course of business in respect of obligations not yet due, or which are being contested in good faith by the appropriate proceedings diligently conducted which operate to stay any foreclosure, distraint or execution on the property or deposits or pledges to obtain the release of any such Lien; (iii) deposits, Liens or pledges to secure workers compensation, unemployment insurance, old age benefits, social security or other statutory obligations, or in connection with, or to secure the performance of, bids, tenders, contracts (other than for the repayment of borrowed money), or leases, or other pledges or deposits for purposes of like nature in the ordinary course of business; (iv) liens arising out of judgments or awards so long as an appeal or proceeding for review is being prosecuted in good faith and execution is stayed; (v) Liens permitted by Section 13.2 of this Agreement; (vi) Liens securing indebtedness created and permitted under the Master Lease Intended as Security dated as of March 15, 1996, between the Borrower and ABN Amro, in an amount not in excess of $25,000,000 in the aggregate; and (vii) Liens securing indebtedness created and permitted under substantially similar lease agreements with similar terms to the lease agreement described in clause (vii) above in an amount not to exceed $50,000,000 in the aggregate from the date hereof through the fiscal year of the Borrower ending in 1998; PROVIDED, THAT, the Borrower will not create, incur, assume, or suffer to exist such Liens securing indebtedness in excess of $25,000,000 during any such fiscal year of the Borrower. L. FINANCIAL COVENANTS OF BORROWER Section 14.3 is deleted in its entirety and the following is substituted therefor: "Section 14.3. Intentionally Left Blank." M. REPRESENTATIONS AND WARRANTIES 1. Section 15.3 is deleted in its entirety and the following is substituted therefor: "This Agreement, the Note and the Security Documents have been duly and validly executed and delivered by the Borrower and constitute valid and legally binding agreements of the Borrower enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or other Laws of general application relating to or affecting the enforcement of creditors' rights." 2. Section 15.6 is deleted in its entirety and the following is substituted therefor: "15.6 INDEBTEDNESS; LIENS. The Borrower has no indebtedness for borrowed money other than its existing indebtedness described in Section 13.2 and there are no Liens on any of the 5 6 properties or assets of the Borrower except of the type described in subparagraphs (i) through (viii) of Section 13.4." 3. Section 15.18 is deleted in its entirety and the following is substituted therefor: "The Borrower has paid record and marketable title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all of its other property, except to the extent that the failure to have such title or interest, in any instance or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Borrower. N. DEFAULT Subsections 17(i) and (j) are deleted in their entirety and subsection 17(k) is renumbered as subsection 17(i). O. REMEDIES 1. The first phrase of Section 18(a) is deleted in its entirety and the following is substituted therefor: (a) If a Default specified under paragraphs (a) through (f) or (i) of this Section 18 shall occur and be continuing or shall exist, the Bank shall be under no further obligation to make Loans to the Borrower hereunder; and the Bank may by written notice to the Borrower declare the unpaid balance of all Loans to the Borrower then outstanding and interest accrued thereon, and all other liabilities of the Borrower hereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable, without presentment, demand or protest of any kind, all of which are hereby expressly waived. 2. Section 18(d) is deleted in its entirety and the following is substituted therefor: "The Bank may exercise all rights and the Bank will have all remedies available under this Agreement and under the law, the right to court costs, reasonable attorneys' fees and legal expertise. 3. Subsection 18(e) is deleted in its entirety and the following is substituted therefor: "18(e) Intentionally Left Blank." 4. Subsection 18(h) is deleted in its entirety and the following is substituted therefor: "18(h) Upon the occurrence of a Default, the Bank may grant extensions to, or adjust claims of, or make compromises or settlements with, debtors, guarantors 6 7 or any other parties or any securities, guaranties or insurance, without notice to or the consent of the Borrower, without affecting the Borrower's liability under this Agreement, the Security Documents or the Related Documents." 5. Subsection 18(i) is amended to substitute the term "assets" for the term "Collateral". 6. Subsection 18(j) is deleted in its entirety and the following is substituted therefor: "18(j) Intentionally Left Blank." P. MISCELLANEOUS Section 19 is amended by adding the following Section 19.7 at the end thereof. "19.7. EXPENSES. All reasonable expenses, including, but not limited to attorney's fees incurred by the Bank after the Closing in taking action in administering this Agreement, the Security Documents, the Related Documents and all additional agreements contemplated in or by this Agreement and in all efforts made to enforce payment, as well as all reasonable attorney's fees and legal expenses incurred in connection therewith, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions or proceedings arising out of or relating to this Agreement, shall be invoiced to, and paid by, the Borrower; provided, however, that the Borrower will not pay for costs and expenses arising solely from the gross negligence or willful misconduct of the Bank. All statements, reports, certificates, opinions and other documents or information furnished by Borrower to the Bank shall be supplied without cost to the Bank." II. GENERAL ------- 1. Except as amended hereby, the Credit Agreement is not otherwise amended and remains in full force and effect. 2. All capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement. 3. SUCCESSORS AND ASSIGNS. This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 4. COUNTERPARTS. This First Amendment may be executed simultaneously in two or more counterparts, each of which shall be deemed to be an original but all of which shall constitute together but one and the same instrument. 5. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY 7 8 AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. 6. EXPENSES. The Borrower agrees to pay all expenses of the Bank in connection with the transactions contemplated by this First Amendment (including, without limitation, the reasonable fees and expenses of counsel for the Bank). 8 9 IN WITNESS WHEREOF, each of the parties hereto have signed this First Amendment the 7th day of January, 1997. ATTEST: ROADWAY EXPRESS, INC. By: _______________________ By:__________________________ Name: Name: J. Dawson Cunningham Title: Title: Vice President-Finance & Administration MORGAN GUARANTY TRUST COMPANY OF NEW YORK By:____________________________ Name: Patricia P. Lunka Title: Vice President 9 10 EXECUTION COPY SECOND AMENDMENT TO CREDIT AGREEMENT This Second Amendment to Credit Agreement ("SECOND AMENDMENT") is dated as of January 7, 1997 and is by and between ROADWAY EXPRESS, INC., a Delaware corporation (the "BORROWER") and BANK ONE, AKRON, NA (the "BANK"). WITNESSETH: WHEREAS, the Borrower and the Bank executed and delivered a Credit Agreement dated as of January 2, 1996 pursuant to which, inter alia, the Bank has agreed to make various loans to the Borrower upon the terms and conditions set forth therein (as the same may be amended, modified or supplemented from time to time, the "CREDIT AGREEMENT"); and WHEREAS, the Borrower and the Bank executed and delivered a First Amendment to Credit Agreement dated July 15, 1996, pursuant to which certain amendments were made to the Credit Agreement (the "FIRST AMENDMENT"); and WHEREAS, the Borrower has requested that certain additional revisions be made to the Credit Agreement; and WHEREAS, as a condition to the Bank consenting and approving the amendments requested by Borrower, the Bank has required that the Borrower execute and deliver this Second Amendment. NOW THEREFORE, each of the parties hereto for valid consideration, the sufficiency of which is hereby acknowledged, agrees as follows: I. AMENDMENTS ---------- A. DEFINITIONS 1. The definition of "ACCOUNT" is deleted in its entirety. 1 11 2. The definition of "ACCOUNT DEBTOR" is deleted in its entirety. 3. The definition of "BORROWING BASE" is deleted in its entirety. 4. The definition of "BORROWING BASE CERTIFICATE" is deleted in its entirety. 5. The definition of "CASH COLLATERAL ACCOUNT" is deleted in its entirety. 6. The definition of "COLLATERAL" is deleted in it entirety. 7. The definition of "INDEBTEDNESS" is amended by deleting subsection (i) thereof. 8. The definition of "LIBOR Line Rate" is deleted in its entirety and the following is substituted therefor: "LIBOR LINE RATE" means the LIBOR Interest Rate plus twenty-five (25) basis points. 9. The definition of "NET AMOUNT OF QUALIFIED ACCOUNTS" is deleted in its entirety. 10. The definition of "QUALIFIED ACCOUNT" is deleted in its entirety. 11. The definition of "SECURITY DOCUMENTS" is deleted in its entirety and the following is substituted therefor: "SECURITY DOCUMENTS" means this Agreement, the Revolving Credit Note and any other documents or agreements at any time executed in connection therewith." B. LOANS 1. The last two sentences of the first paragraph of Section 2.1.1(b) are deleted in their entirety. 2. Section 2.1.1(c) is deleted in its entirety and the following is substituted therefor: "(c) REVOLVING NATURE OF LOANS. Until the Termination Date, and subject to the 2 12 limitations herein set forth, Borrower may borrow and reborrow and repay funds under the Revolving Credit Note; PROVIDED, HOWEVER, that at no time shall the aggregate unpaid principal balance outstanding under the Revolving Credit Note exceed Twenty-Five Million Dollars ($25,000,000.00). Each borrowing shall be in a minimum amount of Five Hundred Thousand Dollars ($500,000.00) and each repayment shall be made to the Bank." 3. Section 2.2(a)(i) is deleted in its entirety and the following is substituted therefor: "(i) LIBOR OPTION: With respect to the Revolving Credit Loan for each Rate Segment of the LIBOR Portion, a rate per annum (computed on the basis of a year of 360 days and actual days elapsed) for each day equal to the LIBOR Line Rate." 4. The second sentence of Section 2.3(a) is deleted in its entirety and the following is substituted therefor: "Notwithstanding the foregoing, after the occurrence of a Default, the principal amount of the Loans shall be payable immediately upon demand made by the Bank at any time under Section 17(a) or automatically under Section 17(b) as the case may be." C. SECURITY Sections 3(a), (b) and (c) are deleted in their entirety and the following is substituted therefor: "3. Intentionally Left Blank." D. BORROWER'S REPORTS Sections 4(a) and (b) are deleted in their entirety and the following is substituted therefor: "4. Intentionally Left Blank." 3 13 E. BORROWER'S RECORDS Section 5 is deleted in its entirety and the following is substituted therefor: "5. Intentionally Left Blank." F. COLLECTIONS BY BORROWERS Section 6 is deleted in its entirety and the following is substituted therefor: "6. Intentionally Left Blank." G. COLLECTIONS BY THE BANK Sections 7(a), (b), (c) and (d) are deleted in their entirety and the following is substituted therefor: "7. Intentionally Left Blank." H. ADDITIONAL PROVISIONS CONCERNING COLLATERAL Sections 8(a), (b), (c) and (d) are deleted in their entirety and the following is substituted therefor: "8. Intentionally Left Blank." I. POWER OF ATTORNEY Section 9 is deleted in its entirety and the following is substituted therefor: "9. Intentionally Left Blank." 4 14 J. LIMITATIONS OF LIABILITY OF THE BANK; INDEMNIFICATION BY BORROWER Section 10(a) is deleted in its entirety and the following is substituted therefor: "10(a) Intentionally Left Blank." K. AFFIRMATIVE COVENANTS 1. Section 11(b)(2)(b) is deleted in its entirety. 2. Section 11(b)(5) is deleted in its entirety. 3. The last sentence of the second paragraph of Section 11(c) is deleted in its entirety. 4. Section 11(e) is amended by deleting the second paragraph thereof in its entirety and substituting the following therefor: "In the event the Borrower fails to secure and keep in force and effect insurance as hereinabove provided, the Bank is authorized at its election upon five (5) Business Day's prior notice to the Borrower to pay the cost of insurance and the Borrower agrees to repay all sums so paid on demand with interest at the rate provided for in this Agreement. The Bank is irrevocably appointed attorney-in-fact of the Borrower to endorse any draft or check which may be payable to the Borrower in order to collect the proceeds of such insurance." 5. Section 11(f) is amended by deleting the first paragraph thereof and substituting the following therefor: "The Borrower will maintain, or cause to be maintained, its properties and assets used or useful in its business in good condition, repair and working order (normal wear and tear excepted)." 6. Section 11(j) is amended by deleting subsection 11(j)(ii) thereof. 7. Section 11(m) is deleted in its entirety. L. NEGATIVE COVENANTS 5 15 1. Section 12(b) is amended to delete subsections 12(b)(iii)(1) and (2) and subsections 12(b)(iii) (3) and (4) are renumbered as 12(b)(iii) (1) and (2). 2. Section 12(c) is amended by deleting subsection 12(c)(ii) and substituting the following therefor: "(ii) the Borrower may sell properties and assets so long as all sales are made in the ordinary course of business and such sales do not constitute a sale of all or a substantial part of the Borrower's properties and assets.." 3. Section 12(d) is amended by deleting it in its entirety and substituting the following therefor: (d) LIENS. Subject to the Intercreditor Agreement, the Borrower will not create, incur, assume or suffer to exist any lien, charge or other encumbrance on or security interest in ("Liens") any of its properties or assets in which the Bank now or hereafter may have a security interest, whether such properties or assets are now owned or existing or hereafter acquired or arising, except (i) liens for taxes, assessments or other governmental charges or levies which at the particular time are not due, or remain payable without penalty or interest or are being contested in good faith by appropriate proceedings diligently conducted, provided adequate reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made therefor; (ii) mechanic's, carrier's, worker's employee's, repairmen's, warehousemen's, vendor's or other similar liens arising in the ordinary course of business in respect of obligations not yet due, or which are being contested in good faith by the appropriate proceedings diligently conducted which operate to stay any foreclosure, distraint or execution on the property or deposits or pledges to obtain the release of any such lien; (iii) deposits, liens or pledges to secure workers compensation, unemployment insurance, old age benefits, social security or other statutory obligations, or in connection with, or to secure the performance of, bids, tenders, contracts (other than for the repayment of borrowed money), or leases, or other pledges or deposits for purposes of like nature in the ordinary course of business; (iv) liens arising out of judgments or awards so long as an appeal or proceeding for review is being prosecuted in good faith and execution is stayed; (v) Liens permitted by Section 12(b) of this Agreement; (vi) Liens securing indebtedness created and permitted under the Master Lease Intended as Security dated as of March 15, 1996, between the Borrower and ABN Amro, in an amount not in excess of $25,000,000.00 in the aggregate; and (vii) Liens securing indebtedness created and permitted under substantially similar lease agreements with similar terms to the lease agreement described in clause (vii) above in an amount not to exceed $50,000,000.00 in the aggregate from the date hereof through the fiscal year of the Borrower ending in 1998; PROVIDED, THAT, the Borrower will not create, incur, assume, or suffer to exist such Liens securing indebtedness in excess of $25,000,000.00 during any such fiscal year of the Borrower. M. FINANCIAL COVENANTS OF BORROWER 6 16 Section 13(c) is deleted in its entirety. N. REPRESENTATIONS AND WARRANTIES 1. Section 14(c) is deleted in its entirety and the following is substituted therefor: "This Agreement, the Revolving Credit Note and the Security Documents have been duly and validly executed and delivered by the Borrower and constitute valid and legally binding agreements of the Borrower enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or other Laws of general application relating to or affecting the enforcement of creditors' rights." 2. Section 14(f) is deleted in its entirety and the following is substituted therefor: "(f) INDEBTEDNESS; LIENS. The Borrower has no indebtedness for borrowed money other than its existing indebtedness described in Section 12(b) and there are no Liens on any of the properties or assets of the Borrower except of the type described in subparagraphs (i) through (vii) of Section 12(d)." 3. Section 14(r) is deleted in its entirety and the following is substituted therefor: "The Borrower has paid record and marketable title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all of its other property, except to the extent that the failure to have such title or interest, in any instance or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Borrower. O. DEFAULT Subsections 16(i) and (j) are deleted in their entirety and subsection 16(k) is renumbered as subsection 16(i). P. REMEDIES 7 17 1. The first phrase of Section 17(a) is deleted in its entirety and the following is substituted therefor: "(a) If a Default specified under paragraphs (a) through (f) or (i) of this Section 17 shall occur and be continuing or shall exist, the Bank shall be under no further obligation to make Loans to the Borrower hereunder;" 2. Section 17(d) is deleted in its entirety and the following is substituted therefor: "The Bank may exercise all rights and the Bank will have all remedies available under this Agreement and under the law, the right to court costs, reasonable attorneys' fees and legal expertise. 3. Subsection 17(e) is deleted in its entirety and the following is substituted therefor: "17(e) Intentionally Left Blank." 4. Subsection 17(h) is deleted in its entirety and the following is substituted therefor: "17(h) Upon the occurrence of a Default, the Bank may grant extensions to, or adjust claims of, or make compromises or settlements with, debtors, guarantors or any other parties or any securities, guaranties or insurance, without notice to or the consent of the Borrower, without affecting the Borrower's liability under this Agreement, the Security Documents or the Related Documents." 5. Subsection 17(i) is amended to substitute the term "assets" for the term "Collateral". 6. Subsection 17(j) is deleted in its entirety and the following is substituted therefor: "17(j) Intentionally Left Blank." Q. EXPENSES Section 18 is deleted in its entirety and the following is substituted therefor: "18. EXPENSES. All reasonable expenses, including, but not limited to attorney's fees 8 18 incurred by the Bank after the Closing in taking action in administering this Agreement, the Security Documents, the Related Documents and all additional agreements contemplated in or by this Agreement and in all efforts made to enforce payment, as well as all reasonable attorney's fees and legal expenses incurred in connection therewith, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions or proceedings arising out of or relating to this Agreement, shall be invoiced to, and paid by, the Borrower; PROVIDED, HOWEVER, that the Borrower will not pay for costs and expenses arising solely from the gross negligence or willful misconduct of the Bank. All statements, reports, certificates, opinions and other documents or information furnished by Borrower to the Bank shall be supplied without cost to the Bank." R. WAIVERS Subsection 19(c) is deleted in its entirety and the following is substituted therefor: "(c) The Borrower hereby waives notice of demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein." S. DEFEASANCE Section 24 is deleted in its entirety and the following is substituted therefor: "24. Intentionally Left Blank." II. GENERAL -------- 1. Except as amended hereby and by the First Amendment, the Credit Agreement is not otherwise amended and remains in full force and effect. 2. All capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement. 3. This Second Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 9 19 4. This Second Amendment may be executed simultaneously in two or more counterparts, each of which shall be deemed to be an original but all of which shall constitute together but one and the same instrument. 5. THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF OHIO. 6. The Borrower agrees to pay all expenses of the Bank in connection with the transactions contemplated by this Second Amendment (including, without limitation, the reasonable fees and expenses of counsel for the Bank). IN WITNESS WHEREOF, each of the parties hereto have signed this Second Amendment the 7th day of January, 1997. ATTEST: ROADWAY EXPRESS, INC. By: _____________________ By: ______________________ Name: _____________________ Name: ______________________ Its: _____________________ Its: ______________________ BANK ONE, AKRON, N.A. By: ____________________ Name: ____________________ Its: ____________________ 10 20 AMENDED AND RESTATED INTERCREDITOR AGREEMENT -------------------------------------------- Roadway Express, Inc., a Delaware corporation (herein called the "DEBTOR") from time to time incurs Obligations (as defined below), direct and /or contingent, to each of the undersigned (herein each called a "CREDITOR" and collectively the "CREDITORS"). It is hereby agreed: 1. "CREDIT AGREEMENTS" means each of the Morgan Agreement and the Bank One Agreement; "BANK ONE AGREEMENT" means the Credit Agreement made as of January 2, 1996 between the Debtor and Bank One, Akron, N.A. ("BANK ONE"), as from time to time amended, supplemented or modified; and "MORGAN AGREEMENT" means the Credit Agreement, dated as of July 15, 1996 between the Debtor and Morgan Guaranty Trust Company of New York ("MORGAN"), as from time to time amended, supplemented or modified. 2. "OBLIGATION" means any amount due or to become due a Creditor under its respective Credit Agreement; "Obligations" has a correlative meaning. 3. Each of the Creditors acknowledges that it is anticipated that the total amount of Obligations of the Debtor outstanding at any time to the Creditors shall not exceed in the aggregate the principal amount of $50,000,000, as follows: (a) not more than $25,000,000 owing to Bank One; and (b) not more than $25,000,000 owing to Morgan. 4. Each of the Creditors agrees to give prompt notice to the other Creditors following its becoming aware of the occurrence of an Event of Default or event which, with the giving of notices or lapse of time or both, would become an Event of Default. Other than to decline to make further financial accommodations (by investment, reinvestment, loan or otherwise) pursuant to its respective Credit Agreement, no Creditor shall take any action to accelerate Debtor's obligations to it or to foreclose on the Collateral. Notwithstanding the foregoing, the Creditor whose loans constitute a majority of the outstanding loans with respect to each of the Credit Agreements on the date of the Event of Default shall have the right on five (5) days written notice to the other Creditor to accelerate Debtor's obligations to it and following such notice the other Creditor shall also have the right to accelerate Debtor's obligations to it. Each Creditor further agrees that it will not permit its respective Credit Agreement to be amended or modified (in each case from that contained in such Creditor's respective Credit Agreement as in effect on the date hereof) without the prior consent of the other Creditor. 1 21 5. This Intercreditor Agreement shall terminate ten (10) days following the payment and satisfaction in full of all Obligations to either of the Creditors; PROVIDED, THAT, the provisions of this Intercreditor Agreement shall continue to be effective or be reinstated if at any time any such Obligation or portion thereof is required to be returned or restored in the bankruptcy or insolvency of any person. 6. THIS INTERCREDITOR AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. Unless the context otherwise requires, all terms used herein are defined in the Uniform Commercial Code shall have the meanings therein stated. 7. This Intercreditor Agreement is solely for the benefit of Creditors and their successors or assigns and no other person or persons shall have any right, benefit, priority or interest under, or because of the existence of, this Intercreditor Agreement. 8. This Intercreditor Agreement amends, restates and replaces the Intercreditor Agreement dated as of July 15, 1996 between Morgan and Bank One. 9. Each of the executed several counterparts of this Intercreditor Agreement shall be an original. All such counterparts shall together constitute one and the same instrument. [The remainder of this page intentionally left blank] 2 22 IN WITNESS WHEREOF, each Creditor has caused this Intercreditor Agreement to be duly executed as of the 7th day of January, 1997. BANK ONE, AKRON, N.A. By:__________________________________ Name: Susan D. Steiger Title: Vice President Address: 50 South Main Street Second Floor Akron, Ohio 44309 Attention: Susan Steiger Telephone: (330) 972-1674 Telecopy: (330) 972-1598 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By:__________________________________ Name: Patricia P. Lunka Title: Vice President Address: 60 Wall Street New York, New York 10260 Attention: Loan Department Telephone: (212) 648-7457 Telecopy: (212) 648-5336 3 EX-10.21 3 EXHIBIT 10.21 1 Exhibit 10.21 Schedule of Documents Not Filed which are substantially identical in all material respects to previously filed documents. 1. Master Lease Agreement between Roadway Express, Inc. and ABN AMRO Bank N.V. dated March 3, 1997. This lease agreement for 3,250 linehaul trailers is identical in all material respects to the Master Lease Agreement dated March 15, 1996, which was filed as Exhibit 10.18 to the registrant's Form 10-Q for the period ended June 15, 1996. This new lease agreement covers an additional 3,250 trailers selected by the Company from the same pool of linehaul trailers specified in the first lease. 1 EX-27 4 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 29, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-29-1997 39,205 0 262,949 0 0 318,542 1,379,772 1,010,215 705,374 294,991 0 206 0 0 224,704 705,374 0 590,675 0 580,233 221 0 0 10,221 4,699 5,522 0 0 0 5,522 0.27 0.27
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