-----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, N3EaTF8xlmN+xHGbcySyYyqs6W5oSUPsoJ9yeCM+PnDfYcy5U2ZrIbAuGkaExcCM AGI/KEPv3AopiyrJzjxAVQ== 0000950152-98-005893.txt : 19980714 0000950152-98-005893.hdr.sgml : 19980714 ACCESSION NUMBER: 0000950152-98-005893 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980620 FILED AS OF DATE: 19980710 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: SEC FILE NUMBER: 000-00600 FILM NUMBER: 98664376 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. 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 20, 1998. 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 June 20, 1998 was 20,553,130. 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 20, 1998 December 31, 1997 ---------------------------------------------------------------------- (in thousands) Assets Current assets: Cash and cash equivalents $ 94,132 $ 58,505 Accounts receivable, net 275,163 288,050 Other current assets 16,090 16,357 ---------------------------------------------------------------------- Total current assets 385,385 362,912 Carrier operating property at cost 1,358,938 1,366,569 Allowance for depreciation 1,004,969 1,008,485 ---------------------------------------------------------------------- Net carrier operating property 353,969 358,084 Goodwill, net 8,314 8,747 Deferred income taxes 15,287 14,243 ---------------------------------------------------------------------- Total assets $ 762,955 $ 743,986 ====================================================================== Liabilities and shareholders' equity Current liabilities Accounts payable $ 171,353 $ 165,536 Salaries and wages payable 111,553 103,609 Other current liabilities 50,223 53,657 ---------------------------------------------------------------------- Total current liabilities 333,129 322,802 Long-term liabilities Casualty claims payable 52,460 55,267 Future equipment repairs 17,594 19,773 Accrued pension and retiree medical 100,818 96,708 ---------------------------------------------------------------------- Total long-term liabilities 170,872 171,748 Shareholders' equity Common Stock - $.01 par value Authorized - 100,000,000 shares Issued - 20,556,714 shares 206 206 Other shareholders' equity 258,748 249,230 ---------------------------------------------------------------------- Total shareholders' equity 258,954 249,436 ---------------------------------------------------------------------- Total liabilities and equity $ 762,955 $ 743,986 ======================================================================
Note: The balance sheet at December 31, 1997 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 20, 1998 June 21, 1997 ---------------------------------------------------- (in thousands, except per share data) Revenue $ 609,352 $ 609,374 Operating expenses: Salaries, wages and benefits 397,748 387,427 Operating supplies and expenses 103,883 105,259 Purchased transportation 58,089 60,759 Operating taxes and licenses 18,098 17,549 Insurance and claims expense 13,405 13,963 Provision for depreciation 9,512 11,807 Net (gain) on disposal of operating property (461) (1,307) ---------------------------------------------------- Total operating expenses 600,274 595,457 ---------------------------------------------------- Operating income 9,078 13,917 Other income, net 178 69 ---------------------------------------------------- Income before income taxes 9,256 13,986 Provision for income taxes 3,949 6,219 ---------------------------------------------------- Net income 5,307 7,767 ==================================================== Net income per share - basic $ 0.26 $ 0.39 Net income per share - diluted $ 0.27 $ 0.38 Average shares outstanding - basic 20,110 20,220 Average shares outstanding - diluted 20,352 20,536 Dividends declared per share $ 0.05 $ 0.05
See notes to condensed consolidated financial statements. 2 4 ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
Twenty-four Weeks Ended (Two Quarters) June 20, 1998 June 21, 1997 ---------------------------------------------------- (in thousands, except per share data) Revenue $ 1,231,015 $ 1,200,049 Operating expenses: Salaries, wages and benefits 798,231 769,708 Operating supplies and expenses 214,085 207,206 Purchased transportation 115,126 108,977 Operating taxes and licenses 37,451 36,393 Insurance and claims expense 28,383 30,862 Provision for depreciation 19,407 24,435 Net (gain) on disposal of operating property (1,570) (1,891) ---------------------------------------------------- Total operating expenses 1,211,113 1,175,690 ---------------------------------------------------- Operating income 19,902 24,359 Other income (expense), net 880 (152) ---------------------------------------------------- Income before income taxes 20,782 24,207 Provision for income taxes 8,866 10,918 ---------------------------------------------------- Net income 11,916 13,289 ==================================================== Net income per share - basic $ 0.59 $ 0.66 Net income per share - diluted $ 0.59 $ 0.65 Average shares outstanding - basic 20,109 20,226 Average shares outstanding - diluted 20,344 20,542 Dividends declared per share $ 0.10 $ 0.10
See notes to condensed consolidated financial statements. 3 5 ROADWAY EXPRESS, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Twenty-four Weeks Ended (Two Quarters) June 20, 1998 June 21, 1997 ---------------------------------------------------- (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 11,916 $ 13,289 Depreciation and amortization 19,840 24,319 Other operating adjustments 15,119 (14,454) ---------------------------------------------------- Net cash provided by operating activities 46,875 23,154 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of carrier operating property (19,761) (9,548) Sales of carrier operating property 6,038 8,220 Business acquisition - (15,000) ---------------------------------------------------- Net cash used by investing activities (13,723) (16,328) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (2,053) (2,047) Issuance of treasury shares 4,528 - ---------------------------------------------------- Net cash provided (used) from financing activities 2,475 (2,047) Net increase in cash and cash equivalents 35,627 4,779 Cash and cash equivalents at beginning of period 58,505 36,243 ==================================================== Cash and cash equivalents at end of period $ 94,132 $ 41,022 ====================================================
See notes to condensed consolidated financial statements. 4 6 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 24 weeks ended June 20, 1998 are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. 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, 1997. 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 Twenty-four Weeks Ended (Second Quarter) (Two Quarters) June 20, 1998 June 21, 1997 June 20, 1998 June 21, 1997 ------------------- ------------------- ----------------- ------------------- (in thousands) U.S. Federal $3,935 $4,913 $ 8,568 $ 8,129 U.S. State 410 664 921 1,289 Foreign (396) 642 (623) 1,500 ------------------- ------------------- ----------------- ------------------- Total $3,949 $6,219 $ 8,866 $ 10,918 =================== =================== ================= ===================
Note D--Earnings per Share The following table sets forth the computation of basic and diluted earnings per share:
Twelve Weeks Ended Twenty-four Weeks Ended (Second Quarter) (Two Quarters) June 20, 1998 June 21, 1997 June 20, 1998 June 21, 1997 ------------------------------------------------------------------------------ (in thousands, except per share data) Net income $ 5,307 $ 7,767 $ 11,916 $ 13,289 ============================================================================== Weighted-average shares for basic earnings per share 20,110 20,220 20,109 20,226 Management incentive stock plans 242 316 235 316 ------------------------------------------------------------------------------ Weighted-average shares for diluted earnings per share 20,352 20,536 20,344 20,542 ============================================================================== Earnings per share - basic $ 0.26 $ 0.39 $ 0.59 $ 0.66 Earnings per share - diluted $ 0.27 $ 0.38 $ 0.59 $ 0.65
5 7 Note E--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 20, 1998 June 21, 1997 June 20, 1998 June 21, 1997 ------------------ ----------------- ------------------ -------------------- (in thousands) Net income $ 5,307 $ 7,767 $ 11,916 $ 13,289 Foreign currency translation adjustments (523) 123 (567) 98 ============================================================================= Comprehensive income $ 4,784 $ 7,890 $ 11,349 $ 13,387 =============================================================================
Note F--Impact of Recently Issued Accounting Standards The Company adopted the provisions of the AICPA Statement of Position 98-1 (SOP 98-1), Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, effective January 1, 1998. The adoption of SOP 98-1 increased net income and diluted earnings per share through June 20, 1998, by $526,000 and $0.03, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Revenue for the second quarter of 1998 was $609.4 million, which was flat when compared to the second quarter of 1997. A 2.5% increase in revenue per ton was offset by a 2.4% decrease in tonnage. Despite the successful contract negotiations that culminated in a tentative agreement with the International Brotherhood of Teamsters six weeks before the expiration of the contract, the Company experienced a diversion of freight to non-union carriers that continued into the second quarter, resulting from fears of service interruptions. Less-than-truckload (LTL) tonnage was down 2.6% and truckload tonnage was down 1.7%, compared to second quarter 1997. The operating ratio deteriorated to 98.5%, compared to 97.7% in the second quarter 1997. Operating costs per ton rose 3.3% compared to the second quarter of 1997. Salaries, wages, and benefit costs per ton increased by 5.2%, or $10.39 per ton. Of this amount, $2.39 per ton is attributable to wage increases under the new labor contract. The remaining increase is due to operational inefficiencies, primarily in terminal operations, due in part to the reduced volume of freight. Direct labor costs accounted for 81% of the increase in salaries, wages, and benefits during the quarter. Purchased transportation costs decreased by $2.7 million, or 4.4%. Rail costs declined $4.5 million as the portion of miles on the rail decreased to 24.8%, compared to 27.7% in 1997. The use of cartage and commission agents in the pickup and delivery operations increased by $1.9 million over the prior year quarter. Depreciation expense continues to decline as more revenue equipment becomes fully depreciated and the Company increases its use of leased equipment. Also, the Company's system count has been reduced to 403 terminals, compared to 413 terminals at the end of the second quarter 1997. The tax expense attributable to the operating income for the first two quarters of 1998 and 1997 differs from the Federal statutory rate due to the impact of state taxes, taxes on foreign operations, and non-deductible operating expenses as described in Note C to the Condensed Consolidated Financial Statements. The Company's cash position continues to improve. At the end of the quarter, cash and marketable securities amounted to $94.1 million, a $35.6 million increase over year-end 1997. Cash flow from operations is sufficient to meet working capital needs, planned capital expenditures, and the recently announced plan to purchase from time to time up to $20 million of the Company's common stock on the open market. The Company entered into a third operating lease agreement to replace an additional 3,250 (approximately 10%) of the linehaul trailers during 1998. Under these 6 8 agreements approximately 7,200 of a planned total of 10,000 trailers have been replaced with leased units through June 20, 1998. 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 7, 1998, the Board of Directors declared a cash dividend of $0.05 per share on the Company's common stock, payable on September 8, 1998, to shareholders of record on August 21, 1998. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit No. - ----------- 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 - ---------------- -------------- June 24, 1998 Registrant's announcement that its Board of Directors authorized the purchase of up to $20 million of the Company's common stock. 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 9, 1998 By: /s/ J. Dawson Cunningham ------------ -------------------------------------- J. Dawson Cunningham, Executive Vice President, Chief Financial Officer and Treasurer Date: July 9, 1998 By: /s/ John G. Coleman ------------ -------------------------------------- John G. Coleman, Controller 7 EX-10.1 2 EXHIBIT 10.1 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. 2. Master Lease Agreement between Roadway Express, Inc. and ABN AMRO Bank N.V. dated April 1, 1998. 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. EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROADWAY EXPRESS INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 20, 1998 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-20-1998 94,132 0 275,163 0 0 385,385 1,358,938 1,004,969 762,955 333,129 0 0 0 206 258,748 762,955 0 1,231,015 0 1,211,113 (880) 0 0 20,782 8,866 11,916 0 0 0 11,916 0.59 0.59
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