Exhibit 99.2
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Roadway Express, Inc. and Subsidiaries
Quarters ended March 23, 2002 and March 24, 2001
1
ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 23, 2002 December 31, 2001
---------- ----------
(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 30,712 $ 46,087
Accounts receivable, including retained
interest in securitized receivables, net 164,490 165,465
Other current assets 37,898 24,412
---------- ----------
Total current assets 233,100 235,964
Carrier operating property, at cost 1,422,092 1,435,931
Less allowance for depreciation 1,005,185 1,011,280
---------- ----------
Net carrier operating property 416,907 424,651
Goodwill, net 14,451 14,722
Other assets 39,376 36,050
---------- ----------
Total assets $ 703,834 $ 711,387
========== ==========
Liabilities and parent company investment
Current liabilities:
Accounts payable $ 150,990 $ 166,197
Salaries and wages 106,363 112,099
Other current liabilities 48,716 49,492
---------- ----------
Total current liabilities 306,069 327,788
Long-term liabilities:
Casualty claims and other 62,157 63,536
Accrued pension and retiree medical 122,251 119,145
---------- ----------
Total long-term liabilities 184,408 182,681
Parent company investment 213,357 200,918
---------- ----------
Total liabilities and parent company investment $ 703,834 $ 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
(First Quarter)
March 23, 2002 March 24, 2001
---------------------------
(in thousands)
Revenue $ 553,558 $ 650,485
Operating expenses:
Salaries, wages and benefits 366,335 412,126
Operating supplies and expenses 95,499 113,709
Purchased transportation 51,126 64,381
Operating taxes and licenses 14,188 17,539
Insurance and claims expense 10,388 13,180
Provision for depreciation 15,269 15,261
Net loss on disposal of operating property 346 186
--------- ---------
Total operating expenses 553,151 636,382
--------- ---------
Operating income 407 14,103
Other (expense), net (1,025) (5,429)
--------- ---------
(Loss) income before income taxes (618) 8,674
Provision for income taxes 57 3,684
--------- ---------
Net (loss) income $ (675) $ 4,990
========= =========
See notes to condensed consolidated financial statements.
3
ROADWAY EXPRESS INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Twelve Weeks Ended
(First Quarter)
March 23, 2002 March 24, 2001
---------------------------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (675) $ 4,990
Depreciation 15,269 15,744
Other operating adjustments (22,088) (12,309)
-------- --------
Net cash (used in) provided by operating activities (7,494) 8,425
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of carrier operating property (9,149) (18,039)
Sales of carrier operating property 1,278 302
-------- --------
Net cash (used) by investing activities (7,871) (17,737)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid -- (968)
Treasury stock activity, net -- (613)
-------- --------
Net cash (used) by financing activities -- (1,581)
Effect of exchange rate on cash (10) (13)
-------- --------
Net (decrease) in cash and cash equivalents (15,375) (10,906)
Cash and cash equivalents at beginning of period 46,087 64,939
-------- --------
Cash and cash equivalents at end of period $ 30,712 $ 54,033
======== ========
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 March 23, 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.
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Note 2 -- Accounting Period
Roadway Express, Inc. (the registrant, 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 (Loss) Income
Comprehensive (loss) income differs from net (loss) income due to foreign
currency translation adjustments as shown below:
Twelve Weeks Ended
(First Quarter)
March 23, 2002 March 24, 2001
---------------------------
(in thousands)
Net (loss) income $ (675) $ 4,990
Foreign currency translation
adjustments (1,178) (965)
-------- --------
Comprehensive (loss) income $ (1,853) $ 4,025
======== ========
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 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
March 23, 2002
Guarantor Non-Guarantor
Subsidiaries Subsidiaries Eliminations Consolidated
-------------------------------------------------------------------
(in millions)
Cash and cash equivalents $ 30 $ 1 $ - $ 31
Accounts receivable 141 14 -- 155
Due from affiliates 47 -- (37) 10
Prepaid expenses and supplies 25 -- -- 25
Deferred income taxes 13 -- -- 13
------- ------- ------- -------
Total current assets 256 15 (37) 234
Carrier operating property, at cost 1,396 26 -- 1,422
Less allowance for depreciation 992 13 -- 1,005
------- ------- ------- -------
Net carrier operating property 404 13 -- 417
Goodwill, net -- 14 -- 14
Investment in subsidiaries (5) -- 5 --
Long-term assets 5 -- -- 5
Deferred income taxes 34 -- -- 34
------- ------- ------- -------
Total assets $ 694 $ 42 $ (32) $ 704
======= ======= ======= =======
Accounts payable $ 145 $ 8 $ -- $ 153
Due to affiliates -- 37 (37) --
Salaries and wages 104 2 -- 106
Freight and casualty claims payable 48 1 -- 49
------- ------- ------- -------
Total current liabilities 297 48 (37) 308
Casualty claims and other 62 (1) -- 61
Accrued pension and retiree medical 122 -- -- 122
Parent company investment 213 (5) 5 213
------- ------- ------- -------
Total liabilities and parent company investment $ 694 $ 42 $ (32) $ 704
======= ======= ======= =======
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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
======= ======= ======= =======
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Note 6 -- Guarantor and Non-Guarantor Subsidiaries (continued)
Condensed Consolidating Statements of Income
Twelve weeks ended March 23, 2002 Guarantor Non-Guarantor
(First Quarter) Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------- ------- ---------
(in millions)
Revenue $ 529 $ 24 $ - $ 553
Operating expenses:
Salaries, wages and benefits 359 8 - 367
Operating supplies and expenses 89 6 - 95
Purchased transportation 43 8 - 51
Operating taxes and licenses 14 1 - 15
Insurance and claims expenses 10 - - 10
Provision for depreciation 14 1 - 15
Net gain on disposal of operating property - - - -
Results of affiliates - - - -
--------- ------- ------- ---------
Total operating expenses 529 24 - 553
--------- ------- ------- ---------
Operating income - - - -
Other (expense), net (1) - - (1)
--------- ------- ------- ---------
(Loss) before income taxes (1) - - (1)
Provision for income taxes - - - -
--------- ------- ------- ---------
Net (loss) $ (1) $ - $ - $ (1)
========= ======= ======= =========
Twelve weeks ended March 24, 2001 Guarantor Non-Guarantor
(First Quarter) Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------- ------- ---------
(in millions)
Revenue $ 625 $ 26 $ (1) $ 650
Operating expenses:
Salaries, wages and benefits 402 10 - 412
Operating supplies and expenses 107 7 - 114
Purchased transportation 56 9 (1) 64
Operating taxes and licenses 17 1 - 18
Insurance and claims expenses 13 - - 13
Provision for depreciation 14 1 - 15
Net gain on disposal of operating property - - - -
Results of affiliates 3 - (3) -
--------- ------- ------- ---------
Total operating expenses 612 28 (4) 636
--------- ------- ------- ---------
Operating income (loss) 13 (2) 3 14
Other (expense), net (4) (1) - (5)
--------- ------- ------- ---------
Income (loss) before income taxes 9 (3) 3 9
Provision for income taxes 4 - - 4
--------- ------- ------- ---------
Net income (loss) $ 5 $ (3) $ 3 $ 5
========= ======= ======= =========
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Note 6 -- Guarantor and Non-Guarantor Subsidiaries (continued)
Condensed Consolidating Statement of Cash Flows
Twelve Weeks Ended March 23, 2002 Guarantor Non-Guarantor
(First Quarter) Subsidiaries Subsidiaries Eliminations Consolidated
--------- -------- ----- ---------
(in millions)
Net cash (used) provided by operating activities $ (8) $ 1 $ - $ (7)
Cash flows from investing activities
Purchases of carrier operating property, net (7) (1) - (8)
--------- -------- ----- ---------
Net cash (used) in investing activities (7) (1) - (8)
Net cash (used) in financing activities - - - -
Net (decrease) in cash and cash equivalents (15) - - (15)
Cash and cash equivalents at beginning of year 45 1 - 46
--------- -------- ----- ---------
Cash and cash equivalents at end of year $ 30 $ 1 $ - $ 31
========= ======== ===== =========
Twelve Weeks Ended March 24, 2001 Guarantor Non-Guarantor
(First Quarter) Subsidiaries Subsidiaries Eliminations Consolidated
--------- ---------- ------ ---------
(in millions)
Net cash provided by operating activities $ 7 $ 2 $ - $ 9
Cash flows from investing activities
Purchases of carrier operating property, net (17) (1) - (18)
--------- ---------- ------ ---------
Net cash (used) in investing activities (17) (1) - (18)
Cash flows from financing activities
Dividends paid (1) - - (1)
Treasury stock activity - net (1) - - (1)
--------- ---------- ------ ---------
Net cash (used) in financing activities (2) - - (2)
Net (decrease) increase in cash and cash equivalents (12) 1 - (11)
Cash and cash equivalents at beginning of year 61 4 - 65
--------- ---------- ------ ---------
Cash and cash equivalents at end of year $ 49 $ 5 $ - $ 54
========= ========== ====== =========
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