Exhibit 99.1
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Roadway Express, Inc. and Subsidiaries
Quarters ended March 29, 2003 and March 23, 2002
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ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 29, 2003 December 31, 2002
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(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 80,403 $ 82,016
Accounts receivable, including retained
interest in securitized receivables, net 197,627 212,834
Other current assets 47,352 31,662
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Total current assets 325,382 326,512
Carrier operating property, at cost 1,410,703 1,414,794
Less allowance for depreciation 995,194 996,224
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Net carrier operating property 415,509 418,570
Goodwill, net 15,505 14,816
Other assets 46,161 43,666
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Total assets $ 802,557 $ 803,564
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Liabilities and parent company investment
Current liabilities:
Payable $ 197,976 $ 190,457
Salaries and wages 117,669 141,242
Other current liabilities 46,541 45,606
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Total current liabilities 362,186 377,305
Long-term liabilities:
Casualty claims and other 53,551 55,953
Accrued pension and retiree medical 139,040 133,072
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Total long-term liabilities 192,591 189,025
Parent company investment 247,780 237,234
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Total liabilities and parent company investment $ 802,557 $ 803,564
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Note: The balance sheet at December 31, 2002 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.
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ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
Twelve Weeks Ended
(First Quarter)
March 29, 2003 March 23, 2002
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(in thousands)
Revenue $ 705,244 $ 553,558
Operating expenses:
Salaries, wages and benefits 439,438 366,335
Operating supplies and expenses 125,826 95,499
Purchased transportation 74,242 51,126
Operating taxes and licenses 18,379 14,188
Insurance and claims expense 13,895 10,388
Provision for depreciation 14,924 15,269
Net loss on disposal of operating property 802 346
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Total operating expenses 687,506 553,151
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Operating income 17,738 407
Other (expense), net (572) (1,025)
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Income (loss) before income taxes 17,166 (618)
Provision for income taxes 6,891 57
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Net income (loss) $ 10,275 $ (675)
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See notes to condensed consolidated financial statements.
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ROADWAY EXPRESS INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Twelve Weeks Ended
(First Quarter)
March 29, 2003 March 23, 2002
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(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 10,275 $ (675)
Depreciation 14,924 15,269
Other operating adjustments (14,339) (22,088)
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Net cash provided by (used in) operating activities 10,860 (7,494)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of carrier operating property (13,122) (9,149)
Sales of carrier operating property 598 1,278
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Net cash (used) in investing activities (12,524) (7,871)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid - -
Treasury stock activity, net - -
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Net cash (used) in financing activities - -
Effect of exchange rate on cash 51 (10)
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Net (decrease) in cash and cash equivalents (1,613) (15,375)
Cash and cash equivalents at beginning of period 82,016 46,087
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Cash and cash equivalents at end of period $ 80,403 $ 30,712
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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 29, 2003 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2003. 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, 2002.
The Company provides freight services in one business segment, long haul LTL
freight services in North America, and offers services to more than 100
countries worldwide.
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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--Comprehensive (Loss) Income
Comprehensive income (loss) differs from net income (loss) due to foreign
currency translation adjustments as shown below:
Twelve Weeks Ended
(First Quarter)
March 29, 2003 March 23, 2002
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(in thousands)
Net income (loss) $ 10,275 $ (675)
Foreign currency translation
adjustments 2,763 (1,148)
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Comprehensive income (loss) $ 13,038 $ (1,823)
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Note 4--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
multi-employer 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 that relate to the Company's
business prior to the spin-off. The amount and timing of such payments 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. On January 16, 2003, the Company made a $14,000,000
payment to its former parent under the tax sharing agreement for taxes and
interest related to certain of the proposed adjustments for tax years 1994 and
1995.
We estimate the possible range of the remaining payments that may be due to the
former parent to be approximately $0 to $16,000,000 in additional taxes and $0
to $10,000,000 in related interest, net of tax benefit. 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.
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