Exhibit 99.2
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Roadway Next Day Corporation
Quarters ended March 29, 2003 and March 23, 2002
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Roadway Next Day Corporation
Condensed Consolidated Balance Sheets (Unaudited)
MARCH 29, 2003 December 31, 2002
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(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 6,919 $ 12,992
Accounts receivable, net 20,049 24,785
Assets of discontinued operation - 87,431
Other current assets 7,315 6,618
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Total current assets 34,283 131,826
Carrier operating property, at cost 101,325 100,854
Less allowance for depreciation 12,594 10,240
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Net carrier operating property 88,731 90,614
Goodwill, net 269,093 269,093
Other assets 21,652 22,511
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Total assets $ 413,759 $ 514,044
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Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 18,683 $ 14,209
Salaries and wages 8,796 8,522
Payable to Roadway Corporation 10,447 33,703
Liabilities of discontinued operation - 32,407
Other current liabilities 4,499 4,209
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Total current liabilities 42,425 93,050
Long-term liabilities:
Casualty claims and other 8,459 8,456
Deferred income taxes 10,697 10,666
Payable to Roadway Corporation 273,513 273,513
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Total long-term liabilities 292,669 292,635
Parent company investment 78,665 128,359
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Total liabilities and shareholders' equity $ 413,759 $ 514,044
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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 Next Day Corporation
Condensed Statements of Consolidated Income (Unaudited)
Twelve Weeks Ended
(First Quarter)
MARCH 29, 2003 March 23, 2002
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(in thousands)
Revenue $ 48,826 $ 45,409
Operating expenses:
Salaries, wages and benefits 34,067 31,318
Operating supplies and expenses 6,639 5,209
Purchased transportation 542 383
Operating taxes and licenses 1,408 1,377
Insurance and claims 1,174 1,043
Provision for depreciation 2,374 2,819
Loss (gain) on sale of property 9 (51)
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Total operating expenses 46,213 42,098
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Operating income from continuing operations 2,613 3,311
Other (expense), net (6,294) (5,921)
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(Loss) from continuing operations before income taxes (3,681) (2,610)
(Benefit) from income taxes (1,402) (878)
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(Loss) from continuing operations (2,279) (1,732)
Income from discontinued operations 147 124
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Net (loss) $ (2,132) $ (1,608)
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See notes to condensed consolidated financial statements.
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Roadway Next Day Corporation
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
(Loss) from continuing operations $ (2,279) $ (1,732)
Depreciation and amortization 3,336 3,286
Other operating adjustments 3,070 16,344
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Net cash provided by operating activities 4,127 17,898
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of carrier operating property (664) (1,892)
Sales of carrier operating property 164 102
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Net cash (used) by investing activities (500) (1,790)
CASH FLOWS FROM FINANCING ACTIVITIES
Transfer to parent (7,300) (30,568)
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Net cash (used) by financing activities (7,300) (30,568)
Net (decrease) in cash and cash equivalents from
continuing operations (3,673) (14,460)
Net (decrease) in cash and cash equivalents from
discontinued operations (2,400) (4,339)
Cash and cash equivalents at beginning of period 12,992 29,469
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Cash and cash equivalents at end of period $ 6,919 $ 10,670
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See notes to condensed consolidated financial statements.
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Roadway Next Day Corporation 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 completed the required transitional goodwill impairment test under
SFAS No. 142 for all reporting units effective June 15, 2002 which did not
indicate any impairment. As a result of finalizing the Roadway Next Day purchase
price allocation during the fourth quarter, goodwill reflected in the ATS
segment preliminary purchase price allocation was reallocated to the New Penn
segment. Accordingly, all goodwill resulting from the Roadway Next Day
acquisition has been recorded in the New Penn business segment at December 31,
2002. The Company updated its goodwill impairment test at December 31, 2002 due
to the reallocation of goodwill previously recorded in the ATS business segment.
The performance of the updated impairment test did not indicate any impairment
of goodwill. The Company expects to perform the required annual goodwill
impairment assessment on a recurring basis at the end of the second quarter each
year, or more frequently should any indicators of possible impairment be
identified.
The Company operates in one business segment, New Penn Motor Express, Inc.,
which provides regional next-day LTL service primarily in New England and the
Middle Atlantic states.
Note 2--Accounting Period
The 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.
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Note 3 - Discontinued operations
On December 26, 2002, the Company entered into an agreement to sell Arnold
Transportation Services (ATS) to a management group led by the unit's president
and a private equity firm, for approximately $55,000,000. The ATS business
segment was acquired as part of the Company's purchase of Roadway Next Day in
November 2001, but did not fit the Company's strategic focus of being a LTL
carrier. The transaction was completed on January 23, 2003. The Company did not
recognize a significant gain or loss as a result of this transaction.
The Company has reported the ATS results as a discontinued operation in the
accompanying financial statements and, unless otherwise stated, the notes to the
financial statements for all periods presented exclude the amounts related to
this discontinued operation.
The following table presents revenue and income from the discontinued operations
for the quarters ended March 29, 2003 and March 23, 2002. The quarter ended
March 29, 2003 includes results of operations only through the disposal date,
January 23, 2003.
TWELVE WEEKS ENDED
(FIRST QUARTER)
MARCH 29, 2003 March 23, 2002
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(in thousands)
Revenue $ 9,267 $ 38,201
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Pre-tax income from discontinued operations 198 212
Income tax expense 51 88
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Income from discontinued operations $ 147 $ 124
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