Exhibit 99.1
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Roadway Express, Inc. and Subsidiaries
Quarters ended June 21, 2003 and June 15, 2002
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ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 21, 2003 December 31, 2002
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(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 46,653 $ 82,016
Accounts receivable, including retained
interest in securitized receivables, net 197,908 212,834
Other current assets 42,208 31,662
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Total current assets 286,769 326,512
Carrier operating property, at cost 1,409,975 1,414,794
Less allowance for depreciation 1,000,723 996,224
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Net carrier operating property 409,252 418,570
Goodwill, net 17,087 14,816
Other assets 48,709 43,666
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Total assets $ 761,817 $ 803,564
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Liabilities and parent company investment
Current liabilities:
Accounts payable $ 183,583 $ 190,457
Salaries and wages 115,885 141,242
Other current liabilities 47,072 45,606
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Total current liabilities 346,540 377,305
Long-term liabilities:
Casualty claims and other 53,115 55,953
Accrued pension and retiree medical 145,803 133,072
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Total long-term liabilities 198,918 189,025
Parent company investment 216,359 237,234
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Total liabilities and parent company investment $ 761,817 $ 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
(Second Quarter)
June 21, 2003 June 15, 2002
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(in thousands)
Revenue $ 691,156 $ 606,409
Operating expenses:
Salaries, wages and benefits 433,102 392,635
Operating supplies and expenses 125,734 103,488
Purchased transportation 75,276 57,317
Operating taxes and licenses 17,182 16,043
Insurance and claims expense 13,599 11,964
Provision for depreciation 14,471 15,416
Net loss on disposal of operating property (21) 303
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Total operating expenses 679,343 597,166
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Operating income 11,813 9,243
Other (expense) income, net (627) (914)
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Income before income taxes 11,186 8,329
Provision for income taxes 4,842 2,766
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Net income $ 6,344 $ 5,563
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Twenty-Four Weeks Ended
(Two Quarters)
June 21, 2003 June 15, 2002
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(in thousands)
Revenue $ 1,396,400 $ 1,159,967
Operating expenses:
Salaries, wages and benefits 872,539 758,970
Operating supplies and expenses 251,560 198,987
Purchased transportation 149,518 108,443
Operating taxes and licenses 35,561 30,231
Insurance and claims expense 27,494 22,352
Provision for depreciation 29,396 30,685
Net loss on disposal of operating property 781 649
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Total operating expenses 1,366,849 1,150,317
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Operating income 29,551 9,650
Other (expense), net (1,199) (1,939)
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Income before income taxes 28,352 7,711
Provision for income taxes 11,733 2,823
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Net income $ 16,619 $ 4,888
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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)
Twenty-four Weeks Ended
(Two Quarters)
June 21, 2003 June 15, 2002
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(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 16,619 $ 4,888
Depreciation 29,396 30,685
Other operating adjustments (19,982) (10,527)
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Net cash provided by operating activities 26,033 25,046
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of carrier operating property (21,216) (20,401)
Sales of carrier operating property 1,472 1,521
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Net cash (used) by investing activities (19,744) (18,880)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (42,000) -
Treasury stock activity, net - -
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Net cash (used) by financing activities (42,000) -
Effect of exchange rate on cash 348 (91)
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Net (decrease) increase in cash and cash equivalents (35,363) 6,075
Cash and cash equivalents at beginning of period 82,016 46,087
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Cash and cash equivalents at end of period $ 46,653 $ 52,162
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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 and twenty-four weeks ending
June 21, 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.
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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,
expedited, and regional LTL freight services in North America, and offers
services more than 100 countries worldwide.
Note 4--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 21, 2003 June 15, 2002 June 21, 2003 June 15, 2002
-------------------------------------------------------------
(in thousands)
Net income $ 6,344 $ 5,563 $ 16,619 $ 4,888
Foreign currency translation
adjustments 3,089 1,122 5,776 (56)
Derivative fair value adjustments 50 - 126 -
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Comprehensive (loss) income $ 9,483 $ 6,685 $ 22,521 $ 4,832
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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
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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