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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 8-K
C U R R E N T R E P O R T
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 17, 1995
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ROADWAY SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Ohio 0-10716 34-1365496
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1077 Gorge Boulevard, P.O. Box 88, Akron, Ohio 44309-0088
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 384-8184
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(Former name or former address, if changed since last report.)
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Roadway Services, Inc. Form 8-K
INFORMATION REQUIRED IN REPORT
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Item 5. Other Materially Important Events
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On January 17, 1995, the registrant announced expansion plans with respect to
various operating companies and a settlement of a long-running dispute with the
Internal Revenue Service (IRS).
Roadway Package System, Inc. (RPS) will add 17 new regional hub facilities in
the next four years and enter the market for overnight ground service as the
new facilities are brought on line.
Roadway Global Air, Inc. (RGA) will add 23 new "air logistics centers" in the
United States and seven overseas. In 1995, RGA expansion will provide service
to 71% of the U.S. population overnight, up from 62%. The registrant estimated
revenue could double on a 50% increase in expense in RGA's second full year of
operation, which would reduce 1995 earnings for the registrant in the range of
$1.30 to $1.50 per share. The registrant estimates that losses should decline
significantly in 1996 as RGA moves toward break even in 1997 and profitability
in 1998.
A major re-engineering and information technology project, called PRISM, is
under way at Roadway Regional Group, Inc. The PRISM project is estimated to
cost $.25 per share in 1995 but should pay for itself within four years,
delivering major benefits in increased efficiences and advantages to customers.
The registrant estimates that the regional carrier group, which includes Viking
Freight System, Inc., Central Freight Lines Inc., Spartan Express, Inc. and
Coles Express, Inc. would grow revenue by $100 million in 1995.
Roadway Express, Inc., the registrant's largest operating company accounting
for about one-half of the registrant's revenue, is expected to exhibit slow
growth but generate adequate returns.
The registrant reached an agreement with the IRS over a long-running dispute
regarding the classification for federal employment tax purposes of independent
contractors at RPS. For a total of $25 million, RPS will dismiss its refund
claim for 1985 and 1986 and resolve assessments that might have been asserted
by the IRS for later years through 1993. The registrant estimated that a total
potential liability could have been as much as $160 million through 1994.
For its part, the IRS agreed to issue a private letter ruling stating that
operations conducted in accordance with the terms of the present contract with
RPS's van operators would not be inconsistent with an independent contractor
relationship for federal employment tax purposes.
The settlement costs, amounting to $.35 per share after taxes, will be charged
to 1994 net income, which the registrant estimates in the range of $.65 to $.70
per share for the quarter and $.80 to $.85 per share for the year, before the
$.35 per share impact of the IRS settlement.
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The registrant anticipates capital expenditures in 1995 will approach $400
million.
Item 7. Financial Statements and Exhibits
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(c) Exhibits.
10 -- Material contracts.
Credit Agreement among Roadway Services, Inc., Several Lenders
and Chemical Bank dated as of March 31, 1994.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereto duly authorized.
ROADWAY SERVICES, INC.
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REGISTRANT
By JOHN M. GLENN
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John M. Glenn
Vice President and General Counsel
DATED: January 20, 1995