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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the Period ended June 15, 1996.
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from ______ to ______.
Commission file number 0-600
ROADWAY EXPRESS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 34-0492670
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No)
1077 Gorge Boulevard Akron, OH 44310
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 384-1717
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No .
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The number of shares of common stock ($.01 par value) outstanding as of July 8,
1996 was 20,543,164.
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 15, 1996 December 31, 1995
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(dollars in thousands)
Assets
Current assets:
Cash and cash equivalents $ 22,657 $ 23,341
Accounts receivable, net 232,839 227,121
Other current assets 24,150 19,530
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Total current assets 279,646 269,992
Carrier operating property at cost 1,423,862 1,433,712
Allowance for depreciation 1,019,750 1,008,952
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Carrier operating property, net 404,112 424,760
Deferred income taxes 18,733 18,855
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Total assets $ 702,491 $ 713,607
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Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 124,285 $ 125,263
Salaries and wages payable 113,531 110,968
Freight and casualty claims payable 54,538 60,225
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Total current liabilities 292,354 296,456
Long-term liabilities
Casualty claims payable 79,544 95,379
Future equipment repairs 26,509 29,191
Accrued pension and retiree medical 92,789 86,939
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Total long-term liabilities 198,842 211,509
Shareholders' equity
Common Stock - $.01 par value
Authorized - 100,000,000 shares
Issued - 20,556,458 shares 206 206
Other shareholders' equity 211,089 205,436
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Total shareholders' equity 211,295 205,642
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Total liabilities and equity $ 702,491 $ 713,607
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Note: The balance sheet at December 31, 1995 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 15, 1996 June 17, 1995
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(amounts in thousands, except per share data)
Revenue $ 532,749 $ 521,122
Operating expenses:
Salaries, wages and benefits 351,621 358,534
Operating supplies and expenses 90,070 93,820
Purchased transportation 40,537 33,861
Operating taxes and licenses 18,070 17,383
Insurance and claims expense 10,517 13,173
Provision for depreciation 15,298 17,014
Net (gain) loss on disposal of operating property (687) 57
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Total operating expenses 525,426 533,842
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Operating income (loss) 7,323 (12,720)
Other (expense), net (178) (417)
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Income (loss) before income taxes 7,145 (13,137)
Provision (benefit) for income taxes 3,092 (4,548)
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Net income (loss) $ 4,053 $ (8,589)
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Net income (loss) per share $ 0.20 $ (0.42)
Average shares outstanding 20,484 20,556
Twenty-four Weeks Ended
(Two Quarters)
June 15, 1996 June 17, 1995
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(amounts in thousands, except per share data)
Revenue $ 1,049,712 $ 1,043,411
Operating expenses:
Salaries, wages and benefits 697,195 710,486
Operating supplies and expenses 177,152 184,146
Purchased transportation 79,895 65,570
Operating taxes and licenses 35,686 35,055
Insurance and claims expense 20,006 26,737
Provision for depreciation 30,834 33,880
Net (gain) on disposal of operating property (3,321) (181)
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Total operating expenses 1,037,447 1,055,693
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Operating income (loss) 12,265 (12,282)
Other (expense), net (510) (1,928)
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Income (loss) before income taxes 11,755 (14,210)
Provision (benefit) for income taxes 5,079 (5,062)
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Net income (loss) $ 6,676 $ (9,148)
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Net income (loss) per share $ 0.33 $ (0.45)
Average shares outstanding 20,520 20,556
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 15, 1996 June 17, 1995
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(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 6,676 $ (9,148)
Depreciation and amortization 30,854 33,860
Other operating adjustments (30,324) (37,691)
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Net cash provided (used) by operating activities 7,206 (12,979)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of carrier operating property (13,068) (15,614)
Sales of carrier operating property 6,205 2,525
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Net cash used by investing activities (6,863) (13,089)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (1,027) (7,500)
Net borrowings - 20,500
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Net cash (used) provided by financing activities (1,027) 13,000
Net (decrease) in cash & cash equivalents (684) (13,068)
Cash and cash equivalents at beginning of period 23,341 24,028
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Cash and cash equivalents at end of period $ 22,657 $ 10,960
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See notes to condensed consolidated financial statements.
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Roadway Express, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note A--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 12 weeks and 24 weeks ended June 15,
1996 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the registrant's annual
report on Form 10-K for the year ended December 31, 1995.
Note B--Accounting Period
The registrant operates on a 13 four-week period calendar with 12 weeks in each
of the first three quarters and 16 weeks in the fourth quarter.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Roadway Express reported a net income of $4,053,000, or $0.20 per share, for the
second quarter ended June 15, 1996. This improvement is the result of cost
controls and tonnage growth, and compares to a loss of $8,589,000, or $0.42 per
share, in the second quarter of last year. Revenues were $532,749,000 for the
second quarter of 1996, compared to $521,122,000 for the second quarter of 1995.
Cost reductions enabled the Company to compensate for weak revenue rates and
generate a profit for the second quarter.
Roadway's tonnage was up 1.9% in the second quarter. Our less-than-truckload
(LTL) tons were up 3.1% and truckload tonnage was down 2.9%, compared to second
quarter 1995. Freight rate levels have increased 0.3% above those of second
quarter 1995, and have improved by approximately 3% over year-end 1995. Current
rate levels are not sufficient to support long term operational needs. As
industry capacity is reduced, rate levels are expected to improve.
Cost savings resulting from our ongoing network refinement, reduced corporate
overhead, and the positive impact of our safety and risk management programs
contributed to a 3.3% decrease in operating costs per ton of freight compared to
last year, excluding the gain on sale of operating property. The gain on sale of
operating property added $1.9 million to net income in the first half of 1996.
While we plan to sell additional facilities during 1996, we don't anticipate
this level of gain on future sales. Our cost containment strategies are on
schedule. At the end of the quarter our system count was 451 terminals, compared
to 583 terminals at the end of the second quarter 1995. Our strategy also
includes the increased use of railroads in certain linehaul operations, which is
reflected in the 21.8% increase in purchased transportation expense during the
first half of 1996 compared to 1995. Rising fuel costs were a concern during the
second quarter, but the increased use of intermodal transportation and purchases
of fuel on contract minimized the negative impact.
At the end of the quarter, there were no borrowings against the credit facility,
as opposed to a $20.5 million increase of short term borrowings during the first
half of 1995. The short term debt in 1995 was used to fund working capital needs
and a dividend to our former parent. In 1996 our cash flow from operations has
been sufficient to meet working capital needs. We entered into an operating
lease agreement to replace 3,250 (approximately 11%) of our linehaul trailers
during 1996. By the end of the quarter, we had replaced 690 of our aging
trailers with these new leased units.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
On April 1, 1996 a wage and benefit increase of 3.8% became effective under the
terms of the National Master Freight Agreement with the International
Brotherhood of Teamsters. Working with the Teamsters, the Company implemented
the Roadway Express Union Stock Plan, a stock incentive opportunity for our
18,000 Teamster employees who, through incentive-based distributions of stock
tied to Company operating margin, can be rewarded for contributing to a safe,
reliably-staffed, and injury-free work environment. An Employee Stock Purchase
Program was implemented for qualifying employees, allowing them an opportunity
to purchase company stock through payroll deduction at a discount of 15% of the
market price. The Company has finished the previously announced repurchase of
320,000 shares of its outstanding common stock to fund the Management Incentive
Stock Plan. Additionally, on July 10, the Board of Directors announced a cash
dividend of $0.05 per share on the Company's common stock payable on September
3, 1996, to shareholders of record on August 15, 1996. The increase in union
wage rates is expected to be partially offset by reductions in the terminal
network to better utilize existing capacity, improve efficiency, and reduce
fixed costs. The stock plans will better link employee actions to shareholder
interests.
The portions of narrative set forth in this discussion that are not historical
in nature are forward-looking statements. The Company's actual future
performance and operating and financial results may differ from those described
in the forward-looking statements as a result of a variety of factors that,
besides those mentioned, include the condition of the industry and the economy
and the success of the Company's operating plans.
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PART II -- OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On July 10, 1996, the Board of Directors announced a cash dividend of $0.05 per
share on the Company's common stock payable on September 3, 1996, to
shareholders of record on August 15, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No.
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10.18 Operating lease agreement by and between Roadway Express, Inc. and
ABN AMRO North America, Inc.
27 Financial Data Schedule.
List of the Current Reports on Form 8-K which have been filed since April 16,
1996:
Date of Form 8-K Items reported
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July 2, 1996 Press Release dated July 2, 1996 announcing second quarter
1996 operating results.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ROADWAY EXPRESS, INC.
Date:July 17, 1996 By: /s/ J. Dawson Cunningham
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J. Dawson Cunningham, Vice President-Finance and
Administration, and Treasurer (Principal Financial and
Accounting Officer)
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