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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 September 7, 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 (I.R.S. Employer Identification No)
incorporation or organization)
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
September 30, 1996 was 20,536,008.
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 7, 1996 December 31, 1995
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(dollars in thousands)
Assets
Current assets:
Cash and cash equivalents $ 21,413 $ 23,341
Accounts receivable, net 247,243 227,121
Other current assets 20,678 19,530
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Total current assets 289,334 269,992
Carrier operating property at cost 1,411,902 1,433,712
Allowance for depreciation 1,017,899 1,008,952
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Carrier operating property, net 394,003 424,760
Deferred income taxes 17,954 18,855
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Total assets $ 701,291 $ 713,607
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Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 131,650 $ 125,263
Salaries and wages payable 111,613 110,968
Freight and casualty claims payable 50,900 60,225
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Total current liabilities 294,163 296,456
Long-term liabilities
Casualty claims payable 72,053 95,379
Future equipment repairs 25,751 29,191
Accrued pension and retiree medical 94,649 86,939
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Total long-term liabilities 192,453 211,509
Shareholders' equity
Common Stock - $.01 par value
Authorized - 100,000,000 shares
Issued - 20,556,714 shares 206 206
Other shareholders' equity 214,469 205,436
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Total shareholders' equity 214,675 205,642
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Total liabilities and equity $ 701,291 $ 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
(Third Quarter)
September 7, 1996 September 9, 1995
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(amounts in thousands, except per share data)
Revenue $ 540,942 $ 526,580
Operating expenses:
Salaries, wages and benefits 355,154 357,029
Operating supplies and expenses 89,491 87,949
Purchased transportation 44,893 37,395
Operating taxes and licenses 17,614 17,510
Insurance and claims expense 10,517 13,241
Provision for depreciation 14,213 16,590
Net (gain) on disposal of operating property (935) (369)
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Total operating expenses 530,947 529,345
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Operating income (loss) 9,995 (2,765)
Other income (expense), net (364) (826)
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Income (loss) before income taxes 9,631 (3,591)
Provision for income taxes 5,051 457
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Net income (loss) $ 4,580 $ (4,048)
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Net income (loss) per share $ 0.22 $ (0.20)
Average shares outstanding 20,541 20,556
Thirty-six Weeks Ended
(Three Quarters)
September 7, 1996 September 9, 1995
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(amounts in thousands, except per share data)
Revenue $ 1,590,654 $ 1,569,991
Operating expenses:
Salaries, wages and benefits 1,052,349 1,067,515
Operating supplies and expenses 266,643 272,095
Purchased transportation 124,788 102,965
Operating taxes and licenses 53,300 52,565
Insurance and claims expense 30,523 39,978
Provision for depreciation 45,047 50,470
Net (gain) on disposal of operating property (4,256) (550)
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Total operating expenses 1,568,394 1,585,038
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Operating income (loss) 22,260 (15,047)
Other income (expense), net (874) (2,754)
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Income (loss) before income taxes 21,386 (17,801)
Provision (benefit) for income taxes 10,130 (4,605)
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Net income (loss) $ 11,256 $ (13,196)
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Net income (loss) per share $ 0.55 $ (0.65)
Average shares outstanding 20,527 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)
Thirty-six Weeks Ended
(Three Quarters)
September 7, 1996 September 9, 1995
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(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 11,256 $ (13,196)
Depreciation and amortization 45,084 50,440
Other operating adjustments (46,181) (34,781)
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Net cash provided by operating activities 10,159 2,463
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of carrier operating property (20,102) (19,303)
Sales of carrier operating property 10,068 3,318
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Net cash used by investing activities (10,034) (15,985)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (2,053) (7,500)
Net borrowings - 19,000
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Net cash provided (used) by financing activities (2,053) 11,500
Net decrease in cash and cash equivalents (1,928) (2,022)
Cash and cash equivalents at beginning of period 23,341 24,028
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Cash and cash equivalents at end of period $ 21,413 $ 22,006
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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 36 weeks ended September
7, 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.
Note C--Provision for Income Taxes
Taxes provided exceed the U.S. statutory rate primarily due to non-deductible
operating costs, and foreign and state taxes.
Twelve Weeks Ended Thirty-six Weeks Ended
(Third Quarter) (Three Quarters)
September 7, 1996 September 9, 1995 September 7, 1996 September 9, 1995
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(amounts in thousands)
U.S. Federal $ 3,637 $ (236) $ 5,538 $ (7,007)
U.S. State 585 (180) 1,232 (1,028)
Foreign 829 873 3,360 3,430
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Total $ 5,051 $ 457 $10,130 $ (4,605)
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company had net income of $4,580,000, or $0.22 per share, for the third
quarter ended September 7, 1996, compared to a loss of $4,048,000, or $0.20 per
share, in the third quarter of last year. This improvement in earnings is
primarily the result of cost controls and revenue growth. Revenues were
$540,942,000 for the third quarter of 1996, compared to $526,580,000 for the
third quarter of 1995.
The Company's tonnage was up .4% in the third quarter. Our less-than-truckload
(LTL) tons were up 2.1% and truckload tonnage was down 6.8%, compared to third
quarter 1995. Net revenue per ton has increased 2.3% above the third quarter
1995. This increase reflects modest improvement in freight rates and a larger
percentage of the higher rated LTL freight being handled in the third quarter of
1996. LTL rates have increased by 1.5% and truckload rates have increased by
1.0% above third quarter 1995.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Cost containment enabled the Company to compensate for continued weak revenue
rates and generate a profit for the third quarter. Operating expenses per ton
were flat compared to third quarter 1995. Salary, wage, and benefit costs were
slightly lower than last year, principally due to the favorable impact of the
Company's continuing network refinement and the reduction of benefit costs
including workers' compensation. Insurance claims and expenses were 20.6% below
last year due to reduced cargo losses and fewer damage claims, plus the
continued strong safety performance of our work force. Purchased transportation
costs increased 20%, reflecting the Company's expanding use of intermodal
services. Increased fuel prices reduced operating income by $1.3 million. To
alleviate this situation, the company instituted a variable fuel surcharge
effective September 3, 1996, which is based on the U.S. National Average Fuel
Index. Virtually none of the fuel surcharge was recognized in the third quarter
of 1996 since it was put into effect during the last week of the quarter.
Depreciation expenses have also been reduced as more revenue equipment has
become fully depreciated and as we have reduced terminal facilities.
On a year-to-year basis, 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 2.2% decrease in operating costs
per ton of freight, excluding the gain on sale of operating property. The gain
on sale of operating property added $2.2 million to net income in the first
three quarters of 1996. While the Company plans to sell additional facilities
during 1996, we don't anticipate this level of gain on future sales. Our cost
containment strategies are on schedule. The Company's system count has been
reduced to 436 terminals, compared to 549 terminals at the end of the third
quarter 1995. Our strategy also includes the increased use of railroads in
certain linehaul operations, which is reflected in the 21.2% increase in
purchased transportation expense during the first three quarters of 1996
compared to 1995. Rising fuel costs have reduced operating income by $3.7
million during 1996.
The tax expense attributable to the operating income for the first three
quarters of 1996 and the tax benefit attributable to the operating losses in the
first three quarters of 1995 differ from the Federal statutory rate due to the
impact of state taxes, taxes on profitable foreign operations, and
non-deductible operating expenses as described in Note C to the Condensed
Consolidated Financial Statements.
Freight and casualty claims payable have declined since year end 1995 primarily
due to the safety and risk management programs precipitated by the spin-off from
our former parent. New safety programs were initiated to control losses and
claims, and in late 1995 an intensive review was initiated to settle existing
claims which has resulted in significant reductions in this liability.
During the quarter, the Company entered into an additional $25 million credit
agreement, increasing the borrowing capacity to $50 million. At the end of the
quarter, there were no borrowings against the credit facilities, as opposed to a
$19 million increase of short term borrowings during the first three quarters of
1995. The short term debt in 1995 was used to fund working capital needs and a
dividend to our former parent. In 1996, cash flow from operations has been
sufficient to meet working capital needs. The Company 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 1,677 aging trailers
with these new leased units.
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 October 9, 1996, the Board of Directors announced a cash dividend of $0.05
per share on the Company's common stock payable on December 2, 1996, to
shareholders of record on November 15, 1996.
The annual meeting of shareholders of Roadway Express, Inc. will be held on
Wednesday, March 26, 1997 at 9:00 a.m. Eastern Standard Time at the Sheraton
Suites Hotel, 1989 Front St., Cuyahoga Falls, Ohio. Formal notice and proxy
statement, with proxy, and the Annual Report to Shareholders will be mailed on
or about February 21, 1997, to each shareholder of record on February 11, 1997.
Submissions of shareholder proposals to be included in the Roadway Express, Inc.
proxy statement must be received by Friday, November 15, 1996. Please direct all
proposals, in writing, to : Office of the Secretary, Roadway Express, Inc., 1077
Gorge Boulevard, Akron, OH 44310.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT NO.
10.19 $25,000,000 Credit Agreement between Roadway Express, Inc. and
Morgan Guaranty Trust Company of New York.
27 Financial Data Schedule.
List of the Current Reports on Form 8-K which have been filed since July 3,
1996:
DATE OF FORM 8-K ITEMS REPORTED
None.
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: October 10, 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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