Roadway's Third Quarter 2003 EPS $0.71 Before Acquisition-Related Charges
AKRON, Ohio--Sept. 30, 2003--Roadway Corporation today reported that revenues for its third quarter, which ended September 13, 2003, were $751,594,000, up 10% when compared to revenues of $681,696,000 for the third quarter of 2002. The Company reported a net loss of $3,401,000, or $0.18 per share (diluted), compared to net income of $6,936,000, or $0.36 per share (diluted), for the third quarter of 2002. Before charges related to the pending acquisition of Roadway Corporation by Yellow Corporation and effective tax-rate adjustments, net income for the quarter would have been $13,482,000 or $0.71 per share (diluted).For the 36 weeks constituting the Company's first three quarters, net income was $10,917,000, or $0.57 per share (diluted), compared to net income of $10,861,000, or $0.57 per share (diluted), for the same period in 2002. For the first three quarters of 2003, revenues were $2,247,192,000, up 16% when compared to revenues of $1,936,666,000 for the first three quarters of last year. The first three quarters of 2003 contained four more working days than the same period in 2002.
James D. Staley, President and CEO of Roadway Corporation stated: "We are pleased to report that our operating subsidiaries performed quite well. The 10% rise in revenues, combined with effective expense control, resulted in a 64% increase in operating income, before the recognition of $24.3 million in acquisition-related charges. These charges resulted primarily from the vesting of restricted stock awards, other compensation expense and transaction costs. The Company's effective tax rate has shifted from 42% to 53.6% as a result of these acquisition-related costs."
"Roadway Express implemented a 5.9% general freight rate increase on non-contract freight effective July 13. During the quarter, Roadway Express increased its yield per ton by 4.3% while increasing tonnage levels 6.4% above the same period last year. Roadway Express has not experienced any meaningful diversion of freight or customer flight due to the planned Yellow/Roadway acquisition. Overall, our customers seem to be more positive about the direction of the economy, although real economic growth is coming slowly," Staley said.
"New Penn's revenue grew by approximately one percent and their rates rose by 3.3%, even though they experienced a 2.5% tonnage decline for the quarter. While operating in the highly competitive and economically difficult Northeast market, New Penn improved its operating margins, excluding acquisition-related charges, and finished the quarter with an operating ratio of 89. As a next-day carrier, New Penn did not benefit from the freight added to the market when Consolidated Freightways ceased operations," Staley concluded.
Looking forward, the Company anticipates full-year 2003 revenue to increase approximately 7% to 8%, and earnings-per-share from continuing operations, excluding the impact of acquisition-related charges, to be consistent with previously provided guidance of between $2.36 and $2.60 compared to $1.85 in 2002. Including acquisition-related charges and the higher effective tax rate, the Company expects earnings-per-share for full-year 2003 to be in the range of $1.36 to $1.60 excluding any future acquisition-related charges. Fourth quarter year-over-year comparisons will be more difficult, as the impact of Consolidated Freightways' closure was already included in the fourth quarter of 2002, and the period will have four less working days than the same period in 2002.
Roadway declared October 16, 2003 as the record date for Roadway stockholders in connection with the pending Yellow/Roadway transaction. Stockholders of Roadway common stock as of the close of trading on October 16, 2003, will have the right to participate in a special meeting of stockholders to approve matters related to the acquisition of Roadway by Yellow. The shareholder meeting date has not been set, but is expected to occur in December 2003.
As a result of the sale of Arnold Transportation Services (ATS) on January 23, 2003, ATS has been accounted for as a discontinued operation for all periods presented. Assets and liabilities of ATS are included in the current section of the Condensed Consolidated Balance Sheet at December 31, 2002.
Condensed Statements of Consolidated Income
Roadway Corporation and Subsidiaries
Twelve Weeks Ended
(Third Quarter)
September 13, September 7,
2003 2002
------------------------------
(in thousands, except per
share data)
Revenue $751,594 $681,696
Operating expenses:
Salaries, wages and benefits 477,174 438,017
Operating supplies and expenses 122,412 108,176
Purchased transportation 77,246 63,850
Operating taxes and licenses 18,515 17,966
Insurance and claims 15,133 16,483
Provision for depreciation 16,658 18,079
Net (gain) loss on sale of operating
property (5,068) 1,075
Compensation and other expense related
to the acquisition by Yellow 24,337 -
-----------------------
Total operating expenses 746,407 663,646
-----------------------
Operating income from continuing
operations 5,187 18,050
Other (expense), net (6,279) (6,650)
-----------------------
(Loss) income from continuing operations
before income taxes (1,092) 11,400
Provision for income taxes 2,309 4,944
-----------------------
(Loss) income from continuing operations (3,401) 6,456
Income from discontinued operations - 480
-----------------------
Net (loss) income $ (3,401) $ 6,936
=======================
Earnings (loss) per share - basic:
Continuing operations $ (0.18) $ 0.35
Discontinued operations - 0.03
-----------------------
Total earnings per share - basic $ (0.18) $ 0.38
Earnings (loss) per share - diluted:
Continuing operations $ (0.18) $ 0.33
Discontinued operations - 0.03
-----------------------
Total earnings per share - diluted $ (0.18) $ 0.36
Average shares outstanding - basic 19,460 18,478
Average shares outstanding - diluted 19,460 18,914
Operating ratio 99.3% 97.4%
(Loss) profit margin from continuing
operations (0.5)% 0.9%
Condensed Statements of Consolidated Income
Roadway Corporation and Subsidiaries
Thirty-six Weeks Ended
(Three Quarters)
September 13, September 7,
2003 2002
---------------------------
(in thousands, except per
share data)
Revenue $2,247,192 $1,936,666
Operating expenses:
Salaries, wages and benefits 1,420,832 1,264,454
Operating supplies and expenses 382,846 314,489
Purchased transportation 227,755 173,134
Operating taxes and licenses 57,069 51,011
Insurance and claims 44,774 41,043
Provision for depreciation 50,827 54,319
Net (gain) loss on sale of operating
property (4,227) 1,653
Compensation and other expense related to
the acquisition by Yellow 24,337 -
------------------------
Total operating expenses 2,204,213 1,900,103
------------------------
Operating income from continuing operations 42,979 36,563
Other (expense), net (19,117) (20,297)
------------------------
Income from continuing operations before
income taxes 23,862 16,266
Provision for income taxes 12,790 7,047
------------------------
Income from continuing operations 11,072 9,219
(Loss) Income from discontinued operations (155) 1,642
------------------------
Net income $ 10,917 $ 10,861
========================
Earnings (loss) per share - basic:
Continuing operations $ 0.58 $ 0.50
Discontinued operations (0.01) 0.09
------------------------
Total earnings per share - basic $ 0.57 $ 0.59
Earnings (loss) per share - diluted:
Continuing operations $ 0.58 $ 0.48
Discontinued operations (0.01) 0.09
------------------------
Total earnings per share - diluted $ 0.57 $ 0.57
Average shares outstanding - basic 19,018 18,502
Average shares outstanding - diluted 19,038 18,982
Operating ratio 98.1% 98.1%
Profit margin from continuing operations 0.5% 0.5%
Condensed Consolidated Balance Sheets
Roadway Corporation and Subsidiaries
September 13, December 31,
2003 2002
---------------------------
(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 132,894 $ 106,929
Other current assets 290,100 356,143
-----------------------
Total current assets 422,994 463,072
Net carrier operating property 491,344 509,183
Goodwill, net 285,874 283,910
Deferred income taxes 37,015 39,941
Other assets 46,186 39,767
-----------------------
Total assets $1,283,413 $1,335,873
=======================
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 187,924 $ 193,501
Other current liabilities 184,814 267,389
-----------------------
Total current liabilities 372,738 460,890
Long-term liabilities 218,166 213,601
Long-term debt 248,924 273,513
Shareholders' equity 443,585 387,869
-----------------------
Total liabilities and equity $1,283,413 $1,335,873
=======================
Condensed Statements of Consolidated Cash Flows
Roadway Corporation and Subsidiaries
Thirty-six Weeks Ended
(Three Quarters)
September 13, September 7,
2003 2002
--------------------------
(in thousands)
Cash flows from operating activities:
Income from continuing operations $ 11,072 $ 9,219
Adjustments 43,176 34,911
--------------------------
Net cash provided by continuing operating
activities 54,248 44,130
Net cash provided (used) by
investing activities 19,519 (69,120)
Net cash (used) by financing activities (48,068) (15,920)
Effect of exchange rate changes on cash 305 (200)
--------------------------
Net increase (decrease) in cash and cash
equivalents from continuing operations 26,004 (41,110)
Net (decrease) in cash and cash equivalents
from discontinued operations (39) (4,080)
--------------------------
Cash and cash equivalents at
beginning of period 106,929 110,432
--------------------------
Cash and cash equivalents at end of period $132,894 $ 65,242
==========================
Reportable Segments and Related
Operating Data
Twelve Weeks Ended September 13,
2003
# of working days - 58 (Third Quarter 2003)
(Dollars in thousands, except per ton
data) Roadway New Segment
Express Penn Total
--------------------------------
Revenue $700,668 $ 50,926 $751,594
Salaries, wages & benefits 441,446 33,412 474,858
Operating supplies 117,826 7,247 125,073
Purchased transportation 76,729 517 77,246
Other operating expense 40,736 4,157 44,893
Acquisition expenses 23,374 963 24,337
--------------------------------
Operating expense 700,111 46,296 746,407
--------------------------------
Operating income $ 557 $ 4,630 $ 5,187
================================
Operating ratio 99.9% 90.9% 99.3%
LTL tons 1,458,899 190,771
Truckload tons 306,635 29,052
--------------------
Total tons 1,765,534 219,823
LTL shipments 3,027,865 430,019
Truckload shipments 37,826 3,601
--------------------
Total shipments 3,065,691 433,620
Revenue per LTL ton $ 441.31 $ 250.86
Revenue per truckload ton $ 171.07 $ 105.62
Revenue per ton $ 396.86 $ 231.67
Expense per ton $ 396.54 $ 210.61
Twelve Weeks Ended September 7,
2002
# of working days - 58 (Third Quarter 2002)
(Dollars in thousands, except per ton
data) Roadway New Segment
Express Penn Total
--------------------------------
Revenue $631,158 $ 50,538 $681,696
Salaries, wages & benefits 402,918 33,171 436,089
Operating supplies 104,540 5,929 110,469
Purchased transportation 63,318 532 63,850
Other operating expense 48,636 4,602 53,238
--------------------------------
Operating expense 619,412 44,234 663,646
--------------------------------
Operating income $ 11,746 $ 6,304 $ 18,050
================================
Operating ratio 98.1% 87.5% 97.4%
LTL tons 1,347,193 195,791
Truckload tons 312,130 29,651
--------------------
Total tons 1,659,323 225,442
LTL shipments 2,810,263 432,803
Truckload shipments 37,585 3,653
--------------------
Total shipments 2,847,848 436,456
Revenue per LTL ton $ 432.20 $ 242.01
Revenue per truckload ton $ 156.68 $ 106.36
Revenue per ton $ 380.37 $ 224.17
Expense per ton $ 373.29 $ 196.21
Reportable Segments and Related
Operating Data
Thirty-six Weeks Ended September 13,
2003
# of working days - 179 (Three Quarters 2003)
(Dollars in thousands, except per
ton data) Roadway New Segment
Express Penn Total
-------------------------------------
Revenue $2,097,068 $ 150,124 $2,247,192
Salaries, wages & benefits 1,313,985 99,512 1,413,497
Operating supplies 369,386 22,158 391,544
Purchased transportation 226,247 1,508 227,755
Other operating expense 133,968 13,112 147,080
Acquisition expenses 23,374 963 24,337
-------------------------------------
Operating expense 2,066,960 137,253 2,204,213
-------------------------------------
Operating income $ 30,108 $ 12,871 $ 42,979
=====================================
Operating ratio 98.6% 91.4% 98.1%
LTL tons 4,384,783 566,921
Truckload tons 910,013 86,723
------------------------
Total tons 5,294,796 653,644
LTL shipments 9,223,684 1,283,363
Truckload shipments 112,445 10,639
------------------------
Total shipments 9,336,129 1,294,002
Revenue per LTL ton $ 443.52 $ 248.45
Revenue per truckload ton $ 167.41 $ 106.92
Revenue per ton $ 396.06 $ 229.67
Expense per ton $ 390.38 $ 209.98
Thirty-six Weeks Ended September 7,
2002
# of working days - 175 (Three Quarters 2002)
(Dollars in thousands, except per
ton data) Roadway New Segment
Express Penn Total
-------------------------------------
Revenue $1,791,125 $ 145,541 $1,936,666
Salaries, wages & benefits 1,161,888 96,602 1,258,490
Operating supplies 303,527 17,980 321,507
Purchased transportation 171,761 1,373 173,134
Other operating expense 132,553 14,419 146,972
-------------------------------------
Operating expense 1,769,729 130,374 1,900,103
-------------------------------------
Operating income $ 21,396 $ 15,167 $ 36,563
=====================================
Operating ratio 98.8% 89.6% 98.1%
LTL tons 3,866,001 566,946
Truckload tons 862,135 81,499
-------------------------
Total tons 4,728,136 648,445
LTL shipments 8,151,571 1,256,504
Truckload shipments 104,486 10,136
-------------------------
Total shipments 8,256,057 1,266,640
Revenue per LTL ton $ 428.85 $ 241.43
Revenue per truckload ton $ 154.49 $ 106.28
Revenue per ton $ 378.82 $ 224.45
Expense per ton $ 374.30 $ 201.05
The following tables show the charges related to the pending acquisition of Roadway Corporation by Yellow Corporation, and their impact on operating income, operating ratio, income taxes, and earnings per share. These charges resulted primarily from the vesting of restricted stock awards, other compensation expense and transaction costs. The Company's effective tax rate has shifted from 42.0% to 53.6% as a result of these acquisition-related costs.
Twelve Weeks Ended
September 13, 2003
(Third quarter)
Acquisition
As reported Charges Pro forma
--------------------------------
Roadway Corporation
-------------------
Revenue $751,594 $ - $751,594
Operating expenses 746,407 (24,337) 722,070
----------------------------
Operating Income 5,187 24,337 29,524
Other (expense), net (6,279) - (6,279)
----------------------------
Pretax (loss) income (1,092) 24,337 23,245
Income tax expense 2,309 7,454 9,763
----------------------------
Net (loss) income $ (3,401) $ 16,883 $ 13,482
============================
(Loss) earnings per share (diluted) $ (0.18) $ 0.89 $ 0.71
Operating ratio 99.3% 96.1%
Roadway Express
---------------
Revenue $700,668 $ - $700,668
Operating expenses 700,111 (23,374) 676,737
----------------------------
Operating income $ 557 $ 23,374 $ 23,931
============================
Operating ratio 99.9% 96.6%
New Penn
--------
Revenue $ 50,926 $ - $ 50,926
Operating expenses 46,296 (963) 45,333
----------------------------
Operating income $ 4,630 $ 963 $ 5,593
============================
Operating ratio 90.9% 89.0%
Thirty-six Weeks Ended
September 13, 2003
(Three Quarters)
Acquisition
As reported Charges Pro forma
---------------------------------
Roadway Corporation
-------------------
Revenue $2,247,192 $ - $2,247,192
Operating expenses 2,204,213 (24,337) 2,179,876
--------------------------------
Operating income 42,979 24,337 67,316
Other (expense), net (19,117) - (19,117)
--------------------------------
Pretax income 23,862 24,337 48,199
Income tax expense 12,790 7,454 20,244
--------------------------------
Operating income from continuing
operations 11,072 16,883 27,955
Discontinued operations 155 - 155
--------------------------------
Net income $ 11,227 $ 16,883 $ 28,110
================================
Earnings per share (diluted) $ 0.59 $ 0.89 $ 1.48
Operating ratio 98.1% 97.0%
Roadway Express
---------------
Revenue $2,097,068 $ - $2,097,068
Operating expenses 2,066,960 (23,374) 2,043,586
--------------------------------
Operating income $ 30,108 $ 23,374 $ 53,482
================================
Operating ratio 98.6% 97.4%
New Penn
--------
Revenue $ 150,124 $ - $ 150,124
Operating expenses 137,253 (963) 136,290
--------------------------------
Operating income $ 12,871 $ 963 $ 13,834
================================
Operating ratio 91.4% 90.8%
Roadway Corporation operates with 12 weeks in each of the first three quarters and 16 weeks in the fourth quarter.
A conference call discussing this quarter's performance with securities analysts will be simulcast live on the Company's Web site at www.roadwaycorp.com beginning at 11:00 a.m. (Eastern time) on Tuesday, September 30, 2003. The call will remain available for the next three weeks.
Note: This release contains, and other statements that we may make may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to the outlook for expectations for revenue, earnings or other future financial or business performance, strategies, expectations and goals. All statements that are not historical statements of fact are "forward-looking statements" and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements include all comments relating to our beliefs and expectations as to future events and trends affecting our business, results of operations and financial condition. We intend for the words "believes," "anticipates," "expects," "intends," "plans," "continues," "projects," and similar expressions to identify forward-looking statements. The risks and uncertainties include, among others, variable factors such as capacity and rate levels in the motor freight industry; fuel prices; the impact of competition; the state of the national economy; the success of our operating plans, including our ability to manage growth and control costs; labor relations matters; uncertainties concerning the impact terrorist activities may have on the economy and the motor freight industry; and the timely completion of Yellow Corporation's plan to acquire Roadway Corporation and its subsidiaries. We have based these forward-looking statements on management's analysis about future events only as of the date of this press release. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this press release. These forward-looking statements are subject to risks, uncertainties and assumptions about us and our subsidiaries. In addition to the disclosure contained in this document, you should carefully review the risks and uncertainties contained in other documents Roadway Corporation files from time to time with the Securities and Exchange Commission. Those documents are accessible on the SEC's Web site at www.sec.gov and through our Web site at www.roadwaycorp.com.
Included in the Dow Jones Transportation Average, Roadway Corporation is a holding company dedicated to leveraging opportunities to expand the transportation-related service offerings available to customers through the Roadway portfolio of strategically linked transportation companies. Roadway Corporation's principal subsidiaries include Roadway Express and Roadway Next Day Corporation. Roadway Express is a leading ISO 9001 and C-TPAT/PIP and FAST certified transporter of industrial, commercial and retail goods in the two- to five-day regional and long-haul markets. Roadway Express provides seamless service throughout all 50 states, Canada, Mexico and Puerto Rico including export/import services for more than 100 countries worldwide. Roadway Express owns Reimer Express Lines in Canada and Mexican-based Roadway Express, S.A. de C.V. Roadway Next Day Corporation is a holding company focused on business opportunities in the shorter-haul regional and next-day markets. Roadway Next Day Corporation owns New Penn Motor Express, a next-day, ground less-than-truckload carrier of general commodities serving twelve states in the Northeastern United States, Quebec, Canada and Puerto Rico, with links to the Midwest and Southeast United States and Ontario, Canada. For additional information, contact Roadway Corporation at www.roadwaycorp.com.