UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment
No. 2
to
FORM 8-K
on Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 2003
Yellow Roadway Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 000-12255 | 48-0948788 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 10990 Roe Avenue Overland Park, Kansas |
66211 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (913) 696-6100
This amendment is being filed solely to add a new Note 8 regarding Guarantor and Non-Guarantor Subsidiaries to the portion of Exhibit 99.3 relating to Roadway Corporation’s financial statements for the twelve weeks ended March 29, 2003 and to add a new Note 9 regarding Guarantor and Non-Guarantor Subsidiaries to the portion of Exhibit 99.3 relating to Roadway Corporation’s financial statements for the twelve and twenty-four weeks ended June 21, 2003.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of businesses acquired.
The following financial statements of Roadway Corporation are included in Exhibit 99.3 hereto and incorporated herein by reference:
| Report of independent auditors dated January 22, 2003 |
| Consolidated balance sheets at December 31, 2002 and 2001 |
| Statements of consolidated income for the years ended December 31, 2002, 2001 and 2000 |
| Statements of consolidated shareholders’ equity for the years ended December 31, 2002, 2001 and 2000 |
| Statements of consolidated cash flows for the years ended December 31, 2002, 2001 and 2000 |
| Notes to consolidated financial statements |
| [Each of the above documents was filed as part of Exhibit 99.3 to the initial filing of this Current Report on Form 8-K on October 21, 2003] |
| Consolidated balance sheets at March 29, 2003 (unaudited) and December 31, 2002 |
| Statements of consolidated income (unaudited) for the twelve weeks ended March 29, 2003 and March 23, 2002 |
| Statements of consolidated cash flows (unaudited) for the twelve weeks ended March 29, 2003 and March 23, 2002 |
| Notes to condensed consolidated financial statements |
| Consolidated balance sheets at June 21, 2003 (unaudited) and December 31, 2002 |
| Statements of consolidated income (unaudited) for the twelve weeks ended June 21, 2003 and June 15, 2002 and the twenty-four weeks ended June 21, 2003 and June 15, 2002 |
| Statements of consolidated cash flows (unaudited) for the twenty-four weeks ended June 21, 2003 and June 15, 2002 |
| Notes to condensed consolidated financial statements |
(b) Pro forma financial information.
(c) Exhibits.
| 99.3 | Certain financial statements of Roadway Corporation (see Item 7(a) above). |
The information presented in this Current Report on Form 8-K may contain forward-looking statements and certain assumptions upon which such forward-looking statements are in part based. Numerous important factors, including those factors identified in Yellow Corporation’s Annual Report on Form 10-K and other of the company’s filings with the Securities and Exchange Commission, and the fact that the assumptions set forth in this Current Report on Form 8-K could prove incorrect, could cause actual results to differ materially from those contained in such forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 10, 2004
| YELLOW ROADWAY CORPORATION | ||
| By: |
/s/ Donald G. Barger, Jr. | |
| Donald G. Barger, Jr. | ||
| Senior Vice President and Chief Financial Officer | ||
Index to Exhibits
| Exhibit Number |
Description | |
| 99.3 | Certain financial statements of Roadway Corporation. |
Exhibit 99.3
Roadway Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
| March 29, 2003 |
December 31, 2002 | |||||
| (in thousands, except share data) | ||||||
| Assets |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 117,151 | $ | 106,929 | ||
| Accounts receivable, including retained interest in securitized receivables, net |
217,610 | 230,216 | ||||
| Assets of discontinued operations |
— | 87,431 | ||||
| Other current assets |
55,018 | 38,496 | ||||
| Total current assets |
389,779 | 463,072 | ||||
| Carrier operating property, at cost |
1,512,028 | 1,515,648 | ||||
| Less allowance for depreciation |
1,007,788 | 1,006,465 | ||||
| Net carrier operating property |
504,240 | 509,183 | ||||
| Goodwill, net |
284,598 | 283,910 | ||||
| Other assets |
90,157 | 79,708 | ||||
| Total assets |
$ | 1,268,774 | $ | 1,335,873 | ||
| Liabilities and shareholders’ equity |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 187,457 | $ | 193,501 | ||
| Salaries and wages |
126,680 | 151,464 | ||||
| Liabilities of discontinued operations |
— | 32,407 | ||||
| Other current liabilities |
60,743 | 83,518 | ||||
| Total current liabilities |
374,880 | 460,890 | ||||
| Long-term liabilities: |
||||||
| Casualty claims and other |
77,467 | 78,548 | ||||
| Accrued pension and retiree medical |
140,960 | 135,053 | ||||
| Long-term debt |
273,513 | 273,513 | ||||
| Total long-term liabilities |
491,940 | 487,114 | ||||
| Shareholders’ equity: |
||||||
| Common Stock - $.01 par value Authorized - 100,000,000 shares Issued - 20,556,714 shares |
206 | 206 | ||||
| Other shareholders’ equity |
401,748 | 387,663 | ||||
| Total shareholders’ equity |
401,954 | 387,869 | ||||
| Total liabilities and shareholders’ equity |
$ | 1,268,774 | $ | 1,335,873 | ||
The number of shares of common stock outstanding at March 29, 2003 and December 31, 2002 were 19,653,213 and 19,368,590, respectively.
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.
1
Roadway Corporation and Subsidiaries
Condensed Statements of Consolidated Income (Unaudited)
| Twelve Weeks Ended | ||||||||
| (First Quarter) |
||||||||
| March 29, 2003 |
March 23, 2002 |
|||||||
| (in thousands, except per share data) | ||||||||
| Revenue |
$ | 754,070 | $ | 598,967 | ||||
| Operating expenses: |
||||||||
| Salaries, wages and benefits |
475,435 | 399,164 | ||||||
| Operating supplies and expenses |
130,412 | 99,209 | ||||||
| Purchased transportation |
74,784 | 51,509 | ||||||
| Operating taxes and licenses |
19,866 | 15,564 | ||||||
| Insurance and claims expense |
15,112 | 11,431 | ||||||
| Provision for depreciation |
17,299 | 18,088 | ||||||
| Net loss on disposal of operating property |
811 | 295 | ||||||
| Total operating expenses |
733,719 | 595,260 | ||||||
| Operating income from continuing operations |
20,351 | 3,707 | ||||||
| Other (expense), net |
(6,794 | ) | (6,824 | ) | ||||
| Income (loss) from continuing operations before income taxes |
13,557 | (3,117 | ) | |||||
| Provision (benefit) for income taxes |
5,694 | (1,244 | ) | |||||
| Income (loss) from continuing operations |
7,863 | (1,873 | ) | |||||
| Income from discontinued operations |
147 | 124 | ||||||
| Net income (loss) |
$ | 8,010 | $ | (1,749 | ) | |||
| Earnings (loss) per share – basic: |
||||||||
| Continuing operations |
$ | 0.42 | $ | (0.10 | ) | |||
| Discontinued operations |
$ | 0.01 | $ | 0.01 | ||||
| Total earnings (loss) per share – basic |
$ | 0.43 | $ | (0.09 | ) | |||
| Earnings (loss) per share – diluted: |
||||||||
| Continuing operations |
$ | 0.41 | $ | (0.10 | ) | |||
| Discontinued operations |
$ | 0.01 | $ | 0.01 | ||||
| Total earnings (loss) per share – diluted |
$ | 0.42 | $ | (0.09 | ) | |||
| Average shares outstanding – basic |
18,655 | 18,555 | ||||||
| Average shares outstanding – diluted |
19,086 | 18,555 | ||||||
| Dividends declared per share |
$ | 0.05 | $ | 0.05 | ||||
See notes to condensed consolidated financial statements.
2
Roadway Corporation and Subsidiaries
Condensed Statements of Consolidated Cash Flows (Unaudited)
| Twelve Weeks Ended | ||||||||
| (First Quarter) |
||||||||
| March 29, 2003 |
March 23, 2002 |
|||||||
| (in thousands) | ||||||||
| Cash flows from operating activities |
||||||||
| Income (loss) from continuing operations |
$ | 7,863 | $ | (1,873 | ) | |||
| Depreciation and amortization |
18,260 | 18,555 | ||||||
| Other operating adjustments |
(24,201 | ) | (52,778 | ) | ||||
| Net cash provided (used) by operating activities |
1,922 | (36,096 | ) | |||||
| Cash flows from investing activities |
||||||||
| Purchases of carrier operating property |
(13,786 | ) | (11,043 | ) | ||||
| Sales of carrier operating property |
762 | 1,381 | ||||||
| Business disposal |
47,221 | — | ||||||
| Net cash provided (used) by investing activities |
34,197 | (9,662 | ) | |||||
| Cash flows from financing activities |
||||||||
| Dividends paid |
(960 | ) | (957 | ) | ||||
| Treasury stock activity, net |
(950 | ) | 24 | |||||
| Long-term (repayments) borrowings |
(24,000 | ) | — | |||||
| Net cash (used) by financing activities |
(25,910 | ) | (933 | ) | ||||
| Effect of exchange rate changes on cash |
51 | (11 | ) | |||||
| Net increase (decrease) in cash and cash equivalents from continuing operations |
10,260 | (46,702 | ) | |||||
| Net (decrease) in cash and cash equivalents from discontinued operations |
(38 | ) | (4,339 | ) | ||||
| Cash and cash equivalents at beginning of period |
106,929 | 110,433 | ||||||
| Cash and cash equivalents at end of period |
$ | 117,151 | $ | 59,392 | ||||
See notes to condensed consolidated financial statements.
3
Roadway Corporation 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 weeks ended March 29, 2003 are not necessarily indicative of the results that may be expected for the year ending 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.
Note 2—Accounting Period
Roadway Corporation (the registrant 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—Discontinued operations
On December 26, 2002, the Company entered into an agreement to sell Arnold Transportation Services (ATS) to a management group led by the unit’s president and a private equity firm, for approximately $55,000,000. The ATS business segment was acquired as part of the Company’s purchase of Roadway Next Day in November 2001, but did not fit the Company’s strategic focus of being a LTL carrier. The transaction was completed on January 23, 2003. The Company did not recognize a significant gain or loss as a result of this transaction.
The Company has reported the ATS results as a discontinued operation in the accompanying financial statements and, unless otherwise stated, the notes to the financial statements for all periods presented exclude the amounts related to this discontinued operation.
The following table presents revenue and income from the discontinued operations for the quarters ended March 29, 2003 and March 23, 2002. The quarter ended March 29, 2003 includes results of operations only through the disposal date, January 23, 2003.
| Twelve Weeks Ended | ||||||
| (First Quarter) | ||||||
| March 29, 2003 |
March 23, 2002 | |||||
| (in thousands) | ||||||
| Revenue |
$ | 9,267 | $ | 38,201 | ||
| Pre-tax income from discontinued operations |
198 | 212 | ||||
| Income tax expense |
51 | 88 | ||||
| Income from discontinued operations |
$ | 147 | $ | 124 | ||
4
Note 4—Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share:
| Twelve Weeks Ended | |||||||
| (First Quarter) |
|||||||
| March 29, 2003 |
March 23, 2002 |
||||||
| (in thousands, except per share data) | |||||||
| Income (loss) from: |
|||||||
| Continuing operations |
$ | 7,863 | $ | (1,873 | ) | ||
| Discontinued operations |
147 | 124 | |||||
| Net income (loss) |
$ | 8,010 | $ | (1,749 | ) | ||
| Weighted-average shares for basic earnings per share |
18,655 | 18,555 | |||||
| Management incentive stock plans |
431 | — | |||||
| Weighted-average shares for diluted earnings per share |
19,086 | 18,555 | |||||
| Basic earnings (loss) per share from: |
|||||||
| Continuing operations |
$ | 0.42 | $ | (0.10 | ) | ||
| Discontinued operations |
0.01 | $ | 0.01 | ||||
| Basic earnings (loss) per share |
$ | 0.43 | $ | (0.09 | ) | ||
| Diluted earnings (loss) per share from: |
|||||||
| Continuing operations |
$ | 0.41 | $ | (0.10 | ) | ||
| Discontinued operations |
0.01 | $ | 0.01 | ||||
| Diluted earnings (loss) per share |
$ | 0.42 | $ | (0.09 | ) | ||
5
Note 5—Segment information
The Company provides freight services in two business segments: Roadway Express (Roadway) and New Penn Motor Express (New Penn). The Roadway segment provides long haul LTL freight services in North America and offers services to over 100 countries worldwide. The New Penn segment provides regional, next-day LTL freight service primarily in the northeast region of the United States.
The Company’s reportable segments are identified based on differences in products, services, and management structure. The measurement basis of segment profit or loss is operating income. Business segment assets consist primarily of customer receivables, net carrier operating property, and goodwill.
| Twelve weeks ended March 29, 2003 | ||||||||||||
| (First Quarter) |
||||||||||||
| Roadway Express |
New Penn |
Total |
||||||||||
| (in thousands) | ||||||||||||
| Revenue |
$ | 705,244 | $ | 48,826 | $ | 754,070 | ||||||
| Operating expense: |
||||||||||||
| Salaries, wages & benefits |
439,438 | 33,443 | 472,881 | |||||||||
| Operating supplies |
125,826 | 7,667 | 133,493 | |||||||||
| Purchased transportation |
74,242 | 542 | 74,784 | |||||||||
| Operating license and tax |
18,379 | 1,389 | 19,768 | |||||||||
| Insurance and claims |
13,895 | 954 | 14,849 | |||||||||
| Depreciation |
14,924 | 2,209 | 17,133 | |||||||||
| Net loss (gain) on sale of operating property |
802 | 9 | 811 | |||||||||
| Total operating expense |
687,506 | 46,213 | 733,719 | |||||||||
| Operating income |
$ | 17,738 | $ | 2,613 | $ | 20,351 | ||||||
| Operating ratio |
97.5 | % | 94.6 | % | 97.3 | % | ||||||
| Total assets |
$ | 802,557 | $ | 403,315 | $ | 1,205,872 | ||||||
6
Note 5—Segment information (continued)
| Twelve weeks ended March 23, 2002 | ||||||||||||
| (First Quarter) |
||||||||||||
| Roadway Express |
New Penn |
Total |
||||||||||
| (in thousands) | ||||||||||||
| Revenue |
$ | 553,558 | $ | 45,409 | $ | 598,967 | ||||||
| Operating expense: |
||||||||||||
| Salaries, wages & benefits |
366,335 | 30,709 | 397,044 | |||||||||
| Operating supplies |
95,499 | 6,114 | 101,613 | |||||||||
| Purchased transportation |
51,126 | 383 | 51,509 | |||||||||
| Operating license and tax |
14,188 | 1,359 | 15,547 | |||||||||
| Insurance and claims |
10,388 | 894 | 11,282 | |||||||||
| Depreciation |
15,269 | 2,690 | 17,959 | |||||||||
| Net loss (gain) on sale of operating property |
346 | (51 | ) | 295 | ||||||||
| Total operating expense |
553,151 | 42,098 | 595,249 | |||||||||
| Operating income |
$ | 407 | $ | 3,311 | $ | 3,718 | ||||||
| Operating ratio |
99.9 | % | 92.7 | % | 99.4 | % | ||||||
| Total assets |
$ | 703,834 | $ | 335,218 | $ | 1,039,052 | ||||||
Reconciliation of segment operating income to consolidated operating income from continuing operations before taxes:
| Twelve Weeks Ended | ||||||||
| (First Quarter) |
||||||||
| March 29, 2003 |
March 23, 2002 |
|||||||
| (in thousands) | ||||||||
| Segment operating income from continuing operations |
$ | 20,351 | $ | 3,718 | ||||
| Unallocated corporate (expense) |
— | (11 | ) | |||||
| Interest (expense) |
(5,102 | ) | (5,464 | ) | ||||
| Other (expense), net |
(1,692 | ) | (1,360 | ) | ||||
| Consolidated income (loss) from continuing operations before taxes |
$ | 13,557 | $ | (3,117 | ) | |||
7
Note 5—Segment information (continued)
Reconciliation of total segment assets to total consolidated assets:
| March 29,2003 |
December 31, 2002 |
|||||||
| (in thousands) | ||||||||
| Total segment assets |
$ | 1,205,872 | $ | 1,211,584 | ||||
| Unallocated corporate assets |
77,102 | 41,351 | ||||||
| Assets of discontinued operations |
— | 87,431 | ||||||
| Elimination of intercompany balances |
(14,200 | ) | (4,493 | ) | ||||
| Consolidated assets |
$ | 1,268,774 | $ | 1,335,873 | ||||
Note 6—Comprehensive Income
Comprehensive income differs from net income due to foreign currency translation adjustments and derivative fair value adjustments as shown below:
| Twelve Weeks Ended | |||||||
| (First Quarter) |
|||||||
| March 29, 2003 |
March 23, 2002 |
||||||
| (in thousands) | |||||||
| Net income (loss) |
$ | 8,010 | $ | (1,749 | ) | ||
| Foreign currency translation adjustments |
2,688 | (1,178 | ) | ||||
| Derivative fair value adjustment |
76 | — | |||||
| Comprehensive income (loss) |
$ | 10,774 | $ | (2,927 | ) | ||
Note 7—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 range of the remaining payments that may be due to the former parent to be $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.
8
Note 8—Guarantor and Non-Guarantor Subsidiaries
The credit facility borrowings and the senior notes issued in connection with the acquisition of Arnold are secured by a first-priority perfected lien on all of the capital stock of the Company’s direct subsidiaries. They are also supported by guarantees provided by all of the Company’s material subsidiaries, which are wholly owned. These guarantees are full and unconditional, joint and several.
The following condensed consolidating financial statements set forth the Company’s balance sheets, statements of income, and statements of cash flows for the same time periods as the financial statements presented in Item 1 above. In the following schedules “Parent Company” refers to the balances of Roadway Corporation, “Guarantor Subsidiaries” refers to non-minor domestic subsidiaries, and “Non-guarantor subsidiaries” refers to foreign and minor domestic subsidiaries and “Eliminations” represent the adjustments necessary to (a) eliminate intercompany transactions and (b) eliminate the investments in the Company’s subsidiaries.
| Condensed Consolidating Balance Sheets March 29, 2003 |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | ||||||||||||
| (in millions) | |||||||||||||||||
| Cash and cash equivalents |
$ | 30 | $ | 84 | $ | 3 | $ | – | $ | 117 | |||||||
| Accounts receivable, including retained interest in securitized receivables, net |
– | 202 | 16 | – | 218 | ||||||||||||
| Due from affiliates |
20 | 312 | 1 | (333 | ) | – | |||||||||||
| Prepaid expenses and supplies |
– | 26 | – | – | 26 | ||||||||||||
| Deferred income taxes |
– | 29 | – | – | 29 | ||||||||||||
| Total current assets |
50 | 653 | 20 | (333 | ) | 390 | |||||||||||
| Carrier operating property, at cost |
– | 1,484 | 28 | – | 1,512 | ||||||||||||
| Less allowance for depreciation |
– | 992 | 16 | – | 1,008 | ||||||||||||
| Net carrier operating property |
– | 492 | 12 | – | 504 | ||||||||||||
| Goodwill, net |
– | 269 | 16 | – | 285 | ||||||||||||
| Investment in subsidiaries |
606 | 8 | – | (614 | ) | – | |||||||||||
| Deferred income taxes |
4 | 38 | 1 | – | 43 | ||||||||||||
| Long-term assets |
18 | 29 | – | – | 47 | ||||||||||||
| Total assets |
$ | 678 | $ | 1,489 | $ | 49 | $ | (947 | ) | $ | 1,269 | ||||||
| Accounts payable |
$ | (21 | ) | $ | 200 | $ | 8 | $ | – | $ | 187 | ||||||
| Due to affiliates |
290 | 13 | 30 | (333 | ) | – | |||||||||||
| Salaries and wages |
– | 125 | 2 | – | 127 | ||||||||||||
| Current portion of long-term debt |
– | 10 | – | – | 10 | ||||||||||||
| Freight and casualty claims payable |
– | 50 | 1 | – | 51 | ||||||||||||
| Total current liabilities |
269 | 398 | 41 | (333 | ) | 375 | |||||||||||
| Casualty claims and other |
7 | 60 | – | – | 67 | ||||||||||||
| Deferred income taxes |
– | 10 | – | – | 10 | ||||||||||||
| Long-term debt |
– | 274 | – | – | 274 | ||||||||||||
| Accrued pension and retiree medical |
– | 141 | – | – | 141 | ||||||||||||
| Total shareholders’ equity |
402 | 606 | 8 | (614 | ) | 402 | |||||||||||
| Total liabilities and shareholders’ equity |
$ | 678 | $ | 1,489 | $ | 49 | $ | (947 | ) | $ | 1,269 | ||||||
9
Note 8—Guarantor and Non-Guarantor Subsidiaries (continued)
| Condensed Consolidating Balance Sheets December 31, 2002 |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | ||||||||||||
| (in millions) | |||||||||||||||||
| Cash and cash equivalents |
$ | 12 | $ | 88 | $ | 7 | $ | – | $ | 107 | |||||||
| Accounts receivable, including retained interest in securitized receivables, net |
– | 216 | 14 | – | 230 | ||||||||||||
| Due from affiliates |
11 | 330 | 2 | (343 | ) | – | |||||||||||
| Prepaid expenses and supplies |
– | 17 | – | – | 17 | ||||||||||||
| Deferred income taxes |
– | 22 | – | – | 22 | ||||||||||||
| Assets of discontinued operations |
– | 87 | – | – | 87 | ||||||||||||
| Total current assets |
23 | 760 | 23 | (343 | ) | 463 | |||||||||||
| Carrier operating property, at cost |
– | 1,488 | 28 | – | 1,516 | ||||||||||||
| Less allowance for depreciation |
– | 992 | 15 | – | 1,007 | ||||||||||||
| Net carrier operating property |
– | 496 | 13 | – | 509 | ||||||||||||
| Goodwill, net |
– | 269 | 15 | – | 284 | ||||||||||||
| Investment in subsidiaries |
656 | 4 | – | (660 | ) | – | |||||||||||
| Deferred income taxes |
4 | 36 | – | – | 40 | ||||||||||||
| Long-term assets |
10 | 30 | – | – | 40 | ||||||||||||
| Total assets |
$ | 693 | $ | 1,595 | $ | 51 | $ | (1,003 | ) | $ | 1,336 | ||||||
| Accounts payable |
$ | (12 | ) | $ | 195 | $ | 11 | $ | – | $ | 194 | ||||||
| Due to affiliates |
310 | 2 | 31 | (343 | ) | – | |||||||||||
| Salaries and wages |
2 | 145 | 4 | – | 151 | ||||||||||||
| Current portion of long-term debt |
– | 34 | – | – | 34 | ||||||||||||
| Freight and casualty claims payable |
– | 49 | 1 | – | 50 | ||||||||||||
| Liabilities of discontinued operations |
– | 32 | – | – | 32 | ||||||||||||
| Total current liabilities |
300 | 457 | 47 | (343 | ) | 461 | |||||||||||
| Casualty claims and other |
5 | 62 | – | – | 67 | ||||||||||||
| Deferred income taxes |
– | 11 | – | – | 11 | ||||||||||||
| Long-term debt |
– | 274 | – | – | 274 | ||||||||||||
| Accrued pension and retiree medical |
– | 135 | – | – | 135 | ||||||||||||
| Total shareholders’ equity |
388 | 656 | 4 | (660 | ) | 388 | |||||||||||
| Total liabilities and shareholders’ equity |
$ | 693 | $ | 1,595 | $ | 51 | $ | (1,003 | ) | $ | 1,336 | ||||||
10
Note 8—Guarantor and Non-Guarantor Subsidiaries (continued)
| Condensed Consolidating Statements of Income Twelve Weeks Ended March 29 2003 (First Quarter) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Revenue |
$ | – | $ | 724 | $ | 30 | $ | – | $ | 754 | |||||||||
| Operating expenses: |
|||||||||||||||||||
| Salaries, wages and benefits |
2 | 463 | 10 | – | 475 | ||||||||||||||
| Operating supplies and expenses |
(2 | ) | 125 | 7 | – | 130 | |||||||||||||
| Purchased transportation |
– | 66 | 9 | – | 75 | ||||||||||||||
| Operating taxes and licenses |
– | 20 | – | – | 20 | ||||||||||||||
| Insurance and claims expenses |
– | 15 | – | – | 15 | ||||||||||||||
| Provision for depreciation |
– | 17 | 1 | – | 18 | ||||||||||||||
| Net loss (gain) on disposal of operating property |
– | 1 | – | – | 1 | ||||||||||||||
| Results of affiliates |
(8 | ) | (2 | ) | – | 10 | – | ||||||||||||
| Total operating expenses |
(8 | ) | 705 | 27 | 10 | 734 | |||||||||||||
| Operating (loss) income |
8 | 19 | 3 | (10 | ) | 20 | |||||||||||||
| Other (expenses), net |
– | (6 | ) | – | – | (6 | ) | ||||||||||||
| (Loss) income before income taxes |
8 | 13 | 3 | (10 | ) | 14 | |||||||||||||
| (Benefit) provision for income taxes |
– | 5 | 1 | – | 6 | ||||||||||||||
| Net (loss) income |
$ | 8 | $ | 8 | $ | 2 | $ | (10 | ) | $ | 8 | ||||||||
| Condensed Consolidating Statements of Income Twelve Weeks Ended March 23, 2002 (First Quarter) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Revenue |
$ | – | $ | 575 | $ | 24 | $ | – | $ | 599 | |||||||||
| Operating expenses: |
|||||||||||||||||||
| Salaries, wages and benefits |
2 | 389 | 8 | – | 399 | ||||||||||||||
| Operating supplies and expenses |
(2 | ) | 95 | 6 | – | 99 | |||||||||||||
| Purchased transportation |
– | 44 | 8 | – | 52 | ||||||||||||||
| Operating taxes and licenses |
– | 15 | 1 | – | 16 | ||||||||||||||
| Insurance and claims expenses |
– | 11 | – | – | 11 | ||||||||||||||
| Provision for depreciation |
– | 17 | 1 | – | 18 | ||||||||||||||
| Net loss (gain) on disposal of operating property |
– | – | – | – | – | ||||||||||||||
| Results of affiliates |
4 | – | – | (4 | ) | – | |||||||||||||
| Total operating expenses |
4 | 571 | 24 | (4 | ) | 595 | |||||||||||||
| Operating (loss) income |
(4 | ) | 4 | – | 4 | 4 | |||||||||||||
| Other (expenses), net |
– | (7 | ) | – | – | (7 | ) | ||||||||||||
| (Loss) income before income taxes |
(4 | ) | (3 | ) | – | 4 | (3 | ) | |||||||||||
| (Benefit) provision for income taxes |
(2 | ) | 1 | – | – | (1 | ) | ||||||||||||
| Net (loss) income |
$ | (2 | ) | $ | (4 | ) | $ | – | $ | 4 | $ | (2 | ) | ||||||
11
Note 8—Guarantor and Non-Guarantor Subsidiaries (continued)
| Condensed Consolidating Statement of Cash Flows Twelve Weeks Ended March 29, 2003 (First Quarter) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Net cash (used) provided by operating activities |
$ | (10 | ) | $ | 15 | $ | (3 | ) | $ | – | $ | 2 | |||||||
| Cash flows from investing activities |
– | (13 | ) | (1 | ) | – | (14 | ) | |||||||||||
| Purchases of carrier operating property, net |
– | 1 | – | – | 1 | ||||||||||||||
| Issuance of long-term note receivable |
(8 | ) | – | – | – | (8 | ) | ||||||||||||
| Business acquisitions |
55 | – | – | – | 55 | ||||||||||||||
| Net cash (used) in investing activities |
47 | (12 | ) | (1 | ) | – | 34 | ||||||||||||
| Cash flows from financing activities |
|||||||||||||||||||
| Dividends received (paid) |
(1 | ) | – | – | – | (1 | ) | ||||||||||||
| Transfer to (from) parent |
7 | (7 | ) | – | – | – | |||||||||||||
| Accounts receivable securitization |
– | – | – | – | – | ||||||||||||||
| Treasury stock activity—net |
(1 | ) | – | – | – | (1 | ) | ||||||||||||
| Debt issuance costs |
– | – | – | – | |||||||||||||||
| Long-term debt |
(24 | ) | – | – | – | (24 | ) | ||||||||||||
| Net cash provided (used) in financing activities |
(19 | ) | (7 | ) | – | – | (26 | ) | |||||||||||
| Effect of exchange rate changes on cash |
– | – | – | – | – | ||||||||||||||
| Net (decrease) in cash and cash equivalents |
18 | (4 | ) | (4 | ) | – | 10 | ||||||||||||
| Cash and cash equivalents at beginning of year |
12 | 88 | 7 | – | 107 | ||||||||||||||
| Cash and cash equivalents at end of year |
$ | 30 | $ | 84 | $ | 3 | $ | – | $ | 117 | |||||||||
| Condensed Consolidating Statement of Cash Flows Twelve Weeks Ended March 23, 2002 (First Quarter) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Net cash (used) provided by operating activities |
$ | (47 | ) | $ | 10 | $ | 1 | $ | – | $ | (36 | ) | |||||||
| Cash flows from investing activities |
|||||||||||||||||||
| Purchases of carrier operating property, net |
– | (9 | ) | (1 | ) | – | (10 | ) | |||||||||||
| Business acquisitions |
– | – | – | – | – | ||||||||||||||
| Net cash (used) in investing activities |
– | (9 | ) | (1 | ) | – | (10 | ) | |||||||||||
| Cash flows from financing activities |
|||||||||||||||||||
| Dividends received (paid) |
30 | (31 | ) | – | – | (1 | ) | ||||||||||||
| Accounts receivable securitization |
– | – | – | – | – | ||||||||||||||
| Treasury stock activity—net |
– | – | – | – | – | ||||||||||||||
| Long-term debt |
– | – | – | – | – | ||||||||||||||
| Net cash provided (used) in financing activities |
30 | (31 | ) | – | – | (1 | ) | ||||||||||||
| Net (decrease) in cash and cash equivalents from continuing operations |
(17 | ) | (30 | ) | – | – | (47 | ) | |||||||||||
| Net (decrease) in cash and cash equivalents from discontinued operations |
– | (4 | ) | – | – | (4 | ) | ||||||||||||
| Cash and cash equivalents at beginning of year |
35 | 74 | 1 | – | 110 | ||||||||||||||
| Cash and cash equivalents at end of year |
$ | 18 | $ | 40 | $ | 1 | $ | – | $ | 59 | |||||||||
12
Roadway Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
| June 21, 2003 |
December 31, 2002 | |||||
| (in thousands, except share data) | ||||||
| Assets |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 125,692 | $ | 106,929 | ||
| Accounts receivable, including retained interest in securitized receivables, net |
215,055 | 230,216 | ||||
| Assets of discontinued operations |
— | 87,431 | ||||
| Other current assets |
49,541 | 38,496 | ||||
| Total current assets |
390,288 | 463,072 | ||||
| Carrier operating property, at cost |
1,511,699 | 1,515,648 | ||||
| Less allowance for depreciation |
1,015,682 | 1,006,465 | ||||
| Net carrier operating property |
496,017 | 509,183 | ||||
| Goodwill, net |
286,181 | 283,910 | ||||
| Other assets |
91,093 | 79,708 | ||||
| Total assets |
$ | 1,263,579 | $ | 1,335,873 | ||
| Liabilities and shareholders’ equity |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 164,806 | $ | 193,501 | ||
| Salaries and wages |
125,162 | 151,464 | ||||
| Liabilities of discontinued operations |
— | 32,407 | ||||
| Other current liabilities |
61,889 | 83,518 | ||||
| Total current liabilities |
351,857 | 460,890 | ||||
| Long-term liabilities: |
||||||
| Casualty claims and other |
75,505 | 78,548 | ||||
| Accrued pension and retiree medical |
147,800 | 135,053 | ||||
| Long-term debt |
270,279 | 273,513 | ||||
| Total long-term liabilities |
493,584 | 487,114 | ||||
| Shareholders’ equity: |
||||||
| Common Stock - $.01 par value |
206 | 206 | ||||
| Other shareholders’ equity |
417,932 | 387,663 | ||||
| Total shareholders’ equity |
418,138 | 387,869 | ||||
| Total liabilities and shareholders’ equity |
$ | 1,263,579 | $ | 1,335,873 | ||
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.
1
Roadway Corporation and Subsidiaries
Condensed Statements of Consolidated Income (Unaudited)
| Twelve Weeks Ended (Second Quarter) |
||||||||
| June 21, 2003 |
June 15, 2002 |
|||||||
| (in thousands, except per share data) | ||||||||
| Revenue |
$ | 741,528 | $ | 656,003 | ||||
| Operating expenses: |
||||||||
| Salaries, wages and benefits |
468,223 | 427,273 | ||||||
| Operating supplies and expenses |
130,022 | 107,104 | ||||||
| Purchased transportation |
75,725 | 57,775 | ||||||
| Operating taxes and licenses |
18,688 | 17,481 | ||||||
| Insurance and claims expense |
14,529 | 13,129 | ||||||
| Provision for depreciation |
16,870 | 18,152 | ||||||
| Net loss on disposal of operating property |
30 | 283 | ||||||
| Total operating expenses |
724,087 | 641,197 | ||||||
| Operating income from continuing operations |
17,441 | 14,806 | ||||||
| Other (expense), net |
(6,044 | ) | (6,823 | ) | ||||
| Income from continuing operations before income taxes |
11,397 | 7,983 | ||||||
| Provision for income taxes |
4,787 | 3,347 | ||||||
| Income from continuing operations |
6,610 | 4,636 | ||||||
| (Loss) income from discontinued operations |
(302 | ) | 1,038 | |||||
| Net income |
$ | 6,308 | $ | 5,674 | ||||
| Earnings (loss) per share – basic: |
||||||||
| Continuing operations |
$ | 0.35 | $ | 0.25 | ||||
| Discontinued operations |
(0.02 | ) | 0.05 | |||||
| Total earnings per share – basic |
$ | 0.33 | $ | 0.30 | ||||
| Earnings (loss) per share – diluted: |
||||||||
| Continuing operations |
$ | 0.35 | $ | 0.25 | ||||
| Discontinued operations |
(0.02 | ) | 0.05 | |||||
| Total earnings per share – diluted |
$ | 0.33 | $ | 0.30 | ||||
| Average shares outstanding – basic |
18,955 | 18,474 | ||||||
| Average shares outstanding – diluted |
19,336 | 18,888 | ||||||
| Dividends declared per share |
$ | 0.05 | $ | 0.05 | ||||
See notes to condensed consolidated financial statements.
2
Roadway Corporation and Subsidiaries
Condensed Statements of Consolidated Income (Unaudited)
| Twenty-four Weeks Ended (Two Quarters) |
||||||||
| June 21, 2003 |
June 15, 2002 |
|||||||
| (in thousands, except per share data) | ||||||||
| Revenue |
$ | 1,495,598 | $ | 1,254,970 | ||||
| Operating expenses: |
||||||||
| Salaries, wages and benefits |
943,658 | 826,437 | ||||||
| Operating supplies and expenses |
260,434 | 206,313 | ||||||
| Purchased transportation |
150,509 | 109,284 | ||||||
| Operating taxes and licenses |
38,554 | 33,045 | ||||||
| Insurance and claims expense |
29,641 | 24,560 | ||||||
| Provision for depreciation |
34,169 | 36,240 | ||||||
| Net loss on disposal of operating property |
841 | 578 | ||||||
| Total operating expenses |
1,457,806 | 1,236,457 | ||||||
| Operating income from continuing operations |
37,792 | 18,513 | ||||||
| Other (expense), net |
(12,838 | ) | (13,647 | ) | ||||
| Income from continuing operations before income taxes |
24,954 | 4,866 | ||||||
| Provision for income taxes |
10,481 | 2,103 | ||||||
| Income from continuing operations |
14,473 | 2,763 | ||||||
| (Loss) income from discontinued operations |
(155 | ) | 1,162 | |||||
| Net income |
$ | 14,318 | $ | 3,925 | ||||
| Earnings (loss) per share – basic: |
||||||||
| Continuing operations |
$ | 0.77 | $ | 0.15 | ||||
| Discontinued operations |
(0.01 | ) | 0.06 | |||||
| Total earnings per share – basic |
$ | 0.76 | $ | 0.21 | ||||
| Earnings (loss) per share – diluted: |
||||||||
| Continuing operations |
$ | 0.76 | $ | 0.15 | ||||
| Discontinued operations |
(0.01 | ) | 0.06 | |||||
| Total earnings per share – diluted |
$ | 0.75 | $ | 0.21 | ||||
| Average shares outstanding – basic |
18,802 | 18,514 | ||||||
| Average shares outstanding – diluted |
19,177 | 18,968 | ||||||
| Dividends declared per share |
$ | 0.10 | $ | 0.10 | ||||
See notes to condensed consolidated financial statements.
3
Roadway Corporation and Subsidiaries
Condensed Statements of Consolidated Cash Flows (Unaudited)
| Twenty-four Weeks Ended (Two Quarters) |
||||||||
| June 21, 2003 |
June 15, 2002 |
|||||||
| (in thousands) | ||||||||
| Cash flows from operating activities |
||||||||
| Income from continuing operations |
$ | 14,473 | $ | 2,763 | ||||
| Depreciation and amortization |
35,849 | 37,175 | ||||||
| Other operating adjustments |
(31,928 | ) | (45,756 | ) | ||||
| Net cash provided (used) by operating activities |
18,394 | (5,818 | ) | |||||
| Cash flows from investing activities |
||||||||
| Purchases of carrier operating property |
(22,448 | ) | (24,313 | ) | ||||
| Sales of carrier operating property |
1,721 | 1,869 | ||||||
| Business disposal |
47,430 | — | ||||||
| Net cash provided (used) by investing activities |
26,703 | (22,444 | ) | |||||
| Cash flows from financing activities |
||||||||
| Dividends paid |
(1,931 | ) | (1,940 | ) | ||||
| Treasury stock activity, net |
1,713 | (1,383 | ) | |||||
| Transfer from discontinued operation |
— | 2,500 | ||||||
| Long-term (repayments) borrowings |
(26,426 | ) | (2,500 | ) | ||||
| Net cash (used) by financing activities |
(26,644 | ) | (3,323 | ) | ||||
| Effect of exchange rate changes on cash |
348 | (90 | ) | |||||
| Net increase (decrease) in cash and cash equivalents from continuing operations |
18,801 | (31,675 | ) | |||||
| Net (decrease) in cash and cash equivalents from discontinued operations |
(38 | ) | (5,163 | ) | ||||
| Cash and cash equivalents at beginning of period |
106,929 | 110,432 | ||||||
| Cash and cash equivalents at end of period |
$ | 125,692 | $ | 73,594 | ||||
See notes to condensed consolidated financial statements.
4
Roadway Corporation 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 ended June 21, 2003 are not necessarily indicative of the results that may be expected for the year ending 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.
The Company completed the required goodwill impairment test under SFAS No. 142 for all reporting units effective June 21, 2003 which did not indicate any impairment. The Company expects to perform the required annual goodwill impairment assessment on a recurring basis at the end of the second quarter each year, or more frequently should any indicators of possible impairment be identified.
Note 2—Accounting Period
Roadway Corporation (the registrant 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—Discontinued operations
On December 26, 2002, the Company entered into an agreement to sell Arnold Transportation Services (ATS) to a management group led by the unit’s president and a private equity firm, for approximately $55,000,000. The ATS business segment was acquired as part of the Company’s purchase of Arnold Industries, Inc. (subsequently renamed Roadway Next Day Corporation) in November 2001, but did not fit the Company’s strategic focus of being a LTL carrier. The transaction was completed on January 23, 2003. The Company did not recognize a significant gain or loss as a result of this transaction.
The Company has reported the ATS results as a discontinued operation in the accompanying financial statements and, unless otherwise stated, the notes to the financial statements for all periods presented exclude the amounts related to this discontinued operation.
5
Note 4—Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share:
| Twelve Weeks Ended (Second Quarter) |
Twenty-four Weeks Ended (Two Quarters) | |||||||||||||
| June 21, 2003 |
June 15, 2002 |
June 21, 2003 |
June 15, 2002 | |||||||||||
| (in thousands, except per share data) | ||||||||||||||
| Income (loss) from: |
||||||||||||||
| Continuing operations |
$ | 6,610 | $ | 4,636 | $ | 14,473 | $ | 2,763 | ||||||
| Discontinued operations |
(302 | ) | 1,038 | (155 | ) | 1,162 | ||||||||
| Net income |
$ | 6,308 | $ | 5,674 | $ | 14,318 | $ | 3,925 | ||||||
| Weighted-average shares for basic earnings per share |
18,955 | 18,474 | 18,802 | 18,514 | ||||||||||
| Management incentive stock plans |
381 | 414 | 375 | 454 | ||||||||||
| Weighted-average shares for diluted earnings per share |
19,336 | 18,888 | 19,177 | 18,968 | ||||||||||
| Basic earnings (loss) per share from: |
||||||||||||||
| Continuing operations |
$ | 0.35 | $ | 0.25 | $ | 0.77 | $ | 0.15 | ||||||
| Discontinued operations |
(0.02 | ) | 0.05 | (0.01 | ) | 0.06 | ||||||||
| Basic earnings per share |
$ | 0.33 | $ | 0.30 | $ | 0.76 | $ | 0.21 | ||||||
| Diluted earnings (loss) per share from: |
||||||||||||||
| Continuing operations |
$ | 0.35 | $ | 0.25 | $ | 0.76 | $ | 0.15 | ||||||
| Discontinued operations |
(0.02 | ) | 0.05 | (0.01 | ) | 0.06 | ||||||||
| Diluted earnings per share |
$ | 0.33 | $ | 0.30 | $ | 0.75 | $ | 0.21 | ||||||
6
Note 5—Segment information
The Company provides freight services in two business segments: Roadway Express (Roadway) and New Penn Motor Express (New Penn). The Roadway segment provides long haul, expedited, and regional LTL freight services in North America and offers services to over 100 countries worldwide. The New Penn segment provides regional, next-day LTL freight services primarily in the northeast region of the United States.
The Company’s reportable segments are identified based on differences in products, services, and management structure. The measurement basis of segment profit or loss is operating income. Business segment assets consist primarily of customer receivables, net carrier operating property, and goodwill.
| Twelve weeks ended June 21, 2003 (Second Quarter) |
||||||||||||
| Roadway Express |
New Penn |
Total |
||||||||||
| (in thousands) | ||||||||||||
| Revenue |
$ | 691,156 | $ | 50,372 | $ | 741,528 | ||||||
| Operating expense: |
||||||||||||
| Salaries, wages & benefits |
433,101 | 32,657 | 465,758 | |||||||||
| Operating supplies |
125,734 | 7,244 | 132,978 | |||||||||
| Purchased transportation |
75,276 | 449 | 75,725 | |||||||||
| Operating license and tax |
17,182 | 1,427 | 18,609 | |||||||||
| Insurance and claims |
13,599 | 684 | 14,283 | |||||||||
| Depreciation |
14,472 | 2,232 | 16,704 | |||||||||
| Net loss (gain) on sale of operating property |
(21 | ) | 51 | 30 | ||||||||
| Total operating expense |
679,343 | 44,744 | 724,087 | |||||||||
| Operating income |
$ | 11,813 | $ | 5,628 | $ | 17,441 | ||||||
| Operating ratio |
98.3 | % | 88.8 | % | 97.6 | % | ||||||
| Total assets |
$ | 761,817 | $ | 405,914 | $ | 1,167,731 | ||||||
7
Note 5—Segment information (continued)
| Twelve weeks ended June 15, 2002 (Second Quarter) |
||||||||||||
| Roadway Express |
New Penn |
Total |
||||||||||
| (in thousands) | ||||||||||||
| Revenue |
$ | 606,409 | $ | 49,594 | $ | 656,003 | ||||||
| Operating expense: |
||||||||||||
| Salaries, wages & benefits |
392,635 | 32,722 | 425,357 | |||||||||
| Operating supplies |
103,488 | 5,937 | 109,425 | |||||||||
| Purchased transportation |
57,317 | 458 | 57,775 | |||||||||
| Operating license and tax |
16,043 | 1,383 | 17,426 | |||||||||
| Insurance and claims |
11,964 | 947 | 12,911 | |||||||||
| Depreciation |
15,416 | 2,615 | 18,031 | |||||||||
| Net loss (gain) on sale of operating property |
303 | (20 | ) | 283 | ||||||||
| Total operating expense |
597,166 | 44,042 | 641,208 | |||||||||
| Operating income |
$ | 9,243 | $ | 5,552 | $ | 14,795 | ||||||
| Operating ratio |
98.5 | % | 88.8 | % | 97.7 | % | ||||||
| Total assets |
$ | 713,832 | $ | 336,587 | $ | 1,050,419 | ||||||
| Twenty-four weeks ended June 21, 2003 (Two Quarters) |
||||||||||||
| Roadway Express |
New Penn |
Total |
||||||||||
| (in thousands) | ||||||||||||
| Revenue |
$ | 1,396,400 | $ | 99,198 | $ | 1,495,598 | ||||||
| Operating expense: |
||||||||||||
| Salaries, wages & benefits |
872,539 | 66,100 | 938,639 | |||||||||
| Operating supplies |
251,560 | 14,911 | 266,471 | |||||||||
| Purchased transportation |
149,518 | 991 | 150,509 | |||||||||
| Operating license and tax |
35,561 | 2,816 | 38,377 | |||||||||
| Insurance and claims |
27,494 | 1,638 | 29,132 | |||||||||
| Depreciation |
29,396 | 4,441 | 33,837 | |||||||||
| Net loss (gain) on sale of operating property |
781 | 60 | 841 | |||||||||
| Total operating expense |
1,366,849 | 90,957 | 1,457,806 | |||||||||
| Operating income |
$ | 29,551 | $ | 8,241 | $ | 37,792 | ||||||
| Operating ratio |
97.9 | % | 91.7 | % | 97.5 | % | ||||||
8
Note 5—Segment information (continued)
| Twenty-four weeks ended June 15, 2002 (Two Quarters) |
||||||||||||
| Roadway Express |
New Penn |
Total |
||||||||||
| (in thousands) | ||||||||||||
| Revenue |
$ | 1,159,967 | $ | 95,003 | $ | 1,254,970 | ||||||
| Operating expense: |
||||||||||||
| Salaries, wages & benefits |
758,970 | 63,431 | 822,401 | |||||||||
| Operating supplies |
198,987 | 12,051 | 211,038 | |||||||||
| Purchased transportation |
108,443 | 841 | 109,284 | |||||||||
| Operating license and tax |
30,231 | 2,742 | 32,973 | |||||||||
| Insurance and claims |
22,352 | 1,841 | 24,193 | |||||||||
| Depreciation |
30,685 | 5,305 | 35,990 | |||||||||
| Net loss (gain) on sale of operating property |
649 | (71 | ) | 578 | ||||||||
| Total operating expense |
1,150,317 | 86,140 | 1,236,457 | |||||||||
| Operating income |
$ | 9,650 | $ | 8,863 | $ | 18,513 | ||||||
| Operating ratio |
99.2 | % | 90.7 | % | 98.5 | % | ||||||
Reconciliation of segment operating income to consolidated operating income from continuing operations before taxes:
| Twelve Weeks Ended (Second Quarter) |
Twenty-four weeks ended (Two quarters) |
|||||||||||||||
| June 21, 2003 |
June 15, 2002 |
June 21, 2003 |
June 15, 2002 |
|||||||||||||
| (in thousands) | ||||||||||||||||
| Segment operating income from continuing operations |
$ | 17,441 | $ | 14,795 | $ | 37,792 | $ | 18,513 | ||||||||
| Unallocated corporate income |
— | 11 | — | — | ||||||||||||
| Interest (expense) |
(4,779 | ) | (5,473 | ) | (9,881 | ) | (10,937 | ) | ||||||||
| Other (expense), net |
(1,265 | ) | (1,350 | ) | (2,957 | ) | (2,710 | ) | ||||||||
| Consolidated income from continuing operations before taxes |
$ | 11,397 | $ | 7,983 | $ | 24,954 | $ | 4,866 | ||||||||
9
Note 5—Segment information (continued)
Reconciliation of total segment assets to total consolidated assets:
| June 21, 2003 |
December 31, 2002 |
|||||||
| (in thousands) | ||||||||
| Total segment assets |
$ | 1,167,731 | $ | 1,211,584 | ||||
| Unallocated corporate assets |
103,142 | 41,351 | ||||||
| Assets of discontinued operations |
— | 87,431 | ||||||
| Elimination of intercompany balances |
(7,294 | ) | (4,493 | ) | ||||
| Consolidated assets |
$ | 1,263,579 | $ | 1,335,873 | ||||
Note 6—Comprehensive Income
Comprehensive income differs from net income due to foreign currency translation adjustments and derivative fair value adjustments as shown below:
| Twelve weeks Ended (Second Quarter) |
Twenty-four weeks ended (Two quarters) |
||||||||||||
| June 21, 2003 |
June 15, 2002 |
June 21, 2003 |
June 15, 2002 |
||||||||||
| (in thousands) | |||||||||||||
| Net income |
$ | 6,308 | $ | 5,674 | $ | 14,318 | $ | 3,925 | |||||
| Foreign currency translation adjustments |
3,089 | 1,122 | 5,776 | (56 | ) | ||||||||
| Derivative fair value adjustment |
50 | — | 126 | — | |||||||||
| Comprehensive income |
$ | 9,447 | $ | 6,796 | $ | 20,220 | $ | 3,869 | |||||
Note 7—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 range of the remaining payments that may be due to the former parent to be $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.
10
Note 8—Subsequent event
On July 8, 2003, the Company announced the signing of a definitive agreement under which Yellow Corporation would acquire Roadway for approximately $966 million, or $48 per share. See the Company’s 8-K filed on July 8, 2003 for further information and details.
Note 9—Guarantor and Non-Guarantor Subsidiaries
The credit facility borrowings and the senior notes issued in connection with the acquisition of Arnold are secured by a first-priority perfected lien on all of the capital stock of the Company’s direct subsidiaries. They are also supported by guarantees provided by all of the Company’s material subsidiaries, which are wholly owned. These guarantees are full and unconditional, joint and several.
The following condensed consolidating financial statements set forth the Company’s balance sheets, statements of income, and statements of cash flows for the same time periods as the financial statements presented in Item 1 above. In the following schedules “Parent Company” refers to Roadway Corporation, “Guarantor Subsidiaries” refers to non-minor domestic subsidiaries, and “Non-guarantor subsidiaries” refers to foreign and minor domestic subsidiaries and “Eliminations” represent the adjustments necessary to (a) eliminate intercompany transactions and (b) eliminate the investments in the Company’s subsidiaries.
| Condensed Consolidating Balance Sheets June 21, 2003 |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | ||||||||||||
| (in millions) | |||||||||||||||||
| Cash and cash equivalents |
$ | 67 | $ | 54 | $ | 5 | $ | – | $ | 126 | |||||||
| Accounts receivable, including retained interest in securitized receivables, net |
– | 198 | 17 | – | 215 | ||||||||||||
| Due from affiliates |
9 | 308 | 1 | (318 | ) | – | |||||||||||
| Prepaid expenses and supplies |
1 | 22 | – | – | 23 | ||||||||||||
| Deferred income taxes |
– | 27 | – | – | 27 | ||||||||||||
| Total current assets |
77 | 609 | 23 | (318 | ) | 391 | |||||||||||
| Carrier operating property, at cost |
– | 1,480 | 31 | – | 1,511 | ||||||||||||
| Less allowance for depreciation |
– | 997 | 18 | – | 1,015 | ||||||||||||
| Net carrier operating property |
– | 483 | 13 | – | 496 | ||||||||||||
| Goodwill, net |
– | 269 | 17 | – | 286 | ||||||||||||
| Investment in subsidiaries |
578 | 14 | – | (592 | ) | – | |||||||||||
| Deferred income taxes |
4 | 40 | 1 | – | 45 | ||||||||||||
| Long-term assets |
18 | 28 | – | – | 46 | ||||||||||||
| Total assets |
$ | 677 | $ | 1,443 | $ | 54 | $ | (910 | ) | $ | 1,264 | ||||||
| Accounts payable |
$ | (32 | ) | $ | 191 | $ | 6 | $ | – | $ | 165 | ||||||
| Due to affiliates |
285 | 3 | 30 | (318 | ) | – | |||||||||||
| Salaries and wages |
– | 122 | 3 | – | 125 | ||||||||||||
| Current portion of long-term debt |
– | 11 | – | – | 11 | ||||||||||||
| Freight and casualty claims payable |
– | 50 | 1 | – | 51 | ||||||||||||
| Total current liabilities |
253 | 377 | 40 | (318 | ) | 352 | |||||||||||
| Casualty claims and other |
6 | 60 | – | – | 66 | ||||||||||||
| Deferred income taxes |
– | 10 | – | – | 10 | ||||||||||||
| Long-term debt |
– | 270 | – | – | 270 | ||||||||||||
| Accrued pension and retiree medical |
– | 148 | – | – | 148 | ||||||||||||
| Total shareholders’ equity |
418 | 578 | 14 | (592 | ) | 418 | |||||||||||
| Total liabilities and shareholders’ equity |
$ | 677 | $ | 1,443 | $ | 54 | $ | (910 | ) | $ | 1,264 | ||||||
11
Note 9—Guarantor and Non-Guarantor Subsidiaries (continued)
| Condensed Consolidating Balance Sheets December 31, 2002 |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | ||||||||||||
| (in millions) | |||||||||||||||||
| Cash and cash equivalents |
$ | 12 | $ | 88 | $ | 7 | $ | – | $ | 107 | |||||||
| Accounts receivable, including retained interest in securitized receivables, net |
– | 216 | 14 | – | 230 | ||||||||||||
| Due from affiliates |
11 | 330 | 2 | (343 | ) | – | |||||||||||
| Prepaid expenses and supplies |
– | 17 | – | – | 17 | ||||||||||||
| Deferred income taxes |
– | 22 | – | – | 22 | ||||||||||||
| Assets of discontinued operations |
– | 87 | – | – | 87 | ||||||||||||
| Total current assets |
23 | 760 | 23 | (343 | ) | 463 | |||||||||||
| Carrier operating property, at cost |
– | 1,488 | 28 | – | 1,516 | ||||||||||||
| Less allowance for depreciation |
– | 992 | 15 | – | 1,007 | ||||||||||||
| Net carrier operating property |
– | 496 | 13 | – | 509 | ||||||||||||
| Goodwill, net |
– | 269 | 15 | – | 284 | ||||||||||||
| Investment in subsidiaries |
656 | 4 | – | (660 | ) | – | |||||||||||
| Deferred income taxes |
4 | 36 | – | – | 40 | ||||||||||||
| Long-term assets |
10 | 30 | – | – | 40 | ||||||||||||
| Total assets |
$ | 693 | $ | 1,595 | $ | 51 | $ | (1,003 | ) | $ | 1,336 | ||||||
| Accounts payable |
$ | (12 | ) | $ | 195 | $ | 11 | $ | – | $ | 194 | ||||||
| Due to affiliates |
310 | 2 | 31 | (343 | ) | – | |||||||||||
| Salaries and wages |
2 | 145 | 4 | – | 151 | ||||||||||||
| Current portion of long-term debt |
– | 34 | – | – | 34 | ||||||||||||
| Freight and casualty claims payable |
– | 49 | 1 | – | 50 | ||||||||||||
| Liabilities of discontinued operations |
– | 32 | – | – | 32 | ||||||||||||
| Total current liabilities |
300 | 457 | 47 | (343 | ) | 461 | |||||||||||
| Casualty claims and other |
5 | 62 | – | – | 67 | ||||||||||||
| Deferred income taxes |
– | 11 | – | – | 11 | ||||||||||||
| Long-term debt |
– | 274 | – | – | 274 | ||||||||||||
| Accrued pension and retiree medical |
– | 135 | – | – | 135 | ||||||||||||
| Total shareholders’ equity |
388 | 656 | 4 | (660 | ) | 388 | |||||||||||
| Total liabilities and shareholders’ equity |
$ | 693 | $ | 1,595 | $ | 51 | $ | (1,003 | ) | $ | 1,336 | ||||||
12
Note 9—Guarantor and Non-Guarantor Subsidiaries (continued)
| Condensed Consolidating Statements of Income Twelve Weeks Ended June 21, 2003 (Second Quarter) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Revenue |
$ | – | $ | 711 | $ | 31 | $ | – | $ | 742 | |||||||||
| Operating expenses: |
|||||||||||||||||||
| Salaries, wages and benefits |
2 | 456 | 10 | – | 468 | ||||||||||||||
| Operating supplies and expenses |
(2 | ) | 125 | 7 | – | 130 | |||||||||||||
| Purchased transportation |
– | 67 | 9 | – | 76 | ||||||||||||||
| Operating taxes and licenses |
– | 18 | 1 | – | 19 | ||||||||||||||
| Insurance and claims expenses |
– | 15 | – | – | 15 | ||||||||||||||
| Provision for depreciation |
– | 16 | 1 | – | 17 | ||||||||||||||
| Net loss on disposal of operating property |
– | – | – | – | – | ||||||||||||||
| Results of affiliates |
(6 | ) | (2 | ) | – | 8 | – | ||||||||||||
| Total operating expenses |
(6 | ) | 695 | 28 | 8 | 725 | |||||||||||||
| Operating income |
6 | 16 | 3 | (8 | ) | 17 | |||||||||||||
| Other (expenses), net |
– | (6 | ) | – | – | (6 | ) | ||||||||||||
| Income before income taxes |
6 | 10 | 3 | (8 | ) | 11 | |||||||||||||
| (Benefit) provision for income taxes |
– | 4 | 1 | – | 5 | ||||||||||||||
| Net income |
$ | 6 | $ | 6 | $ | 2 | $ | (8 | ) | $ | 6 | ||||||||
| Condensed Consolidating Statements of Income Twelve Weeks Ended June 15, 2002 (Second Quarter) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Revenue |
$ | – | $ | 627 | $ | 30 | $ | (1 | ) | $ | 656 | ||||||||
| Operating expenses: |
|||||||||||||||||||
| Salaries, wages and benefits |
1 | 417 | 9 | – | 427 | ||||||||||||||
| Operating supplies and expenses |
(1 | ) | 102 | 7 | (1 | ) | 107 | ||||||||||||
| Purchased transportation |
– | 49 | 9 | – | 58 | ||||||||||||||
| Operating taxes and licenses |
– | 18 | – | – | 18 | ||||||||||||||
| Insurance and claims expenses |
– | 13 | – | – | 13 | ||||||||||||||
| Provision for depreciation |
– | 17 | 1 | – | 18 | ||||||||||||||
| Net loss on disposal of operating property |
– | – | – | – | – | ||||||||||||||
| Results of affiliates |
(4 | ) | (2 | ) | – | 6 | – | ||||||||||||
| Total operating expenses |
(4 | ) | 614 | 26 | 5 | 641 | |||||||||||||
| Operating income |
4 | 13 | 4 | (6 | ) | 15 | |||||||||||||
| Other (expenses), net |
– | (7 | ) | – | – | (7 | ) | ||||||||||||
| Income before income taxes |
4 | 6 | 4 | (6 | ) | 8 | |||||||||||||
| (Benefit) provision for income taxes |
(2 | ) | 3 | 2 | – | 3 | |||||||||||||
| Income from continuing operations |
6 | 3 | 2 | (6 | ) | 5 | |||||||||||||
| Income from discontinued operations |
– | 1 | – | – | 1 | ||||||||||||||
| Net income |
$ | 6 | $ | 4 | $ | 2 | $ | (6 | ) | $ | 6 | ||||||||
13
Note 9—Guarantor and Non-Guarantor Subsidiaries (continued)
| Condensed Consolidating Statements of Income Twenty-four Weeks Ended June 21, 2003 (Two Quarters) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Revenue |
$ | – | $ | 1,435 | $ | 61 | $ | – | $ | 1,496 | |||||||||
| Operating expenses: |
|||||||||||||||||||
| Salaries, wages and benefits |
4 | 920 | 20 | – | 944 | ||||||||||||||
| Operating supplies and expenses |
(4 | ) | 250 | 14 | – | 260 | |||||||||||||
| Purchased transportation |
– | 132 | 18 | – | 150 | ||||||||||||||
| Operating taxes and licenses |
– | 38 | 1 | – | 39 | ||||||||||||||
| Insurance and claims expenses |
– | 29 | 1 | – | 30 | ||||||||||||||
| Provision for depreciation |
– | 33 | 1 | – | 34 | ||||||||||||||
| Net loss on disposal of operating property |
– | 1 | – | – | 1 | ||||||||||||||
| Results of affiliates |
(14 | ) | (4 | ) | – | 18 | – | ||||||||||||
| Total operating expenses |
(14 | ) | 1,399 | 55 | 18 | 1,458 | |||||||||||||
| Operating income |
14 | 36 | 6 | (18 | ) | 38 | |||||||||||||
| Other (expenses), net |
– | (14 | ) | 1 | – | (13 | ) | ||||||||||||
| Income before income taxes |
14 | 22 | 7 | (18 | ) | 25 | |||||||||||||
| (Benefit) provision for income taxes |
– | 8 | 3 | – | 11 | ||||||||||||||
| Net income |
$ | 14 | $ | 14 | $ | 4 | $ | (18 | ) | $ | 14 | ||||||||
| Condensed Consolidating Statements of Income Twenty-four Weeks Ended June 15, 2002 (Two Quarters) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Revenue |
$ | – | $ | 1,202 | $ | 54 | $ | (1 | ) | $ | 1,255 | ||||||||
| Operating expenses: |
|||||||||||||||||||
| Salaries, wages and benefits |
3 | 807 | 17 | – | 827 | ||||||||||||||
| Operating supplies and expenses |
(3 | ) | 197 | 13 | (1 | ) | 206 | ||||||||||||
| Purchased transportation |
– | 92 | 17 | – | 109 | ||||||||||||||
| Operating taxes and licenses |
– | 32 | 1 | – | 33 | ||||||||||||||
| Insurance and claims expenses |
– | 24 | – | – | 24 | ||||||||||||||
| Provision for depreciation |
– | 34 | 2 | – | 36 | ||||||||||||||
| Net loss on disposal of operating property |
– | 1 | – | – | 1 | ||||||||||||||
| Results of affiliates |
(4 | ) | (2 | ) | – | 6 | – | ||||||||||||
| Total operating expenses |
(4 | ) | 1,185 | 50 | 5 | 1,236 | |||||||||||||
| Operating income |
4 | 17 | 4 | (6 | ) | 19 | |||||||||||||
| Other (expenses), net |
– | (14 | ) | – | – | (14 | ) | ||||||||||||
| Income before income taxes |
4 | 3 | 4 | (6 | ) | 5 | |||||||||||||
| (Benefit) provision for income taxes |
– | – | 2 | – | 2 | ||||||||||||||
| Income from continuing operations |
4 | 3 | 2 | (6 | ) | 3 | |||||||||||||
| Income from discontinued operations |
– | 1 | – | – | 1 | ||||||||||||||
| Net income |
$ | 4 | $ | 4 | $ | 2 | $ | (6 | ) | $ | 4 | ||||||||
14
Note 9—Guarantor and Non-Guarantor Subsidiaries (continued)
| Condensed Consolidating Statement of Cash Flows Twenty-four Weeks Ended June 21, 2003 (Two Quarters) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Net cash (used) provided by operating activities |
$ | (15 | ) | $ | 34 | $ | (1 | ) | $ | – | $ | 18 | |||||||
| Cash flows from investing activities |
|||||||||||||||||||
| Purchases of carrier operating property, net |
– | (19 | ) | (1 | ) | – | (20 | ) | |||||||||||
| Business acquisitions |
47 | – | – | – | 47 | ||||||||||||||
| Net cash (used) in investing activities |
47 | (19 | ) | (1 | ) | – | 27 | ||||||||||||
| Cash flows from financing activities |
|||||||||||||||||||
| Dividends received (paid) |
(2 | ) | – | – | – | (2 | ) | ||||||||||||
| Transfers to (from) parent |
49 | (49 | ) | – | – | – | |||||||||||||
| Treasury stock activity—net |
2 | – | – | – | 2 | ||||||||||||||
| Debt issuance costs |
– | – | – | – | – | ||||||||||||||
| Long-term borrowings (repayment) |
(26 | ) | – | – | – | (26 | ) | ||||||||||||
| Net cash provided (used) in financing activities |
23 | (49 | ) | – | – | (26 | ) | ||||||||||||
| Effect of exchange rate changes on cash |
– | – | – | – | – | ||||||||||||||
| Net (decrease) increase in cash and cash equivalents |
55 | (34 | ) | (2 | ) | – | 19 | ||||||||||||
| Cash and cash equivalents at beginning of year |
12 | 88 | 7 | – | 107 | ||||||||||||||
| Cash and cash equivalents at end of year |
$ | 67 | $ | 54 | $ | 5 | $ | – | $ | 126 | |||||||||
| Condensed Consolidating Statement of Cash Flows Twenty-four Weeks Ended June 15, 2002 (Two Quarters) |
Parent |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated |
||||||||||||||
| (in millions) | |||||||||||||||||||
| Net cash (used) provided by operating activities |
$ | (62 | ) | $ | 51 | $ | 5 | $ | – | $ | (6 | ) | |||||||
| Cash flows from investing activities |
|||||||||||||||||||
| Purchases of carrier operating property, net |
– | (21 | ) | (1 | ) | – | (22 | ) | |||||||||||
| Business acquisitions |
– | – | – | – | – | ||||||||||||||
| Net cash (used) in investing activities |
– | (21 | ) | (1 | ) | – | (22 | ) | |||||||||||
| Cash flows from financing activities |
|||||||||||||||||||
| Dividends received (paid) |
40 | (42 | ) | – | – | (2 | ) | ||||||||||||
| Treasury stock activity—net |
(1 | ) | – | – | – | (1 | ) | ||||||||||||
| Transfer from discontinued operations |
– | 3 | – | – | 3 | ||||||||||||||
| Long-term borrowings (repayment) |
(3 | ) | – | – | – | (3 | ) | ||||||||||||
| Net cash provided (used) in financing activities |
36 | (39 | ) | – | – | (3 | ) | ||||||||||||
| Net (decrease) increase in cash and cash equivalents from continuing operations |
(26 | ) | (9 | ) | 4 | – | (31 | ) | |||||||||||
| Net (decrease) increase in cash and cash equivalents from discontinued operations |
– | (5 | ) | – | – | (5 | ) | ||||||||||||
| Cash and cash equivalents at beginning of year |
35 | 74 | 1 | – | 110 | ||||||||||||||
| Cash and cash equivalents at end of year |
$ | 9 | $ | 60 | $ | 5 | $ | – | $ | 74 | |||||||||
15