UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 17, 2004
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
Item 5. Other Events
As previously reported, on December 11, 2003, Yellow Corporation (now Yellow Roadway Corporation) completed the acquisition of Roadway Corporation. The unaudited pro forma financial information in Exhibit 99.1 presents the combined results of operations of Yellow Roadway for the year ended December 31, 2003 as if the acquisition had occurred as of the beginning of the 2003 fiscal year. The unaudited pro forma financial information is not intended to represent or be indicative of the consolidated results of operations of Yellow Roadway that would have been reported had the acquisition been completed as of January 1, 2003, and should not be taken as representative of the future consolidated results of operations of Yellow Roadway.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
| (a) | Financial statements of businesses acquired. |
Not applicable
| (b) | Pro forma financial information. |
The following pro forma information is included in Exhibit 99.1 hereto and incorporated herein by reference:
Unaudited Condensed Combined Pro Forma Statement of Operations for the Year Ended December 31, 2003
Notes to unaudited condensed combined pro forma financial statements
| (c) | Exhibits. |
| 99.1 | Certain pro forma financial information (see Item 7(b) above) |
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 17, 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 | |
| 99.1 | Certain pro forma financial information |
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2003
| Historical |
Pro Forma |
|||||||||||||||
| Yellow Roadway |
Roadway (1/1 - 12/11) |
Adjustments |
Combined |
|||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Revenue |
$ | 3,068,616 | $ | 3,052,119 | $ | 100 | (1) | $ | 6,120,835 | |||||||
| Operating expenses: |
||||||||||||||||
| Salaries, wages and employees’ benefits |
1,970,440 | 1,946,709 | 1,908 | (6) | 3,919,057 | |||||||||||
| Operating expenses and supplies |
449,825 | 514,050 | (1,153 | )(2) | 962,722 | |||||||||||
| Operating taxes and licenses |
83,548 | 77,057 | 160,605 | |||||||||||||
| Claims and insurance |
67,670 | 60,080 | 636 | (6) | 128,386 | |||||||||||
| Depreciation and amortization |
87,398 | 69,782 | 1,153 | (2) | 171,613 | |||||||||||
| 480 | (3) | |||||||||||||||
| 12,800 | (4) | |||||||||||||||
| Purchased transportation |
318,176 | 314,435 | 632,611 | |||||||||||||
| (Gains) losses on property disposals, net |
(167 | ) | (2,572 | ) | (2,739 | ) | ||||||||||
| Spin-off and reorganization charges |
3,124 | 53,734 | (56,858 | )(5) | — | |||||||||||
| Total operating expenses |
2,980,014 | 3,033,275 | (41,034 | ) | 5,972,255 | |||||||||||
| Operating income |
88,602 | 18,844 | 41,134 | 148,580 | ||||||||||||
| Interest expense |
20,606 | 18,124 | 7,133 | (2) | 49,872 | |||||||||||
| 4,009 | (6) | |||||||||||||||
| ABS facility charges |
— | 3,145 | (3,145 | )(6) | — | |||||||||||
| Other, net |
1,182 | 13,539 | (9,005 | )(2) | 5,716 | |||||||||||
| Nonoperating expenses, net |
21,788 | 34,808 | (1,008 | ) | 55,588 | |||||||||||
| Income from continuing operations before income taxes |
66,814 | (15,964 | ) | 42,142 | 92,992 | |||||||||||
| Income tax provision |
26,131 | 12,626 | 16,108 | (7) | 54,865 | |||||||||||
| Income from continuing operations |
$ | 40,683 | $ | (28,590 | ) | $ | 26,034 | $ | 38,127 | |||||||
| Earnings per share from continuing operations: |
||||||||||||||||
| Basic |
$ | 1.34 | $ | 0.80 | ||||||||||||
| Diluted |
$ | 1.33 | $ | 0.79 | ||||||||||||
| Average common shares outstanding: |
||||||||||||||||
| Basic |
30,370 | 47,723 | ||||||||||||||
| Diluted |
30,655 | 48,100 | ||||||||||||||
NOTES TO UNAUDITED CONDENSED COMBINED PRO FORMA
FINANCIAL STATEMENTS
These pro forma adjustments reflect the valuations of Roadway’s tangible and intangible assets and liabilities as well as conforming accounting policies recorded as of December 11, 2003 in conjunction with the acquisition. The allocation of the purchase price is preliminary and subject to adjustment, however, we do not expect material changes. These unaudited condensed combined pro forma financial statements are not necessarily indicative of the operating results or financial position that would have occurred had the acquisition been consummated at the dates indicated, nor necessarily indicative of future operating results.
| (1) | Represents the adjustment necessary to conform Roadway’s revenue recognition policy to the policy used by Yellow. |
| (2) | Reflects certain statement of operations reclassifications made to conform Roadway’s presentation to the presentation used by Yellow. |
| (3) | Adjustment to record additional depreciation expense on the new basis of Roadway’s property and equipment. |
| (4) | Adjustment to record amortization expense on identifiable intangible assets. |
| (5) | Adjustment to eliminate the expense related to the vesting of restricted stock awards, other compensation and transaction fees associated with the acquisition of Roadway by Yellow that were recognized on Roadway’s historical Statement of Consolidated Income for the period January 1, 2003 through December 11, 2003 and the Yellow Roadway Statement of Consolidated Operations for the year ended December 31, 2003. |
| (6) | Adjustment to record additional interest expense, letter of credit fees and amortization of deferred financing costs on borrowings related to our offering of 3.375% contingent convertible senior notes due 2023, our offering of 5.0% contingent convertible senior notes due 2023 and other bank financing transactions related to the acquisition. The estimated weighted average annual interest rate of the completed and contemplated debt structure is 5.5%. A 1/8th% change in the variable interest rates associated with these borrowings would have a $0.3 million effect on annual interest expense. A $10.0 million change in the amount of borrowings necessary to finance the acquisition would have a $0.4 million effect on annual interest expense. |
| (7) | Adjustment to record the income tax impact of the pro forma adjustments at an effective income tax rate of 40.0%. |