<PAGE> 1
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): November 17, 1995
-------------------
ROADWAY SERVICES, INC.
(Exact name of registrant as specified in its charter)
Ohio 0-10716 34-1365496
- ------------------- ---------------- ------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1077 Gorge Boulevard, P.O. Box 88, Akron, Ohio 44309-0088
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 384-8184
Not applicable
------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit Index at Page 4
<PAGE> 2
INFORMATION REQUIRED IN REPORT
------------------------------
Item 2. Acquisition or Disposition of Assets.
------------------------------------
On November 6, 1995, the Board of Directors of the registrant,
Roadway Services, Inc. (RSI), announced plans to exit the air freight business
served by its subsidiary, Roadway Global Air, Inc. (RGA). The Board
simultaneously announced that RSI intended to sell the RGA business in part
pending the successful outcome of negotiations. The company's decision was
prompted by RGA's poor earnings per share in 1994, its first full year of
operation. Through the first three quarters of 1995, RGA lost an additional
$1.18 per share, and was projected to lose $1.70 per share for the full year if
operations had continued. RSI believes that the discontinuation of its air
freight business would eliminate ongoing losses incurred by RGA and free
resources for investment in the company's other subsidiaries.
On November 17, 1995, RSI announced that Burlington Air Express
(Burlington) would provide continuing U.S. air freight service to former
customers of RGA beginning November 20, 1995. Burlington agreed to acquire
RGA's tracking and information system and RGA's air terminal in San Jose,
California, the consideration for which RSI does not believe to be material.
Burlington has an option for 60 days to acquire certain computer equipment from
RGA. It has also expressed an interest in buying other used equipment made
excess by RGA's shutdown, although the terms of such acquisitions remain
undetermined. RSI currently intends to dispose of, or transfer to other RSI
companies, any remaining assets related to its U.S. air freight service not
otherwise acquired by Burlington; however, there can be no assurance that the
company will be able to identify a purchaser or purchasers for such assets, or
that if such purchasers are identified, that they will be willing to purchase
such assets on terms satisfactory to the company.
RSI is currently engaged in negotiations to transfer its
non-U.S. operations to an international freight forwarder. However, there can
be no assurance that such negotiations will yield any result or benefit to the
company.
RSI initially estimated a pre-tax charge of $65 million for
costs related to abandonment of RGA's business, but has not yet determined the
impact on such figure resulting from its agreement with Burlington and the
sales, if any, of other RGA assets, including its non-U.S. business.
Page 2 of 4
<PAGE> 3
Item 7. Financial Statements, Pro Forma Financial Information and
---------------------------------------------------------
Exhibits.
--------
(b) Pro Forma Financial Information.
-------------------------------
The following pro forma financial information is incorporated herein by
reference to note (b) on page 32 and to pages 33 through 38 of the registrant's
Proxy Statement for the Special Meeting of Shareholders to be held on December
14, 1995, File No. 0-10716, and is filed as an exhibit hereto.
Roadway Services, Inc. Pro Forma Condensed Financial Statements
Unaudited Pro Forma Condensed Balance Sheet, September 9, 1995
Unaudited Pro Forma Statement of Consolidated Income, Thirty-Six
Weeks Ended September 9, 1995
Unaudited Pro Forma Statement of Consolidated Income, Year Ended
December 31, 1994
Unaudited Pro Forma Statement of Consolidated Income, Thirty-Six
Weeks Ended September 10, 1994
(c) Exhibits.
--------
99 Roadway Services, Inc. Pro Forma Condensed Financial Statements
Unaudited Pro Forma Condensed Balance Sheet, September 9, 1995
Unaudited Pro Forma Statement of Consolidated Income, Thirty-Six
Weeks Ended September 9, 1995
Unaudited Pro Forma Statement of Consolidated Income, Year Ended
December 31, 1994
Unaudited Pro Forma Statement of Consolidated Income, Thirty-Six
Weeks Ended September 10, 1994
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROADWAY SERVICES, INC.
------------------------------
REGISTRANT
By JOHN M. GLENN
----------------------------
John M. Glenn
Vice President and
General Counsel
Dated: December 4, 1995
Page 3 of 4
<PAGE> 4
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------- -----------
99 Roadway Services, Inc. Pro Forma Condensed Financial Statements.
Unaudited Pro Forma Condensed Balance Sheet, September 9, 1995
Unaudited Pro Forma Statement of Consolidated Income, Thirty-Six
Weeks Ended September 9, 1995
Unaudited Pro Forma Statement of Consolidated Income, Year Ended
December 31, 1994
Unaudited Pro Forma Statement of Consolidated Income, Thirty-Six
Weeks Ended September 10, 1994
Page 4 of 4
<PAGE> 1
(b) On November 6, 1995, the Company Board announced plans to exit the air
freight business served by RGA, RSI's worldwide air freight subsidiary. The
Company estimated a pre-tax charge of approximately $65 million for the
operation's discontinuance which is not reflected in the pro forma financial
statements. On November 17, 1995, the Company announced an agreement with an
air freight company to provide continuing services to RGA's former U.S.
customers and to sell certain limited U.S. assets. Although no assurances
can be given, discussions are continuing with respect to the disposition of
other U.S. assets and with an international freight forwarder with respect
to the non-U.S. operations of RGA. The estimate of the pre-tax charge does
not include the effects of any transactions or any sale proceeds which may
be realized. No revised estimate is available as of the date of this Proxy
Statement.
<PAGE> 2
ROADWAY SERVICES, INC. PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited Pro Forma Condensed Financial Statements of RSI
have been prepared on a pro forma basis to give effect to the Distribution and
the discontinuance of the business of RGA. The unaudited Pro Forma Condensed
Balance Sheet gives effect to the Distribution and the discontinuance of the
business of RGA as if both events occurred on September 9, 1995. The unaudited
Pro Forma Condensed Statements of Consolidated Income give effect to the
Distribution and the discontinuance of the business of RGA as if both events
occurred at the beginning of each period presented.
The unaudited Pro Forma Condensed Financial Statements and accompanying
notes should be read in conjunction with the audited financial statements and
notes thereto incorporated by reference in this Proxy Statement. The unaudited
Pro Forma Condensed Financial Statements do not purport to represent what the
results of operations or financial position of RSI would actually have been if
the Distribution and the discontinuance of the business of RGA in fact had
occurred on the dates indicated or at any future date.
<PAGE> 3
ROADWAY SERVICES, INC. AND SUBSIDIARIES
---------------------------------------
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 9, 1995
<TABLE>
<CAPTION>
LESS PRO
PRO FORMA ADJUSTMENTS FORMA
------------------------ PRO FORMA EFFECTS OF
OTHER BEFORE EFFECTS RGA
LESS EFFECTS OF RGA DISCONTINUANCE
HISTORICAL REX (A) OF SPIN-OFF DISCONTINUANCE (F),(G) PRO FORMA
---------- ---------- ----------- -------------- ------------ ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash.................................... $ 35,310 $ 22,006 $ -- $ 13,304 $ 476 $ 12,828
Marketable securities................... 1,906 -- -- 1,906 -- 1,906
Accounts receivable..................... 513,051 236,156 -- 276,895 18,547 258,348
Due from affiliates..................... -- -- 29,000(b) 29,000 -- 29,000
Prepaid expenses and supplies........... 87,668 14,316 -- 73,352 2,963 70,389
Deferred income taxes................... 37,093 4,670 -- 32,423 2,364 30,059
---------- ---------- ----------- -------------- ------------ ----------
TOTAL CURRENT ASSETS................ 675,028 277,148 29,000 426,880 24,350 402,530
Carrier operating property.............. 2,890,528 1,435,556 -- 1,454,972 53,784 1,401,188
Less allowances for depreciation........ 1,596,465 995,325 -- 601,140 24,380 576,760
---------- ---------- ----------- -------------- ------------ ----------
TOTAL CARRIER OPERATING PROPERTY.... 1,294,063 440,231 -- 853,832 29,404 824,428
Deferred income taxes................... -- 2,720 2,720(c) -- -- --
Prepaid pension expense................. -- -- 36,500(d) 36,500 -- 36,500
Cost in excess of net assets of
businesses acquired................... 95,042 -- -- 95,042 -- 95,042
Investment in REX....................... -- -- 10,648(e) 10,648 -- 10,648
---------- ---------- ----------- -------------- ------------ ----------
95,042 2,720 49,868 142,190 -- 142,190
---------- ---------- ----------- -------------- ------------ ----------
$2,064,133 $ 720,099 $78,868 $1,422,902 $ 53,754 $1,369,148
========== ========== =========== ============== ============== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable........................ $ 326,786 $ 110,667 $ -- $ 216,119 $ 14,750 $ 201,369
Salaries and wages payable.............. 191,408 111,334 -- 80,074 2,742 77,332
Short-term debt......................... 195,000 -- -- 195,000 -- 195,000
Short-term debt affiliates.............. -- 29,000 29,000(b) -- -- --
Other current liabilities............... 128,926 71,087 -- 57,839 (4,725) 62,564
---------- ---------- ----------- -------------- ------------ ----------
TOTAL CURRENT LIABILITIES........... 842,120 322,088 29,000 549,032 12,767 536,265
Casualty claims payable after one
year.................................. 110,025 90,454 -- 19,571 -- 19,571
Future equipment repairs................ 29,971 28,373 -- 1,598 -- 1,598
Retiree medical......................... 63,653 43,930 -- 19,723 74 19,649
Deferred income taxes................... 36,460 -- 2,720(c) 53,380 2,130 51,250
14,200(d)
---------- ---------- ----------- -------------- ------------ ----------
TOTAL LONG-TERM LIABILITIES......... 240,109 162,757 16,920 94,272 2,204 92,068
10,648(e)
TOTAL SHAREHOLDERS' EQUITY.......... 981,904 235,254 22,300(d) 779,598 38,783 740,815
---------- ---------- ----------- -------------- ------------ ----------
$2,064,133 $ 720,099 $78,868 $1,422,902 $ 53,754 $1,369,148
========== ========== =========== ============== ============== ==========
</TABLE>
<PAGE> 4
- ---------------
(a) Reflects the elimination of historical REX amounts as presented in the
historical financial statements of REX included elsewhere in this Proxy
Statement.
(b) At the balance sheet date, REX owed the Company $29 million. Such balance is
not included in the Company's historical balance sheet as it was eliminated
in consolidation. This adjustment reflects the receivable on a pro forma
basis, which will be paid or eliminated on or before the Distribution Date.
The line of credit borrowing between REX and the Company is more fully
described in "REX Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and
"The Distribution--Transactions Prior to or Contemporaneous with the
Distribution".
(c) Reclassification of deferred income taxes from noncurrent assets to
long-term liabilities.
(d) Represents the transfer of accrued pension costs and related deferred income
taxes from RSI to REX attributable to the defined benefit pension plan
obligation and related assets for active REX employees. The projected
benefit obligation was actuarially determined based on the participants in
the Plan that are active REX employees and actuarial assumptions used were
consistent with assumptions previously used by RSI. The assets were split
based on the requirements of Section 414(l) of the Code and other management
considerations.
(e) Assumes 5% of REX Common Stock is retained by RSI.
(f) On November 6, 1995, the Company Board announced plans to exit the air
freight business served by RGA. See note (b) to "Roadway Services, Inc. and
Subsidiaries Capitalization".
(g) Reflects the elimination of historical RGA amounts, excluding intercompany
borrowings, and a capital contribution of $125.4 million by the Company.
<PAGE> 5
ROADWAY SERVICES, INC. AND SUBSIDIARIES
---------------------------------------
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED INCOME
THIRTY-SIX WEEKS ENDED SEPTEMBER 9, 1995
<TABLE>
<CAPTION>
LESS PRO
PRO FORMA ADJUSTMENTS FORMA
------------------------ PRO FORMA EFFECTS OF
OTHER BEFORE EFFECTS RGA
LESS EFFECTS OF RGA DISCONTINUANCE
HISTORICAL REX (A) OF SPIN-OFF DISCONTINUANCE (C),(D) PRO FORMA
---------- ---------- ----------- -------------- ----------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
REVENUE.................................. $3,292,819 $1,569,991 $ -- $1,722,828 $ 75,839 $1,646,989
OPERATING EXPENSES
Salaries, wages and benefits........... 1,740,501 1,067,515 (3,300)(b) 669,686 30,627 639,059
Purchased transportation............... 639,181 102,965 -- 536,216 75,293 460,923
Operating supplies and expenses........ 584,291 272,095 -- 312,196 23,379 288,817
Operating taxes and licenses........... 88,989 52,565 -- 36,424 2,898 33,526
Insurance and claims................... 76,227 39,978 -- 36,249 834 35,415
Provision for depreciation............. 148,550 50,470 -- 98,080 9,386 88,694
Net (gain) loss on sale of carrier
operating property................. (1,530) (550) -- (980) 5 (985)
---------- ---------- ----------- -------------- ----------- ----------
TOTAL OPERATING EXPENSES............. 3,276,209 1,585,038 (3,300) 1,687,871 142,422 1,545,449
---------- ---------- ----------- -------------- ----------- ----------
OPERATING INCOME (LOSS).............. 16,610 (15,047) 3,300 34,957 (66,583) 101,540
Other (expense) income, net.............. (1,636) (2,754) -- 1,118 (5,117)(e) 6,235
---------- ---------- ----------- -------------- ----------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES..... 14,974 (17,801) 3,300 36,075 (71,700) 107,775
Provision (benefit) for income taxes..... 8,797 (4,605) 1,300(b) 14,702 (24,964) 39,666
---------- ---------- ----------- -------------- ----------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS......................... $ 6,177 $ (13,196) $ 2,000 $ 21,373 $ (46,736) $ 68,109
========== ========== =========== ============== ============ ==========
INCOME PER SHARE FROM CONTINUING
OPERATIONS......................... $ 0.16 $ 0.54 $ 1.73
========== ============== ==========
</TABLE>
- ---------------
(a) Reflects the elimination of the historical results of operations of REX as
presented in the historical financial statements of REX included elsewhere
in this Proxy Statement. Included in "Other (expense) income, net" is
interest expense of $1.5 million incurred under intercompany credit
agreements with a subsidiary of the Company.
(b) Represents the decrease in pension expense and related tax effect through
the thirty-six weeks ended September 9, 1995 attributable to the transfer of
the defined benefit pension plan obligation and related assets for active
REX employees from RSI to REX.
(c) On November 6, 1995, the Board of Directors of the Company announced plans
to exit the air freight business served by RGA. See note (b) to "Roadway
Services, Inc. and Subsidiaries Capitalization".
(d) Reflects the elimination of historical RGA amounts.
(e) Includes interest expense of $5.1 million incurred under intercompany credit
agreements with a subsidiary of the Company with outstanding borrowings
aggregating $125.4 million at September 9, 1995.
<PAGE> 6
ROADWAY SERVICES, INC. AND SUBSIDIARIES
---------------------------------------
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED INCOME
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------ PRO FORMA
OTHER BEFORE EFFECTS LESS PRO FORMA
LESS EFFECTS OF RGA EFFECTS OF RGA
HISTORICAL REX (A) OF SPIN-OFF DISCONTINUANCE DISCONTINUANCE(C),(D) PRO FORMA
---------- ---------- ----------- -------------- --------------------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
REVENUE......................... $4,572,004 $2,171,117 $ -- $2,400,887 $ 73,364 $2,327,523
OPERATING EXPENSES
Salaries, wages and
benefits.................... 2,420,716 1,512,235 (4,800)(b) 903,681 31,787 871,894
Purchased transportation...... 889,476 105,486 -- 783,990 83,974 700,016
Operating supplies and
expenses.................... 776,366 388,268 -- 388,098 27,331 360,767
Operating taxes and
licenses.................... 120,249 74,031 -- 46,218 2,400 43,818
Insurance and claims.......... 107,372 46,913 -- 60,459 815 59,644
Provision for depreciation.... 207,267 75,750 -- 131,517 11,488 120,029
Net (gain) loss on sale of
carrier operating
property.................. (1,179) (2,628) -- 1,449 (3) 1,452
---------- ---------- ----------- -------------- ---------- ----------
TOTAL OPERATING EXPENSES.... 4,520,267 2,200,055 (4,800) 2,315,412 157,792 2,157,620
---------- ---------- ----------- -------------- ---------- ----------
OPERATING INCOME (LOSS)..... 51,737 (28,938) 4,800 85,475 (84,428) 169,903
Other (expense) income, net..... 701 (1,775) -- 2,476 (3,901)(e) 6,377
---------- ---------- ----------- -------------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES....... 52,438 (30,713) 4,800 87,951 (88,329) 176,280
Provision (benefit) for income
taxes......................... 32,878 (9,268) 1,900(b) 44,046 (30,797) 74,843
---------- ---------- ----------- -------------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS..... $ 19,560 $ (21,445) $ 2,900 $ 43,905 $ (57,532) $ 101,437
========== ========== =========== ============== ====================== ==========
INCOME PER SHARE FROM
CONTINUING OPERATIONS..... $ 0.50 $ 1.11 $ 2.58
========== ============== ==========
</TABLE>
- ---------------
(a) Reflects the elimination of the historical results of operations of REX as
presented in the historical financial statements of REX included elsewhere
in this Proxy Statement.
(b) Represents the decrease in pension expense and related tax effect for the
year ended December 31, 1994 attributable to the transfer of the defined
benefit pension plan obligation and related assets for active REX employees
from RSI to REX.
(c) On November 6, 1995, the Board of Directors of the Company announced plans
to exit the air freight business served by RGA. See note (b) to "Roadway
Services, Inc. and Subsidiaries Capitalization".
(d) Reflects the elimination of historical RGA amounts.
(e) Includes interest expense of $3.9 million incurred under intercompany credit
agreements with a subsidiary of RSI with outstanding borrowings aggregating
$80.0 million at December 31, 1994.
<PAGE> 7
ROADWAY SERVICES, INC. AND SUBSIDIARIES
---------------------------------------
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED INCOME
THIRTY-SIX WEEKS ENDED SEPTEMBER 10, 1994
<TABLE>
<CAPTION>
LESS PRO
PRO FORMA ADJUSTMENTS FORMA
------------------------ PRO FORMA EFFECTS OF
OTHER BEFORE EFFECTS RGA
LESS EFFECTS OF RGA DISCONTINUANCE
HISTORICAL REX (A) OF SPIN-OFF DISCONTINUANCE (C),(D) PRO FORMA
---------- ---------- ----------- -------------- ------------ ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
REVENUE................................. $3,045,404 $1,443,002 $ -- $1,602,402 $ 43,498 $1,558,904
OPERATING EXPENSES
Salaries, wages and benefits.......... 1,638,997 1,024,289 (3,300)(b) 611,408 20,522 590,886
Purchased transportation.............. 559,879 59,443 -- 500,436 51,754 448,682
Operating supplies and expenses....... 534,065 272,466 -- 261,599 16,673 244,926
Operating taxes and licenses.......... 84,316 52,062 -- 32,254 1,599 30,655
Insurance and claims.................. 72,481 30,888 -- 41,593 490 41,103
Provision for depreciation............ 144,260 53,450 -- 90,810 8,997 81,813
Net (gain) loss on sale of carrier
operating property.................. (661) (1,363) -- 702 (3) 705
---------- ---------- ----------- -------------- ------------ ----------
TOTAL OPERATING EXPENSES.............. 3,033,337 1,491,235 (3,300) 1,538,802 100,032 1,438,770
---------- ---------- ----------- -------------- ------------ ----------
OPERATING INCOME (LOSS)............... 12,067 (48,233) 3,300 63,600 (56,534) 120,134
Other (expense) income, net............. 1,473 (978) -- 2,451 (2,331)(e) 4,782
---------- ---------- ----------- -------------- ------------ ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES...... 13,540 (49,211) 3,300 66,051 (58,865) 124,916
Provision (benefit) for income taxes.... 7,705 (22,209) 1,300(b) 31,214 (20,460) 51,674
---------- ---------- ----------- -------------- ------------ ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS.......................... $ 5,835 $ (27,002) $ 2,000 $ 34,837 ($38,405) $ 73,242
========== ========== =========== ============== ============== ==========
INCOME PER SHARE FROM CONTINUING
OPERATIONS.......................... $ 0.15 $ 0.88 $ 1.86
========== ============== ==========
</TABLE>
- ---------------
(a) Reflects the elimination of the historical results of operations of REX as
presented in the historical financial statements of REX included elsewhere
in this Proxy Statement.
(b) Represents the decrease in pension expense and related tax effect through
thirty-six weeks ended September 10, 1994 attributable to the transfer of
the defined benefit pension plan obligation and related assets for active
REX employees from RSI to REX.
(c) On November 6, 1995, the Board of Directors of the Company announced plans
to exit the air freight business served by RGA. See note (b) to "Roadway
Services, Inc. and Subsidiaries Capitalization".
(d) Reflects the elimination of historical RGA amounts.
(e) Includes interest expense of $2.3 million incurred under intercompany credit
agreements with a subsidiary of RSI with outstanding borrowings aggregating
$68.9 million at September 10, 1994.
