<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the period ended June 17, 1995
--------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-10716
ROADWAY SERVICES INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-1365496
- ---------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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 is (216) 384-8184
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
--- ---
The number of shares of common stock without par value outstanding as of July
14, 1995 was 39,077,486.
<PAGE> 2
INDEX
ROADWAY SERVICES, INC.
FORM 10-Q
PERIOD ENDED JUNE 17, 1995
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets--June 17, 1995 and
December 31, 1994
Condensed Statements of Consolidated Income--Twelve weeks
and twenty-four weeks ended June 17, 1995 and June 18, 1994
Condensed Statements of Consolidated Cash Flows--Twenty-four
weeks ended June 17, 1995 and June 18, 1994
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
- ---------------------------
Item 4. Results of Votes of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
- ----------
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<PAGE> 3
<TABLE>
PART I - FINANCIAL INFORMATION
ROADWAY SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
<CAPTION>
June 17, December 31,
1995 1994
---------- ----------
(dollars in thousands)
<S> <C> <C>
ASSETS
Cash........................................................ $20,296 $29,075
Marketable securities....................................... 4,070 7,976
Accounts receivable......................................... 487,296 492,560
Prepaid expenses and supplies............................... 86,759 77,361
Deferred income taxes....................................... 36,708 35,806
---------- ----------
TOTAL CURRENT ASSETS..................................... 635,129 642,778
Carrier operating property.................................. 2,829,643 2,688,277
Less allowances for depreciation............................ 1,555,713 1,478,560
---------- ----------
TOTAL CARRIER OPERATING PROPERTY......................... 1,273,930 1,209,717
Cost in excess of net assets of businesses acquired......... 95,634 96,940
---------- ----------
$2,004,693 $1,949,435
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable............................................ $311,282 $339,859
Salaries and wages.......................................... 193,775 219,747
Short-term debt............................................. 141,600 -
Other current liabilities................................... 125,098 137,479
---------- ----------
TOTAL CURRENT LIABILITIES................................ 771,755 697,085
Casualty claims payable after one year...................... 109,473 107,427
Future equipment repairs.................................... 28,916 26,639
Retiree medical............................................. 62,183 59,243
Deferred income taxes....................................... 38,942 43,647
---------- ----------
TOTAL LONG-TERM LIABILITIES.............................. 239,514 236,956
Common stock - 40,896,414 shares issued..................... 39,898 39,898
Additional capital.......................................... 51,310 51,153
Earnings reinvested in the business......................... 954,952 978,459
---------- ----------
1,046,160 1,069,510
Less cost of common stock in treasury - 1,426,000
shares in 1995 and 1,477,000 shares in 1994................ 52,736 54,116
---------- ----------
TOTAL SHAREHOLDERS' EQUITY............................... 993,424 1,015,394
---------- ----------
$2,004,693 $1,949,435
========== ==========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
ROADWAY SERVICES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME (Unaudited)
<CAPTION>
Twelve Weeks Ended Twenty-Four Weeks Ended
(Second Quarter) (First Half)
--------------------- ----------------------
June 17, June 18, June 17, June 18,
1995 1994 1995 1994
------ ------ ------ ------
(amounts in thousands, except per share data)
<S> <C> <C> <C> <C>
REVENUE........................................ 1,097,387 $930,157 $2,184,394 $1,953,897
OPERATING EXPENSES
Salaries, wages and benefits................. 580,516 501,426 1,152,631 1,051,781
Purchased transportation..................... 210,729 190,310 420,240 36O,180
Operating supplies and expenses.............. 203,616 180,952 393,885 352,823
0perating taxes and licenses................. 3O,229 25,802 59,6O2 55,346
Insurance and claims......................... 25,897 24,282 51,781 49,370
Provision for depreciation................... 49,863 48,9O4 97,944 96,737
Net gain on sale of property................. (61) (353) (453) (362)
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES................... 1,100,789 971,323 2,175,630 1,965,875
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS).................... (3,402) (41,166) 8,764 (11,978)
Other income (expense)-net..................... 303 324 (926) 350
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES.......... (3,099) (40,842) 7,838 (11,628)
Provision (benefit) for income taxes........... (1,097) (19,116) 3,989 (5,814)
---------- ---------- ---------- ----------
NET INCOME (LOSS)........................ $(2,002) $(21,726) $3,849 $(5,814)
========== ========== ========== ==========
NET INCOME (L0SS) PER SHARE.............. $(.05) $(.55) $.10 $(.15)
========== ========== ========== ==========
DIVIDENDS DECLARED PER SHARE................. $.35 $.35 $.70 $.70
========== ========== ========== ==========
AVERAGE SHARES OUTSTANDING................... 39,467 39,395 39,451 39,383
========== ========== ========== ==========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
ROADWAY SERVICES INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED
CASH FLOWS (Unaudited)
<CAPTION>
Twenty-Four Weeks Ended
(First Half)
--------------------------
June 17, June 18,
1995 1994
-------- --------
(dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)....................................... $ 3,849 $ (5,814)
Adjustments............................................. 30,901 104,988
-------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES...................... 34,750 99,174
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of carrier operating property................. (165,651) (92,105)
Sales of carrier operating property..................... 3,947 3,088
Purchases of marketable securities...................... - (11,330)
Sales of marketable securities.......................... 3,906 27,124
-------- --------
NET CASH USED IN INVESTING ACTIVITIES............. (157,798) (73,223)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid.......................................... (27,331) (27,303)
Increase in short-term debt-net......................... 141,600 -
-------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES...................... 114,269 (27,303)
-------- --------
NET DECREASE IN CASH.............................. (8,779) (1,352)
CASH AT BEGINNING OF YEAR......................... 29,075 27,628
-------- --------
CASH AT END OF SECOND QUARTER..................... $ 20,296 $ 26,276
======== ========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
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ROADWAY SERVICES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the twenty-four
weeks ended June 17, 1995 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1995. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the registrant's annual report on Form 10-K for the year ended December 31,
1994.
Note B - Accounting Period
- --------------------------
The registrant operates on a 13 four-week period calendar with 12 weeks in each
of the first three quarters and 16 weeks in the fourth quarter.
Note C - Short-Term Debt
- ------------------------
At June 17, 1995, short-term debt included borrowings of $140.0 million under an
unsecured $300 million Credit Agreement with several banks, which expires in
March 1999. Interest on outstanding borrowings is based on various rates as
defined in the agreement. This agreement, which was entered into by the
registrant during the first quarter of 1995, contains restrictions on secured
borrowings and requires the registrant to maintain a minimum level of
consolidated net worth. Additional borrowings of $1.6 million were outstanding
at June 17, 1995 under an unsecured $25 million revolving line of credit. The
weighted average interest rate on all borrowings during the second quarter was
6.6%. Due to the short-term nature of the debt, the outstanding
balance approximated fair value.
Item 2. Management's Discussion and Analysis of Financial Condition
- --------------------------------------------------------------------
and Results of Operations
-------------------------
Consolidated revenue for the second quarter ended June 17, 1995 increased
$167.2 million or 18% over revenue for the same period in 1994. For the
twenty-four weeks constituting the registrant's first half, revenue increased
$230.5 million or 11.8% over 1994. Results for the second quarter a year ago
were impacted by the 24-day work stoppage against Roadway Express in April 1994
by the Teamsters Union. The Teamsters strike reduced revenue for the second
quarter of 1994 for Roadway Express by approximately $190 million. This
reduction was largely offset by increased business volumes at all of the
registrant's other operating companies, particularly the Roadway Regional Group
(RRG), Roadway Package System (RPS) and Roberts Express.
An intense pricing environment, especially in the national and regional less-
than-truckload (LTL) markets, and a slowing economy, which has contributed to
lower than anticipated volume levels, caused revenue to be below plan at all
the registrant's operating companies except Roadway Logistics Systems (ROLS).
At Roadway Express, the registrant's largest operating company, rate levels
continued to decline in the quarter, and are currently below those of a year
ago. Near the end of the quarter, LTL tonnage at Roadway was only 2.1% above
last year's depressed post-strike levels, and total tonnage was down 1.2% as
compared with the same period. Revenue at RPS was up 6.2% for the quarter over
the second quarter a year ago. The RRG, consisting of Viking Freight System,
Central Freight Lines, Spartan Express and Coles Express, posted revenues that
were approximately 8% below last year's second quarter. As a result of the
slowing
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<PAGE> 7
economy, year over year revenue growth at the RRG is now estimated to be
somewhat less than originally anticipated. Roadway Global Air (RGA) and ROLS
continued to post strong revenue gains.
Second quarter 1995 operating expenses increased $129.5 million or 13.3% over
comparable 1994 levels, while first half operating expenses were up $209.8
million or 10.7% above 1994 levels. The increase in operating expenses for the
quarter was mostly attributable to Roadway Express, where meaningful comparison
to last year's quarter is significantly impacted by the Teamsters strike in
1994. RPS, RGA, and ROLS experienced increased operating expenses resulting from
higher business volumes. At Roadway Express, wages and benefits increased by
3.1% effective April 1, 1995, in accordance with the industry labor contract.
Purchased transportation has risen due to increased use of rail by Roadway
Express, and increased business volumes at RPS and RGA.
The net loss for the second quarter was $.05 per share compared to a $.55 per
share loss in 1994, while the first half's net income of $.10 per share
compared to a $.15 per share loss a year ago. A significant component of these
poor results was a $.22 per share loss at Roadway Express during the quarter.
Earnings from the registrant's other operating units in the aggregate were
below last year, but were only slightly behind plan. RGA lost $.40 per share
in the quarter compared with a $.38 per share loss in the first quarter and a
loss of $.36 per share in the second quarter last year. The full year loss for
RGA is still expected to be in the range of $1.30 to $1.50 per share, as
estimated in January.
Roadway Express has implemented cost reductions, including the streamlining of
its field management organization, which eliminated six of 25 geographic
districts and one of five divisions, effective July 1. Salaries have been
frozen, staff reductions have been made and discretionary expenses curtailed,
while sales efforts are being fully supported. The actions taken, both short
term and long term, to restore profitability at Roadway Express are the most
stringent in at least 30 years. Costs for the realignment at Roadway Express,
(along with the consolidation of Spartan Express' southern and central
divisions into a single headquarters staff), totaled $.03 per share and are
included in the second quarter results. Intense cost containment efforts will
continue at all of our operating companies for the remainder of 1995. For the
second half, unless freight rates continue to decline precipitously, Roadway
Express should be able to operate profitably, permitting the registrant to at
least earn $1.40 per share for 1995.
Borrowings under financing agreements amounted to $141.6 million at the end of
the second quarter. It is anticipated that borrowings will continue to increase
through the end of the third quarter, with some decline in the fourth quarter.
It is anticipated that funds generated from future operating activities and
financing sources currently in place will finance projected 1995 capital
expenditures and provide adequate levels of working capital, funds for planned
business expansion and other needs of the business. Total capital expenditures
in 1995 are currently projected at approximately $385 million.
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<PAGE> 8
PART II - OTHER INFORMATION
Item 4. Results of Votes of Security Holders
- --------------------------------------------
On May 10, 1995, the registrant held its Annual Meeting of Shareholders at
which the following directors were elected, receiving the number of votes set
forth beside their names.
<TABLE>
<S> <C> <C> <C>
George B. Beitzel 32,766,534 G. James Roush 32,758,716
Richard A. Chenoweth 32,759,122 Daniel J. Sullivan 32,750,732
Joseph M. Clapp 32,757,459 William Sword 32,749,056
Norman C. Harbert 32,762,795 H. Mitchell Watson, Jr. 32,749,483
Charles R. Longsworth 32,755,883 Sarah Roush Werner 32,760,556
Robert E. Mercer 32,761,494
</TABLE>
With respect to a shareholder proposal in favor of confidential voting,
5,615,842 votes were cast in favor of the proposal; 18,998,665 votes were cast
against such proposal; 6,952,531 votes abstained; and there were 1,459,200
broker non-votes.
With respect to a shareholder proposal regarding executive compensation,
1,374,759 votes were cast in favor of the proposal; 23,121,209 votes were cast
against such proposal; 7,071,070 votes abstained; and there were 1,459,200
broker non-votes.
With respect to the ratification of Ernst & Young as independent auditors,
32,701,761 votes were cast in favor of the proposal; 235,053 votes were cast
against such proposal; and 89,424 votes abstained.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
--------
(10) Roadway Services, Inc. Directors' Deferred Fee Plan (as Amended and
Restated as of May 10, 1995)
(27) Financial Data Schedule
(b) Reports on Form 8-K Filed During the Second Quarter of 1995--None
-----------------------------------------------------------------
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 thereunto duly authorized.
ROADWAY SERVICES, INC.
----------------------------------
(Registrant)
Date: July 19, 1995 By D. A. Wilson
----------------- -------------------------------
D. A. Wilson, Senior Vice
President- Finance and
Planning, Secretary and Chief
Financial Officer
Date: July 19, 1995 By R. E. Griggs
----------------- -------------------------------
Roy E. Griggs,
Vice President and Controller
-8-
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EXHIBIT 10
ROADWAY SERVICES, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 Declared Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.6 Deferral Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Deferred Benefit Account . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 Deferred Share Award Account . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 Deferred Share Award Benefit . . . . . . . . . . . . . . . . . . . . . . 2
2.10 Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.12 Emergency Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.13 Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.14 Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.15 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.16 Participation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.17 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.18 Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.19 Share Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.20 Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV DEFERRAL OF FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 Deferral of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2 Crediting of Deferred Fees . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Deferral of Share Awards . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4 Crediting of Deferred Share Awards . . . . . . . . . . . . . . . . . . . . 4
4.5 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE V DEFERRED BENEFIT ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Determination of Deferred Benefit Account . . . . . . . . . . . . . . . . 5
5.2 Crediting of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Crediting of Dividend Equivalents . . . . . . . . . . . . . . . . . . . . 5
5.4 Statement of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.5 Vesting of Deferred Benefit Account . . . . . . . . . . . . . . . . . . . 5
ARTICLE VI DEFERRED SHARE AWARD ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . 6
6.1 Determination of Deferred Share Award Account . . . . . . . . . . . . . . 6
6.2 Crediting of Dividend Equivalents . . . . . . . . . . . . . . . . . . . . 6
6.3 Statement of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.4 Vesting of Deferred Benefit Account . . . . . . . . . . . . . . . . . . . 6
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VII PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.1 Termination of Service as a Director or Death . . . . . . . . . . . . . . 6
7.2 Emergency Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.3 Interim Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.4 Form of Payment -- Deferral Benefits . . . . . . . . . . . . . . . . . . . 7
7.5 Form of Payment -- Deferred Share Award Benefits . . . . . . . . . . . . . 8
7.6 Commencement of Payments . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII BENEFICIARY DESIGNATION . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.1 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.3 No Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.4 Effect of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IX ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.1 Committee; Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.2 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.3 Binding Effect of Decisions . . . . . . . . . . . . . . . . . . . . . . . 9
9.4 Indemnity of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE X AMENDMENT AND TERMINATION OF PLAN . . . . . . . . . . . . . . . . . . . . 9
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11.1 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11.2 Non-assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11.3 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.5 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.6 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.7 No Right to Continued Service . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
ii
<PAGE> 4
ROADWAY SERVICES, INC.
----------------------
DIRECTORS' DEFERRED COMPENSATION PLAN
-------------------------------------
(As Amended and Restated as of May 10, 1995)
This Directors' Deferred Compensation Plan amends and restates
the Roadway Services, Inc. Directors' Deferred Fee Plan, dated as of May 10,
1989.
ARTICLE I
---------
PURPOSE
-------
The purpose of the Roadway Services, Inc. Directors' Deferred
Compensation Plan (the "Plan") is to provide funds and/or shares of common
stock without par value of Roadway Services, Inc., upon termination of service
or death for nonemployee directors of Roadway Services, Inc. or their
beneficiaries. It is intended that the Plan will assist in attracting and
retaining qualified individuals to serve as Directors.
ARTICLE II
----------
DEFINITIONS
-----------
For the purposes of the Plan, the following words and phrases
shall have the meanings indicated:
2.1 BENEFICIARY. Beneficiary means the person or persons
designated or deemed to be designated by the Participant pursuant to Article
VIII to receive benefits payable under the Plan in the event of the
Participant's death.
2.2 BOARD. Board means the Board of Directors of the Company.
2.3 COMMITTEE. Committee has the meaning set forth in Section
9.1.
2.4 COMPANY. Company means Roadway Services, Inc., an Ohio
corporation, and any successor thereto.
2.5 DECLARED RATE. Declared Rate means the interest rate
payable on 26-week U.S. Treasury bills issued on the specified date or, if not
then issued, on the next date of issue.
<PAGE> 5
2.6 DEFERRAL BENEFIT. Deferral Benefit means the benefit
payable to a Participant or his or her Beneficiary pursuant to Article VII and
based on such Participant's Deferred Benefit Account.
2.7 DEFERRED BENEFIT ACCOUNT. Deferred Benefit Account means
the account maintained on the books of the Company for each Participant
pursuant to Article V.
2.8 DEFERRED SHARE AWARD ACCOUNT. Deferred Share Award Account
means the account maintained on the books of the Company for each Participant
pursuant to Article VI.
2.9 DEFERRED SHARE AWARD BENEFIT. Deferred Share Award Benefit
means the benefit payable to a Participant or his or her Beneficiary pursuant
to Article VII and based on such Participant's Deferred Share Award Account.
2.10 DETERMINATION DATE. Determination Date means each January
1 and July 1.
2.11 DIRECTOR. Director means a member of the Board.
2.12 EMERGENCY BENEFIT. Emergency Benefit has the meaning set
forth in Section 7.2.
2.13 FAIR MARKET VALUE. Fair Market Value means the average of
the highest and lowest sales prices of a Share on the specified date (or, if no
Share was traded on such date, on the next preceding date on which it was
traded) as reported in The Wall Street Journal under the heading NASDAQ
National Market Issues or any similar or successor heading.
2.14 FEE. Fee or Fees means any compensation payable in cash to
a Director for his or her services as a member of the Board or any committee
thereof.
2.15 PARTICIPANT. Participant means any eligible Director who
elects to participate by filing a Participation Agreement as provided in
Section 3.2.
2.16 PARTICIPATION AGREEMENT. Participation Agreement means the
agreement filed by a Participant, in the form prescribed by the Committee,
pursuant to Section 3.2.
2.17 PLAN YEAR. Plan Year means a twelve month period
commencing January 1 and ending the following December 31.
2.18 SHARE. Share means a share of common stock without par
value of the Company.
2.19 SHARE AWARD. Share Award means any compensation payable in
Shares to a Director for his or her services as a member of the Board or any
committee thereof.
2
<PAGE> 6
2.20 UNIT. Unit means an accounting unit equal in value to one
Share. The number of Units included in any Deferred Benefit Account or
Deferred Share Award Account shall be adjusted as appropriate to reflect any
stock dividend, stock split, recapitalization, merger or other similar event
affecting Shares.
ARTICLE III
-----------
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 ELIGIBILITY. Eligibility to participate in the Plan is
limited to those Directors who are not employees of the Company or any of its
subsidiaries.
3.2 PARTICIPATION. Participation in the Plan shall be limited
to eligible Directors who elect to participate in the Plan by filing a
Participation Agreement with the Committee. A properly completed and executed
Participation Agreement must be filed on or prior to the December 31
immediately preceding the Plan Year in which the Participant's participation in
the Plan will commence, and the election to participate shall be effective on
the first day of the Plan Year following receipt by the Company of the
Participation Agreement. In the event that a Director first becomes eligible
to participate during the course of a Plan Year, such Participation Agreement
must be filed no later than thirty days following election or appointment to
the Board, and such Participation Agreement shall be effective only with regard
to Fees and Share Awards earned or payable following the filing of the
Participation Agreement with the Committee.
3.3 TERMINATION OF PARTICIPATION. A Participant may elect to
terminate his or her participation in the Plan by filing a written notice
thereof with the Committee, which termination shall be effective at any time
specified by the Participant in the notice but not earlier than the first day
of the Plan Year immediately succeeding the Plan Year in which such notice is
filed with the Committee. Amounts credited to such Participant's Deferred
Benefit Account and Deferred Share Award Account with respect to periods prior
to the effective date of such termination shall continue to be payable pursuant
to, and otherwise governed by, the terms of the Plan.
ARTICLE IV
----------
DEFERRAL OF FEES
----------------
4.1 DEFERRAL OF FEES. A Participant may elect to defer all or
a specified percentage of his or her Fees, and a Participant may elect to have
that portion of his or her deferred Fees credited to his Deferred Benefit
Account either in dollar amounts or Units. A Participant may change the
percentage of his
3
<PAGE> 7
or her Fees to be deferred, or the form in which Fees are to be credited, by
filing a written notice thereof with the Committee, which shall be effective as
of the first day of the Plan Year immediately succeeding the Plan Year in which
such notice is filed with the Committee.
4.2 CREDITING OF DEFERRED FEES. Deferred Fees that a
Participant elects to have credited in dollar amounts shall be credited to the
Participant's Deferred Benefit Account as they become payable to the Director.
Deferred Fees otherwise payable to a Director during a Plan Year that a
Participant elects to have credited in Units shall be credited to the
Participant's Deferred Benefit Account annually after the end of such Plan Year
on the basis of the average price of Shares acquired by the Roadway Services,
Inc. Stock Bonus Plan during such Plan Year (and such annual credits shall take
into account the amount of cash dividends paid by the Company on equivalent
amounts of Shares during periods after the dates on which such Fees otherwise
would have been payable to the Director).
4.3 DEFERRAL OF SHARE AWARDS. A Participant may elect to defer
all or a specified percentage of his or her Share Awards, and a Participant
will have that portion of each deferred Share Award credited to his or her
Deferred Share Award Account in Units. A Participant may change the percentage
of his or her Share Award to be deferred by filing a written notice thereof
with the Committee, which shall be effective as of the first day of the Plan
Year immediately succeeding the Plan Year in which such notice is filed with
the Committee. No fractional Shares shall be deferred, but the number of
Shares deferred shall be rounded down to the nearest whole Share.
4.4 CREDITING OF DEFERRED SHARE AWARDS. The percentage of
Share Awards that a Participant elects to defer shall be credited to the
Participant's Deferred Share Award Account as each Share Award becomes payable
to the Director. The number of Units credited to the Participant's Deferred
Share Award Account shall be equal to the number of Shares of a Participant's
Share Award which the Participant has elected to defer.
4.5 WITHHOLDING TAXES. If the Company is required to withhold
any taxes or other awards from a Director's Fees or deferred Share Award
pursuant to any state, federal or local law, such amounts shall, to the extent
possible, be deducted from the Participant's Fees or Share Award before such
amounts are credited as described in Sections 4.3 and 4.4 above. Any
additional withholding amount required shall be paid by the Director to the
Company as a condition to payment of credits of such Units.
4
<PAGE> 8
ARTICLE V
---------
DEFERRED BENEFIT ACCOUNT
------------------------
5.1 DETERMINATION OF DEFERRED BENEFIT ACCOUNT. On any
particular date, a Participant's Deferred Benefit Account shall consist of the
aggregate amount of dollars and Units credited thereto pursuant to Section 4.2,
plus any interest credited pursuant to Section 5.2, plus any dividend
equivalents credited pursuant to Section 5.3, minus the aggregate amount of
distributions, if any, made from such Deferred Benefit Account.
5.2 CREDITING OF INTEREST. As of each Determination Date, each
Deferred Benefit Account to which Fees have been credited in dollar amounts
shall be increased by the amount of interest earned since the immediately
preceding Determination Date. Interest shall be credited at the Declared Rate
as of such Determination Date based on the average daily balance of the dollar
credited portion of the Participant's Deferred Benefit Account since the
immediately preceding Determination Date, but after the Deferred Benefit
Account has been adjusted for any contributions or distributions to be credited
or deducted for such period. Interest for the period prior to the first
Determination Date applicable to a Deferred Benefit Account shall be prorated.
Until a Participant or his or her Beneficiary receives his or her entire
Deferred Benefit Account, the unpaid balance thereof credited in dollar amounts
shall bear interest as provided in this Section 5.2.
5.3 CREDITING OF DIVIDEND EQUIVALENTS. Each Deferred Benefit
Account to which Fees have been credited in Units shall be credited annually
after the end of each Plan Year with additional Units equal in value to the
amount of cash dividends paid by the Company during such Plan Year on the
number of Shares equivalent to the average daily balance of Units in such
Deferred Benefit Account during such Plan Year. Such dividend equivalents
shall be valued on the basis of the average price of Shares acquired by the
Roadway Services, Inc. Stock Bonus Plan during such Plan Year. Until a
Participant or his or her Beneficiary receives his or her entire Deferred
Benefit Account, the unpaid balance thereof credited in Units shall earn
dividend equivalents as provided in this Section 5.3.
5.4 STATEMENT OF ACCOUNTS. The Committee shall provide to each
Participant, within 120 days after the close of each Plan Year, a statement
setting forth the balance of such Participant's Deferred Benefit Account as of
the last day of the preceding Plan Year and showing all adjustments made
thereto during such Plan Year.
5.5 VESTING OF DEFERRED BENEFIT ACCOUNT. A Participant shall
be 100% vested in his or her Deferred Benefit Account at all times.
5
<PAGE> 9
ARTICLE VI
----------
DEFERRED SHARE AWARD ACCOUNT
----------------------------
6.1 DETERMINATION OF DEFERRED SHARE AWARD ACCOUNT. On any
particular date, a Participant's Share Deferred Share Award Account shall
consist of the aggregate number of Units credited thereto pursuant to Section
4.4, plus any dividend equivalents credited pursuant to Section 6.2, minus the
aggregate amount of distributions, if any, made from such Deferred Share Award
Account.
6.2 CREDITING OF DIVIDEND EQUIVALENTS. Each Deferred Share
Award Account shall be credited annually after the end of each Plan Year with
additional Units equal in value to the amount of cash dividends paid by the
Company during such Plan Year on that number of Shares equivalent to the
average daily balance of Units in such Deferred Share Award Account during such
Plan Year. Such dividend equivalents shall be valued on the basis of the
average price of Shares acquired by the Roadway Services, Inc. Stock Bonus Plan
during such Plan Year. Until a Participant or his or her Beneficiary receives
his or her entire Deferred Share Award Account, the unpaid balance thereof
credited in Units shall earn dividend equivalents as provided in this Section
6.2.
6.3 STATEMENT OF ACCOUNTS. The Committee shall provide to each
Participant, within 120 days after the close of each Plan Year, a statement
setting forth the balance of such Participant's Deferred Share Award Account as
of the last day of the preceding Plan Year and showing all adjustments made
thereto during such Plan Year.
6.4 VESTING OF DEFERRED BENEFIT ACCOUNT. A Participant shall
be 100% vested in his or her Deferred Share Award Account at all times.
ARTICLE VII
-----------
PAYMENT OF BENEFITS
-------------------
7.1 TERMINATION OF SERVICE AS A DIRECTOR OR DEATH. Upon the
earliest of (i) termination of service of the Participant as a Director of the
Company, for reasons other than his or her death, or (ii) the death of a
Participant, the Company shall pay to the Participant or his Beneficiary, as
the case may be, in cash a Deferral Benefit equal to the balance of his or her
Deferred Benefit Account, plus, in cash or Shares as previously elected by the
Participant, a Deferred Share Award Benefit equal to the balance of his or her
Deferred Share Award Account.
7.2 EMERGENCY BENEFIT. In the event that the Committee, upon
written petition of a Participant, determines, in its sole discretion, that the
Participant has suffered an unforeseeable
6
<PAGE> 10
financial emergency, the Company shall pay to the Participant, as soon as
practicable following such determination, an amount in cash necessary to meet
the emergency (the "Emergency Benefit"), but not exceeding the aggregate
balance of such Participant's Deferred Benefit Account and Deferred Share Award
Account as of the date of such payment. For purposes of this Section 7.2, an
"unforeseeable financial emergency" shall mean an unexpected need for cash
arising from an illness, disability, casualty loss, sudden financial reversal
or other such unforeseeable occurrence. Cash needs arising from foreseeable
events such as the purchase of a house or education expenses for children shall
not be considered to be the result of an unforeseeable financial emergency.
The amount of the Deferral Benefit and Deferred Share Award Benefit otherwise
payable under the Plan to such Participant shall be adjusted to reflect the
early payment of the Emergency Benefit. For purposes of this Section 7.2,
Deferred Benefit Accounts and Deferred Share Award Accounts including Units
shall be valued on the basis of the Fair Market Value of the Shares on the date
of payment of an Emergency Benefit.
7.3 INTERIM DISTRIBUTION. A Participant may elect by notice in
writing filed with the Committee, to receive an interim distribution of all or
any specified percentage of his or her deferred Fees or deferred Share Awards
beginning at any time at least three years after the date such Fees and Share
Awards otherwise would have been payable had the Participant not elected to
participate in the Plan. Such a notice may be filed at any time or times, but
may only apply to Fees and Share Awards not yet earned or credited at the time
such notice is filed. The Participant may elect to receive an interim
distribution in either a lump sum payment or in a series of annual installments
over a period not to exceed ten years. Any benefits paid to the Participant as
an interim distribution shall reduce the amounts otherwise payable to the
Participant under the Plan. For purposes of this Section 7.3, Deferred Benefit
Accounts and Deferred Share Award Accounts including Units shall be valued on
the basis of the Fair Market Value of the Shares on the date payment of an
interim distribution commences.
7.4 FORM OF PAYMENT -- DEFERRAL BENEFITS. The Deferral Benefit
payable pursuant to Section 7.1 shall be paid in one of the following forms, as
elected by the Participant in his or her Participation Agreement:
(a) Equal quarterly installments over a period of ten
years (together, in the case of deferred compensation credited in
dollar amounts, with interest thereon credited after the payment
commencement date pursuant to Section 5.2).
(b) A lump sum.
7
<PAGE> 11
(c) A combination of (a) and (b) above. The Participant
shall designate the percentage payable under each option.
For the purposes of this Section 7.4, each distribution from Deferred Benefit
Accounts including Units shall be valued on the basis of the Fair Market Value
of the Shares on the date payment of such distribution is made.
7.5 FORM OF PAYMENT -- DEFERRED SHARE AWARD BENEFITS. The
Deferred Share Award Benefit payable pursuant to Section 7.1 shall be paid in a
single distribution in whole Shares plus cash equal in value to any fractional
Share.
For the purposes of this Section 7.5, each distribution
from a Deferred Share Award Account shall be valued on the basis of the Fair
Market Value of the Shares on the date payment of such distribution is made.
7.6 COMMENCEMENT OF PAYMENTS. Commencement of payments under
Section 7.1 of the Plan shall begin within sixty days following receipt of
notice by the Committee of an event which entitles a Participant (or a
Beneficiary) to payments under the Plan, or at such earlier date as may be
determined by the Committee.
ARTICLE VIII
------------
BENEFICIARY DESIGNATION
-----------------------
8.1 BENEFICIARY DESIGNATION. Each Participant shall have the
right, at any time, to designate any person or persons as his Beneficiary to
whom payment under the Plan shall be made in the event of his or her death
prior to complete distribution to the Participant of his or her Deferral
Benefit and/or Deferred Share Award Benefit. Any Beneficiary designation shall
be made in a written instrument filed with the Committee and shall be effective
only when received in writing by the Committee.
8.2 AMENDMENTS. Any Beneficiary designation may be changed by
a Participant by the filing of a new Beneficiary designation, which will cancel
all Beneficiary designations previously filed.
8.3 NO DESIGNATION. If a Participant fails to designate a
Beneficiary as provided above, or if all designated Beneficiaries predecease
the Participant, then the Participant's designated Beneficiary shall be deemed
to be the Participant's estate.
8.4 EFFECT OF PAYMENT. Payment to a Participant's Beneficiary
(or, upon the death of a Beneficiary, to his or her
8
<PAGE> 12
estate) shall completely discharge the Company's obligations under the Plan.
ARTICLE IX
----------
ADMINISTRATION
--------------
9.1 COMMITTEE; DUTIES. The Committee shall consist of the
Chairman of the Board (provided he is not a nonemployee Director) and two
Company officers or Directors who are not nonemployee Directors who shall be
appointed by the Chairman of the Board. The Committee shall supervise the
administration of the Plan, may from time to time adopt procedures governing
the Plan and shall have authority to give interpretive rulings with respect to
the Plan.
9.2 AGENTS. The Committee may appoint an individual, who may
be an employee of the Company, to be the Committee's agent with respect to the
day-to-day administration of the Plan. In addition, the Committee may, from
time to time, employ other agents and delegate to them such administrative
duties as it sees fit, and may from time to time consult with counsel who may
be counsel to the Company.
9.3 BINDING EFFECT OF DECISIONS. Any decision or action of the
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan shall be final and
binding upon all persons having any interest in the Plan.
9.4 INDEMNITY OF COMMITTEE. The Company shall indemnify the
members of the Committee against claims, loss, damage, expense and liability
arising from any action or failure to act with respect to the Plan to the
extent provided in the Regulations of the Company and any applicable
indemnification agreement between the Company and such member.
ARTICLE X
---------
AMENDMENT AND TERMINATION OF PLAN
---------------------------------
The Board may at any time amend, suspend, terminate or reinstate any
or all of the provisions of the Plan, except that no such amendment, suspension
or termination may adversely affect any Participant's Deferred Benefit Account
and/or Deferred Share Award Account as it existed as of the effective date of
such amendment, suspension or termination without such Participant's consent.
The Committee may, in its sole discretion, from time to time increase the
Declared Rate, but in no event shall the Declared Rate be decreased.
9
<PAGE> 13
ARTICLE XI
----------
MISCELLANEOUS
-------------
11.1 FUNDING. Neither Participants, nor their Beneficiaries,
nor their heirs, successors or assigns, shall have any secured interest or
claim in any property or assets of the Company. The Company's obligation under
the Plan shall be merely that of an unfunded and unsecured promise of the
Company to pay money in the future. The Company may create a trust to hold
funds to be used in payment of its obligations under the Plan, and may fund
such trust, provided that any funds contained therein shall remain liable for
the claims of the Company's general creditors.
11.2 NON-ASSIGNABILITY. No right or interest under the Plan of
a Participant or his or her Beneficiary (or any person claiming through or
under any of them), other than the surviving spouse of any deceased
Participant, shall be assignable or transferable in any manner or be subject to
alienation, anticipation, sale, pledge, encumbrance or other legal process or
in any manner be liable for or subject to the debts or liabilities of any such
Participant or Beneficiary. If any Participant or Beneficiary (other than the
surviving spouse of any deceased Participant) shall attempt to or shall
transfer, assign, alienate, anticipate, sell, pledge or otherwise encumber his
or her benefits hereunder or any part thereof, or if by reason of his or her
bankruptcy or other event happening at any time such benefits would devolve
upon anyone else or would not be enjoyed by him or her, then the Committee, in
its discretion, may terminate his or her interest in any such benefit to the
extent the Committee considers necessary or advisable to prevent or limit the
effects of such occurrence. Termination shall be effected by filing a written
"termination declarations" with the Secretary of the Company and making
reasonable efforts to deliver a copy to the Participant or Beneficiary whose
interest is adversely affected (the Terminated Participant).
As long as the Terminated Participant is alive, any
benefits affected by the termination shall be retained by the Company and, in
the Committee's sole and absolute judgment, may be paid to or expended for the
benefit of the Terminated Participant, his or her spouse, his or her children
or any other person or persons in fact dependent upon him or her in such a
manner as the Committee shall deem proper. Upon the death of the Terminated
Participant, all benefits withheld from him or her and not paid to others in
accordance with the preceding sentence shall be disposed of according to the
provisions of the Plan that would apply if he or she died prior to the time
that all benefits to which he or she was entitled were paid to him or her.
11.3 CAPTIONS. The captions contained herein are for
convenience only and shall not control or affect the meaning or construction
hereof.
10
<PAGE> 14
11.4 GOVERNING LAW. The provisions of the Plan shall be
construed and interpreted according to the laws of the State of Ohio.
11.5 SUCCESSORS. The provisions of the Plan shall bind and
inure to the benefit of the Company and its successors and assigns. The term
successors as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of the Company and
successors of any such corporation or other business entity.
11.6 EFFECTIVE DATE. The effective date of this amended and
restated Director's Deferred Compensation Plan shall be May 10, 1995.
11.7 NO RIGHT TO CONTINUED SERVICE. Nothing contained herein
shall be construed to confer upon any Director the right to continue to serve
as a Director of the Company or in any other capacity.
11
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