<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the Period ended March 29, 1997.
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from ______ to ______.
Commission file number 0-600
ROADWAY EXPRESS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-0492670
- --------------------------------------------- ------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No)
1077 Gorge Boulevard Akron, OH 44310
- ---------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 384-1717
---------------
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 ($.01 par value) outstanding as of April
17, 1997 was 20,528,251.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 29, 1997 December 31, 1996
----------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 39,205 $ 36,243
Accounts receivable, net 262,949 260,789
Other current assets 16,388 16,847
----------------------------------------------------------------------
Total current assets 318,542 313,879
Carrier operating property at cost 1,379,772 1,392,048
Allowance for depreciation 1,010,215 1,013,954
----------------------------------------------------------------------
Net carrier operating property 369,557 378,094
Deferred income taxes 17,275 17,651
----------------------------------------------------------------------
Total assets $ 705,374 $ 709,624
======================================================================
Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 131,584 $ 135,248
Salaries and wages payable 110,458 110,124
Other current liabilities 52,949 52,545
----------------------------------------------------------------------
Total current liabilities 294,991 297,917
Long-term liabilities
Casualty claims payable 63,586 66,674
Future equipment repairs 23,256 24,281
Accrued pension and retiree medical 98,631 96,156
----------------------------------------------------------------------
Total long-term liabilities 185,473 187,111
Shareholders' equity
Common Stock - $.01 par value
Authorized - 100,000,000 shares
Issued - 20,556,714 shares 206 206
Other shareholders' equity 224,704 224,390
----------------------------------------------------------------------
Total shareholders' equity 224,910 224,596
----------------------------------------------------------------------
Total liabilities and equity $ 705,374 $ 709,624
======================================================================
</TABLE>
Note: The balance sheet at December 31, 1996 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
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ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Twelve Weeks Ended
(First Quarter)
March 29, 1997 March 23, 1996
----------------------------------------------------
(amounts in thousands, except per share data)
<S> <C> <C>
Revenue $ 590,675 $ 516,963
Operating expenses:
Salaries, wages and benefits 382,281 345,574
Operating supplies and expenses 101,947 87,082
Purchased transportation 48,218 39,358
Operating taxes and licenses 18,844 17,616
Insurance and claims expense 16,899 9,489
Provision for depreciation 12,628 15,536
Net (gain) on disposal of operating property (584) (2,634)
----------------------------------------------------
Total operating expenses 580,233 512,021
----------------------------------------------------
Operating income 10,442 4,942
Other (expense), net (221) (332)
----------------------------------------------------
Income before income taxes 10,221 4,610
Provision for income taxes 4,699 1,987
----------------------------------------------------
Net income $ 5,522 $ 2,623
====================================================
Net income per share $ 0.27 $ 0.13
Average shares outstanding 20,548 20,557
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 4
ROADWAY EXPRESS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Twelve Weeks Ended
(First Quarter)
March 29, 1997 March 23, 1996
----------------------------------------------------
(dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,522 $ 2,623
Depreciation and amortization 12,646 15,543
Other operating adjustments (10,674) (14,309)
----------------------------------------------------
Net cash provided by operating activities 7,494 3,857
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of carrier operating property (6,222) (7,319)
Sales of carrier operating property 2,716 3,976
----------------------------------------------------
Net cash used by investing activities (3,506) (3,343)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (1,026) -
Net borrowings - -
----------------------------------------------------
Net cash used by financing activities (1,026) -
Net increase in cash and cash equivalents 2,962 514
Cash and cash equivalents at beginning of period 36,243 23,341
----------------------------------------------------
Cash and cash equivalents at end of period $ 39,205 $ 23,855
====================================================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 5
Roadway Express, 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 12 weeks ended March 29, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. 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, 1996.
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--Provision for Income Taxes
Taxes provided exceed the U.S. statutory rate primarily due to non-deductible
operating costs, and foreign and state taxes.
<TABLE>
<CAPTION>
Twelve Weeks Ended
(First Quarter)
March 29, 1997 March 23, 1996
----------------------- -----------------------
(amounts in thousands)
<S> <C> <C>
U.S. Federal $ 3,216 $ 871
U.S. State 625 239
Foreign 858 877
----------------------- -----------------------
Total $ 4,699 $ 1,987
======================= =======================
</TABLE>
Note D-Impact of Recently Issued Accounting Standards
The Company will adopt the provisions of Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share", as of December 31, 1997. The
adoption of SFAS 128 is expected to have no impact on the Company's calculation
of earnings per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company had net income of $5,522,000, or $0.27 per share, for the first
quarter ended March 29, 1997, compared to income of $2,623,000, or $0.13 per
share, in the first quarter of last year. This improvement in earnings is
primarily the result of revenue growth and cost controls relating to our nearly
completed network improvements. Revenues were $590,675,000 for the first quarter
of 1997, a 14.3% improvement over first quarter 1996 revenue of $516,963,000.
4
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
The Company's tonnage was up 8.7% in the first quarter compared to the prior
year quarter. This increase was partly attributable to the inclusion of three
extra working days in the first quarter this year. Less-than-truckload (LTL)
tons were up 9.3% and truckload tonnage was up 6.4% compared to first quarter
1996. Net revenue per ton has increased 5.1% above the first quarter 1996. This
increase reflects the impact of the January 1 price increase and the variable
fuel surcharge which was instituted at the end of the third quarter, 1996.
Operating expenses per ton (excluding gain on sale of operating property) were
up 3.8% compared to first quarter 1996. Fuel, purchased transportation, and
insurance costs increased faster than business levels this quarter. Purchased
transportation costs increased 22.5%, reflecting the Company's increasing use of
railroads in certain linehaul operations, and our expanding use of freight
containers for overseas operations. Higher fuel prices added $4.0 million to
operating expenses in the current quarter compared to first quarter 1996.
Salaries and wages were impacted by the tonnage growth and the 3.8% wage and
benefit increase on April 1, 1996, under the terms of the Teamster contract, as
well as by an increase in workers' compensation expenses. Freight, workers'
compensation, and casualty claims payable declined during 1996 primarily due to
new safety and risk management programs and an intensive review to settle
existing claims, which was essentially completed by the end of 1996. Despite the
new safety programs, insurance and claims expense increased by $7.4 million
during the first quarter of 1997 due to the reduced expense in 1996, and a
higher than expected settlement on a claim in 1997. Depreciation expense
continues to decline as more revenue equipment becomes fully depreciated and as
we reduce the number of terminal facilities. The Company's system count has been
reduced to 415 terminals, compared to 468 terminals at the end of the first
quarter 1996.
The tax expense attributable to the operating income for the first quarters of
1996 and 1995 differs from the Federal statutory rate due to the impact of state
taxes, taxes on profitable foreign operations, and non-deductible operating
expenses as described in Note C to the Condensed Consolidated Financial
Statements.
At the end of the quarter, there were no borrowings against the credit
facilities; cash flow from operations has been sufficient to meet working
capital needs. The Company entered into a second operating lease agreement to
replace an additional 3,250 (approximately 11%) of our linehaul trailers during
1997. Under these agreements, we have replaced approximately 4,300 aging
trailers with new leased units.
On February 7, 1997, Roadway announced that it had reached agreement for the
friendly acquisition of Reimer Express Lines, Ltd. of Winnipeg, Manitoba,
Canada, for $15 million in cash. The agreement also contains provisions for
additional payments of up to $10 million, subject to Reimer achieving defined
performance criteria over a five year period. The purchase is subject to
Canadian federal and provincial approvals, and is expected to be completed
during the second quarter of 1997. This acquisition will immediately and vastly
expand Roadway's Canadian coverage. The Company's current Canadian subsidiary
will be closed upon completion of the purchase of Reimer. The Company does not
expect to incur material expenses in relation to the shut-down of the existing
Canadian subsidiary.
The portions of narrative set forth in this discussion that are not historical
in nature are forward-looking statements. The Company's actual future
performance and operating and financial results may differ from those described
in the forward-looking statements as a result of a variety of factors that,
besides those mentioned, include the condition of the industry and the economy
and the success of the Company's operating plans.
5
<PAGE> 7
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on March 26, 1997. Two
matters were voted upon at this meeting: (i) the election of seven members to
the Board of Directors and (ii) ratification of the appointment of Ernst & Young
LLP as the independent auditors. There were 18,358,612 shares voted and
2,176,691 shares not voted.
The following table shows the results of the vote.
<TABLE>
<CAPTION>
PROPOSAL FOR AGAINST WITHHELD
<S> <C> <C> <C>
Election of Directors
Frank P. Doyle 18,210,135 148,477
Phillip J. Meek 18,221,207 137,405
Robert E. Mercer 18,183,070 175,542
Carl W. Schafer 18,211,229 147,383
William Sword 18,209,855 148,756
Sarah Roush Werner 18,215,105 143,507
Michael W. Wickham 18,121,073 237,538
Appointment of Ernst &
Young LLP as auditors 18,161,618 114,036 82,958
</TABLE>
ITEM 5. OTHER INFORMATION
On April 16, 1997, the Board of Directors announced a cash dividend of $0.05 per
share on the Company's common stock payable on June 2, 1997, to shareholders of
record on May 16, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No.
- -----------
10.20 Amendment to the $25,000,000 Credit Agreements between Roadway Express,
Inc., Morgan Guaranty Trust Company of New York, and Bank One of Akron,
N.A.
10.21 Schedule of documents not filed which are substantially identical in all
material respects to previously filed documents.
27 Financial Data Schedule.
List of the Current Reports on Form 8-K which were filed during the current
quarter:
Date of Form 8-K Items reported
- ---------------- --------------
February 18, 1997 Announcement of the agreement between the Company and the
shareholders of Reimer for the friendly acquisition of
Reimer Express Lines, Ltd of Winnipeg, Manitoba, Canada.
6
<PAGE> 8
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 EXPRESS, INC.
Date: May 1, 1997 By: /s/ J. Dawson Cunningham
----------- ---------------------------
J. Dawson Cunningham, Vice President-
Finance and Administration, and
Treasurer (Principal Financial and
Accounting Officer)
7
<PAGE> 1
Exhibit 10.20
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement ("FIRST AMENDMENT") is dated
as of January 7, 1997 and is by and between ROADWAY EXPRESS, INC., a Delaware
corporation (the "BORROWER") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the
"BANK").
WITNESSETH:
WHEREAS, the Borrower and the Bank executed and delivered a Credit
Agreement dated as of July 15, 1996 pursuant to which, inter alia, the Bank has
agreed to make various loans to the Borrower upon the terms and conditions set
forth therein (as the same may be amended, modified or supplemented from time to
time, the "CREDIT AGREEMENT"); and
WHEREAS, the Borrower has requested that certain revisions be made to
the Credit Agreement; and
WHEREAS, as a condition to the Bank consenting and approving the
amendments requested by Borrower, the Bank has required that the Borrower
execute and deliver this First Amendment.
NOW THEREFORE, each of the parties hereto for valid consideration, the
sufficiency of which is hereby acknowledged, agrees as follows:
I. AMENDMENTS
----------
A. DEFINITIONS
1. The definition of "ACCOUNT" is deleted in its entirety.
2. The definition of "ACCOUNT DEBTOR" is deleted in its
entirety.
3. The definition of "BORROWING BASE" is deleted in its
entirety.
4. The definition of "BORROWING BASE CERTIFICATE" is deleted
in its entirety.
5. The definition of "CASH COLLATERAL ACCOUNT" is deleted in
its entirety.
1
<PAGE> 2
6. The definition of "COLLATERAL" is deleted in it
entirety.
7. The definition of "EURO-DOLLAR MARGIN" is deleted in its
entirety and the following is substituted therefor:
"The term "Euro-Dollar Margin" means 0.25%."
8. The definition of "INDEBTEDNESS" is amended by deleting
subsection (i) thereof.
9. The definition of "NET AMOUNT OF QUALIFIED ACCOUNTS" is
deleted in its entirety.
10. The definition of "QUALIFIED ACCOUNT" is deleted in its
entirety.
11. The definition of "SECURITY DOCUMENTS" is deleted in its
entirety and the following is substituted therefor:
"The term "SECURITY DOCUMENTS" means this Agreement, the
Note and any other documents or agreements at any time
executed in connection therewith."
B. SECURITY
Sections 4.1 and 4.2 are deleted in their entirety and the
following is substituted therefor:
"Section 4. Intentionally Left Blank."
C. BORROWER'S REPORTS
Sections 5.1 and 5.2 are deleted in their entirety and the
following is substituted therefor:
"Section 5. Intentionally Left Blank."
D. BORROWER'S RECORDS
Section 6 is deleted in its entirety and the following is
substituted therefor:
"Section 6. Intentionally Left Blank."
E. COLLECTIONS BY BORROWERS
2
<PAGE> 3
Section 7 is deleted in its entirety and the following is
substituted therefor:
"Section 7. Intentionally Left Blank."
F. COLLECTIONS BY THE BANK
Sections 8.1, 8.2, 8.3 and 8.4 are deleted in their entirety and
the following is substituted therefor:
"Section 8. Intentionally Left Blank."
G. ADDITIONAL PROVISIONS CONCERNING COLLATERAL
Sections 9.1, 9.2, 9.3 and 9.4 are deleted in their entirety and
the following is substituted therefor:
"Section 9. Intentionally Left Blank."
H. POWER OF ATTORNEY
Section 10 is deleted in its entirety and the following is
substituted therefor:
"Section 10. Intentionally Left Blank."
I. LIMITATIONS OF LIABILITY OF THE BANK; INDEMNIFICATION BY
BORROWER
Section 11.1 is deleted in its entirety and the following is
substituted therefor:
"Section 11.1. Intentionally Left Blank."
J. AFFIRMATIVE COVENANTS
1. Section 12.2(2) is amended to delete clause (b) thereof
and clause (c) is relettered as clause (b).
2. Section 12.2(5) is deleted in its entirety and the
following is substituted therefor:
"Section 12.2(5). Intentionally Left Blank."
3
<PAGE> 4
3. The last sentence of the second paragraph of Section
12.3 is deleted in its entirety.
4. Section 12.5 is amended by deleting the second paragraph
thereof in its entirety and substituting the following
therefor:
"In the event the Borrower fails to secure and keep in force and
effect insurance as hereinabove provided, the Bank is authorized
at its election upon five (5) Business Day's prior notice to the
Borrower to pay the cost of insurance and the Borrower agrees to
repay all sums so paid on demand with interest at the rate
provided for in this Agreement. The Bank is irrevocably
appointed attorney-in-fact of the Borrower to endorse any draft
or check which may be payable to the Borrower in order to
collect the proceeds of such insurance."
5. Section 12.6 is amended by deleting the first paragraph
thereof and substituting the following therefor:
"The Borrower will maintain, or cause to be maintained, its
properties and assets used or useful in its business in good
condition, repair and working order (normal wear and tear
excepted)."
6. Section 12.10 is amended by deleting 12.10(ii) thereof.
7. Section 12.13 is deleted in its entirety, and the
following is substituted therefor:
"Section 12.13. Intentionally Left Blank."
K. NEGATIVE COVENANTS
1. Section 13.2 is amended to delete subsections
13.2(iii)(A) and (B) and subsections 13.2(iii) (C) and (D) are renumbered as
13.2(iii) (A) and (B).
2. Section 13.3 is amended by deleting subsection 13.3(ii)
and substituting the following therefor:
"(ii) the Borrower may sell properties and assets so long as (i)
all sales are made in the ordinary course of business and such sales do not
constitute a sale of all or a substantial part of the Borrower's properties and
assets."
3. Section 13.4 is amended by deleting it in its entirety
and substituting the following therefor:
13.4 LIENS. Subject to the Intercreditor Agreement, the
Borrower will not create, incur, assume or suffer to exist any lien, charge or
other encumbrance on or security interest in ("Liens") any of its properties or
assets in which the Bank now or hereafter may have a security
4
<PAGE> 5
interest, whether such properties or assets are now owned or existing or
hereafter acquired or arising, except (i) Liens for taxes, assessments or other
governmental charges or levies which at the particular time are not due, or
remain payable without penalty or interest or are being contested in good faith
by appropriate proceedings diligently conducted, provided adequate reserve or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made therefor; (ii) mechanic's, carrier's, worker's, employee's,
repairmen's, warehousemen's, vendor's or other similar Liens arising in the
ordinary course of business in respect of obligations not yet due, or which are
being contested in good faith by the appropriate proceedings diligently
conducted which operate to stay any foreclosure, distraint or execution on the
property or deposits or pledges to obtain the release of any such Lien; (iii)
deposits, Liens or pledges to secure workers compensation, unemployment
insurance, old age benefits, social security or other statutory obligations, or
in connection with, or to secure the performance of, bids, tenders, contracts
(other than for the repayment of borrowed money), or leases, or other pledges
or deposits for purposes of like nature in the ordinary course of business;
(iv) liens arising out of judgments or awards so long as an appeal or
proceeding for review is being prosecuted in good faith and execution is
stayed; (v) Liens permitted by Section 13.2 of this Agreement; (vi) Liens
securing indebtedness created and permitted under the Master Lease Intended as
Security dated as of March 15, 1996, between the Borrower and ABN Amro, in an
amount not in excess of $25,000,000 in the aggregate; and (vii) Liens securing
indebtedness created and permitted under substantially similar lease agreements
with similar terms to the lease agreement described in clause (vii) above in an
amount not to exceed $50,000,000 in the aggregate from the date hereof through
the fiscal year of the Borrower ending in 1998; PROVIDED, THAT, the Borrower
will not create, incur, assume, or suffer to exist such Liens securing
indebtedness in excess of $25,000,000 during any such fiscal year of the
Borrower.
L. FINANCIAL COVENANTS OF BORROWER
Section 14.3 is deleted in its entirety and the following is
substituted therefor:
"Section 14.3. Intentionally Left Blank."
M. REPRESENTATIONS AND WARRANTIES
1. Section 15.3 is deleted in its entirety and the
following is substituted therefor:
"This Agreement, the Note and the Security Documents have been
duly and validly executed and delivered by the Borrower and
constitute valid and legally binding agreements of the Borrower
enforceable in accordance with their terms, except as limited
by bankruptcy, insolvency or other Laws of general application
relating to or affecting the enforcement of creditors' rights."
2. Section 15.6 is deleted in its entirety and the
following is substituted therefor:
"15.6 INDEBTEDNESS; LIENS. The Borrower has no indebtedness for
borrowed money other than its existing indebtedness described in Section 13.2
and there are no Liens on any of the
5
<PAGE> 6
properties or assets of the Borrower except of the type described in
subparagraphs (i) through (viii) of Section 13.4."
3. Section 15.18 is deleted in its entirety and the
following is substituted therefor:
"The Borrower has paid record and marketable title in fee
simple to, or a valid leasehold interest in, all its real
property, and good title to, or a valid leasehold interest in,
all of its other property, except to the extent that the
failure to have such title or interest, in any instance or in
the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Borrower.
N. DEFAULT
Subsections 17(i) and (j) are deleted in their entirety and
subsection 17(k) is renumbered as subsection 17(i).
O. REMEDIES
1. The first phrase of Section 18(a) is deleted in its
entirety and the following is substituted therefor:
(a) If a Default specified under paragraphs (a) through (f) or
(i) of this Section 18 shall occur and be continuing or shall
exist, the Bank shall be under no further obligation to make
Loans to the Borrower hereunder; and the Bank may by written
notice to the Borrower declare the unpaid balance of all Loans
to the Borrower then outstanding and interest accrued thereon,
and all other liabilities of the Borrower hereunder to be
forthwith due and payable, and the same shall thereupon become
and be immediately due and payable, without presentment, demand
or protest of any kind, all of which are hereby expressly
waived.
2. Section 18(d) is deleted in its entirety and the
following is substituted therefor:
"The Bank may exercise all rights and the Bank will have all
remedies available under this Agreement and under the law, the
right to court costs, reasonable attorneys' fees and legal
expertise.
3. Subsection 18(e) is deleted in its entirety and the
following is substituted therefor:
"18(e) Intentionally Left Blank."
4. Subsection 18(h) is deleted in its entirety and the
following is substituted therefor:
"18(h) Upon the occurrence of a Default, the Bank may grant
extensions to, or adjust claims of, or make compromises
or settlements with, debtors, guarantors
6
<PAGE> 7
or any other parties or any securities, guaranties or
insurance, without notice to or the consent of the Borrower,
without affecting the Borrower's liability under this
Agreement, the Security Documents or the Related Documents."
5. Subsection 18(i) is amended to substitute the term
"assets" for the term "Collateral".
6. Subsection 18(j) is deleted in its entirety and the
following is substituted therefor:
"18(j) Intentionally Left Blank."
P. MISCELLANEOUS
Section 19 is amended by adding the following Section 19.7 at
the end thereof.
"19.7. EXPENSES. All reasonable expenses, including, but not
limited to attorney's fees incurred by the Bank after the
Closing in taking action in administering this Agreement, the
Security Documents, the Related Documents and all additional
agreements contemplated in or by this Agreement and in all
efforts made to enforce payment, as well as all reasonable
attorney's fees and legal expenses incurred in connection
therewith, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions or proceedings
arising out of or relating to this Agreement, shall be invoiced
to, and paid by, the Borrower; provided, however, that the
Borrower will not pay for costs and expenses arising solely
from the gross negligence or willful misconduct of the Bank.
All statements, reports, certificates, opinions and other
documents or information furnished by Borrower to the Bank
shall be supplied without cost to the Bank."
II. GENERAL
-------
1. Except as amended hereby, the Credit Agreement is not otherwise
amended and remains in full force and effect.
2. All capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.
3. SUCCESSORS AND ASSIGNS. This First Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
4. COUNTERPARTS. This First Amendment may be executed
simultaneously in two or more counterparts, each of which shall be deemed to be
an original but all of which shall constitute together but one and the same
instrument.
5. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY
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<PAGE> 8
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
6. EXPENSES. The Borrower agrees to pay all expenses of the Bank in
connection with the transactions contemplated by this First Amendment
(including, without limitation, the reasonable fees and expenses of counsel for
the Bank).
8
<PAGE> 9
IN WITNESS WHEREOF, each of the parties hereto have signed this First
Amendment the 7th day of January, 1997.
ATTEST: ROADWAY EXPRESS, INC.
By: _______________________ By:__________________________
Name: Name: J. Dawson Cunningham
Title: Title: Vice President-Finance
& Administration
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:____________________________
Name: Patricia P. Lunka
Title: Vice President
9
<PAGE> 10
EXECUTION COPY
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement ("SECOND AMENDMENT") is dated
as of January 7, 1997 and is by and between ROADWAY EXPRESS, INC., a Delaware
corporation (the "BORROWER") and BANK ONE, AKRON, NA (the "BANK").
WITNESSETH:
WHEREAS, the Borrower and the Bank executed and delivered a Credit
Agreement dated as of January 2, 1996 pursuant to which, inter alia, the Bank
has agreed to make various loans to the Borrower upon the terms and conditions
set forth therein (as the same may be amended, modified or supplemented from
time to time, the "CREDIT AGREEMENT"); and
WHEREAS, the Borrower and the Bank executed and delivered a First
Amendment to Credit Agreement dated July 15, 1996, pursuant to which certain
amendments were made to the Credit Agreement (the "FIRST AMENDMENT"); and
WHEREAS, the Borrower has requested that certain additional revisions
be made to the Credit Agreement; and
WHEREAS, as a condition to the Bank consenting and approving the
amendments requested by Borrower, the Bank has required that the Borrower
execute and deliver this Second Amendment.
NOW THEREFORE, each of the parties hereto for valid consideration, the
sufficiency of which is hereby acknowledged, agrees as follows:
I. AMENDMENTS
----------
A. DEFINITIONS
1. The definition of "ACCOUNT" is deleted in its entirety.
1
<PAGE> 11
2. The definition of "ACCOUNT DEBTOR" is deleted in its
entirety.
3. The definition of "BORROWING BASE" is deleted in its
entirety.
4. The definition of "BORROWING BASE CERTIFICATE" is
deleted in its entirety.
5. The definition of "CASH COLLATERAL ACCOUNT" is deleted
in its entirety.
6. The definition of "COLLATERAL" is deleted in it
entirety.
7. The definition of "INDEBTEDNESS" is amended by deleting
subsection (i) thereof.
8. The definition of "LIBOR Line Rate" is deleted in its
entirety and the following is substituted therefor:
"LIBOR LINE RATE" means the LIBOR Interest Rate plus
twenty-five (25) basis points.
9. The definition of "NET AMOUNT OF QUALIFIED ACCOUNTS" is
deleted in its entirety.
10. The definition of "QUALIFIED ACCOUNT" is deleted in its
entirety.
11. The definition of "SECURITY DOCUMENTS" is deleted in
its entirety and the following is substituted therefor:
"SECURITY DOCUMENTS" means this Agreement, the Revolving Credit
Note and any other documents or agreements at any time executed in
connection therewith."
B. LOANS
1. The last two sentences of the first paragraph of
Section 2.1.1(b) are deleted in their entirety.
2. Section 2.1.1(c) is deleted in its entirety and the
following is substituted therefor:
"(c) REVOLVING NATURE OF LOANS. Until the Termination Date,
and subject to the
2
<PAGE> 12
limitations herein set forth, Borrower may borrow and reborrow
and repay funds under the Revolving Credit Note; PROVIDED,
HOWEVER, that at no time shall the aggregate unpaid principal
balance outstanding under the Revolving Credit Note exceed
Twenty-Five Million Dollars ($25,000,000.00). Each borrowing
shall be in a minimum amount of Five Hundred Thousand Dollars
($500,000.00) and each repayment shall be made to the Bank."
3. Section 2.2(a)(i) is deleted in its entirety and the
following is substituted therefor:
"(i) LIBOR OPTION: With respect to the Revolving Credit Loan
for each Rate Segment of the LIBOR Portion, a rate per annum
(computed on the basis of a year of 360 days and actual days
elapsed) for each day equal to the LIBOR Line Rate."
4. The second sentence of Section 2.3(a) is deleted in its
entirety and the following is substituted therefor:
"Notwithstanding the foregoing, after the occurrence of a
Default, the principal amount of the Loans shall be payable immediately
upon demand made by the Bank at any time under Section 17(a) or automatically
under Section 17(b) as the case may be."
C. SECURITY
Sections 3(a), (b) and (c) are deleted in their entirety and
the following is substituted therefor:
"3. Intentionally Left Blank."
D. BORROWER'S REPORTS
Sections 4(a) and (b) are deleted in their entirety and the
following is substituted therefor:
"4. Intentionally Left Blank."
3
<PAGE> 13
E. BORROWER'S RECORDS
Section 5 is deleted in its entirety and the following is
substituted therefor:
"5. Intentionally Left Blank."
F. COLLECTIONS BY BORROWERS
Section 6 is deleted in its entirety and the following is
substituted therefor:
"6. Intentionally Left Blank."
G. COLLECTIONS BY THE BANK
Sections 7(a), (b), (c) and (d) are deleted in their entirety
and the following is substituted therefor:
"7. Intentionally Left Blank."
H. ADDITIONAL PROVISIONS CONCERNING COLLATERAL
Sections 8(a), (b), (c) and (d) are deleted in their entirety
and the following is substituted therefor:
"8. Intentionally Left Blank."
I. POWER OF ATTORNEY
Section 9 is deleted in its entirety and the following is
substituted therefor:
"9. Intentionally Left Blank."
4
<PAGE> 14
J. LIMITATIONS OF LIABILITY OF THE BANK; INDEMNIFICATION BY
BORROWER
Section 10(a) is deleted in its entirety and the following is
substituted therefor:
"10(a) Intentionally Left Blank."
K. AFFIRMATIVE COVENANTS
1. Section 11(b)(2)(b) is deleted in its entirety.
2. Section 11(b)(5) is deleted in its entirety.
3. The last sentence of the second paragraph of Section
11(c) is deleted in its entirety.
4. Section 11(e) is amended by deleting the second
paragraph thereof in its entirety and substituting the following therefor:
"In the event the Borrower fails to secure and keep in force
and effect insurance as hereinabove provided, the Bank is
authorized at its election upon five (5) Business Day's prior
notice to the Borrower to pay the cost of insurance and the
Borrower agrees to repay all sums so paid on demand with
interest at the rate provided for in this Agreement. The Bank
is irrevocably appointed attorney-in-fact of the Borrower to
endorse any draft or check which may be payable to the Borrower
in order to collect the proceeds of such insurance."
5. Section 11(f) is amended by deleting the first
paragraph thereof and substituting the following
therefor:
"The Borrower will maintain, or cause to be maintained, its
properties and assets used or useful in its business in good
condition, repair and working order (normal wear and tear
excepted)."
6. Section 11(j) is amended by deleting subsection
11(j)(ii) thereof.
7. Section 11(m) is deleted in its entirety.
L. NEGATIVE COVENANTS
5
<PAGE> 15
1. Section 12(b) is amended to delete subsections
12(b)(iii)(1) and (2) and subsections 12(b)(iii) (3) and (4) are renumbered as
12(b)(iii) (1) and (2).
2. Section 12(c) is amended by deleting subsection
12(c)(ii) and substituting the following therefor:
"(ii) the Borrower may sell properties and assets so long as
all sales are made in the ordinary course of business and such sales do not
constitute a sale of all or a substantial part of the Borrower's properties and
assets.."
3. Section 12(d) is amended by deleting it in its entirety
and substituting the following therefor:
(d) LIENS. Subject to the Intercreditor Agreement, the Borrower will
not create, incur, assume or suffer to exist any lien, charge or other
encumbrance on or security interest in ("Liens") any of its properties or
assets in which the Bank now or hereafter may have a security interest, whether
such properties or assets are now owned or existing or hereafter acquired or
arising, except (i) liens for taxes, assessments or other governmental charges
or levies which at the particular time are not due, or remain payable without
penalty or interest or are being contested in good faith by appropriate
proceedings diligently conducted, provided adequate reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made therefor; (ii) mechanic's, carrier's, worker's employee's, repairmen's,
warehousemen's, vendor's or other similar liens arising in the ordinary course
of business in respect of obligations not yet due, or which are being contested
in good faith by the appropriate proceedings diligently conducted which operate
to stay any foreclosure, distraint or execution on the property or deposits or
pledges to obtain the release of any such lien; (iii) deposits, liens or
pledges to secure workers compensation, unemployment insurance, old age
benefits, social security or other statutory obligations, or in connection
with, or to secure the performance of, bids, tenders, contracts (other than for
the repayment of borrowed money), or leases, or other pledges or deposits for
purposes of like nature in the ordinary course of business; (iv) liens arising
out of judgments or awards so long as an appeal or proceeding for review is
being prosecuted in good faith and execution is stayed; (v) Liens permitted by
Section 12(b) of this Agreement; (vi) Liens securing indebtedness created and
permitted under the Master Lease Intended as Security dated as of March 15,
1996, between the Borrower and ABN Amro, in an amount not in excess of
$25,000,000.00 in the aggregate; and (vii) Liens securing indebtedness created
and permitted under substantially similar lease agreements with similar terms
to the lease agreement described in clause (vii) above in an amount not to
exceed $50,000,000.00 in the aggregate from the date hereof through the fiscal
year of the Borrower ending in 1998; PROVIDED, THAT, the Borrower will not
create, incur, assume, or suffer to exist such Liens securing indebtedness in
excess of $25,000,000.00 during any such fiscal year of the Borrower.
M. FINANCIAL COVENANTS OF BORROWER
6
<PAGE> 16
Section 13(c) is deleted in its entirety.
N. REPRESENTATIONS AND WARRANTIES
1. Section 14(c) is deleted in its entirety and the
following is substituted therefor:
"This Agreement, the Revolving Credit Note and the Security
Documents have been duly and validly executed and delivered by
the Borrower and constitute valid and legally binding
agreements of the Borrower enforceable in accordance with their
terms, except as limited by bankruptcy, insolvency or other
Laws of general application relating to or affecting the
enforcement of creditors' rights."
2. Section 14(f) is deleted in its entirety and the
following is substituted therefor:
"(f) INDEBTEDNESS; LIENS. The Borrower has no indebtedness for
borrowed money other than its existing indebtedness described in Section 12(b)
and there are no Liens on any of the properties or assets of the Borrower
except of the type described in subparagraphs (i) through (vii) of Section
12(d)."
3. Section 14(r) is deleted in its entirety and the
following is substituted therefor:
"The Borrower has paid record and marketable title in fee
simple to, or a valid leasehold interest in, all its real
property, and good title to, or a valid leasehold interest in,
all of its other property, except to the extent that the
failure to have such title or interest, in any instance or in
the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Borrower.
O. DEFAULT
Subsections 16(i) and (j) are deleted in their entirety and
subsection 16(k) is renumbered as subsection 16(i).
P. REMEDIES
7
<PAGE> 17
1. The first phrase of Section 17(a) is deleted in its
entirety and the following is substituted therefor:
"(a) If a Default specified under paragraphs (a) through (f) or
(i) of this Section 17 shall occur and be continuing or shall
exist, the Bank shall be under no further obligation to make
Loans to the Borrower hereunder;"
2. Section 17(d) is deleted in its entirety and the
following is substituted therefor:
"The Bank may exercise all rights and the Bank will have all
remedies available under this Agreement and under the law, the
right to court costs, reasonable attorneys' fees and legal
expertise.
3. Subsection 17(e) is deleted in its entirety and the
following is substituted therefor:
"17(e) Intentionally Left Blank."
4. Subsection 17(h) is deleted in its entirety and the
following is substituted therefor:
"17(h) Upon the occurrence of a Default, the Bank may grant
extensions to, or adjust claims of, or make compromises or
settlements with, debtors, guarantors or any other parties or
any securities, guaranties or insurance, without notice to or
the consent of the Borrower, without affecting the Borrower's
liability under this Agreement, the Security Documents or the
Related Documents."
5. Subsection 17(i) is amended to substitute the term
"assets" for the term "Collateral".
6. Subsection 17(j) is deleted in its entirety and the
following is substituted therefor:
"17(j) Intentionally Left Blank."
Q. EXPENSES
Section 18 is deleted in its entirety and the following is
substituted therefor:
"18. EXPENSES. All reasonable expenses, including, but not
limited to attorney's fees
8
<PAGE> 18
incurred by the Bank after the Closing in taking action in
administering this Agreement, the Security Documents, the
Related Documents and all additional agreements contemplated in
or by this Agreement and in all efforts made to enforce
payment, as well as all reasonable attorney's fees and legal
expenses incurred in connection therewith, whether through
judicial proceedings or otherwise, or in defending or
prosecuting any actions or proceedings arising out of or
relating to this Agreement, shall be invoiced to, and paid by,
the Borrower; PROVIDED, HOWEVER, that the Borrower will not pay
for costs and expenses arising solely from the gross negligence
or willful misconduct of the Bank. All statements, reports,
certificates, opinions and other documents or information
furnished by Borrower to the Bank shall be supplied without
cost to the Bank."
R. WAIVERS
Subsection 19(c) is deleted in its entirety and the following
is substituted therefor:
"(c) The Borrower hereby waives notice of demand, presentment,
protest and notice thereof with respect to any and all instruments, notice of
acceptance hereof, notice of loans or advances made, credit extended,
collateral received or delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except such as are
expressly provided for herein."
S. DEFEASANCE
Section 24 is deleted in its entirety and the following is
substituted therefor:
"24. Intentionally Left Blank."
II. GENERAL
--------
1. Except as amended hereby and by the First Amendment, the Credit
Agreement is not otherwise amended and remains in full force and effect.
2. All capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.
3. This Second Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
9
<PAGE> 19
4. This Second Amendment may be executed simultaneously in two or
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute together but one and the same instrument.
5. THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF OHIO.
6. The Borrower agrees to pay all expenses of the Bank in
connection with the transactions contemplated by this Second Amendment
(including, without limitation, the reasonable fees and expenses of counsel for
the Bank).
IN WITNESS WHEREOF, each of the parties hereto have signed this
Second Amendment the 7th day of January, 1997.
ATTEST: ROADWAY EXPRESS, INC.
By: _____________________ By: ______________________
Name: _____________________ Name: ______________________
Its: _____________________ Its: ______________________
BANK ONE, AKRON, N.A.
By: ____________________
Name: ____________________
Its: ____________________
10
<PAGE> 20
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
--------------------------------------------
Roadway Express, Inc., a Delaware corporation (herein called the
"DEBTOR") from time to time incurs Obligations (as defined below), direct and
/or contingent, to each of the undersigned (herein each called a "CREDITOR" and
collectively the "CREDITORS"). It is hereby agreed:
1. "CREDIT AGREEMENTS" means each of the Morgan
Agreement and the Bank One Agreement; "BANK ONE AGREEMENT"
means the Credit Agreement made as of January 2, 1996 between
the Debtor and Bank One, Akron, N.A. ("BANK ONE"), as from
time to time amended, supplemented or modified; and "MORGAN
AGREEMENT" means the Credit Agreement, dated as of July 15,
1996 between the Debtor and Morgan Guaranty Trust Company of
New York ("MORGAN"), as from time to time amended,
supplemented or modified.
2. "OBLIGATION" means any amount due or to become due
a Creditor under its respective Credit Agreement;
"Obligations" has a correlative meaning.
3. Each of the Creditors acknowledges that it is
anticipated that the total amount of Obligations of the Debtor
outstanding at any time to the Creditors shall not exceed in
the aggregate the principal amount of $50,000,000, as follows:
(a) not more than $25,000,000 owing to Bank One; and (b) not
more than $25,000,000 owing to Morgan.
4. Each of the Creditors agrees to give prompt notice
to the other Creditors following its becoming aware of the
occurrence of an Event of Default or event which, with the
giving of notices or lapse of time or both, would become an
Event of Default. Other than to decline to make further
financial accommodations (by investment, reinvestment, loan or
otherwise) pursuant to its respective Credit Agreement, no
Creditor shall take any action to accelerate Debtor's
obligations to it or to foreclose on the Collateral.
Notwithstanding the foregoing, the Creditor whose loans
constitute a majority of the outstanding loans with respect to
each of the Credit Agreements on the date of the Event of
Default shall have the right on five (5) days written notice
to the other Creditor to accelerate Debtor's obligations to it
and following such notice the other Creditor shall also have
the right to accelerate Debtor's obligations to it. Each
Creditor further agrees that it will not permit its respective
Credit Agreement to be amended or modified (in each case from
that contained in such Creditor's respective Credit Agreement
as in effect on the date hereof) without the prior consent of
the other Creditor.
1
<PAGE> 21
5. This Intercreditor Agreement shall terminate ten
(10) days following the payment and satisfaction in full of
all Obligations to either of the Creditors; PROVIDED, THAT,
the provisions of this Intercreditor Agreement shall continue
to be effective or be reinstated if at any time any such
Obligation or portion thereof is required to be returned or
restored in the bankruptcy or insolvency of any person.
6. THIS INTERCREDITOR AGREEMENT SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK. Unless the context
otherwise requires, all terms used herein are defined in the
Uniform Commercial Code shall have the meanings therein
stated.
7. This Intercreditor Agreement is solely for the
benefit of Creditors and their successors or assigns and no
other person or persons shall have any right, benefit,
priority or interest under, or because of the existence of,
this Intercreditor Agreement.
8. This Intercreditor Agreement amends, restates and
replaces the Intercreditor Agreement dated as of July 15, 1996
between Morgan and Bank One.
9. Each of the executed several counterparts of this
Intercreditor Agreement shall be an original. All such
counterparts shall together constitute one and the same
instrument.
[The remainder of this page intentionally left blank]
2
<PAGE> 22
IN WITNESS WHEREOF, each Creditor has caused this Intercreditor
Agreement to be duly executed as of the 7th day of January, 1997.
BANK ONE, AKRON, N.A.
By:__________________________________
Name: Susan D. Steiger
Title: Vice President
Address: 50 South Main Street
Second Floor
Akron, Ohio 44309
Attention: Susan Steiger
Telephone: (330) 972-1674
Telecopy: (330) 972-1598
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:__________________________________
Name: Patricia P. Lunka
Title: Vice President
Address: 60 Wall Street
New York, New York 10260
Attention: Loan Department
Telephone: (212) 648-7457
Telecopy: (212) 648-5336
3
<PAGE> 1
Exhibit 10.21
Schedule of Documents Not Filed which are substantially identical in all
material respects to previously filed documents.
1. Master Lease Agreement between Roadway Express, Inc. and ABN AMRO Bank
N.V. dated March 3, 1997. This lease agreement for 3,250 linehaul
trailers is identical in all material respects to the Master Lease
Agreement dated March 15, 1996, which was filed as Exhibit 10.18 to
the registrant's Form 10-Q for the period ended June 15, 1996. This
new lease agreement covers an additional 3,250 trailers selected by
the Company from the same pool of linehaul trailers specified in the
first lease.
1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROADWAY
EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE
QUARTER ENDED MARCH 29, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-29-1997
<CASH> 39,205
<SECURITIES> 0
<RECEIVABLES> 262,949
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 318,542
<PP&E> 1,379,772
<DEPRECIATION> 1,010,215
<TOTAL-ASSETS> 705,374
<CURRENT-LIABILITIES> 294,991
<BONDS> 0
<COMMON> 206
0
0
<OTHER-SE> 224,704
<TOTAL-LIABILITY-AND-EQUITY> 705,374
<SALES> 0
<TOTAL-REVENUES> 590,675
<CGS> 0
<TOTAL-COSTS> 580,233
<OTHER-EXPENSES> 221
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,221
<INCOME-TAX> 4,699
<INCOME-CONTINUING> 5,522
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,522
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
