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Acquisition Charges Dampen Roadway’s 3rd Quarter

Roadway Corp. posted a loss of $3.4 million, or 18 cents a share, for the third quarter ended Sept. 3, compared with a profit of $6.94 million, or 36 cents a share, a year ago

by Staff
September 30, 2003
2 min to read


Roadway Corp. posted a loss of $3.4 million, or 18 cents a share, for the third quarter ended Sept. 3, compared with a profit of $6.94 million, or 36 cents a share, a year ago.

The Akron, Ohio-based carrier was hurt by charges related to its upcoming acquisition by Yellow Corp., according to the Associated Press.
However, excluding those charges, the truckload carrier beat its own earnings projections. Roadway also backed its estimates for the full year.
Before acquisition charges, net income for the quarter would have been $13.5 million, or 71 cents a share. Roadway agreed last summer to be acquired by Yellow Corp. for $966 million.
The $24.3 million in charges were mostly for the vesting of restricted stock awards, other compensation expense and transaction costs, Roadway said.
Revenue for the third quarter ended Sept. 13 rose 10% to $751,594,000 from $681,696,000 a year ago.
James D. Staley, president and CEO of Roadway, said, "We are pleased to report that our operating subsidiaries performed quite well. The 10% rise in revenues, combined with effective expense control, resulted in a 64% increase in operating income, before the recognition of $24.3 million in acquisition-related charges. These charges resulted primarily from the vesting of restricted stock awards, other compensation expense and transaction costs. The company's effective tax rate has shifted from 42% to 53.6% as a result of these acquisition-related costs.
"Roadway Express implemented a 5.9% general freight rate increase on non-contract freight effective July 13. During the quarter, Roadway Express increased its yield per ton by 4.3% while increasing tonnage levels 6.4% above the same period last year. Roadway Express has not experienced any meaningful diversion of freight or customer flight due to the planned Yellow/Roadway acquisition. Overall, our customers seem to be more positive about the direction of the economy, although real economic growth is coming slowly," Staley said.
Looking forward, the company anticipates full-year 2003 revenue to increase approximately 7% to 8%, and earnings-per-share from continuing operations, excluding the impact of acquisition-related charges, to be consistent with previously provided guidance of between $2.36 and $2.60 compared to $1.85 in 2002. Including acquisition-related charges and the higher effective tax rate, the company expects earnings-per-share for full-year 2003 to be in the range of $1.36 to $1.60 excluding any future acquisition-related charges.
Fourth quarter year-over-year comparisons will be more difficult, as the impact of Consolidated Freightways' closure was already included in the fourth quarter of 2002, and the period will have four less working days than the same period in 2002.

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