##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


|(Mark One)
|----------
|[ü]       

For the Period ended June 21, 2003.
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 000-32821

ROADWAY CORPORATION




(Exact name of registrant as specified in its charter)


|                                                               |  |                                    
|-------------------------------------------------------------- |  | -----------------------------------
|Delaware                                                       |  | 34-1956254                         
|                                                               |  |                                    
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer 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 ü   No        .

Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act).
Yes ü   No        .

The number of shares of common stock ($.01 par value) outstanding as of June
21, 2003 was 19,898,002.





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TABLE OF CONTENTS



|                               |                                                                                               |                                                                                                       |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | Roadway Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)               
|                               |                                                                                               | Roadway Corporation and Subsidiaries Condensed Statements of Consolidated Income (Unaudited)         
|                               |                                                                                               | Roadway Corporation and Subsidiaries Condensed Statements of Consolidated Income (Unaudited)         
|                               |                                                                                               | Roadway Corporation and Subsidiaries Condensed Statements of Consolidated Cash Flows (Unaudited)     
|                               |                                                                                               | Roadway Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited)
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                               | Item 4. Disclosure Controls and Procedures                                                   
|PART II  OTHER INFORMATION   
|                               | Item 2. Changes in securities and use of proceeds                                            
|                               | Item 5. Other information                                                                    
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|Exhibit 10.20                 
|Exhibit 31.1                  
|Exhibit 31.2                  
|Exhibit 32.1                  
|Exhibit 32.2                  
|Exhibit 99.1                  
|Exhibit 99.2                  



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements




Roadway Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |         |     | 
|------------------------------------------ | -------------------------------------------------------------------------------- | ------------------------------------------------------- | --------- | --------------------------------- | --- | ----------------- | --------- | ------- | --- | 
|                                           |                                                                                  |                                                         |           | June 21, 2003                     |     | December 31, 2002
|                                           |                                                                                  |                                                         |           |                                   |     |                  
|                                           |                                                                                  |                                                         |           | (in thousands,
except share data)
|Assets                                     |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Current assets:                            |                                                                                  |                                                         |           |                                   |     |                   |           |        
|                                           | Cash and cash equivalents                                                        |                                                         | $         | 125,692                           |     |                   | $         | 106,929 |    
|                                           | Accounts receivable, including retained interest
in securitized receivables, net |                                                         |           | 215,055                           |     |                   |           | 230,216 |    
|                                           | Assets of discontinued operations                                                |                                                         |           |                                  |     |                   |           | 87,431  |    
|                                           | Other current assets                                                             |                                                         |           | 49,541                            |     |                   |           | 38,496  |    
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Total current assets                       |                                                                                  |                                                         | 390,288   |                                   |     |                   | 463,072   |        
|Carrier operating property, at cost        |                                                                                  |                                                         | 1,511,699 |                                   |     |                   | 1,515,648 |        
|Less allowance for depreciation            |                                                                                  |                                                         | 1,015,682 |                                   |     |                   | 1,006,465 |        
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Net carrier operating property             |                                                                                  |                                                         | 496,017   |                                   |     |                   | 509,183   |        
|Goodwill, net                              |                                                                                  |                                                         | 286,181   |                                   |     |                   | 283,910   |        
|Other assets                               |                                                                                  |                                                         | 91,093    |                                   |     |                   | 79,708    |        
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Total assets                               |                                                                                  | $                                                       | 1,263,579 |                                   |     | $                 | 1,335,873 |        
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Liabilities and shareholders equity       |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Current liabilities:                       |                                                                                  |                                                         |           |                                   |     |                   |           |        
|                                           | Accounts payable                                                                 |                                                         | $         | 164,806                           |     |                   | $         | 193,501 |    
|                                           | Salaries and wages                                                               |                                                         |           | 125,162                           |     |                   |           | 151,464 |    
|                                           | Liabilities of discontinued operations                                           |                                                         |           |                                  |     |                   |           | 32,407  |    
|                                           | Other current liabilities                                                        |                                                         |           | 61,889                            |     |                   |           | 83,518  |    
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Total current liabilities                  |                                                                                  |                                                         | 351,857   |                                   |     |                   | 460,890   |        
|Long-term liabilities:                     |                                                                                  |                                                         |           |                                   |     |                   |           |        
|                                           | Casualty claims and other                                                        |                                                         |           | 75,505                            |     |                   |           | 78,548  |    
|                                           | Accrued pension and retiree medical                                              |                                                         |           | 147,800                           |     |                   |           | 135,053 |    
|                                           | Long-term debt                                                                   |                                                         |           | 270,279                           |     |                   |           | 273,513 |    
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Total long-term liabilities                |                                                                                  |                                                         | 493,584   |                                   |     |                   | 487,114   |        
|Shareholders equity:                      |                                                                                  |                                                         |           |                                   |     |                   |           |        
|                                           | Common Stock - $.01 par value                                                    |                                                         |           |                                   |     |                   |           |         |    
|                                           |                                                                                  | Authorized - 100,000,000 shares                         |           |                                   |     |                   |           |         |     | 
|                                           |                                                                                  | Issued - 20,556,714 shares                              |           |                                   | 206 |                   |           |         | 206 | 
|                                           |                                                                                  | Outstanding  19,898,002 in 2003 and 19,368,590 in 2002 |           |                                   |     |                   |           |         |     | 
|                                           | Other shareholders equity                                                       |                                                         |           | 417,932                           |     |                   |           | 387,663 |    
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Total shareholders equity                 |                                                                                  |                                                         | 418,138   |                                   |     |                   | 387,869   |        
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        
|Total liabilities and shareholders equity |                                                                                  | $                                                       | 1,263,579 |                                   |     | $                 | 1,335,873 |        
|                                           |                                                                                  |                                                         |           |                                   |     |                   |           |        

Note: The balance sheet at December 31, 2002 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.

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Roadway Corporation and Subsidiaries
Condensed Statements of Consolidated Income (Unaudited)

|                                                      |                                            |   |                                       |         |               |   |         |         | 
|----------------------------------------------------- | ------------------------------------------ | - | ------------------------------------- | ------- | ------------- | - | ------- | ------- | 
|                                                      |                                            |   | Twelve Weeks Ended                   
|                                                      |                                            |   | (Second Quarter)                     
|                                                      |                                            |   | June 21, 2003                         |         | June 15, 2002
|                                                      |                                            |   |                                       |         |              
|                                                      |                                            |   | (in thousands, except per share data)
|Revenue                                               |                                            | $ | 741,528                               |         |               | $ | 656,003 |        
|Operating expenses:                                   |                                            |   |                                       |         |               |   |         |        
|                                                      | Salaries, wages and benefits               |   |                                       | 468,223 |               |   |         | 427,273 | 
|                                                      | Operating supplies and expenses            |   |                                       | 130,022 |               |   |         | 107,104 | 
|                                                      | Purchased transportation                   |   |                                       | 75,725  |               |   |         | 57,775  | 
|                                                      | Operating taxes and licenses               |   |                                       | 18,688  |               |   |         | 17,481  | 
|                                                      | Insurance and claims expense               |   |                                       | 14,529  |               |   |         | 13,129  | 
|                                                      | Provision for depreciation                 |   |                                       | 16,870  |               |   |         | 18,152  | 
|                                                      | Net loss on disposal of operating property |   |                                       | 30      |               |   |         | 283     | 
|                                                      |                                            |   |                                       |         |               |   |         |        
|Total operating expenses                              |                                            |   | 724,087                               |         |               |   | 641,197 |        
|                                                      |                                            |   |                                       |         |               |   |         |        
|Operating income from continuing operations           |                                            |   | 17,441                                |         |               |   | 14,806  |        
|Other (expense), net                                  |                                            |   | (6,044                                | )       |               |   | (6,823  | )      
|                                                      |                                            |   |                                       |         |               |   |         |        
|Income from continuing operations before income taxes |                                            |   | 11,397                                |         |               |   | 7,983   |        
|Provision for income taxes                            |                                            |   | 4,787                                 |         |               |   | 3,347   |        
|                                                      |                                            |   |                                       |         |               |   |         |        
|Income from continuing operations                     |                                            |   | 6,610                                 |         |               |   | 4,636   |        
|(Loss) income from discontinued operations            |                                            |   | (302                                  | )       |               |   | 1,038   |        
|                                                      |                                            |   |                                       |         |               |   |         |        
|Net income                                            |                                            | $ | 6,308                                 |         |               | $ | 5,674   |        
|                                                      |                                            |   |                                       |         |               |   |         |        
|Earnings (loss) per share  basic:                    |                                            |   |                                       |         |               |   |         |        
|                                                      | Continuing operations                      |   | $                                     | 0.35    |               |   | $       | 0.25    | 
|                                                      | Discontinued operations                    |   |                                       | (0.02   | )             |   |         | 0.05    | 
|                                                      |                                            |   |                                       |         |               |   |         |        
|Total earnings per share  basic                      |                                            | $ | 0.33                                  |         |               | $ | 0.30    |        
|                                                      |                                            |   |                                       |         |               |   |         |        
|Earnings (loss) per share  diluted:                  |                                            |   |                                       |         |               |   |         |        
|                                                      | Continuing operations                      |   | $                                     | 0.35    |               |   | $       | 0.25    | 
|                                                      | Discontinued operations                    |   |                                       | (0.02   | )             |   |         | 0.05    | 
|                                                      |                                            |   |                                       |         |               |   |         |        
|Total earnings per share  diluted                    |                                            | $ | 0.33                                  |         |               | $ | 0.30    |        
|                                                      |                                            |   |                                       |         |               |   |         |        
|Average shares outstanding  basic                    |                                            |   | 18,955                                |         |               |   | 18,474  |        
|Average shares outstanding  diluted                  |                                            |   | 19,336                                |         |               |   | 18,888  |        
|Dividends declared per share                          |                                            | $ | 0.05                                  |         |               | $ | 0.05    |        

See notes to condensed consolidated financial statements.

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Roadway Corporation and Subsidiaries
Condensed Statements of Consolidated Income (Unaudited)

|                                                      |                                            |   |                                       |         |               |   |           |         | 
|----------------------------------------------------- | ------------------------------------------ | - | ------------------------------------- | ------- | ------------- | - | --------- | ------- | 
|                                                      |                                            |   | Twenty-four Weeks Ended              
|                                                      |                                            |   | (Two Quarters)                       
|                                                      |                                            |   | June 21, 2003                         |         | June 15, 2002
|                                                      |                                            |   |                                       |         |              
|                                                      |                                            |   | (in
thousands, except per share data)
|Revenue                                               |                                            | $ | 1,495,598                             |         |               | $ | 1,254,970 |        
|Operating expenses:                                   |                                            |   |                                       |         |               |   |           |        
|                                                      | Salaries, wages and benefits               |   |                                       | 943,658 |               |   |           | 826,437 | 
|                                                      | Operating supplies and expenses            |   |                                       | 260,434 |               |   |           | 206,313 | 
|                                                      | Purchased transportation                   |   |                                       | 150,509 |               |   |           | 109,284 | 
|                                                      | Operating taxes and licenses               |   |                                       | 38,554  |               |   |           | 33,045  | 
|                                                      | Insurance and claims expense               |   |                                       | 29,641  |               |   |           | 24,560  | 
|                                                      | Provision for depreciation                 |   |                                       | 34,169  |               |   |           | 36,240  | 
|                                                      | Net loss on disposal of operating property |   |                                       | 841     |               |   |           | 578     | 
|                                                      |                                            |   |                                       |         |               |   |           |        
|Total operating expenses                              |                                            |   | 1,457,806                             |         |               |   | 1,236,457 |        
|                                                      |                                            |   |                                       |         |               |   |           |        
|Operating income from continuing operations           |                                            |   | 37,792                                |         |               |   | 18,513    |        
|Other (expense), net                                  |                                            |   | (12,838                               | )       |               |   | (13,647   | )      
|                                                      |                                            |   |                                       |         |               |   |           |        
|Income from continuing operations before income taxes |                                            |   | 24,954                                |         |               |   | 4,866     |        
|Provision for income taxes                            |                                            |   | 10,481                                |         |               |   | 2,103     |        
|                                                      |                                            |   |                                       |         |               |   |           |        
|Income from continuing operations                     |                                            |   | 14,473                                |         |               |   | 2,763     |        
|(Loss) income from discontinued operations            |                                            |   | (155                                  | )       |               |   | 1,162     |        
|                                                      |                                            |   |                                       |         |               |   |           |        
|Net income                                            |                                            | $ | 14,318                                |         |               | $ | 3,925     |        
|                                                      |                                            |   |                                       |         |               |   |           |        
|Earnings (loss) per share  basic:                    |                                            |   |                                       |         |               |   |           |        
|                                                      | Continuing operations                      |   | $                                     | 0.77    |               |   | $         | 0.15    | 
|                                                      | Discontinued operations                    |   |                                       | (0.01   | )             |   |           | 0.06    | 
|                                                      |                                            |   |                                       |         |               |   |           |        
|Total earnings per share  basic                      |                                            | $ | 0.76                                  |         |               | $ | 0.21      |        
|                                                      |                                            |   |                                       |         |               |   |           |        
|Earnings (loss) per share  diluted:                  |                                            |   |                                       |         |               |   |           |        
|                                                      | Continuing operations                      |   | $                                     | 0.76    |               |   | $         | 0.15    | 
|                                                      | Discontinued operations                    |   |                                       | (0.01   | )             |   |           | 0.06    | 
|                                                      |                                            |   |                                       |         |               |   |           |        
|Total earnings per share  diluted                    |                                            | $ | 0.75                                  |         |               | $ | 0.21      |        
|                                                      |                                            |   |                                       |         |               |   |           |        
|Average shares outstanding  basic                    |                                            |   | 18,802                                |         |               |   | 18,514    |        
|Average shares outstanding  diluted                  |                                            |   | 19,177                                |         |               |   | 18,968    |        
|Dividends declared per share                          |                                            | $ | 0.10                                  |         |               | $ | 0.10      |        

See notes to condensed consolidated financial statements.

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Roadway Corporation and Subsidiaries
Condensed Statements of Consolidated Cash Flows (Unaudited)

|                                                                                |  |                         |         |               |  |   |         |  
|------------------------------------------------------------------------------- |  | ----------------------- | ------- | ------------- |  | - | ------- | -
|                                                                                |  | Twenty-four Weeks Ended
|                                                                                |  | (Two Quarters)         
|                                                                                |  | June 21, 2003           |         | June 15, 2002
|                                                                                |  |                         |         |              
|                                                                                |  | (in
thousands)         
|Cash flows from operating activities                                            |  |                         |         |               |  |   |         |  
|Income from continuing operations                                               |  | $                       | 14,473  |               |  | $ | 2,763   |  
|Depreciation and amortization                                                   |  |                         | 35,849  |               |  |   | 37,175  |  
|Other operating adjustments                                                     |  |                         | (31,928 | )             |  |   | (45,756 | )
|                                                                                |  |                         |         |               |  |   |         |  
|Net cash provided (used) by operating activities                                |  |                         | 18,394  |               |  |   | (5,818  | )
|Cash flows from investing activities                                            |  |                         |         |               |  |   |         |  
|Purchases of carrier operating property                                         |  |                         | (22,448 | )             |  |   | (24,313 | )
|Sales of carrier operating property                                             |  |                         | 1,721   |               |  |   | 1,869   |  
|Business disposal                                                               |  |                         | 47,430  |               |  |   |        |  
|                                                                                |  |                         |         |               |  |   |         |  
|Net cash provided (used) by investing activities                                |  |                         | 26,703  |               |  |   | (22,444 | )
|Cash flows from financing activities                                            |  |                         |         |               |  |   |         |  
|Dividends paid                                                                  |  |                         | (1,931  | )             |  |   | (1,940  | )
|Treasury stock activity, net                                                    |  |                         | 1,713   |               |  |   | (1,383  | )
|Transfer from discontinued operation                                            |  |                         |        |               |  |   | 2,500   |  
|Long-term (repayments) borrowings                                               |  |                         | (26,426 | )             |  |   | (2,500  | )
|                                                                                |  |                         |         |               |  |   |         |  
|Net cash (used) by financing activities                                         |  |                         | (26,644 | )             |  |   | (3,323  | )
|Effect of exchange rate changes on cash                                         |  |                         | 348     |               |  |   | (90     | )
|                                                                                |  |                         |         |               |  |   |         |  
|Net increase (decrease) in cash and cash
equivalents from continuing operations |  |                         | 18,801  |               |  |   | (31,675 | )
|Net (decrease) in cash and cash equivalents
from discontinued operations        |  |                         | (38     | )             |  |   | (5,163  | )
|Cash and cash equivalents at beginning of period                                |  |                         | 106,929 |               |  |   | 110,432 |  
|                                                                                |  |                         |         |               |  |   |         |  
|Cash and cash equivalents at end of period                                      |  | $                       | 125,692 |               |  | $ | 73,594  |  
|                                                                                |  |                         |         |               |  |   |         |  

See notes to condensed consolidated financial statements.

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Roadway Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1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 twelve and
twenty-four weeks ended June 21, 2003 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2003. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Roadway Corporation Annual Report on Form
10-K for the year ended December 31, 2002.

The Company completed the required
goodwill impairment test under SFAS No. 142 for all reporting units
effective June 21, 2003 which did not indicate any impairment.
The Company expects to perform the required annual goodwill
impairment assessment on a recurring basis at the end of the second
quarter each year, or more frequently should any indicators of
possible impairment be identified.

Note 2Accounting Period

Roadway Corporation (the registrant or Company) operates on 13 four-week
accounting periods with 12 weeks in each of the first three quarters and 16
weeks in the fourth quarter.

Note 3Discontinued operations

On December 26, 2002, the Company entered into an agreement to sell Arnold
Transportation Services (ATS) to a management group led by the units president
and a private equity firm, for approximately $55,000,000. The ATS business
segment was acquired as part of the Companys purchase of Arnold Industries,
Inc. (subsequently renamed Roadway Next Day Corporation) in November 2001, but
did not fit the Companys strategic focus of being a LTL carrier. The
transaction was completed on January 23, 2003. The Company did not recognize a
significant gain or loss as a result of this transaction.

The Company has reported the ATS results as a discontinued operation in the
accompanying financial statements and, unless otherwise stated, the notes to
the financial statements for all periods presented exclude the amounts related
to this discontinued operation.

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Note 4Earnings per Share

The following table sets forth the computation of basic and diluted earnings
per share:

|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |       | 
|------------------------------------------------------ | ----------------------- | - | ------------------ | ----- | ----------------------- | ------------------------------------- | ------------- | ----- | ------------- | - | ------ | ------ | - | - | ------ | ----- | 
|                                                       |                         |   | Twelve Weeks Ended |       | Twenty-four Weeks Ended
|                                                       |                         |   | (Second Quarter)   |       | (Two Quarters)         
|                                                       |                         |   | June 21, 2003      |       | June 15, 2002           |                                       | June 21, 2003 |       | June 15, 2002
|                                                       |                         |   |                    |       |                         |                                       |               |       |              
|                                                       |                         |   |                    |       |                         | (in thousands,
except per share data) |               |       |              
|Income (loss) from:                                    |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|                                                       | Continuing operations   |   | $                  | 6,610 |                         |                                       | $             | 4,636 |               |   | $      | 14,473 |   |   | $      | 2,763 | 
|                                                       | Discontinued operations |   |                    | (302  | )                       |                                       |               | 1,038 |               |   |        | (155   | ) |   |        | 1,162 | 
|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|Net income                                             |                         | $ | 6,308              |       |                         | $                                     | 5,674         |       |               | $ | 14,318 |        |   | $ | 3,925  |      
|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|Weighted-average shares for
basic earnings per share   |                         |   | 18,955             |       |                         |                                       | 18,474        |       |               |   | 18,802 |        |   |   | 18,514 |      
|Management incentive stock plans                       |                         |   | 381                |       |                         |                                       | 414           |       |               |   | 375    |        |   |   | 454    |      
|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|Weighted-average shares for
diluted earnings per share |                         |   | 19,336             |       |                         |                                       | 18,888        |       |               |   | 19,177 |        |   |   | 18,968 |      
|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|Basic earnings (loss) per share from:                  |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|                                                       | Continuing operations   |   | $                  | 0.35  |                         |                                       | $             | 0.25  |               |   | $      | 0.77   |   |   | $      | 0.15  | 
|                                                       | Discontinued operations |   |                    | (0.02 | )                       |                                       |               | 0.05  |               |   |        | (0.01  | ) |   |        | 0.06  | 
|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|Basic earnings per share                               |                         | $ | 0.33               |       |                         | $                                     | 0.30          |       |               | $ | 0.76   |        |   | $ | 0.21   |      
|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|Diluted earnings (loss) per share from:                |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|                                                       | Continuing operations   |   | $                  | 0.35  |                         |                                       | $             | 0.25  |               |   | $      | 0.76   |   |   | $      | 0.15  | 
|                                                       | Discontinued operations |   |                    | (0.02 | )                       |                                       |               | 0.05  |               |   |        | (0.01  | ) |   |        | 0.06  | 
|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      
|Diluted earnings per share                             |                         | $ | 0.33               |       |                         | $                                     | 0.30          |       |               | $ | 0.75   |        |   | $ | 0.21   |      
|                                                       |                         |   |                    |       |                         |                                       |               |       |               |   |        |        |   |   |        |      

6



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Note 5Segment information

The Company provides freight services in two business segments: Roadway Express
(Roadway) and New Penn Motor Express (New Penn). The Roadway segment provides
long haul, expedited, and regional LTL freight services in North America and
offers services to over 100 countries worldwide. The New Penn segment provides
regional, next-day LTL freight services primarily in the northeast region of
the United States.

The Companys reportable segments are identified based on differences in
products, services, and management structure. The measurement basis of segment
profit or loss is operating income. Business segment assets consist primarily
of customer receivables, net carrier operating property, and goodwill.

|                        |                                               |   |                                  |         |          |   |         |        |  |   |           |         | 
|----------------------- | --------------------------------------------- | - | -------------------------------- | ------- | -------- | - | ------- | ------ |  | - | --------- | ------- | 
|                        |                                               |   | Twelve weeks ended June 21, 2003
|                        |                                               |   | (Second Quarter)                
|                        |                                               |   | Roadway Express                  |         | New Penn |   | Total  
|                        |                                               |   |                                  |         |          |   |        
|                        |                                               |   | (in
thousands)                  
|Revenue                 |                                               | $ | 691,156                          |         |          | $ | 50,372  |        |  | $ | 741,528   |        
|Operating expense:      |                                               |   |                                  |         |          |   |         |        |  |   |           |        
|                        | Salaries, wages & benefits                    |   |                                  | 433,101 |          |   |         | 32,657 |  |   |           | 465,758 | 
|                        | Operating supplies                            |   |                                  | 125,734 |          |   |         | 7,244  |  |   |           | 132,978 | 
|                        | Purchased transportation                      |   |                                  | 75,276  |          |   |         | 449    |  |   |           | 75,725  | 
|                        | Operating license and tax                     |   |                                  | 17,182  |          |   |         | 1,427  |  |   |           | 18,609  | 
|                        | Insurance and claims                          |   |                                  | 13,599  |          |   |         | 684    |  |   |           | 14,283  | 
|                        | Depreciation                                  |   |                                  | 14,472  |          |   |         | 2,232  |  |   |           | 16,704  | 
|                        | Net loss (gain) on sale of operating property |   |                                  | (21     | )        |   |         | 51     |  |   |           | 30      | 
|                        |                                               |   |                                  |         |          |   |         |        |  |   |           |        
|Total operating expense |                                               |   | 679,343                          |         |          |   | 44,744  |        |  |   | 724,087   |        
|                        |                                               |   |                                  |         |          |   |         |        |  |   |           |        
|Operating income        |                                               | $ | 11,813                           |         |          | $ | 5,628   |        |  | $ | 17,441    |        
|                        |                                               |   |                                  |         |          |   |         |        |  |   |           |        
|Operating ratio         |                                               |   | 98.3                             | %       |          |   | 88.8    | %      |  |   | 97.6      | %      
|Total assets            |                                               | $ | 761,817                          |         |          | $ | 405,914 |        |  | $ | 1,167,731 |        

7



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Note 5Segment information (continued)

|                        |                                               |   |                                  |         |          |   |         |        |   |   |           |         | 
|----------------------- | --------------------------------------------- | - | -------------------------------- | ------- | -------- | - | ------- | ------ | - | - | --------- | ------- | 
|                        |                                               |   | Twelve weeks ended June 15, 2002
|                        |                                               |   | (Second Quarter)                
|                        |                                               |   | Roadway Express                  |         | New Penn |   | Total  
|                        |                                               |   |                                  |         |          |   |        
|                        |                                               |   | (in
thousands)                  
|Revenue                 |                                               | $ | 606,409                          |         |          | $ | 49,594  |        |   | $ | 656,003   |        
|Operating expense:      |                                               |   |                                  |         |          |   |         |        |   |   |           |        
|                        | Salaries, wages & benefits                    |   |                                  | 392,635 |          |   |         | 32,722 |   |   |           | 425,357 | 
|                        | Operating supplies                            |   |                                  | 103,488 |          |   |         | 5,937  |   |   |           | 109,425 | 
|                        | Purchased transportation                      |   |                                  | 57,317  |          |   |         | 458    |   |   |           | 57,775  | 
|                        | Operating license and tax                     |   |                                  | 16,043  |          |   |         | 1,383  |   |   |           | 17,426  | 
|                        | Insurance and claims                          |   |                                  | 11,964  |          |   |         | 947    |   |   |           | 12,911  | 
|                        | Depreciation                                  |   |                                  | 15,416  |          |   |         | 2,615  |   |   |           | 18,031  | 
|                        | Net loss (gain) on sale of operating property |   |                                  | 303     |          |   |         | (20    | ) |   |           | 283     | 
|                        |                                               |   |                                  |         |          |   |         |        |   |   |           |        
|Total operating expense |                                               |   | 597,166                          |         |          |   | 44,042  |        |   |   | 641,208   |        
|                        |                                               |   |                                  |         |          |   |         |        |   |   |           |        
|Operating income        |                                               | $ | 9,243                            |         |          | $ | 5,552   |        |   | $ | 14,795    |        
|                        |                                               |   |                                  |         |          |   |         |        |   |   |           |        
|Operating ratio         |                                               |   | 98.5                             | %       |          |   | 88.8    | %      |   |   | 97.7      | %      
|Total assets            |                                               | $ | 713,832                          |         |          | $ | 336,587 |        |   | $ | 1,050,419 |        

|                        |                                               |   |                                       |         |          |   |        |        |  |   |           |         | 
|----------------------- | --------------------------------------------- | - | ------------------------------------- | ------- | -------- | - | ------ | ------ |  | - | --------- | ------- | 
|                        |                                               |   | Twenty-four weeks ended June 21, 2003
|                        |                                               |   | (Two Quarters)                       
|                        |                                               |   | Roadway Express                       |         | New Penn |   | Total 
|                        |                                               |   |                                       |         |          |   |       
|                        |                                               |   | (in
thousands)                       
|Revenue                 |                                               | $ | 1,396,400                             |         |          | $ | 99,198 |        |  | $ | 1,495,598 |        
|Operating expense:      |                                               |   |                                       |         |          |   |        |        |  |   |           |        
|                        | Salaries, wages & benefits                    |   |                                       | 872,539 |          |   |        | 66,100 |  |   |           | 938,639 | 
|                        | Operating supplies                            |   |                                       | 251,560 |          |   |        | 14,911 |  |   |           | 266,471 | 
|                        | Purchased transportation                      |   |                                       | 149,518 |          |   |        | 991    |  |   |           | 150,509 | 
|                        | Operating license and tax                     |   |                                       | 35,561  |          |   |        | 2,816  |  |   |           | 38,377  | 
|                        | Insurance and claims                          |   |                                       | 27,494  |          |   |        | 1,638  |  |   |           | 29,132  | 
|                        | Depreciation                                  |   |                                       | 29,396  |          |   |        | 4,441  |  |   |           | 33,837  | 
|                        | Net loss (gain) on sale of operating property |   |                                       | 781     |          |   |        | 60     |  |   |           | 841     | 
|                        |                                               |   |                                       |         |          |   |        |        |  |   |           |        
|Total operating expense |                                               |   | 1,366,849                             |         |          |   | 90,957 |        |  |   | 1,457,806 |        
|                        |                                               |   |                                       |         |          |   |        |        |  |   |           |        
|Operating income        |                                               | $ | 29,551                                |         |          | $ | 8,241  |        |  | $ | 37,792    |        
|                        |                                               |   |                                       |         |          |   |        |        |  |   |           |        
|Operating ratio         |                                               |   | 97.9                                  | %       |          |   | 91.7   | %      |  |   | 97.5      | %      

8



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##### Table of Contents



Note 5Segment information (continued)

|                        |                                               |   |                                       |         |          |   |        |        |   |   |           |         | 
|----------------------- | --------------------------------------------- | - | ------------------------------------- | ------- | -------- | - | ------ | ------ | - | - | --------- | ------- | 
|                        |                                               |   | Twenty-four weeks ended June 15, 2002
|                        |                                               |   | (Two Quarters)                       
|                        |                                               |   | Roadway Express                       |         | New Penn |   | Total 
|                        |                                               |   |                                       |         |          |   |       
|                        |                                               |   | (in
thousands)                       
|Revenue                 |                                               | $ | 1,159,967                             |         |          | $ | 95,003 |        |   | $ | 1,254,970 |        
|Operating expense:      |                                               |   |                                       |         |          |   |        |        |   |   |           |        
|                        | Salaries, wages & benefits                    |   |                                       | 758,970 |          |   |        | 63,431 |   |   |           | 822,401 | 
|                        | Operating supplies                            |   |                                       | 198,987 |          |   |        | 12,051 |   |   |           | 211,038 | 
|                        | Purchased transportation                      |   |                                       | 108,443 |          |   |        | 841    |   |   |           | 109,284 | 
|                        | Operating license and tax                     |   |                                       | 30,231  |          |   |        | 2,742  |   |   |           | 32,973  | 
|                        | Insurance and claims                          |   |                                       | 22,352  |          |   |        | 1,841  |   |   |           | 24,193  | 
|                        | Depreciation                                  |   |                                       | 30,685  |          |   |        | 5,305  |   |   |           | 35,990  | 
|                        | Net loss (gain) on sale of operating property |   |                                       | 649     |          |   |        | (71    | ) |   |           | 578     | 
|                        |                                               |   |                                       |         |          |   |        |        |   |   |           |        
|Total operating expense |                                               |   | 1,150,317                             |         |          |   | 86,140 |        |   |   | 1,236,457 |        
|                        |                                               |   |                                       |         |          |   |        |        |   |   |           |        
|Operating income        |                                               | $ | 9,650                                 |         |          | $ | 8,863  |        |   | $ | 18,513    |        
|                        |                                               |   |                                       |         |          |   |        |        |   |   |           |        
|Operating ratio         |                                               |   | 99.2                                  | %       |          |   | 90.7   | %      |   |   | 98.5      | %      

Reconciliation of segment operating income to consolidated operating income
from continuing operations before taxes:

|                                                            |  |                    |        |                         |  |                |        |               |  |   |        |   |  |   |         |  
|----------------------------------------------------------- |  | ------------------ | ------ | ----------------------- |  | -------------- | ------ | ------------- |  | - | ------ | - |  | - | ------- | -
|                                                            |  | Twelve Weeks Ended |        | Twenty-four weeks ended
|                                                            |  | (Second Quarter)   |        | (Two quarters)         
|                                                            |  | June 21, 2003      |        | June 15, 2002           |  | June 21, 2003  |        | June 15, 2002
|                                                            |  |                    |        |                         |  |                |        |              
|                                                            |  |                    |        |                         |  | (in thousands) |        |               |  |  
|Segment operating income
from continuing operations         |  | $                  | 17,441 |                         |  | $              | 14,795 |               |  | $ | 37,792 |   |  | $ | 18,513  |  
|Unallocated corporate income                                |  |                    |       |                         |  |                | 11     |               |  |   |       |   |  |   |        |  
|Interest (expense)                                          |  |                    | (4,779 | )                       |  |                | (5,473 | )             |  |   | (9,881 | ) |  |   | (10,937 | )
|Other (expense), net                                        |  |                    | (1,265 | )                       |  |                | (1,350 | )             |  |   | (2,957 | ) |  |   | (2,710  | )
|                                                            |  |                    |        |                         |  |                |        |               |  |   |        |   |  |   |         |  
|Consolidated income from
continuing operations
before taxes |  | $                  | 11,397 |                         |  | $              | 7,983  |               |  | $ | 24,954 |   |  | $ | 4,866   |  
|                                                            |  |                    |        |                         |  |                |        |               |  |   |        |   |  |   |         |  

9



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Note 5Segment information (continued)

Reconciliation of total segment assets to total consolidated assets:

|                                     |  |                |           |                   |  |   |           |  
|------------------------------------ |  | -------------- | --------- | ----------------- |  | - | --------- | -
|                                     |  | June 21, 2003  |           | December 31, 2002
|                                     |  |                |           |                  
|                                     |  | (in thousands)
|Total segment assets                 |  | $              | 1,167,731 |                   |  | $ | 1,211,584 |  
|Unallocated corporate assets         |  |                | 103,142   |                   |  |   | 41,351    |  
|Assets of discontinued operations    |  |                |          |                   |  |   | 87,431    |  
|Elimination of intercompany balances |  |                | (7,294    | )                 |  |   | (4,493    | )
|                                     |  |                |           |                   |  |   |           |  
|Consolidated assets                  |  | $              | 1,263,579 |                   |  | $ | 1,335,873 |  
|                                     |  |                |           |                   |  |   |           |  

Note 6Comprehensive Income

Comprehensive income differs from net income due to foreign currency
translation adjustments and derivative fair value adjustments as shown below:

|                                         |  |                    |       |                         |  |                |       |               |  |   |        |  |  |   |       |  
|---------------------------------------- |  | ------------------ | ----- | ----------------------- |  | -------------- | ----- | ------------- |  | - | ------ |  |  | - | ----- | -
|                                         |  | Twelve weeks Ended |       | Twenty-four weeks ended
|                                         |  | (Second Quarter)   |       | (Two quarters)         
|                                         |  | June 21, 2003      |       | June 15, 2002           |  | June 21, 2003  |       | June 15, 2002
|                                         |  |                    |       |                         |  |                |       |              
|                                         |  |                    |       |                         |  | (in thousands) |       |               |  |  
|Net income                               |  | $                  | 6,308 |                         |  | $              | 5,674 |               |  | $ | 14,318 |  |  | $ | 3,925 |  
|Foreign currency translation adjustments |  |                    | 3,089 |                         |  |                | 1,122 |               |  |   | 5,776  |  |  |   | (56   | )
|Derivative fair value adjustment         |  |                    | 50    |                         |  |                |      |               |  |   | 126    |  |  |   |      |  
|                                         |  |                    |       |                         |  |                |       |               |  |   |        |  |  |   |       |  
|Comprehensive income                     |  | $                  | 9,447 |                         |  | $              | 6,796 |               |  | $ | 20,220 |  |  | $ | 3,869 |  
|                                         |  |                    |       |                         |  |                |       |               |  |   |        |  |  |   |       |  

Note 7Contingent Matter

The Companys former parent is currently under examination by the Internal
Revenue Service for tax years 1994 and 1995, years prior to the spin-off of the
Company. The IRS has proposed substantial adjustments for these tax years for
multi-employer pension plan deductions. The IRS is challenging the timing, not
the validity of these deductions. The Company is unable to predict the
ultimate outcome of this matter; however, its former parent intends to
vigorously contest these proposed adjustments.

Under a tax sharing agreement entered into by the Company and its former parent
at the time of the spin-off, the Company is obligated to reimburse the former
parent for any additional taxes and interest that relate to the Companys
business prior to the spin-off. The amount and timing of such payments is
dependent on the ultimate resolution of the former parents disputes with the
IRS and the determination of the nature and extent of the obligations under the
tax sharing agreement. On January 16, 2003, the Company made a $14,000,000
payment to its former parent under the tax sharing agreement for taxes and
interest related to certain of the proposed adjustments for tax years 1994 and
1995.

We estimate the range of the remaining payments that may be due to the former
parent to be $0 to $16,000,000 in additional taxes and $0 to $10,000,000 in
related interest, net of tax benefit. The Company has established certain
reserves with respect to these proposed adjustments. There can be no
assurance, however, that the amount or timing of any liability of the Company
to the former parent will not have a material adverse effect on the Companys
results of operations and financial position.

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##### Table of Contents



Note 8Subsequent event

On July 8, 2003, the Company announced the signing of a definitive agreement
under which Yellow Corporation would acquire Roadway for approximately $966
million, or $48 per share. See the Companys 8-K filed on July 8, 2003 for
further information and details.




Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations

Consolidated results of operations for the second quarter ended June 21, 2003
compared to the second quarter ended June 21, 2002

Consolidated revenue was $742 million in the current quarter, a 13% increase
from second quarter 2002. This increase was primarily due to increased revenue
at Roadway Express following the shutdown in September 2002 of Consolidated
Freightways, a major competitor. Operating expenses grew by nearly the same
amount, and the operating ratio (operating expenses as a percentage of revenue)
improved by 0.1 points to 97.6%, compared to last years 97.7%. The Companys
consolidated operating income was $17.4 million compared to $14.8 million in
the second quarter of 2002. This increase in operating income is solely
attributable to the improved performance of Roadway Express. The net other
expense of $6.0 million is primarily composed of interest and amortization of
financing costs associated with the acquisition of Roadway Next Day in 2001.
The Company had net income of $6.3 million or $0.33 per share (diluted), for
the current quarter, compared to a net income of $5.7 million, or $0.30 per
share (diluted) in the same quarter last year.

The effective tax rate for the second quarter of 2003 was 42.0%, compared to
41.9% in the second quarter of 2002. This tax rate differs from the Federal
statutory rate due to the impact of state taxes, taxes on foreign operations,
and non-deductible operating expenses.

Consolidated results of operations for the two quarters ended June 21, 2003
compared to the two quarters ended June 15, 2002

Consolidated revenue was $1,496 million in the first two quarters, a 19%
increase from the first two quarters of 2002. This increase was primarily due
to increased revenue at Roadway Express following the shutdown in September
2002 of Consolidated Freightways, a major competitor. In addition, Roadways
first two quarters this year contained 121 working days compared to 117 working
days in last years first two quarters. Operating expenses grew by 17.9%, and
the operating ratio (operating expenses as a percentage of revenue) improved by
1.0 points to 97.5%, compared to last years 98.5%. The Companys consolidated
operating income was $37.8 million compared to $18.5 million in 2002. This
increase in operating income is solely attributable to the improved performance
of Roadway Express. The net other expense of $12.8 million is primarily
composed of interest and amortization of financing costs. The Company had net
income of $14.3 million or $0.75 per share (diluted), for the first two
quarters of 2003, compared to a net income of $3.9 million, or $0.21 per share
(diluted) in the prior year.

In January 2003, we sold ATS, the truckload subsidiary of Roadway Next Day
Corporation, for $55 million. ATS has been accounted for as a discontinued
operation for all periods presented.

Contract negotiations with the Teamsters were successfully concluded in early
February 2003, well in advance of the March 31, 2003 expiration date. The
Teamsters ratified this new five-year contract on March 28, 2003.

The effective tax rate for the first two quarters of 2003 was 42.0%, compared
to 43.2% in the first two quarters of 2002. This tax rate differs from the
Federal statutory rate due to the impact of state taxes, taxes on foreign
operations, and non-deductible operating expenses.

11



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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Roadway Express, Inc.

Results of operations for the second quarter ended June 21, 2003 compared to
the second quarter ended June 15, 2002

Roadway delivered 1.8 million tons of freight in the current quarter, an
increase of 11.2% compared to the prior years second quarter. This
improvement is primarily due to the shutdown of Consolidated Freightways, and
we expect that positive tonnage comparisons will continue through the third
quarter of 2003. Less-than-truckload (LTL) tons were up 11.8% while truckload
tons were up 8.4%. Net revenue per ton was $388.18, up 2.5% compared to the
same quarter last year, with LTL up 1.9% and truckload up 5.6%. Without the
revenue increase relating to the fuel surcharge, freight rates were up 1.2%
compared to the second quarter of 2002. During the second quarter, Roadway
began to experience a shift in its freight mix, where the company saw some loss
of higher-yielding time-critical freight. In addition, an increase in the
average shipment size and a decrease in the average length-of-haul both
contributed to lower revenue rates. To offset this revenue yield decline,
Roadway announced a rate increase of 5.9% effective July 13, 2003. The
continued economic sluggishness has lead to increased pricing pressures,
especially in the regional markets. A variable rate fuel surcharge averaged
3.1% of revenue in the current quarter compared to 1.8% of revenue in the
prior-year quarter. Total operating expenses increased by 13.8%, while revenue
increased 14.0%, leading to an improvement in the operating ratio to 98.3%,
compared to a 98.5% in the same quarter last year.

Salaries, wages, and benefits as a percentage of revenue decreased to 62.7% in
the current quarter, from 64.8% in the second quarter of 2002. Both direct and
indirect wages reflected this improvement, which was attributable to
efficiencies realized because of the increase in freight volume. Included in
the benefit expense was a $3.6 million increase in cost associated with the
Company-sponsored pension plan, and a $2.7 million increase in variable pay
related to performance. Operating supplies and expenses increased slightly to
18.2% of revenue, up from 17.1% in the prior year quarter, as favorable
variances due to the growth in freight volume were more than offset by higher
fuel prices and increases in terminal and administrative costs. The growth in
purchased transportation as a percent of revenue was primarily due to the 24%
increase of linehaul miles run on the railroads. We also saw expense increases
related to air service provided. Depreciation expense declined as a percent of
revenue because we were able to handle the significant growth in tonnage using
existing capacity.

The following table is a comparison of operating statistics for the second
quarter of 2003 and 2002:

|                          |  |                    |           |               |  |        |           |  |  |  |      |  
|------------------------- |  | ------------------ | --------- | ------------- |  | ------ | --------- |  |  |  | ---- | -
|                          |  | Twelve Weeks Ended |           |               |  |       
|                          |  | (Second Quarter)   |           | Percentage   
|                          |  | June 21, 2003      |           | June 15, 2002 |  | change
|                          |  |                    |           |               |  |       
|LTL tons                  |  |                    | 1,467,657 |               |  |        | 1,312,943 |  |  |  | 11.8 | %
|Truckload tons            |  |                    | 312,853   |               |  |        | 288,494   |  |  |  | 8.4  | %
|                          |  |                    |           |               |  |        |           |  |  |  |      |  
|Total tons                |  |                    | 1,780,510 |               |  |        | 1,601,437 |  |  |  | 11.2 | %
|LTL shipments             |  |                    | 3,095,453 |               |  |        | 2,770,619 |  |  |  | 11.7 | %
|Truckload shipments       |  |                    | 38,315    |               |  |        | 34,799    |  |  |  | 10.1 | %
|                          |  |                    |           |               |  |        |           |  |  |  |      |  
|Total shipments           |  |                    | 3,133,768 |               |  |        | 2,805,418 |  |  |  | 11.7 | %
|Revenue per LTL ton       |  | $                  | 436.33    |               |  | $      | 428.11    |  |  |  | 1.9  | %
|Revenue per truckload ton |  | $                  | 162.27    |               |  | $      | 153.63    |  |  |  | 5.6  | %
|Total revenue per ton     |  | $                  | 388.18    |               |  | $      | 378.67    |  |  |  | 2.5  | %

12



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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of operations for the two quarters ended June 21, 2003 compared to the
two quarters ended June 15, 2002

Roadway delivered 3.5 million tons of freight in the first two quarters, an
increase of 15.0% compared to the prior year. This improvement is primarily
due to the shutdown of Consolidated Freightways, as discussed above.
Less-than-truckload (LTL) tons were up 16.2% while truckload tons were up 9.7%.
There were four more working days in the first two quarters of 2003 compared
to the same period last year. Net revenue per ton was $395.66, up 4.7%
compared to the same two quarters last year, with LTL up 3.8% and truckload up
8.0%. Without the revenue increase relating to the fuel surcharge, freight
rates were up 2.4% compared to the first two quarters of 2002. The variable
rate fuel surcharge averaged 3.6% of revenue in the two quarters ended June 21,
compared to 1.3% of revenue in the prior-year period. Total operating expenses
increased by 18.8%, while revenue increased 20.4%, leading to an improvement in
the operating ratio to 97.9%, compared to a 99.2% in the first two quarters
last year.

The changes in operating expenses that are discussed above in the results of
operations for the second quarter 2003 also apply to the two quarters ended
June 21.

The following table is a comparison of operating statistics for the first two
quarters of 2003 and 2002:

|                          |  |                         |           |               |  |        |           |  |  |  |      |  
|------------------------- |  | ----------------------- | --------- | ------------- |  | ------ | --------- |  |  |  | ---- | -
|                          |  | Twenty-four Weeks Ended |           |               |  |       
|                          |  | (Two Quarters)          |           | Percentage   
|                          |  | June 21, 2003           |           | June 15, 2002 |  | change
|                          |  |                         |           |               |  |       
|LTL tons                  |  |                         | 2,925,884 |               |  |        | 2,518,808 |  |  |  | 16.2 | %
|Truckload tons            |  |                         | 603,379   |               |  |        | 550,005   |  |  |  | 9.7  | %
|                          |  |                         |           |               |  |        |           |  |  |  |      |  
|Total tons                |  |                         | 3,529,263 |               |  |        | 3,068,813 |  |  |  | 15.0 | %
|LTL shipments             |  |                         | 6,195,819 |               |  |        | 5,341,308 |  |  |  | 16.0 | %
|Truckload shipments       |  |                         | 74,619    |               |  |        | 66,901    |  |  |  | 11.5 | %
|                          |  |                         |           |               |  |        |           |  |  |  |      |  
|Total shipments           |  |                         | 6,270,438 |               |  |        | 5,408,209 |  |  |  | 15.9 | %
|Revenue per LTL ton       |  | $                       | 443.12    |               |  | $      | 427.06    |  |  |  | 3.8  | %
|Revenue per truckload ton |  | $                       | 165.55    |               |  | $      | 153.25    |  |  |  | 8.0  | %
|Total revenue per ton     |  | $                       | 395.66    |               |  | $      | 377.99    |  |  |  | 4.7  | %

New Penn Motor Express

Results of operations for the second quarter ended June 21, 2003 compared to
the second quarter ended June 15, 2002

Revenue was $50 million for the second quarter of 2003, up 1.6% from second
quarter of 2002, while tonnage was 1.2% lower. The slow economic recovery and
the highly competitive Northeast market prevented New Penn from showing
year-over-year tonnage improvements. The operating ratio for New Penn was
88.8% in the second quarter of 2003, unchanged from last years second quarter.

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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (continued)

The following table shows the operating statistics for the second quarter of
2003 and 2002:

|                          |  |                    |         |               |  |        |         |  |  |  |      |   
|------------------------- |  | ------------------ | ------- | ------------- |  | ------ | ------- |  |  |  | ---- | --
|                          |  | Twelve Weeks Ended |         |               |  |       
|                          |  | (Second Quarter)   |         | Percentage   
|                          |  | June 21, 2003      |         | June 15, 2002 |  | change
|                          |  |                    |         |               |  |       
|LTL tons                  |  |                    | 190,472 |               |  |        | 193,891 |  |  |  | (1.8 | )%
|Truckload tons            |  |                    | 28,783  |               |  |        | 27,935  |  |  |  | 3.0  | % 
|                          |  |                    |         |               |  |        |         |  |  |  |      |   
|Total tons                |  |                    | 219,255 |               |  |        | 221,826 |  |  |  | (1.2 | )%
|LTL shipments             |  |                    | 431,608 |               |  |        | 428,547 |  |  |  | 0.7  | % 
|Truckload shipments       |  |                    | 3,486   |               |  |        | 3,459   |  |  |  | 0.8  | % 
|                          |  |                    |         |               |  |        |         |  |  |  |      |   
|Total shipments           |  |                    | 435,094 |               |  |        | 432,006 |  |  |  | 0.7  | % 
|Revenue per LTL ton       |  | $                  | 248.25  |               |  | $      | 240.54  |  |  |  | 3.2  | % 
|Revenue per truckload ton |  | $                  | 107.26  |               |  | $      | 105.81  |  |  |  | 1.4  | % 
|Total revenue per ton     |  | $                  | 229.74  |               |  | $      | 223.57  |  |  |  | 2.8  | % 

Results of operations for the two quarters ended June 21, 2003 compared to the
two quarters ended June 15, 2002

Revenue was $99 million for the first two quarters of 2003, up 4.4% from the
same period in 2002, while tonnage was up 2.6%. The first two quarters this
year had four more working days than the same period in 2002, so tonnage on a
daily basis has declined slightly. The unusually harsh winter in the
Northeast, combined with the slow economic recovery and the highly competitive
market, prevented New Penn from showing year-over-year tonnage improvements on
a daily basis. New Penn did not benefit from the shutdown of Consolidated
Freightways since Consolidated did not operate in the next-day market. The
operating ratio for New Penn was 91.7% in the first two quarters of 2003, a
deterioration from last years 90.7%.

The following table shows the operating statistics for the first two quarters
of 2003 and 2002:

|                          |  |                         |         |               |  |        |         |  |  |  |      |  
|------------------------- |  | ----------------------- | ------- | ------------- |  | ------ | ------- |  |  |  | ---- | -
|                          |  | Twenty-four Weeks Ended |         |               |  |       
|                          |  | (Two Quarters)          |         | Percentage   
|                          |  | June 21, 2003           |         | June 15, 2002 |  | change
|                          |  |                         |         |               |  |       
|LTL tons                  |  |                         | 376,150 |               |  |        | 371,155 |  |  |  | 1.3  | %
|Truckload tons            |  |                         | 57,671  |               |  |        | 51,848  |  |  |  | 11.2 | %
|                          |  |                         |         |               |  |        |         |  |  |  |      |  
|Total tons                |  |                         | 433,821 |               |  |        | 423,003 |  |  |  | 2.6  | %
|LTL shipments             |  |                         | 853,344 |               |  |        | 823,701 |  |  |  | 3.6  | %
|Truckload shipments       |  |                         | 7,038   |               |  |        | 6,483   |  |  |  | 8.6  | %
|                          |  |                         |         |               |  |        |         |  |  |  |      |  
|Total shipments           |  |                         | 860,382 |               |  |        | 830,184 |  |  |  | 3.6  | %
|Revenue per LTL ton       |  | $                       | 247.23  |               |  | $      | 241.13  |  |  |  | 2.5  | %
|Revenue per truckload ton |  | $                       | 107.56  |               |  | $      | 106.24  |  |  |  | 1.3  | %
|Total revenue per ton     |  | $                       | 228.66  |               |  | $      | 224.59  |  |  |  | 1.8  | %

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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Liquidity and capital resources

At the end of the quarter, cash and marketable securities amounted to $126
million, a $19 million increase from year-end 2002. During the first two
quarters, cash provided by operating activities was $18.4 million, as compared
to the $5.8 million use of cash in the first quarter of 2002. Two major items
in 2002 contributed to the use of cash: $29 million related to the Roadway Next
Day acquisition, and $9 million for the purchase of stock to fund employee
stock plans. Cash outlays for the acquisition were completed in 2002.
Beginning in 2003, existing treasury shares were used to fund certain employee
stock plans, so additional share purchases have not been necessary.

Capital expenditures were $22.5 million during the first two quarters, which
was in line with last year. Capital expenditures are financed primarily
through internally generated funds. Future expenditures are expected to be
financed in a similar manner, along with planned replacements through operating
lease arrangements. Gross capital expenditures of $95 to $105 million are
expected for 2003. The capital expenditures are primarily designated for
revenue equipment, facilities, and information systems.

The Companys credit facility consists of a five-year, $215 million senior
revolving credit facility with a $165 million sublimit for letters of credit,
and a five-year $175 million senior term loan. As of June 21, 2003, there were
no amounts outstanding under the revolving credit facility, but availability
had been reduced by $128 million as a result of the issuance of letters of
credit, primarily related to casualty claims. As of June 21, 2003, $56 million
was outstanding under the senior term loan facility, with quarterly
installments ranging from $2.5 million in 2003 to $4.9 million in 2006.
Management intends to repay the entire balance by year-end 2003. The senior
term loan accrued interest at the rate of 2.9% as of June 21, 2003.

On January 23, 2003, the sale of ATS was completed for $55 million. The sale
of ATS resulted in a mandatory prepayment of $24 million on the senior term
loan.

The Companys $225 million of 81/4% senior notes are due December 1, 2008.
Interest is due semi-annually on June 1 and December 1.

The Companys Canadian subsidiary also has a $10 million credit facility
available for borrowing under a secured revolving line of credit and bankers
acceptances. At June 21, 2003, there were no amounts outstanding on this
facility.

At June 21, 2003, the Company had outstanding debt of $281 million, $10.5
million of which is classified as current on the balance sheet. Remaining
borrowing capacity of $97 million is currently available under the arrangements
described above.

The financing arrangements include covenants that require the Company to comply
with certain financial ratios, including leverage and fixed-charge coverage
ratios, and maintenance of a minimum level of tangible net worth. The Company
was in compliance with all covenants as of June 21, 2003.

Management believes that cash flows from operations and current financing
sources will be sufficient to support working capital needs, projected capital
expenditures, dividends to shareholders, and anticipated expenditures for other
corporate purposes.

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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Off Balance Sheet Arrangements

Roadway can finance up to $200 million of its domestic accounts receivable
under the accounts receivable securitization arrangement, which has a
three-year term expiring November 2004. Under this arrangement, undivided
interests in Roadways domestic accounts receivable are sold through a special
purpose entity (SPE), a wholly owned subsidiary of Roadway, without recourse,
to an unrelated third party financial conduit. At June 21, 2003, undivided
interests in the accounts receivable pool aggregating $100 million were sold
under this arrangement, leaving an additional $100 million available. This
arrangement allowed Roadway Express to immediately use the $100 million to be
collected on accounts receivable at an effective rate of 2.6% during the second
quarter of 2003.

The arrangement provides that new Roadway accounts receivable are immediately
sold through the SPE. Roadway, through its SPE, retains the risk of credit
loss on the receivables. The conduit has collection rights to recover payments
from the designated accounts receivable and Roadway retains collection and
administrative responsibilities for all accounts receivable.

Other matters

Under the terms of the Companys current contract with the Teamsters, which
extends through March 31, 2008, wage increases approximating 1.7% of wages and
benefits were effective April 1, 2003 with another increase of approximately
2.0%, which will be effective August 1, 2003, designated for benefits.

Reserves for casualty claims represent managements estimates of claims for
property damage and public liability and workers compensation. The Company
manages casualty claims with assistance of a third party administrator (TPA)
along with oversight by a major risk management provider. The Company is
self-insured for these claims with retention generally limited to $3 million.
The Company and its TPA closely monitor the liability balances by using actual
adjuster evaluations of each claim and a statistical benchmarking database for
analysis of reserve accuracy.

The Company receives notices from the Environmental Protection Agency from time
to time identifying it as a potentially responsible party under the
Comprehensive Environmental Response Compensation and Liability Act for various
Superfund sites. The Company believes that its obligation with regard to these
sites is not significant.

On July 8, 2003, the Company announced the signing of a definitive agreement
under which Yellow Corporation would acquire Roadway for approximately $966
million, or $48 per share. See the Companys 8-K filed on July 8, 2003 for
further information and details.

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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (continued)

While most of the information provided herein is historical, some of the
comments made are forward looking statements within the meaning of the Private
Securities Litigation Reform Act with respect to the outlook for expectations
for revenue, earnings or other future financial or business performance,
strategies, expectations and goals. All statements that are not historical
statements of fact are forward-looking statements and are subject to numerous
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied in the forward-looking statements.
Forward-looking statements include all comments relating to our beliefs and
expectations as to future events and trends affecting our business, results of
operations and financial condition. We intend for the words believes,
anticipates, expects, intends, plans, continues, projects, and
similar expressions to identify forward-looking statements. The risks and
uncertainties include, among others, variable factors such as capacity and rate
levels in the motor freight industry; fuel prices; the impact of competition;
the state of the national economy; the success of our operating plans,
including our ability to manage growth and control costs; labor relations
matters, and, uncertainties concerning the impact terrorist activities may have
on the economy and the motor freight industry. We have based these
forward-looking statements on managements analysis about future events only as
of the date of this filing. We undertake no obligation to publicly revise
these forward-looking statements to reflect events or circumstances that arise
after the date of this filing. These forward-looking statements are subject to
risks, uncertainties and assumptions about us and our subsidiaries. In
addition to the disclosure contained in this document, you should carefully
review the risks and uncertainties contained in other documents Roadway
Corporation files from time to time with the Securities and Exchange
Commission. Those documents are accessible on the SECs website at www.sec.gov
and through our website at www.roadwaycorp.com.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

Roadway has interest rate swap agreements with major commercial banks that fix
the interest rate payable on its trailer leases, which are otherwise variable,
and principally based on LIBOR. The value of the leases upon which the
payments are based was not changed due to these agreements. The agreements,
which expire from 2003 to 2004, fix Roadways interest costs at rates varying
from 5.62% to 5.89% on leases with a notional amount of $10.0 million, and
prevent the Companys earnings from being directly affected by changes in
interest rates related to the trailer leases. The fair value of Roadways
interest rate swaps at June 21, 2003 is a liability of approximately $200,000,
net of income taxes, and has been determined using proprietary financial models
developed by the lending institutions that are counterparties to the swap
arrangements.

The Company may incur economic losses due to adverse changes in foreign
currency exchange rates, primarily with fluctuations in the Canadian dollar and
Mexican peso. A 10% adverse change in foreign currency exchange rates would
have no material impact on future cash flows and earnings of the Company.

The effect on the Company of fuel price increases is mitigated by a variable
rate fuel surcharge when the national average diesel fuel price exceeds $1.10
per gallon. This surcharge has been in place at varying rates since the third
quarter of 1999, and was discussed above.

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Item 4. Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of
Roadways management, including its Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of its disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934) as of June 21, 2003. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures were effective. No significant changes were
made in Roadways internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.




PART II  OTHER INFORMATION




Item 2. Changes in securities and use of proceeds

The Company maintains a Union Stock Plan. Participation in the Union Stock
Plan is involuntary, and the plan is noncontributory. Shares of Common Stock
are awarded to participants in the Union Stock Plan as a bonus based on
operating margin, accident and injury record, and attendance. During the first
two quarters of 2003, the Company issued a total of 19,993 shares of Common
Stock to participants under the plan. The Company has concluded that the award
of a Common Stock bonus under the Union Stock Plan does not involve a sale of
a security and thus is not subject to registration under the Securities Act of
1933, as amended.

On January 15, 2003, the Company granted 3,124 shares of common stock, par
value $0.01 per share, to the members of the Roadway Express, Inc. Medical
Board. These transactions were exempt from the registration provisions of the
Securities Act of 1933 pursuant to Section 4(2) of such Act.

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Item 5. Other information

On July 7, 2003, the Board of Directors declared a cash dividend of $0.05 per
share on the Companys common stock payable on September 2, 2003, to
shareholders of record on August 15, 2003.

On July 8, 2003, the Company announced the signing of a definitive agreement
under which Yellow Corporation would acquire Roadway for approximately $966
million, or $48 per share. See the Companys 8-K filed on July 8, 2003 for
further information and details.




Item 6. Exhibits and Reports on Form 8-K

|            |  |                                                                                                                                                                                                                                                    
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                    
|10.20       |  | Board Service Agreement between Roadway Corporation and Michael W. Wickham.                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                    
|31.1        |  | Chief Executive Officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                    
|31.2        |  | Chief Financial Officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                    
|32.1        |  | Chief Executive Officers certification of financial statements and
related information with respect to the Companys quarterly report on
Form 10-Q for the quarter ended June 21, 2003, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
|            |  |                                                                                                                                                                                                                                                    
|32.2        |  | Chief Financial Officers certification of financial statements and
related information with respect to the Companys quarterly report on
Form 10-Q for the quarter ended June 21, 2003, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
|            |  |                                                                                                                                                                                                                                                    
|99.1        |  | Condensed Consolidated Financial Statements of Roadway Express, Inc.
and Subsidiaries for the quarters ended June 21, 2003 and June 15, 2002.                                                                                                      
|            |  |                                                                                                                                                                                                                                                    
|99.2        |  | Condensed Consolidated Financial Statements of Roadway Next Day
Corporation for the quarters ended June 21, 2003 and June 15, 2002.                                                                                                                

(b)     List of the Current Reports on Form 8-K that were filed in the second
quarter of 2003:

|                        |  |                                                                                            
|----------------------- |  | -------------------------------------------------------------------------------------------
|Filing Date of Form 8-K |  | Description                                                                                
|                        |  |                                                                                            
|April 15, 2003          |  | Press release concerning results of operations for the first quarter ending March 29, 2003.

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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 CORPORATION
|                    |  |                     |                                                |                         
|Date: July 29, 2003 |  | By:                 |                                                | /s/ J. Dawson Cunningham
|                    |  |                     |                                               
|                    |  |                     | J. Dawson Cunningham, Executive Vice President
|                    |  |                     | and Chief Financial Officer                   
|                    |  |                     |                                                |                         
|Date: July 29, 2003 |  | By:                 |                                                | /s/ John G. Coleman     
|                    |  |                     |                                               
|                    |  |                     | John G. Coleman, Controller                   

20