##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)



| | [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
| | ---------------------------------------------------------------------------------------------

For the Period ended March 23, 2002.

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    [X]  No ________.

The number of shares of common stock ($.01 par value) outstanding as of April 20, 2002 was 19,369,885.





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TABLE OF CONTENTS



|                               |                                                                                               |  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II  OTHER INFORMATION   
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                               | Item 5. Other information                                                                    
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|EX-99.2                       
|EX-99.3                       



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements

Roadway Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

|                                           |                                                                                        |   |                                   |         |                   |   |           |         | 
|------------------------------------------ | -------------------------------------------------------------------------------------- | - | --------------------------------- | ------- | ----------------- | - | --------- | ------- | 
|                                           |                                                                                        |   | March 23, 2002                    |         | December 31, 2001
|                                           |                                                                                        |   |                                   |         |                  
|                                           |                                                                                        |   | (in thousands, except share data)
|Assets                                     |                                                                                        |   |                                   |         |                   |   |           |        
|                                          
|                                          
|                                          
|                                          
|Current
assets:                            |                                                                                        |   |                                   |         |                   |   |           |        
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents                                                              |   | $                                 | 67,493  |                   |   | $         | 122,873 | 
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts receivable, including retained
interest in securitized receivables,
net       |   |                                   | 193,279 |                   |   |           | 203,175 | 
|                                          
|                                          
|                                          
|                                          
|                                           | Other current assets                                                                   |   |                                   | 50,050  |                   |   |           | 34,406  | 
|                                           |                                                                                        |   |                                   |         |                   |   |           |        
|Total current assets                       |                                                                                        |   | 310,822                           |         |                   |   | 360,454   |        
|                                          
|                                          
|                                          
|                                          
|Carrier operating property, at cost        |                                                                                        |   | 1,609,399                         |         |                   |   | 1,621,539 |        
|                                          
|                                          
|                                          
|                                          
|Less allowance for depreciation            |                                                                                        |   | 1,013,520                         |         |                   |   | 1,013,614 |        
|                                           |                                                                                        |   |                                   |         |                   |   |           |        
|Net carrier operating property             |                                                                                        |   | 595,879                           |         |                   |   | 607,925   |        
|                                          
|                                          
|                                          
|                                          
|Goodwill, net                              |                                                                                        |   | 267,984                           |         |                   |   | 268,253   |        
|                                          
|                                          
|                                          
|                                          
|Other assets                               |                                                                                        |   | 68,429                            |         |                   |   | 66,217    |        
|                                           |                                                                                        |   |                                   |         |                   |   |           |        
|                                          
|                                          
|                                          
|                                          
|Total assets                               |                                                                                        | $ | 1,243,114                         |         |                   | $ | 1,302,849 |        
|                                           |                                                                                        |   |                                   |         |                   |   |           |        
|Liabilities
and shareholders equity       |                                                                                        |   |                                   |         |                   |   |           |        
|                                          
|                                          
|                                          
|                                          
|Current liabilities:                       |                                                                                        |   |                                   |         |                   |   |           |        
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable                                                                       |   | $                                 | 173,717 |                   |   | $         | 216,765 | 
|                                          
|                                          
|                                          
|                                          
|                                           | Salaries and wages                                                                     |   |                                   | 117,327 |                   |   |           | 122,175 | 
|                                          
|                                          
|                                          
|                                          
|                                           | Other current liabilities                                                              |   |                                   | 74,884  |                   |   |           | 74,153  | 
|                                           |                                                                                        |   |                                   |         |                   |   |           |        
|Total current liabilities                  |                                                                                        |   | 365,928                           |         |                   |   | 413,093   |        
|                                          
|                                          
|                                          
|                                          
|Long-term liabilities:                     |                                                                                        |   |                                   |         |                   |   |           |        
|                                          
|                                          
|                                          
|                                          
|                                           | Casualty claims and other                                                              |   |                                   | 99,350  |                   |   |           | 101,841 | 
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued pension and retiree medical                                                    |   |                                   | 124,126 |                   |   |           | 121,020 | 
|                                          
|                                          
|                                          
|                                          
|                                           | Long-term debt                                                                         |   |                                   | 307,000 |                   |   |           | 307,000 | 
|                                           |                                                                                        |   |                                   |         |                   |   |           |        
|Total long-term liabilities                |                                                                                        |   | 530,476                           |         |                   |   | 529,861   |        
|                                          
|                                          
|                                          
|                                          
|Shareholders equity:                      |                                                                                        |   |                                   |         |                   |   |           |        
|                                          
|                                          
|                                          
|                                          
|                                           | Common
Stock  $.01 par valueAuthorized - 100,000,000 sharesIssued - 20,556,714 shares |   |                                   | 206     |                   |   |           | 206     | 
|                                          
|                                          
|                                          
|                                          
|                                           | Other shareholders equity                                                             |   |                                   | 346,504 |                   |   |           | 359,689 | 
|                                           |                                                                                        |   |                                   |         |                   |   |           |        
|                                          
|                                          
|                                          
|                                          
|Total shareholders equity                 |                                                                                        |   | 346,710                           |         |                   |   | 359,895   |        
|                                           |                                                                                        |   |                                   |         |                   |   |           |        
|Total liabilities and shareholders equity |                                                                                        | $ | 1,243,114                         |         |                   | $ | 1,302,849 |        
|                                           |                                                                                        |   |                                   |         |                   |   |           |        

Note: The balance sheet at December 31, 2001 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.

The number of shares of common stock outstanding at March 23, 2002 and December
31, 2001 were 19,375,399 and 19,376,814, respectively.

See notes to condensed consolidated financial statements.

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##### Table of Contents



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

|                                     |                                            |   |                                       |         |                |   |         |         | 
|------------------------------------ | ------------------------------------------ | - | ------------------------------------- | ------- | -------------- | - | ------- | ------- | 
|                                     |                                            |   | Twelve Weeks Ended                   
|                                     |                                            |   | (First Quarter)                      
|                                     |                                            |   | March 23, 2002                        |         | March 24, 2001
|                                     |                                            |   |                                       |         |               
|                                     |                                            |   | (in thousands, except per share data)
|                                     |                                            |   |                                      
|Revenue                              |                                            | $ | 637,168                               |         |                | $ | 650,485 |        
|                                    
|                                    
|                                    
|                                    
|Operating expenses:                  |                                            |   |                                       |         |                |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Salaries, wages and benefits               |   |                                       | 411,474 |                |   |         | 412,126 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Operating supplies and expenses            |   |                                       | 107,223 |                |   |         | 113,709 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Purchased transportation                   |   |                                       | 62,996  |                |   |         | 64,381  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Operating taxes and licenses               |   |                                       | 16,404  |                |   |         | 17,539  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Insurance and claims expense               |   |                                       | 13,140  |                |   |         | 13,180  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Provision for depreciation                 |   |                                       | 21,767  |                |   |         | 15,261  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Net loss on disposal of operating property |   |                                       | 295     |                |   |         | 186     | 
|                                     |                                            |   |                                       |         |                |   |         |        
|Total operating expenses             |                                            |   | 633,299                               |         |                |   | 636,382 |        
|                                     |                                            |   |                                       |         |                |   |         |        
|                                    
|                                    
|                                    
|                                    
|Operating income                     |                                            |   | 3,869                                 |         |                |   | 14,103  |        
|                                    
|                                    
|                                    
|                                    
|Other (expense), net                 |                                            |   | (6,774                                | )       |                |   | (5,429  | )      
|                                     |                                            |   |                                       |         |                |   |         |        
|(Loss) income before income taxes    |                                            |   | (2,905                                | )       |                |   | 8,674   |        
|                                    
|                                    
|                                    
|                                    
|(Benefit) provision for income taxes |                                            |   | (1,156                                | )       |                |   | 3,684   |        
|                                     |                                            |   |                                       |         |                |   |         |        
|Net (loss) income                    |                                            | $ | (1,749                                | )       |                | $ | 4,990   |        
|                                     |                                            |   |                                       |         |                |   |         |        
|(Loss) earnings per share  basic    |                                            | $ | (0.09                                 | )       |                | $ | 0.27    |        
|                                    
|                                    
|                                    
|                                    
|(Loss) earnings per share  diluted  |                                            | $ | (0.09                                 | )       |                | $ | 0.26    |        
|                                    
|                                    
|                                    
|                                    
|Average shares outstanding  basic   |                                            |   | 18,555                                |         |                |   | 18,451  |        
|                                    
|                                    
|                                    
|                                    
|Average shares outstanding  diluted |                                            |   | 18,555                                |         |                |   | 18,912  |        
|                                    
|                                    
|                                    
|                                    
|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 Cash Flows (Unaudited)

|                                                 |  |                    |         |                |  |   |         |  
|------------------------------------------------ |  | ------------------ | ------- | -------------- |  | - | ------- | -
|                                                 |  | Twelve Weeks Ended
|                                                 |  | (First Quarter)   
|                                                 |  | March 23, 2002     |         | March 24, 2001
|                                                 |  |                    |         |               
|                                                 |  | (in thousands)    
|                                                 |  |                   
|Cash flows from operating activities            
|Net (loss) income                                |  | $                  | (1,749  | )              |  | $ | 4,990   |  
|                                                
|                                                
|                                                
|                                                
|Depreciation and amortization                    |  |                    | 21,767  |                |  |   | 15,744  |  
|                                                
|                                                
|                                                
|                                                
|Other operating adjustments                      |  |                    | (64,437 | )              |  |   | (12,309 | )
|                                                 |  |                    |         |                |  |   |         |  
|Net cash (used) provided by operating activities |  |                    | (44,419 | )              |  |   | 8,425   |  
|                                                
|                                                
|                                                
|                                                
|Cash flows from investing activities             |  |                    | (11,398 | )              |  |   | (18,039 | )
|                                                
|                                                
|                                                
|                                                
|Purchases of carrier operating property          |  |                    | (11,398 | )              |  |   | (18,039 | )
|                                                
|                                                
|                                                
|                                                
|Sales of carrier operating property              |  |                    | 1,381   |                |  |   | 302     |  
|                                                 |  |                    |         |                |  |   |         |  
|Net cash (used) by investing activities          |  |                    | (10,017 | )              |  |   | (17,737 | )
|                                                
|                                                
|                                                
|                                                
|Cash flows from financing activities             |  |                    | (957    | )              |  |   | (968    | )
|                                                
|                                                
|                                                
|                                                
|Dividends paid                                   |  |                    | (957    | )              |  |   | (968    | )
|                                                
|                                                
|                                                
|                                                
|Treasury stock activity, net                     |  |                    | 24      |                |  |   | (613    | )
|                                                 |  |                    |         |                |  |   |         |  
|Net cash (used) by financing activities          |  |                    | (933    | )              |  |   | (1,581  | )
|                                                
|                                                
|                                                
|                                                
|Effect of exchange rate changes on cash          |  |                    | (11     | )              |  |   | (13     | )
|                                                 |  |                    |         |                |  |   |         |  
|Net (decrease) in cash and cash equivalents      |  |                    | (55,380 | )              |  |   | (10,906 | )
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |  |                    | 122,873 |                |  |   | 64,939  |  
|                                                 |  |                    |         |                |  |   |         |  
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at end of period       |  | $                  | 67,493  |                |  | $ | 54,033  |  
|                                                 |  |                    |         |                |  |   |         |  

See notes to condensed consolidated financial statements.

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 weeks
ending March 23, 2002 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2002. 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,
2001.

3



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##### Table of Contents



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Business Acquisition

On November 30, 2001, the Company acquired Arnold Industries, Inc. for cash
consideration of $558,831,000, including direct acquisition costs. Included in
the acquired assets of Arnold was $50,763,000 in cash, which was used to
partially finance the acquisition. Also on November 30, 2001, concurrent with
the acquisition of Arnold, the Company sold Arnolds logistics business (ARLO)
to members of the ARLO management team and Mr. Edward H. Arnold, the former
Chairman, President and Chief Executive Officer of Arnold, for $105,000,000 in
cash. The net acquisition consideration of $403,068,000 was financed with
borrowings under a new credit facility, proceeds from an accounts receivable
securitization, the issuance of $225,000,000 in senior notes, and with
available cash.

The acquisition of Arnold was accounted for as a purchase business combination
and accordingly, the assets acquired and liabilities assumed were recorded at
their estimated fair values on the acquisition date. The excess of the
purchase price paid over the fair value of the net assets acquired, totaling
approximately $253,532,000, has been recorded as goodwill. The purchase price
allocation reflected in these financial statements for the acquisition is
preliminary and may be adjusted as estimated fair values of assets acquired and
liabilities assumed are finalized. Upon the finalization of the valuation
process, a portion of the amount initially classified as goodwill in the
financial statements may be reclassified to the tangible and identifiable
intangible assets acquired, based on their estimated fair values at the date of
the acquisition.

Note 4Earnings per Share

Weighted-average basic and diluted shares outstanding are the same numbers for
the first quarter of 2002, since the Company reported a loss. Inclusion of all
potential common shares would have been anti-dilutive. The following table
sets forth the computation of basic and diluted earnings per share:

|                                                       |  |                                       |  |                |  |   |        |   |  |   |        |  |  |  |  | 
|------------------------------------------------------ |  | ------------------------------------- |  | -------------- |  | - | ------ | - |  | - | ------ |  |  |  |  | 
|                                                       |  | Twelve Weeks Ended                   
|                                                       |  | (First Quarter)                      
|                                                       |  | March 23, 2002                        |  | March 24, 2001
|                                                       |  |                                       |  |               
|                                                       |  | (in thousands, except per share data)
|Net (loss) income                                      |  |                                       |  |                |  | $ | (1,749 | ) |  | $ | 4,990  | 
|                                                       |  |                                       |  |                |  |   |        |   |  |   |        | 
|Weighted-average shares for
Basic earnings per share   |  |                                       |  |                |  |   | 18,555 |   |  |   | 18,451 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Management incentive stock plans                       |  |                                       |  |                |  |   |       |   |  |   | 461    | 
|                                                       |  |                                       |  |                |  |   |        |   |  |   |        | 
|Weighted-average shares for
Diluted earnings per share |  |                                       |  |                |  |   | 18,555 |   |  |   | 18,912 | 
|                                                       |  |                                       |  |                |  |   |        |   |  |   |        | 
|(Loss) earnings per share  basic                      |  |                                       |  |                |  | $ | (0.09  | ) |  | $ | 0.27   | 
|                                                      
|                                                      
|                                                      
|                                                      
|(Loss) earnings per share  diluted                    |  |                                       |  |                |  | $ | (0.09  | ) |  | $ | 0.26   | 

4



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Note 5Segment information

The Company provides freight services primarily in three business segments:
Roadway Express (Roadway), New Penn, and Arnold Transportation Services (ATS).
Prior to the acquisition of Arnold Industries, Inc. in November 2001, the
Company operated only in the Roadway segment. The Roadway segment provides
long haul LTL freight services in North America and offers services to an
additional 66 countries worldwide. The acquisition of Arnold Industries, Inc.
added two new segments, New Penn and ATS. The New Penn segment provides
regional, next-day LTL freight service primarily in the northeast region of the
United States. The ATS segment provides irregular route and dedicated freight
services throughout the eastern, midwestern, and southwestern regions 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 March 23, 2002 |        |               |   |        
|                        |                            |   |                 |         |          |   | (First Quarter)                   |        |               |   |        
|                        |                            |   | Roadway Express |         | New Penn |   | ATS                               |        | Segment Total
|                        |                            |   |                 |         |          |   |                                   |        |              
|                        |                            |   | (in thousands) 
|Revenue                 |                            | $ | 553,558         |         |          | $ | 45,409                            |        |               | $ | 38,201  |        |  | $ | 637,168   |        
|                       
|                       
|                       
|                       
|Operating expense:      |                            |   |                 |         |          |   |                                   |        |               |   |         |        |  |   |           |        
|                       
|                       
|                       
|                       
|                        | Salaries, wages & benefits |   |                 | 366,336 |          |   |                                   | 30,709 |               |   |         | 12,310 |  |   |           | 409,355 | 
|                       
|                       
|                       
|                       
|                        | Operating supplies         |   |                 | 95,499  |          |   |                                   | 6,114  |               |   |         | 8,014  |  |   |           | 109,627 | 
|                       
|                       
|                       
|                       
|                        | Purchased transportation   |   |                 | 51,126  |          |   |                                   | 383    |               |   |         | 11,487 |  |   |           | 62,996  | 
|                       
|                       
|                       
|                       
|                        | Other operating expense    |   |                 | 40,190  |          |   |                                   | 4,892  |               |   |         | 6,228  |  |   |           | 51,310  | 
|                        |                            |   |                 |         |          |   |                                   |        |               |   |         |        |  |   |           |        
|Total operating expense |                            |   | 553,151         |         |          |   | 42,098                            |        |               |   | 38,039  |        |  |   | 633,288   |        
|                        |                            |   |                 |         |          |   |                                   |        |               |   |         |        |  |   |           |        
|Operating income        |                            | $ | 407             |         |          | $ | 3,311                             |        |               | $ | 162     |        |  | $ | 3,880     |        
|                        |                            |   |                 |         |          |   |                                   |        |               |   |         |        |  |   |           |        
|Total assets            |                            | $ | 703,834         |         |          | $ | 335,218                           |        |               | $ | 183,057 |        |  | $ | 1,222,109 |        

Reconciliation of segment operating income to consolidated loss before taxes:

|                                     |  |                |        |  
|------------------------------------ |  | -------------- | ------ | -
|                                     |  | (in thousands)
|Segment operating income             |  | $              | 3,880  |  
|                                    
|                                    
|                                    
|                                    
|Unallocated corporate (loss)         |  |                | (11    | )
|                                    
|                                    
|                                    
|                                    
|Interest (expense)                   |  |                | (5,464 | )
|                                    
|                                    
|                                    
|                                    
|Other (expense), net                 |  |                | (1,310 | )
|                                     |  |                |        |  
|                                    
|                                    
|                                    
|                                    
|Consolidated net (loss) before taxes |  | $              | (2,905 | )
|                                     |  |                |        |  

Reconciliation of total segment assets to total consolidated assets at March 23, 2002:

|                                     |  |                |           |  
|------------------------------------ |  | -------------- | --------- | -
|                                     |  | (in thousands)
|Total segment assets                 |  | $              | 1,222,109 |  
|                                    
|                                    
|                                    
|                                    
|Unallocated corporate assets         |  |                | 46,341    |  
|                                    
|                                    
|                                    
|                                    
|Elimination of intercompany balances |  |                | (25,336   | )
|                                     |  |                |           |  
|                                    
|                                    
|                                    
|                                    
|Consolidated assets                  |  | $              | 1,243,114 |  
|                                     |  |                |           |  

5



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##### Table of Contents



Note 6Comprehensive (Loss) Income

Comprehensive (loss) income differs from net (loss) income due to foreign
currency translation adjustments as shown below:

|                                         |  |                    |        |                |  |   |       |  
|---------------------------------------- |  | ------------------ | ------ | -------------- |  | - | ----- | -
|                                         |  | Twelve Weeks Ended
|                                         |  | (First Quarter)   
|                                         |  | March 23, 2002     |        | March 24, 2001
|                                         |  |                    |        |               
|                                         |  | (in thousands)    
|Net (loss) income                        |  | $                  | (1,749 | )              |  | $ | 4,990 |  
|                                        
|                                        
|                                        
|                                        
|Foreign currency translation adjustments |  |                    | (1,178 | )              |  |   | (965  | )
|                                         |  |                    |        |                |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|Comprehensive (loss) income              |  | $                  | (2,927 | )              |  | $ | 4,025 |  
|                                         |  |                    |        |                |  |   |       |  

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
multiemployer 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 which relate to the Companys
business prior to the spin-off. The amount and timing of such payments, if
any, 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. 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.

Note 8Guarantor and Non-Guarantor Subsidiaries

The credit facility borrowings and the senior notes issued in connection with
the acquisition of Arnold are secured by a first-priority perfected lien on all
of the capital stock of the Companys direct subsidiaries. They are also
supported by guarantees provided by all of the Companys material subsidiaries,
which are wholly owned. These guarantees are full and unconditional, joint and
several.

The following condensed consolidating financial statements set forth the
Companys balance sheets, statements of income, and statements of cash flows
for the same time periods as the financial statements presented in Item 1
above. In the following schedules Parent Company refers to the balances of
Roadway Corporation, Guarantor Subsidiaries refers to non-minor domestic
subsidiaries, and Non-guarantor subsidiaries refers to foreign and minor
domestic subsidiaries and Eliminations represent the adjustments necessary to
(a) eliminate intercompany transactions and (b) eliminate the investments in
the Companys subsidiaries.

6



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##### Table of Contents



Note 8Guarantor and Non-Guarantor Subsidiaries (continued)

Condensed Consolidating Balance Sheets
March 23, 2002

|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |       | 
|-------------------------------------------------------------------------------- | ------------------------------ | - | ------------- | --- | ------------ | - | ------------ | ----- | ------------- | - | ------------ | -- |  | - | ------ | ------ | - | - | ----- | ----- | 
|                                                                                 |                                |   |               |     |              |   | Guarantor    |       | Non-Guarantor |   |              |    |  |   |        |        |  
|                                                                                 |                                |   | Parent        |     | Subsidiaries |   | Subsidiaries |       | Eliminations  |   | Consolidated
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |             
|                                                                                 |                                |   | (in millions)
|Cash and cash equivalents                                                        |                                | $ | 18            |     |              | $ | 49           |       |               | $ | 1            |    |  | $ |       |        |   | $ | 68    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Accounts receivable, including retained
interest in securitized receivables, net |                                |   |              |     |              |   | 179          |       |               |   | 14           |    |  |   |       |        |   |   | 193   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Due from affiliates                                                              |                                |   | 12            |     |              |   | 369          |       |               |   |             |    |  |   | (381   | )      |   |   |      |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Prepaid expenses and supplies                                                    |                                |   |              |     |              |   | 32           |       |               |   |             |    |  |   |       |        |   |   | 32    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Deferred income taxes                                                            |                                |   |              |     |              |   | 18           |       |               |   |             |    |  |   |       |        |   |   | 18    |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|                                                                                 | Total current assets           |   |               | 30  |              |   |              | 647   |               |   |              | 15 |  |   |        | (381   | ) |   |       | 311   | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Carrier operating property, at cost                                              |                                |   |              |     |              |   | 1,583        |       |               |   | 26           |    |  |   |       |        |   |   | 1,609 |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Less allowance for depreciation                                                  |                                |   |              |     |              |   | 1,000        |       |               |   | 13           |    |  |   |       |        |   |   | 1,013 |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|                                                                                 | Net carrier operating property |   |               |    |              |   |              | 583   |               |   |              | 13 |  |   |        |       |   |   |       | 596   | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Goodwill, net                                                                    |                                |   |              |     |              |   | 254          |       |               |   | 14           |    |  |   |       |        |   |   | 268   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Investment in subsidiaries                                                       |                                |   | 628           |     |              |   | (5           | )     |               |   |             |    |  |   | (623   | )      |   |   |      |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Deferred income taxes                                                            |                                |   |              |     |              |   | 34           |       |               |   |             |    |  |   |       |        |   |   | 34    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Long-term assets                                                                 |                                |   | 10            |     |              |   | 24           |       |               |   |             |    |  |   |       |        |   |   | 34    |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|                                                                                 | Total assets                   |   | $             | 668 |              |   | $            | 1,537 |               |   | $            | 42 |  |   | $      | (1,004 | ) |   | $     | 1,243 | 
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|Accounts payable                                                                 |                                | $ | (21           | )   |              | $ | 187          |       |               | $ | 8            |    |  | $ |       |        |   | $ | 174   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Due to affiliates                                                                |                                |   | 342           |     |              |   | 2            |       |               |   | 37           |    |  |   | (381   | )      |   |   |      |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Salaries and wages                                                               |                                |   |              |     |              |   | 115          |       |               |   | 2            |    |  |   |       |        |   |   | 117   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Current portion of long-term debt                                                |                                |   |              |     |              |   | 18           |       |               |   |             |    |  |   |       |        |   |   | 18    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Freight and casualty claims payable                                              |                                |   |              |     |              |   | 56           |       |               |   | 1            |    |  |   |       |        |   |   | 57    |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|                                                                                 | Total current liabilities      |   |               | 321 |              |   |              | 378   |               |   |              | 48 |  |   |        | (381   | ) |   |       | 366   | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Casualty claims and other                                                        |                                |   |              |     |              |   | 64           |       |               |   |             |    |  |   |       |        |   |   | 64    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Deferred income taxes                                                            |                                |   |              |     |              |   | 36           |       |               |   | (1           | )  |  |   |       |        |   |   | 35    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Long-term debt                                                                   |                                |   |              |     |              |   | 307          |       |               |   |             |    |  |   |       |        |   |   | 307   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Accrued pension and retiree medical                                              |                                |   |              |     |              |   | 124          |       |               |   |             |    |  |   |       |        |   |   | 124   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Total shareholders equity                                                       |                                |   | 347           |     |              |   | 628          |       |               |   | (5           | )  |  |   | (623   | )      |   |   | 347   |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|Total liabilities and shareholders equity                                       |                                | $ | 668           |     |              | $ | 1,537        |       |               | $ | 42           |    |  | $ | (1,004 | )      |   | $ | 1,243 |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      

7



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##### Table of Contents



Note 8Guarantor and Non-Guarantor Subsidiaries (continued)

Condensed Consolidating Balance Sheets
December 31, 2001

|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |       | 
|-------------------------------------------------------------------------------- | ------------------------------ | - | ------------- | --- | ------------ | - | ------------ | ----- | ------------- | - | ------------ | -- |  | - | ------ | ------ | - | - | ----- | ----- | 
|                                                                                 |                                |   |               |     |              |   | Guarantor    |       | Non-Guarantor |   |              |    |  |   |        |        |  
|                                                                                 |                                |   | Parent        |     | Subsidiaries |   | Subsidiaries |       | Eliminations  |   | Consolidated
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |             
|                                                                                 |                                |   | (in millions)
|Cash and cash equivalents                                                        |                                | $ | 35            |     |              | $ | 87           |       |               | $ | 1            |    |  | $ |       |        |   | $ | 123   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Accounts receivable, including retained
interest in securitized receivables, net |                                |   | 1             |     |              |   | 187          |       |               |   | 15           |    |  |   |       |        |   |   | 203   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Due from affiliates                                                              |                                |   | 11            |     |              |   | 369          |       |               |   | 1            |    |  |   | (381   | )      |   |   |      |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Prepaid expenses and supplies                                                    |                                |   |              |     |              |   | 16           |       |               |   |             |    |  |   |       |        |   |   | 16    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Deferred income taxes                                                            |                                |   |              |     |              |   | 19           |       |               |   |             |    |  |   |       |        |   |   | 19    |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|                                                                                 | Total current assets           |   |               | 47  |              |   |              | 678   |               |   |              | 17 |  |   |        | (381   | ) |   |       | 361   | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Carrier operating property, at cost                                              |                                |   |              |     |              |   | 1,596        |       |               |   | 26           |    |  |   |       |        |   |   | 1,622 |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Less allowance for depreciation                                                  |                                |   |              |     |              |   | 1,001        |       |               |   | 13           |    |  |   |       |        |   |   | 1,014 |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|                                                                                 | Net carrier operating property |   |               |    |              |   |              | 595   |               |   |              | 13 |  |   |        |       |   |   |       | 608   | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Goodwill, net                                                                    |                                |   |              |     |              |   | 253          |       |               |   | 15           |    |  |   |       |        |   |   | 268   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Investment in subsidiaries                                                       |                                |   | 662           |     |              |   | (4           | )     |               |   |             |    |  |   | (658   | )      |   |   |      |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Deferred income taxes                                                            |                                |   |              |     |              |   | 31           |       |               |   |             |    |  |   |       |        |   |   | 31    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Long-term assets                                                                 |                                |   | 10            |     |              |   | 25           |       |               |   |             |    |  |   |       |        |   |   | 35    |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|                                                                                 | Total assets                   |   | $             | 719 |              |   | $            | 1,578 |               |   | $            | 45 |  |   | $      | (1,039 | ) |   | $     | 1,303 | 
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|Accounts payable                                                                 |                                | $ | 15            |     |              | $ | 193          |       |               | $ | 9            |    |  | $ |       |        |   | $ | 217   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Due to affiliates                                                                |                                |   | 344           |     |              |   | 1            |       |               |   | 36           |    |  |   | (381   | )      |   |   |      |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Salaries and wages                                                               |                                |   |              |     |              |   | 119          |       |               |   | 3            |    |  |   |       |        |   |   | 122   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Current portion of long-term debt                                                |                                |   |              |     |              |   | 18           |       |               |   |             |    |  |   |       |        |   |   | 18    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Freight and casualty claims payable                                              |                                |   |              |     |              |   | 55           |       |               |   | 1            |    |  |   |       |        |   |   | 56    |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|                                                                                 | Total current liabilities      |   |               | 359 |              |   |              | 386   |               |   |              | 49 |  |   |        | (381   | ) |   |       | 413   | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Casualty claims and other                                                        |                                |   |              |     |              |   | 66           |       |               |   |             |    |  |   |       |        |   |   | 66    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Deferred income taxes                                                            |                                |   |              |     |              |   | 36           |       |               |   |             |    |  |   |       |        |   |   | 36    |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Long-term debt                                                                   |                                |   |              |     |              |   | 307          |       |               |   |             |    |  |   |       |        |   |   | 307   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Accrued pension and retiree medical                                              |                                |   |              |     |              |   | 121          |       |               |   |             |    |  |   |       |        |   |   | 121   |      
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Total shareholders equity                                                       |                                |   | 360           |     |              |   | 662          |       |               |   | (4           | )  |  |   | (658   | )      |   |   | 360   |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      
|Total liabilities and shareholders equity                                       |                                | $ | 719           |     |              | $ | 1,578        |       |               | $ | 45           |    |  | $ | (1,039 | )      |   | $ | 1,303 |      
|                                                                                 |                                |   |               |     |              |   |              |       |               |   |              |    |  |   |        |        |   |   |       |      

8



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##### Table of Contents



Note 8Guarantor and Non-Guarantor Subsidiaries (continued)

Condensed Consolidating Statements of Income
Twelve Weeks Ended March 23, 2002
(First Quarter)

|                                     |                                                   |   |               |    |              |   |              |     |               |   |              |   |  |   |    |    |   |   |     |     | 
|------------------------------------ | ------------------------------------------------- | - | ------------- | -- | ------------ | - | ------------ | --- | ------------- | - | ------------ | - |  | - | -- | -- | - | - | --- | --- | 
|                                     |                                                   |   |               |    |              |   | Guarantor    |     | Non-Guarantor |   |              |   |  |   |    |    |  
|                                     |                                                   |   | Parent        |    | Subsidiaries |   | Subsidiaries |     | Eliminations  |   | Consolidated
|                                     |                                                   |   |               |    |              |   |              |     |               |   |             
|                                     |                                                   |   | (in millions)
|Revenue                              |                                                   | $ |              |    |              | $ | 613          |     |               | $ | 24           |   |  | $ |   |    |   | $ | 637 |    
|                                    
|                                    
|                                    
|                                    
|Operating expenses:                  |                                                   |   |               |    |              |   |              |     |               |   |              |   |  |   |    |    |   |   |     |    
|                                    
|                                    
|                                    
|                                    
|                                     | Salaries, wages and benefits                      |   |               | 2  |              |   |              | 401 |               |   |              | 8 |  |   |    |   |   |   |     | 411 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Operating supplies and expenses                   |   |               | (2 | )            |   |              | 103 |               |   |              | 6 |  |   |    |   |   |   |     | 107 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Purchased transportation                          |   |               |   |              |   |              | 55  |               |   |              | 8 |  |   |    |   |   |   |     | 63  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Operating taxes and licenses                      |   |               |   |              |   |              | 16  |               |   |              | 1 |  |   |    |   |   |   |     | 17  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Insurance and claims expenses                     |   |               |   |              |   |              | 13  |               |   |              |  |  |   |    |   |   |   |     | 13  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Provision for depreciation                        |   |               |   |              |   |              | 21  |               |   |              | 1 |  |   |    |   |   |   |     | 22  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Net loss (gain) on disposal of
operating property |   |               |   |              |   |              |    |               |   |              |  |  |   |    |   |   |   |     |    | 
|                                    
|                                    
|                                    
|                                    
|                                     | Results of affiliates                             |   |               | 4  |              |   |              |    |               |   |              |  |  |   |    | (4 | ) |   |     |    | 
|                                     |                                                   |   |               |    |              |   |              |     |               |   |              |   |  |   |    |    |   |   |     |    
|Total operating expenses             |                                                   |   | 4             |    |              |   | 609          |     |               |   | 24           |   |  |   | (4 | )  |   |   | 633 |    
|                                     |                                                   |   |               |    |              |   |              |     |               |   |              |   |  |   |    |    |   |   |     |    
|Operating (loss) income              |                                                   |   | (4            | )  |              |   | 4            |     |               |   |             |   |  |   | 4  |    |   |   | 4   |    
|                                    
|                                    
|                                    
|                                    
|Other (expenses), net                |                                                   |   |              |    |              |   | (7           | )   |               |   |             |   |  |   |   |    |   |   | (7  | )  
|                                     |                                                   |   |               |    |              |   |              |     |               |   |              |   |  |   |    |    |   |   |     |    
|(Loss) income before income taxes    |                                                   |   | (4            | )  |              |   | (3           | )   |               |   |             |   |  |   | 4  |    |   |   | (3  | )  
|                                    
|                                    
|                                    
|                                    
|(Benefit) provision for income taxes |                                                   |   | (2            | )  |              |   | 1            |     |               |   |             |   |  |   |   |    |   |   | (1  | )  
|                                     |                                                   |   |               |    |              |   |              |     |               |   |              |   |  |   |    |    |   |   |     |    
|Net (loss) income                    |                                                   | $ | (2            | )  |              | $ | (4           | )   |               | $ |             |   |  | $ | 4  |    |   | $ | (2  | )  
|                                     |                                                   |   |               |    |              |   |              |     |               |   |              |   |  |   |    |    |   |   |     |    

Twelve Weeks Ended March 24, 2001
(First Quarter)

|                                  |                                            |   |        |   |              |   |              |     |               |   |               |    |  |   |    |    |   |   |     |     | 
|--------------------------------- | ------------------------------------------ | - | ------ | - | ------------ | - | ------------ | --- | ------------- | - | ------------- | -- |  | - | -- | -- | - | - | --- | --- | 
|                                  |                                            |   |        |   |              |   | Guarantor    |     | Non-Guarantor |   |               |    |  |   |    |    |  
|                                  |                                            |   | Parent |   | Subsidiaries |   | Subsidiaries |     | Eliminations  |   | Consolidated 
|                                  |                                            |   |        |   |              |   |              |     |               |   |              
|                                  |                                            |   |        |   |              |   |              |     |               |   | (in millions) |    |  |   |    |    |   |   |    
|Revenue                           |                                            | $ |       |   |              | $ | 625          |     |               | $ | 26            |    |  | $ | (1 | )  |   | $ | 650 |    
|                                 
|                                 
|                                 
|                                 
|Operating expenses:               |                                            |   |        |   |              |   |              |     |               |   |               |    |  |   |    |    |   |   |     |    
|                                 
|                                 
|                                 
|                                 
|                                  | Salaries, wages and benefits               |   |        |  |              |   |              | 402 |               |   |               | 10 |  |   |    |   |   |   |     | 412 | 
|                                 
|                                 
|                                 
|                                 
|                                  | Operating supplies and expenses            |   |        |  |              |   |              | 107 |               |   |               | 7  |  |   |    |   |   |   |     | 114 | 
|                                 
|                                 
|                                 
|                                 
|                                  | Purchased transportation                   |   |        |  |              |   |              | 56  |               |   |               | 9  |  |   |    | (1 | ) |   |     | 64  | 
|                                 
|                                 
|                                 
|                                 
|                                  | Operating taxes and licenses               |   |        |  |              |   |              | 17  |               |   |               | 1  |  |   |    |   |   |   |     | 18  | 
|                                 
|                                 
|                                 
|                                 
|                                  | Insurance and claims expenses              |   |        |  |              |   |              | 13  |               |   |               |   |  |   |    |   |   |   |     | 13  | 
|                                 
|                                 
|                                 
|                                 
|                                  | Provision for depreciation                 |   |        |  |              |   |              | 14  |               |   |               | 1  |  |   |    |   |   |   |     | 15  | 
|                                 
|                                 
|                                 
|                                 
|                                  | Net loss on disposal of
operating property |   |        |  |              |   |              |    |               |   |               |   |  |   |    |   |   |   |     |    | 
|                                 
|                                 
|                                 
|                                 
|                                  | Results of affiliates                      |   |        |  |              |   |              | 3   |               |   |               |   |  |   |    | (3 | ) |   |     |    | 
|                                  |                                            |   |        |   |              |   |              |     |               |   |               |    |  |   |    |    |   |   |     |    
|Total operating expenses          |                                            |   |       |   |              |   | 612          |     |               |   | 28            |    |  |   | (4 | )  |   |   | 636 |    
|                                  |                                            |   |        |   |              |   |              |     |               |   |               |    |  |   |    |    |   |   |     |    
|Operating income (loss)           |                                            |   |       |   |              |   | 13           |     |               |   | (2            | )  |  |   | 3  |    |   |   | 14  |    
|                                 
|                                 
|                                 
|                                 
|Other income (expenses), net      |                                            |   |       |   |              |   | (4           | )   |               |   | (1            | )  |  |   |   |    |   |   | (5  | )  
|                                  |                                            |   |        |   |              |   |              |     |               |   |               |    |  |   |    |    |   |   |     |    
|Income (loss) before income taxes |                                            |   |       |   |              |   | 9            |     |               |   | (3            | )  |  |   | 3  |    |   |   | 9   |    
|                                 
|                                 
|                                 
|                                 
|Provision for income taxes        |                                            |   |       |   |              |   | 4            |     |               |   |              |    |  |   |   |    |   |   | 4   |    
|                                  |                                            |   |        |   |              |   |              |     |               |   |               |    |  |   |    |    |   |   |     |    
|                                 
|                                 
|                                 
|                                 
|Net income (loss)                 |                                            | $ |       |   |              | $ | 5            |     |               | $ | (3            | )  |  | $ | 3  |    |   | $ | 5   |    
|                                  |                                            |   |        |   |              |   |              |     |               |   |               |    |  |   |    |    |   |   |     |    

9



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##### Table of Contents



Note 8Guarantor and Non-Guarantor Subsidiaries (continued)

Condensed Consolidating Statement of Cash Flows
Twelve Weeks Ended March 23, 2002
(First Quarter)

|                                                                                  |                                                  |                       |     |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |     |   | 
|--------------------------------------------------------------------------------- | ------------------------------------------------ | --------------------- | --- | ------ | - | ------------ | --- | ------------ | - | ------------- | -- | ------------- | - | - | - | - | - | - | --- | --- | - | 
|                                                                                  |                                                  |                       |     |        |   |              |     | Guarantor    |   | Non-Guarantor |    |               |   |   |   |   |   |  
|                                                                                  |                                                  |                       |     | Parent |   | Subsidiaries |     | Subsidiaries |   | Eliminations  |    | Consolidated 
|                                                                                  |                                                  |                       |     |        |   |              |     |              |   |               |    |              
|                                                                                  |                                                  |                       |     |        |   |              |     |              |   |               |    | (in millions) |   |   |   |   |   |   |     |    
|Net cash (used) provided by operating
activities                                  |                                                  | $                     | (47 | )      |   | $            | 1   |              |   | $             | 1  |               |   | $ |  |   |   | $ | (45 | )  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash flows from investing activities
Purchases of carrier operating property, net |                                                  |                       |    |        |   |              | (9  | )            |   |               | (1 | )             |   |   |  |   |   |   | (10 | )  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                  | Business acquisitions |     |        |  |              |     |              |  |               |    |               |  |   |   |   |  |   |     |     |  | 
|                                                                                  |                                                  |                       |     |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    
|                                                                                  | Net cash (used) in investing activities          |                       |     |       |   |              |     | (9           | ) |               |    | (1            | ) |   |   |  |   |   |     | (10 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash flows from financing activities                                             
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Dividends received (paid)                                                         |                                                  |                       | 30  |        |   |              | (31 | )            |   |               |   |               |   |   |  |   |   |   | (1  | )  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Accounts receivable securitization                                                |                                                  |                       |    |        |   |              |    |              |   |               |   |               |   |   |  |   |   |   |    |    
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Treasury stock activitynet                                                       |                                                  |                       |    |        |   |              |    |              |   |               |   |               |   |   |  |   |   |   |    |    
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Debt issuance costs                                                               |                                                  |                       |    |        |   |              |    |              |   |               |   |               |   |   |  |   |   |   |    |    
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Long-term debt                                                                    |                                                  |                       |    |        |   |              |    |              |   |               |   |               |   |   |  |   |   |   |    |    
|                                                                                  |                                                  |                       |     |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    
|                                                                                  | Net cash provided (used) in financing
activities |                       |     | 30     |   |              |     | (31          | ) |               |    |              |   |   |   |  |   |   |     | (1  | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Effect of exchange rate changes on cash                                           |                                                  |                       |    |        |   |              |    |              |   |               |    |               |   |   |   |   |   |   |    |    
|                                                                                  |                                                  |                       |     |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    
|Net (decrease) in cash and cash equivalents                                       |                                                  |                       | (17 | )      |   |              | (39 | )            |   |               |   |               |   |   |  |   |   |   | (56 | )  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash and cash equivalents at beginning
of year                                    |                                                  |                       | 35  |        |   |              | 87  |              |   |               | 1  |               |   |   |  |   |   |   | 123 |    
|                                                                                  |                                                  |                       |     |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    
|Cash and cash equivalents at end of year                                          |                                                  | $                     | 18  |        |   | $            | 48  |              |   | $             | 1  |               |   | $ |  |   |   | $ | 67  |    
|                                                                                  |                                                  |                       |     |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    

Twelve Weeks Ended March 24, 2001
(First Quarter)

|                                                     |                                         |                       |   |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |     |   |  |  | 
|---------------------------------------------------- | --------------------------------------- | --------------------- | - | ------ | - | ------------ | --- | ------------ | - | ------------- | -- | ------------- | - | - | - | - | - | - | --- | --- | - |  |  | 
|                                                     |                                         |                       |   |        |   |              |     | Guarantor    |   | Non-Guarantor |    |               |   |   |   |   |   |  
|                                                     |                                         |                       |   | Parent |   | Subsidiaries |     | Subsidiaries |   | Eliminations  |    | Consolidated 
|                                                     |                                         |                       |   |        |   |              |     |              |   |               |    |              
|                                                     |                                         |                       |   |        |   |              |     |              |   |               |    | (in millions) |   |   |   |   |   |   |     |    
|Net cash provided by operating activities            |                                         | $                     |  |        |   | $            | 7   |              |   | $             | 2  |               |   | $ |  |   |   | $ | 9   |    
|                                                    
|                                                    
|                                                    
|                                                    
|Cash flows from investing activities                 |                                         |                      
|                                                    
|                                                    
|                                                    
|                                                    
|Purchases
of carrier operating property, net         |                                         |                       |  |        |   |              | (17 | )            |   |               | (1 | )             |   |   |  |   |   |   | (18 | )  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                         | Business acquisitions |   |        |  |              |     |              |  |               |    |               |  |   |   |   |  |   |     |     |  | 
|                                                     |                                         |                       |   |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    
|                                                     | Net cash (used) in investing activities |                       |   |       |   |              |     | (17          | ) |               |    | (1            | ) |   |   |  |   |   |     | (18 | )
|                                                    
|                                                    
|                                                    
|                                                    
|Cash flows from financing activities                 |                                         |                      
|                                                    
|                                                    
|                                                    
|                                                    
|Dividends paid                                       |                                         |                       |  |        |   |              | (1  | )            |   |               |   |               |   |   |  |   |   |   | (1  | )  
|                                                    
|                                                    
|                                                    
|                                                    
|Treasury stock activitynet                          |                                         |                       |  |        |   |              | (1  | )            |   |               |   |               |   |   |  |   |   |   | (1  | )  
|                                                     |                                         |                       |   |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    
|                                                     | Net cash (used) in financing activities |                       |   |       |   |              |     | (2           | ) |               |    |              |   |   |   |  |   |   |     | (2  | )
|                                                    
|                                                    
|                                                    
|                                                    
|Effect of exchange rate changes on cash              |                                         |                       |  |        |   |              |    |              |   |               |   |               |   |   |  |   |   |   |    |    
|                                                     |                                         |                       |   |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    
|Net (decrease) increase in cash and cash
equivalents |                                         |                       |  |        |   |              | (12 | )            |   |               | 1  |               |   |   |  |   |   |   | (11 | )  
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents at
beginning of year       |                                         |                       |  |        |   |              | 61  |              |   |               | 4  |               |   |   |  |   |   |   | 65  |    
|                                                     |                                         |                       |   |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    
|Cash and cash equivalents at end of year             |                                         | $                     |  |        |   | $            | 49  |              |   | $             | 5  |               |   | $ |  |   |   | $ | 54  |    
|                                                     |                                         |                       |   |        |   |              |     |              |   |               |    |               |   |   |   |   |   |   |     |    

10



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##### Table of Contents






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

Consolidated results

The Condensed Statements of Consolidated Income and Consolidated Cash Flows for
the quarter ended March 23, 2002, include the results of operations for New
Penn Motor Express and Arnold Transportation Services (ATS), which were
acquired through the purchase of Arnold Industries (Arnold) on November 30,
2001. The Condensed Consolidated Balance Sheets at March 23, 2002 and December
31, 2001 also include New Penn and ATS.

Consolidated revenue was $637 million in the current quarter, a 2% decrease
from first quarter 2001. Operating expenses declined by 0.5%, and the
operating ratio increased to 99.4, a 1.6 point increase from last years 97.8.
The Companys consolidated operating income was $3.9 million, a decrease of
72.6% from last year. The net other expense of $6.8 million is primarily
composed of interest expense of $5.5 million arising from the financing
associated with the Arnold acquisition. The Company had a net loss of $1.7
million or $0.09 per share, for the first quarter ended March 23, 2002,
compared to income of $5.0 million, or $0.26 per share (diluted) in the same
quarter last year. There was one less working day in the current quarter
compared to first quarter, 2001.

The effective tax rate for the first quarter of 2002 was 39.8%, compared to the
42.5% rate in the first quarter of 2001. 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.

At the end of the quarter, cash and marketable securities amounted to $67
million, a $55 million decrease from year-end 2001. Major components of this
decrease were an $18 million tax payment arising from the sale of Arnolds
logistics operations (ARLO), $11 million for the purchase of Arnold shares
presented for redemption, net capital expenditures of $10 million, and a $9
million purchase of Company stock to fund restricted stock plans.

The Company remained debt free until the acquisition of Arnold Industries in
November 2001. The acquisition was financed with borrowings under a new credit
facility, proceeds from an accounts receivable securitization, the issuance of
$225 million in senior notes, and with available cash.

The credit facility consists of a five-year, $150 million senior revolving
credit facility with a $100 million sublimit for letters of credit, and a
five-year $175 million senior term loan. As of March 23, 2002, there were no
amounts outstanding under the revolving credit facility, but availability had
been reduced by $73 million as a result of the issuance of letters of credit,
primarily related to casualty claims. The term loan was drawn in full to
partially fund the acquisition of Arnold. After tax proceeds of $75 million
from the sale of ARLO were used to pay down borrowings on this facility. As of
March 23, 2002, $100 million was outstanding under the term loan facility, with
quarterly installments ranging from $2.5 million in 2002 to $7.5 million in
2006.

Under the accounts receivable securitization arrangement, Roadway Express can
finance up to $200 million of its domestic accounts receivable. Under this
arrangement, undivided interests in Roadway Express domestic accounts
receivable are sold through a special purpose entity (SPE), a wholly owned
subsidiary of the Company, without recourse, to an unrelated third party
financial conduit. At March 23, 2002, undivided interests in the accounts
receivable pool aggregating $100 million were sold under this arrangement,
leaving an additional $100 million available.

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

The Company also issued $225 million of 81/4% senior notes due December 1,
2008. Interest is due semi-annually June 1 and December 1, commencing June 1,
2002.

11



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##### Table of Contents



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

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 March 23, 2002, nothing was outstanding on this facility.

At March 23, 2002, the Company had outstanding debt of $325 million, $18
million of which is classified as current on the March 23, 2002 balance sheet.
Remaining borrowing capacity of $187 million was available under these
arrangements at the end of quarter 1, 2002.

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.

Management intends to promptly extinguish the outstanding debt as available
cash flows permit, which will position the Company for other qualified
acquisition opportunities.

Capital expenditures are financed primarily through internally generated funds.
Future expenditures are expected to be financed in a similar manner, except
for a planned replacement in 2002 of an additional 15% of Roadway Express
linehaul tractors through operating lease arrangements. In addition to these
leases, capital expenditures of $105 million are planned for 2002. Most of the
capital expenditures are designated for revenue equipment, facilities, and
information systems. Management believes that cash flows from operations and
current financing sources will be sufficient to support its working capital
needs, projected capital expenditures, dividends to shareholders, and
anticipated expenditures for other corporate purposes during 2002.

Under the terms of the Teamster contract, which extends through March 31, 2003,
wage and benefit increases approximating 2% were effective April 1, 2002. The
Company and the Teamsters have had ongoing discussions under auspices of the
current contract. Both parties recognize the benefits in the marketplace of an
early contractual agreement, and are making efforts to accomplish this task.
Our intent is to settle the new contract earlier than the previous contract,
which was settled seven weeks prior to the expiration date.

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 limits that have varied over the
years from $20,000 to $3,000,000. The Company and its TPAs 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 EPA from time to time identifying it as a
potentially responsible party (PRP) 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.

12



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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.

Roadway Express delivered 1.5 million tons of freight in the current quarter,
down 16.0% compared to the prior year quarter. Less-than-truckload (LTL) tons
were down 15.2% and truckload tons were down 19.2%. Tonnage declines were
attributable to reduced business levels in the national economy. Daily tonnage
levels in January 2002 were 18% below those in January 2001. February and
March 2002 tonnage levels improved 8% and 12% respectively over January 2002
levels. This improvement was better than the 2% and 4% increases in the
comparable periods of 2001. Net revenue per ton was $377.24, up 1.3% compared
to the same quarter last year. The industrys pricing environment continues to
remain stable, which mitigates some of the impact of the reduced tonnage. The
improvement in revenue per ton was due to the general rate increase in the
third quarter of 2001, continuing adjustments in contract rates, and freight
mix changes. A variable rate fuel surcharge averaged 0.8% of revenue in the
current quarter compared to 3.3% of revenue in the prior-year quarter. Without
the revenue reduction relating to the fuel surcharge, freight rates were up
3.8% compared to the first quarter of 2001. Total operating expenses were down
$83.2 million, or 13.1%, reflecting the reduced tonnage level. The operating
ratio deteriorated to 99.9, up from 97.8 in the same quarter last year.

Salaries, wages, and benefits as a percentage of revenue increased to 66.2%, up
from 63.4% in the first quarter of 2001. This increase is attributable to
administrative wages, driver wages, health care, and pension benefit costs.
Due to the business level reductions which started in the second half of 2000
when the economic downturn began, approximately 18% of the Companys hourly
work force is currently on layoff, and the number of exempt positions has been
reduced by 8%. Despite these significant reductions in staff, reduced business
levels, particularly in January, resulted in the increase in salaries, wages,
and benefits as a percentage of revenue. Roadway has not made radical changes
to the companys infrastructure that would cut customer service capability or
prevent it from taking advantage of an economic upturn.

All other operating expenses were down slightly as a percentage of revenue,
except for depreciation expense, which was up less than 1% of revenue. The
reduction of operating expenses in line with revenue reductions is the result
of cost controls and Roadways efforts to make its cost structure more
variable.

The following table is a comparison of operating statistics for the first
quarters of 2002 and 2001:

|                          |  |                    |           |                |  |   |           | 
|------------------------- |  | ------------------ | --------- | -------------- |  | - | --------- | 
|                          |  | Twelve Weeks Ended
|                          |  | (First Quarter)   
|                          |  | March 23, 2002     |           | March 24, 2001
|                          |  |                    |           |               
|LTL tons                  |  |                    | 1,205,865 |                |  |   | 1,422,423 | 
|                         
|                         
|                         
|                         
|Truckload tons            |  |                    | 261,511   |                |  |   | 323,690   | 
|                          |  |                    |           |                |  |   |           | 
|Total tons                |  |                    | 1,467,376 |                |  |   | 1,746,113 | 
|                         
|                         
|                         
|                         
|LTL shipments             |  |                    | 2,570,689 |                |  |   | 3,059,105 | 
|                         
|                         
|                         
|                         
|Truckload shipments       |  |                    | 32,102    |                |  |   | 39,239    | 
|                          |  |                    |           |                |  |   |           | 
|Total shipments           |  |                    | 2,602,791 |                |  |   | 3,098,344 | 
|                         
|                         
|                         
|                         
|Revenue per LTL ton       |  | $                  | 425.91    |                |  | $ | 421.15    | 
|                         
|                         
|                         
|                         
|Revenue per truckload ton |  | $                  | 152.83    |                |  | $ | 158.88    | 

13



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##### Table of Contents



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

New Penn Motor Express

Revenue was $45 million for the first quarter of 2002. Daily tonnage levels
were 12% lower than last years pre-acquisition business levels due to the
economic downturn. Following the February closing of a significant competitor
in the northeast, New Penns business returned to levels comparable to that of
a year ago. The operating ratio for New Penn for the quarter was 92.7, and
operating income was $3.3 million.

The following table shows the operating statistics for the first quarter of
2002:

|                          |  |                    |         | 
|------------------------- |  | ------------------ | ------- | 
|                          |  | Twelve Weeks Ended
|                          |  | (First Quarter)   
|                          |  | March 23, 2002    
|                          |  |                   
|LTL tons                  |  |                    | 177,264 | 
|                         
|                         
|                         
|                         
|Truckload tons            |  |                    | 23,913  | 
|                          |  |                    |         | 
|Total tons                |  |                    | 201,177 | 
|                         
|                         
|                         
|                         
|LTL shipments             |  |                    | 395,154 | 
|                         
|                         
|                         
|                         
|Truckload shipments       |  |                    | 3,024   | 
|                          |  |                    |         | 
|Total shipments           |  |                    | 398,178 | 
|                         
|                         
|                         
|                         
|Revenue per LTL ton       |  | $                  | 241.77  | 
|                         
|                         
|                         
|                         
|Revenue per truckload ton |  | $                  | 106.73  | 

ATS

Revenue during the quarter was $38 million, consistent with pre-acquisition
levels of last year. Operating income was $162 thousand, with an operating
ratio of 99.6.

The following table shows the operating statistics for the first quarter of
2002:

|                                             |  |   |       | 
|-------------------------------------------- |  | - | ----- | 
|Revenue per tractor per week                 |  | $ | 2,414 | 
|                                            
|                                            
|                                            
|                                            
|Average number of tractors during the period |  |   | 1,319 | 

14



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##### Table of Contents



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 intended to qualify for the safe
harbor from liability under the Private Securities Litigation Reform Act of
1995. All statements that are not historical statements of fact are
forward-looking statements for purposes of these provisions and are subject
to numerous risks and uncertainties that could cause Roadway Corporations
actual performance to differ from that expressed or implied in the
forward-looking statements. The risks and uncertainties include variable
factors such as capacity and rate levels in the motor freight industry, fuel
prices, the state of the national economy, the success of the Corporations
operating plans, and uncertainties concerning the impact recent terrorist
activities may have on the economy and the motor freight industry. These
forward-looking statements reflect managements analysis of future events only
as of the date of this Annual Report. Roadway Corporation undertakes no
obligation to publicly revise these forward-looking statements to reflect
events or circumstances that arise after the date hereof. In addition to the
disclosure contained herein, readers should carefully review risks and
uncertainties contained in other documents Roadway Corporation files from time
to time with the Securities and Exchange Commission.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company has interest rate swap agreements with major commercial banks to
fix the interest rate of its trailer leases from previous variable interest
rates principally based on LIBOR. The value of the leases upon which the
payments are based was not changed. The agreements, which expire from 2002 to
2004, fix the Companys interest costs at rates varying from 5.62% to 6.59% on
leases with a notional amount of $24 million, and prevent the Companys
earnings from being directly affected by changes in interest rates related to
its trailer leases. The fair value of the Companys interest rate swaps at
March 23, 2002 is a liability of approximately $447,000, net of income taxes,
and has been determined using proprietary financial models developed by the
lending institutions which 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.

Fuel price increases are 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.

15



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##### Table of Contents






PART II  OTHER INFORMATION




Item 4. Submission of Matters to a Vote of Security Holders

The Companys Annual Meeting of Shareholders was held on March 27, 2002. Seven
matters were voted upon at this meeting:



|1. |  | The election of seven members to the Board of Directors                                                       
|-- |  | --------------------------------------------------------------------------------------------------------------
|  
|2. |  | Approving an amendment to the Roadway Corporation Equity Ownership Plan                                       
|  
|3. |  | Approving the adoption of the Roadway Corporation Nonemployee Directors
Equity ownership Plan                
|  
|4. |  | Approving an amendment to the Roadway Corporation Nonemployee Directors
Stock Option Plan                    
|  
|5. |  | Approving an amendment to the Roadway Corporation Nonemployee Directors
Equity and Deferred Compensation Plan
|  
|6. |  | Approving an amendment to the Roadway Corporation 2001 Employee Stock
Purchase Plan                           
|  
|7. |  | Ratification of the appointment of Ernst & Young LLP as the independent
auditors.                             

There were 17,833,925 shares voted of the 19,386,938 shares outstanding and
entitled to vote. The following table shows the results of the vote.

|            |                    |  |            |            |         |  |           |  |  |  |         |         | 
|----------- | ------------------ |  | ---------- | ---------- | ------- |  | --------- |  |  |  | ------- | ------- | 
|            |                    |  | For        |            | Against |  | Abstain  
|Proposal #1 |                    |  |            |            |         |  |           |  |  |  |         |        
|            | Frank P. Doyle     |  | 17,214,623 |            |         |  |           |  |  |  | 619,302 |        
|           
|           
|           
|           
|            | John F. Fiedler    |  |            | 16,964,780 |         |  |           |  |  |  |         | 869,145 | 
|           
|           
|           
|           
|            | Dale F. Frey       |  |            | 17,218,207 |         |  |           |  |  |  |         | 615,718 | 
|           
|           
|           
|           
|            | Phillip J. Meek    |  |            | 17,059,506 |         |  |           |  |  |  |         | 774,419 | 
|           
|           
|           
|           
|            | Carl W. Schafer    |  |            | 17,026,119 |         |  |           |  |  |  |         | 807,806 | 
|           
|           
|           
|           
|            | Sarah Roush Werner |  |            | 17,312,315 |         |  |           |  |  |  |         | 521,610 | 
|           
|           
|           
|           
|            | Michael W. Wickham |  |            | 17,267,621 |         |  |           |  |  |  |         | 566,304 | 
|           
|           
|           
|           
|Proposal #2 |                    |  | 15,759,451 |            |         |  | 1,873,315 |  |  |  | 201,159 |        
|           
|           
|           
|           
|Proposal #3 |                    |  | 15,586,723 |            |         |  | 1,970,832 |  |  |  | 276,370 |        
|           
|           
|           
|           
|Proposal #4 |                    |  | 15,718,952 |            |         |  | 1,831,025 |  |  |  | 283,948 |        
|           
|           
|           
|           
|Proposal #5 |                    |  | 16,225,837 |            |         |  | 1,321,438 |  |  |  | 286,650 |        
|           
|           
|           
|           
|Proposal #6 |                    |  | 17,126,378 |            |         |  | 587,017   |  |  |  | 120,530 |        
|           
|           
|           
|           
|Proposal #7 |                    |  | 17,132,061 |            |         |  | 594,292   |  |  |  | 107,572 |        

16



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##### Table of Contents






Item 5. Other information

On January 24, 2002, the Board of Directors declared a cash dividend of $0.05
per share on the Companys common stock paid on March 1, 2002, to shareholders
of record on February 15, 2002.

On March 27, 2002, the Board of Directors declared a cash dividend of $0.05 per
share on the Companys common stock payable on June 3, 2002, to shareholders of
record on May 10, 2002.




Item 6. Exhibits and Reports on Form 8-K

|            |  |                                                                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                                                                                                                              
|            |  |                                                                                                                                                                                              
|99.2        |  | Condensed Consolidated Financial statements of Roadway Express, Inc.
and Subsidiaries for the quarters ended March 23, 2002 and March 24, 2001.                                              
|           
|           
|           
|           
|99.3        |  | Condensed Consolidated Financial statements of Roadway Next Day
Corporation for the quarter ended March 23, 2002 (Successor Period) and
the quarter ended March 31, 2001 (Predecessor Period)

(b)  List of the Current Reports on Form 8-K that were filed in the First
Quarter of 2002:

|                        |  |                                                                               |  | 
|----------------------- |  | ----------------------------------------------------------------------------- |  | 
|Filing Date of Form 8-K |  | Description                                                                  
|                        |  |                                                                              
|January 23, 2002        |  | Company press release regarding results for the year ended December 31, 2001.




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 EXPRESS, INC.                                                                                                      
|                 
|Date: May 2, 2002 |  | By: |  | /s/ J. Dawson Cunningham

J. Dawson Cunningham, Executive Vice President
and Chief Financial Officer
|                 
|Date: May 2, 2002 |  | By: |  | /s/ John G. Coleman

John G. Coleman, Controller                                                    

17