YRC Worldwide Reports Year-Over-Year and Continued Sequential Improvement in Fourth Quarter 2009 Results
- Successful Debt-for-Equity Exchange Significantly Enhances Balance Sheet
- Exchange Triggers Access to $160 Million in Additional Liquidity
- New Capital-Raise Discussions in Advanced Stages
OVERLAND PARK, Kan., Feb. 5 /PRNewswire-FirstCall/ -- YRC Worldwide Inc. (Nasdaq: YRCW) today reported year-over-year and continued sequential improvement in its fourth quarter 2009 results. For the quarter ending December 31, 2009 the company announced pre-tax income of $50 million that included a net gain on note exchanges of $194 million, lease termination charges of $8 million related to further optimization of the YRC network, and severance charges of $3 million due to further headcount reductions. For the full year 2009 the company reported a pre-tax loss of $899 million compared to a full-year pre-tax loss in 2008 of $1,147 million, including impairment charges of $1,023 million. For the fourth quarter of 2008 the company reported a pre-tax loss of $353 million which included impairment charges of $200 million.
“We continued our positive momentum in the fourth quarter as we executed on our comprehensive plan. During 2009 we accomplished the integration and right-sizing of the national networks, the turnaround of the regional business, cost reductions and process improvements, a self-help liquidity program, and, most recently, the successful note exchange to conclude the year,” stated Bill Zollars, Chairman and CEO of YRC Worldwide. “With our significantly improved balance sheet and additional liquidity resulting from our debt-for-equity exchange, we entered 2010 on a more solid financial base with good momentum.”
The company reported an operating loss of $95 million for the fourth quarter of 2009, a continued sequential improvement from the third quarter operating loss of $118 million, which included a net gain on property disposals of $11 million, following the sequential improvement reported for the second quarter, and a year-over-year improvement from the fourth quarter of 2008 operating loss of $335 million, which included impairment charges of $200 million.
The company has not provided after-tax earnings information in this release as it is currently completing its income tax provision. This delay is caused by the time required to complete a valuation analysis together with the underlying complexity of the accounting associated with the debt-for-equity exchange. The company plans to include after-tax information in its 2009 Form 10-K filed with the Securities and Exchange Commission.
New Capital
The company is executing on its plan to raise new capital sufficient to satisfy the remaining 2010 note obligations and is in advanced discussions with investors.
Liquidity Update
At December 31, 2009 the company reported cash and cash equivalents of $98 million and unused revolver reserves of $160 million within the company’s $950 million revolving credit facility. The company also reported usage of $223 million under its $400 million asset-backed securitization facility. In addition, the company has filed its 2009 estimated federal tax return using the newly available five-year carry-back legislation. YRC Worldwide expects to receive an $85 million cash refund during the first quarter of 2010 which the company would use for operating liquidity.
For the fourth quarter the company completed sale and financing leasebacks of $26 million and sold $27 million of surplus property. During 2009 the company completed sale and financing leasebacks of $332 million and sales of surplus property of $133 million, and deferred union pension contributions of $171 million, all as part of the company’s self-help liquidity plan.
Key Segment Information
Fourth quarter 2009 compared to the fourth quarter 2008:
- YRC National Transportation total shipments per day down 39.9% and total revenue per hundredweight, including fuel surcharge, down 4.2%.
- YRC Regional Transportation total shipments per day down 19.9% and total revenue per hundredweight, including fuel surcharge, down 7.7%.
“Our fourth quarter sequential improvement in operating results, despite seasonally lower revenues, resulted from our cost improvement actions, continued pricing discipline and initiatives to improve our revenue mix,” said Tim Wicks, President and Chief Operating Officer of YRC Worldwide. “Our improved performance, measured year-over-year and from a lower revenue base, is now becoming apparent in our operating results and we expect favorable year-over-year comparisons will accelerate during 2010.”
Additional statistical information is available on the company’s website at yrcw.com under Investors, Earnings Releases & Operating Statistics.
2010 Outlook
Economic forecasts generally indicate a stabilizing economy during 2010 with modest growth prospects. The company recently engaged an independent research firm to conduct a customer survey of transportation decision makers regarding their 2010 business outlook. Sixty-two percent said they were optimistic that their business volumes would increase this year. In addition, eighty-five percent said they intended to increase or maintain their YRC Worldwide shipments during 2010.
Review of Financial Results
YRC Worldwide Inc. will host a conference call for shareholders and the investment community today, Friday, February 5, 2010, beginning at 9:30am ET, 8:30am CT. The conference call will be open to listeners via the YRC Worldwide Internet site yrcw.com. An audio playback will be available after the call also via the YRC Worldwide web site.
Certain amounts presented in this release and the accompanying financial statements and data are preliminary and are subject to change in the company’s Annual Report on Form 10-K for the year-ended December 31, 2009 when it is filed with the Securities and Exchange Commission (“SEC”) based upon completion of the valuation analysis and accounting treatment associated with the debt-for-equity exchange, including (without limitation) changes to the income tax provision (benefit) and gain on debt redemption.
Forward-Looking Statements:
This news release and statements made on the conference call for shareholder and the investment community contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “plan,” “expects,” and similar expressions are intended to identify forward-looking statements.
The company’s expectations regarding its ability to raise new capital are only its expectations regarding such matter. Whether the company is able to raise new capital is dependent upon the company reaching agreement with interested investors and closing such transaction on negotiated terms and conditions, including (without limitation) any closing conditions that investors may require.
The company’s expectations regarding its receipt of a federal income tax refund and the timing of receiving a refund are only its expectations regarding such matters. The actual federal income tax refund received by the company, if any, and the timing of receiving a refund could differ based on a number of factors, including (among others) whether the IRS challenges the company’s refund claim or any other tax positions that the company has taken and the timing of the IRS’s review, approval and payment of the company’s refund claim. The company’s refund claim was based on its estimated 2009 net operating loss (“NOL”). The company will adjust the refund claim based on its actual 2009 NOL when it files its final Federal income tax return for the 2009 tax year, which it expects to file with the IRS during the third quarter of 2010. If the estimated 2009 NOL was overstated, the company will have to repay a portion of any refund it receives. If the estimated 2009 NOL was understated, the company will file for an additional refund claim.
It is important to note that the company’s actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including (among others) inflation, inclement weather, price and availability of fuel, sudden changes in the cost of fuel or the index upon which the company bases its fuel surcharge, competitor pricing activity, expense volatility, including (without limitation) expense volatility due to changes in rail service or pricing for rail service, ability to capture cost reductions, changes in equity and debt markets, a downturn in general or regional economic activity, effects of a terrorist attack, labor relations, including (without limitation), the impact of work rules, work stoppages, strikes or other disruptions, any obligations to multi-employer health, welfare and pension plans, wage requirements and employee satisfaction, and the risk factors that are from time to time included in the company’s reports filed with the SEC, including the company’s Annual Report on Form 10-K for the year ended December 31, 2008.
YRC Worldwide Inc., a Fortune 500 company headquartered in Overland Park, Kan., is one of the largest transportation service providers in the world and the holding company for a portfolio of successful brands including YRC, YRC Reimer, YRC Glen Moore, YRC Logistics, New Penn, Holland and Reddaway. YRC Worldwide has the largest, most comprehensive network in North America, with local, regional, national and international capabilities. Through its team of experienced service professionals, YRC Worldwide offers industry-leading expertise in heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence. Please visit yrcw.com for more information.
Investor Contact: |
Paul Liljegren |
Media Contact: |
Suzanne Dawson |
|
YRC Worldwide Inc. |
Linden Alschuler & Kaplan |
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913.696.6108 |
212.329.1420 |
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CONSOLIDATED BALANCE SHEETS
YRC Worldwide Inc. and Subsidiaries
(Amounts in thousands)
December 31, December 31,
2009 2008
---- ----
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $97,788 $325,349
Accounts receivable, net 517,625 837,055
Prepaid expenses and other * 264,718 298,101
------- -------
Total current assets 880,131 1,460,505
------- ---------
PROPERTY AND EQUIPMENT:
Cost 3,588,699 3,977,881
Less - accumulated depreciation 1,744,990 1,776,904
--------- ---------
Net property and equipment 1,843,709 2,200,977
--------- ---------
OTHER ASSETS:
Intangibles, net 163,544 184,769
Other assets 173,353 119,862
------- -------
Total assets $3,060,737 $3,966,113
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $198,725 $333,910
Wages, vacations, and employees'
benefits 216,074 356,410
Other current and accrued
liabilities * 410,521 489,994
Current maturities of long-term debt 242,416 562,321
------- -------
Total current liabilities 1,067,736 1,742,635
--------- ---------
OTHER LIABILITIES:
Long-term debt, less current portion 890,493 787,415
Deferred income taxes, net * 33,169 242,663
Pension and post retirement 351,861 370,031
Claims and other liabilities 425,776 341,918
SHAREHOLDERS' EQUITY:
Total shareholders' equity * 291,702 481,451
------- -------
Total liabilities and
shareholders' equity $3,060,737 $3,966,113
========== ==========
* - These amounts are subject to change when the Company completes its
valuation analysis and accounting treatment associated with the
debt-for-equity exchange. Final amounts will be included in the Company's
Annual Report on Form 10-K when it is filed with the SEC.
STATEMENTS OF CONSOLIDATED OPERATIONS
YRC Worldwide Inc. and Subsidiaries
For the Three and Twelve Months Ended December 31
(Amounts in thousands)
(Unaudited)
Three Months Twelve Months
------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
OPERATING REVENUE $1,145,565 $1,928,823 $5,282,778 $8,940,401
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Salaries, wages
and employees'
benefits 694,819 1,259,414 3,709,702 5,268,457
Operating expenses
and supplies 275,519 420,508 1,249,191 1,991,446
Purchased
transportation 143,615 235,815 646,685 1,075,286
Depreciation and
amortization 63,052 69,735 255,212 264,291
Other operating
expenses 63,592 88,511 324,481 410,754
(Gains) losses on
property disposals,
net 400 (10,156) (10,155) (19,083)
Impairment charges - 200,312 - 1,023,376
--- ------- --- ---------
Total operating
expenses 1,240,997 2,264,139 6,175,116 10,014,527
--------- --------- --------- ----------
OPERATING INCOME
(LOSS) (95,432) (335,316) (892,338) (1,074,126)
------- -------- -------- ----------
NONOPERATING (INCOME)
EXPENSES:
Interest expense 46,850 21,676 161,923 80,999
Equity investment
impairment - - 30,374 -
Gain on debt
redemption, net * (193,872) (2,400) (193,872) (2,400)
Other, net 1,790 (1,309) 8,329 (6,171)
----- ------ ----- ------
Nonoperating
(income) expenses,
net (145,232) 17,967 6,754 72,428
-------- ------ ----- ------
INCOME (LOSS)
BEFORE INCOME TAXES $49,800 $(353,283) $(899,092) $(1,146,554)
======= ========= ========= ===========
* - These amounts are subject to change when the Company completes its
valuation analysis and accounting treatment associated with the
debt-for-equity exchange. Final amounts will be included in the Company's
Annual Report on Form 10-K when it is filed with the SEC.
CONSOLIDATED CASH FLOW DATA
YRC Worldwide Inc. and Subsidiaries
For the Twelve Months Ended December 31
(Amounts in thousands)
(Unaudited)
2009 2008
---- ----
OPERATING ACTIVITIES:
Income (loss) before income taxes * $(899,092) $(1,146,554)
Noncash items included in income (loss)
before income taxes:
Depreciation and amortization 255,212 264,291
Stock compensation expense 31,290 10,499
Curtailment gain, net - (88,690)
Gain on debt redemption, net * (193,872) (2,400)
Equity investment impairment 30,374 -
Impairment charges - 1,023,376
Gains on property disposals, net (10,155) (19,115)
Amortization of deferred debt costs 29,120 4,305
Other noncash items, net 9,659 (14,317)
Changes in assets and liabilities, net:
Accounts receivable 312,024 236,860
Accounts payable (147,087) (53,904)
Other operating assets * 95,227 44,091
Other operating liabilities * 102,970 (38,622)
------- -------
Net cash (used in) provided by operating
activities (384,330) 219,820
-------- -------
INVESTING ACTIVITIES:
Acquisition of property and equipment (37,292) (162,276)
Proceeds from disposal of property and
equipment 133,061 127,590
Proceeds from disposition of affiliate 31,948 -
Investment in affiliate - (46,133)
Other 6,363 (6,115)
----- ------
Net cash provided by (used in) investing
activities 134,080 (86,934)
------- -------
FINANCING ACTIVITIES:
Asset backed securitization borrowings
(payments), net (715) (33,000)
Issuance of long-term debt 331,542 510,400
Repayment of long-term debt (247,285) (331,816)
Debt issuance costs (60,853) (11,404)
Proceeds from exercise of stock options - 50
--- ---
Net cash provided by financing activities 22,689 134,230
------ -------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (227,561) 267,116
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 325,349 58,233
------- ------
CASH AND CASH EQUIVALENTS, END OF PERIOD $97,788 $325,349
======= ========
SUPPLEMENTAL CASH FLOW INFORMATION
Pension contribution deferral transfer to
debt $171,351 $-
Debt for equity exchange $463,063 $-
* - These amounts are subject to change when the Company completes its
valuation analysis and accounting treatment associated with the
debt-for-equity exchange. Final amounts will be included in the Company's
Annual Report on Form 10-K when it is filed with the SEC.
SUPPLEMENTAL FINANCIAL INFORMATION
YRC Worldwide Inc. and Subsidiaries
For the Three and Twelve Months Ended December 31
(Amounts in thousands)
(Unaudited)
Three Months
------------
2009 2008 % change
---- ---- --------
Operating revenue:
YRC National
Transportation $743,653 $1,358,518 (45.3)
YRC Regional
Transportation 290,812 418,593 (30.5)
YRC Logistics 95,456 146,830 (35.0)
YRC Truckload 28,931 30,134 (4.0)
Eliminations (13,287) (25,252)
------- -------
Consolidated $1,145,565 $1,928,823 (40.6)
Operating income (loss):
YRC National
Transportation $(89,880) $(243,165)
YRC Regional
Transportation (4,502) (24,280)
YRC Logistics 612 (60,150)
YRC Truckload (2,646) (1,212)
Corporate and other 984 (6,509)
--- ------
Consolidated $(95,432) $(335,316)
Operating ratio:
YRC National
Transportation 112.1% 117.9%
YRC Regional
Transportation 101.5% 105.8%
YRC Logistics 99.4% 141.0%
YRC Truckload 109.1% 104.0%
Consolidated 108.3% 117.4%
(Gains) losses on property
disposals, net:
YRC National
Transportation $(1,085) $(10,260)
YRC Regional
Transportation 1,304 (550)
YRC Logistics 173 174
YRC Truckload 7 107
Corporate and other 1 373
--- ---
Consolidated $400 $(10,156)
Twelve Months
-------------
2009 2008 % change
---- ---- --------
Operating revenue:
YRC National
Transportation $3,489,305 $6,304,881 (44.7)
YRC Regional
Transportation 1,322,612 1,974,104 (33.0)
YRC Logistics 411,753 621,727 (33.8)
YRC Truckload 112,401 120,503 (6.7)
Eliminations (53,293) (80,814)
------- -------
Consolidated $5,282,778 $8,940,401 (40.9)
Operating income (loss):
YRC National
Transportation $(751,170) $(749,436)
YRC Regional
Transportation (126,680) (147,824)
YRC Logistics (4,494) (149,907)
YRC Truckload (8,679) (11,634)
Corporate and other (1,315) (15,325)
------ -------
Consolidated $(892,338) $(1,074,126)
Operating ratio:
YRC National
Transportation 121.5% 111.9%
YRC Regional
Transportation 109.6% 107.5%
YRC Logistics 101.1% 124.1%
YRC Truckload 107.7% 109.7%
Consolidated 116.9% 112.0%
(Gains) losses on property
disposals, net:
YRC National
Transportation $(12,472) $(11,472)
YRC Regional
Transportation 1,989 (3,394)
YRC Logistics 197 (5,952)
YRC Truckload 131 1,034
Corporate and other - 701
--- ---
Consolidated $(10,155) $(19,083)
SUPPLEMENTAL INFORMATION
December 31, December 31,
2009 2008
---- ----
Current debt:
Asset backed securitization
borrowings $146,285 $147,000
Lease financing obligations 2,671 -
Pension contribution
deferral obligation 20,500 -
Contingent convertible
senior notes 21,671 375,821
USF senior notes 45,289 -
Term loan - 38,500
Industrial development bonds 6,000 1,000
----- -----
Total current debt 242,416 562,321
Long-term debt, less
current portion:
Lease financing obligations 316,221 -
Pension contribution
deferral obligation 132,541 -
USF senior notes - 154,915
Term loan 112,612 111,500
Revolving credit facility 329,119 515,000
Industrial development bonds - 6,000
--- -----
Total long-term debt, less
current portion 890,493 787,415
Total debt $1,132,909 $1,349,736
========== ==========
SOURCE YRC Worldwide
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