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 quarterly period ended March 31, 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 0-12255
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YELLOW CORPORATION
------------------
(Exact name of registrant as specified in its charter)
Delaware 48-0948788
- ------------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10990 Roe Avenue, P.O. Box 7563, Overland Park, Kansas 66207
------------------------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
(913) 696-6100
--------------
(Registrant's telephone number, including area code)
No Changes
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 2002
----- -----------------------------
Common Stock, $1 Par Value 28,995,587 shares
YELLOW CORPORATION
INDEX
Item Page
- ---- ----
PART I
1. Financial Statements
Consolidated Balance Sheets -
March 31, 2002 and December 31, 2001 3
Statements of Consolidated Operations -
Three Months Ended March 31, 2002 and 2001 4
Statements of Consolidated Cash Flows -
Three Months Ended March 31, 2002 and 2001 5
Notes to Consolidated Financial Statements 6
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II
4. Submission of Matters to a Vote of Security Holders 16
6. Exhibits and Reports on Form 8-K 17
Signatures 21
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
Yellow Corporation and Subsidiaries
(Amounts in thousands except share data)
(Unaudited)
March 31, December 31,
2002 2001
----------- -----------
ASSETS
CURRENT ASSETS:
Cash $ 18,817 $ 20,694
Accounts receivable 203,286 208,267
Prepaid expenses and other 67,811 83,449
----------- -----------
Total current assets 289,914 312,410
----------- -----------
PROPERTY AND EQUIPMENT:
Cost 2,133,528 2,133,406
Less - Accumulated depreciation 1,272,729 1,267,834
----------- -----------
Net property and equipment 860,799 865,572
----------- -----------
GOODWILL AND OTHER ASSETS 32,449 107,795
----------- -----------
$ 1,183,162 $ 1,285,777
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and checks outstanding $ 98,455 $ 128,343
Wages and employees' benefits 138,310 130,806
Other current liabilities 117,006 103,778
Current maturities of long-term debt 5,929 6,281
----------- -----------
Total current liabilities 359,700 369,208
----------- -----------
OTHER LIABILITIES:
Long-term debt 188,679 213,745
Deferred income taxes 91,606 92,817
Claims, insurance and other 121,516 119,018
----------- -----------
Total other liabilities 401,801 425,580
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value 31,144 31,028
Capital surplus 43,867 41,689
Retained earnings 464,460 537,496
Accumulated other comprehensive income (loss) (4,838) (6,252)
Treasury stock (112,972) (112,972)
----------- -----------
Total shareholders' equity 421,661 490,989
----------- -----------
$ 1,183,162 $ 1,285,777
=========== ===========
The accompanying notes are an integral part of these statements.
3
STATEMENTS OF CONSOLIDATED OPERATIONS
Yellow Corporation and Subsidiaries
For the Three Months Ended March 31, 2002 and 2001
(Amounts in thousands except per share data)
(Unaudited)
2002 2001
--------- ---------
OPERATING REVENUE $ 762,340 $ 831,978
--------- ---------
OPERATING EXPENSES:
Salaries, wages and benefits 496,341 523,344
Operating expenses and supplies 110,895 143,930
Operating taxes and licenses 26,047 28,237
Claims and insurance 18,885 18,491
Depreciation and amortization 30,181 31,865
Purchased transportation 70,919 67,677
Unusual items 968 5,991
--------- ---------
Total operating expenses 754,236 819,535
--------- ---------
INCOME FROM OPERATIONS 8,104 12,443
--------- ---------
NONOPERATING (INCOME) EXPENSES:
Interest expense 3,903 4,065
Loss in Transportation.com - 2,536
Other, net 581 2,725
--------- ---------
Nonoperating expenses, net 4,484 9,326
--------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 3,620 3,117
INCOME TAX PROVISION 1,481 1,371
--------- ---------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 2,139 1,746
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR GOODWILL (75,175) -
--------- ---------
NET INCOME (LOSS) $ (73,036) $ 1,746
========= =========
AVERAGE SHARES OUTSTANDING-BASIC 24,934 24,036
========= =========
AVERAGE SHARES OUTSTANDING-DILUTED 25,259 24,399
========= =========
BASIC EARNINGS (LOSS) PER SHARE:
Income before cumulative effect of
accounting change $ 0.09 $ 0.07
Cumulative effect of change in
accounting for goodwill (3.02) -
--------- ---------
Net income $ (2.93) $ 0.07
--------- ---------
DILUTED EARNINGS (LOSS) PER SHARE:
Income before cumulative effect of
accounting change $ 0.08 $ 0.07
Cumulative effect of change in
accounting for goodwill (2.97) -
--------- ---------
Net income $ (2.89) $ 0.07
--------- ---------
The accompanying notes are an integral part of these statements.
4
STATEMENTS OF CONSOLIDATED CASH FLOWS
Yellow Corporation and Subsidiaries
For the Three Months Ended March 31, 2002 and 2001
(Amounts in thousands)
(Unaudited)
2002 2001
-------- --------
OPERATING ACTIVITIES:
Net cash from operating activities $ 48,737 $ 46,873
-------- --------
INVESTING ACTIVITIES:
Acquisition of property and equipment (28,419) (48,263)
Proceeds from disposal of property and equipment 1,184 975
Other - (2,500)
-------- --------
Net cash used in investing activities (27,235) (49,788)
-------- --------
FINANCING ACTIVITIES:
Proceeds from stock options and other, net 2,039 5,168
Increase (decrease) in long-term debt (25,418) 13,574
-------- --------
Net cash provided by (used in) financing activities (23,379) 18,742
-------- --------
NET INCREASE (DECREASE) IN CASH (1,877) 15,827
CASH, BEGINNING OF PERIOD 20,694 25,799
-------- --------
CASH, END OF PERIOD $ 18,817 $ 41,626
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (refunds), net $ (5,348) $ 2,491
======== ========
Interest paid $ 2,216 $ 2,591
======== ========
The accompanying notes are an integral part of these statements.
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Yellow Corporation and Subsidiaries
(unaudited)
1. The accompanying consolidated financial statements include the accounts of
Yellow Corporation and its wholly owned subsidiaries (the company).
The consolidated financial statements have been prepared by the company,
without audit by independent public accountants, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, all normal recurring adjustments necessary for a fair statement
of the results of operations for the interim periods included herein have
been made. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from these statements
pursuant to such rules and regulations. Accordingly, the accompanying
consolidated financial statements should be read in conjunction with the
consolidated financial statements included in the company's 2001 Annual
Report to Shareholders.
2. The company provides national, regional and international
less-than-truckload(LTL), truckload (TL), and non-asset based
transportation services through its three principal operating units and
captive technology company. Yellow Transportation, Inc. (Yellow
Transportation) is the largest subsidiary and provides LTL national,
regional and international transportation services for industrial,
commercial, retail and government markets. SCS Transportation, Inc. (SCS
Transportation) (formed as a holding company on January 1, 2002) provides
regional overnight and second-day LTL and selected TL transportation
services through two subsidiaries, Saia Motor Freight Line, Inc. (Saia) and
Jevic Transportation, Inc. (Jevic). Meridian IQ, LLC (Meridian IQ) provides
domestic and international forwarding, multi-modal brokerage and
transportation management services. Yellow Technologies, Inc. is a
subsidiary that provides information technology and other services to the
company and its subsidiaries. For the quarter ended March 31, 2002 Yellow
Transportation comprised approximately 74 percent of total revenue while
Saia comprised approximately 15 percent and Jevic approximately 9 percent
of total revenue.
6
3. In the third quarter of 2001, the company completed its acquisition of the
35 percent ownership in Meridian IQ (formerly Transportation.com) that it
did not previously own, from its venture capital partners. The cash
purchase price of approximately $14.3 million was allocated primarily to
goodwill ($10.3 million) and tax benefit receivable ($4.0 million). The
results of Meridian IQ have been consolidated in the company's financial
statements since September 2001. Prior to the acquisition date, the company
accounted for its 65 percent ownership interest under the equity method of
accounting in accordance with EITF 96-16 due to substantive participating
rights of the minority investors. Losses on the company's investment were
recorded in nonoperating expenses, until the acquisition date.
4. Unusual items include integration and business reorganization costs and
property gains and losses.
5. The company reports financial and descriptive information about its
reportable operating segments on a basis consistent with that used
internally for evaluating segment operating performance and allocating
resources to segments.
The company has four reportable segments, which are strategic business
units that offer different products and services. Yellow Transportation is
a unionized carrier that provides comprehensive national, regional and
international transportation services. Saia is a regional LTL carrier that
provides overnight and second-day service in twenty-one states and Puerto
Rico. On March 4, 2001, WestEx and Action Express were integrated into the
Saia segment. Comparative prior year segment data has been restated to
reflect the integration. Jevic is a hybrid regional heavy LTL and TL
carrier that provides overnight and second-day service primarily in the
Northeastern states. Meridian IQ is a segment that provides domestic and
international forwarding, multi-modal brokerage and transportation
management services.
The segments are managed separately because each requires different
operating, technology and marketing strategies. The company evaluates
performance primarily on operating income and return on capital.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies in the company's 2001 Annual
Report to Shareholders. Management fees and other corporate services are
charged to segments based on direct benefit received or allocated based on
revenues. The following table summarizes the company's operations by
business segment (in thousands):
7
Yellow Corporate Con-
Transportation Saia Jevic Meridian IQ and Other solidated
-------------- ---- ----- ----------- --------- ---------
As of Mar. 31, 2002
Identifiable assets $ 724,229 $ 278,778 $ 158,141 $ 23,006 $ (992) $1,183,162
As of December 31, 2001
Identifiable assets $ 757,484 $ 275,852 $ 231,520 $ 17,641 $ 3,280 $1,285,777
Three months ended Mar. 31, 2002
Operating revenue $ 564,643 $ 115,028 $ 68,510 $ 15,402 $ (1,243) $ 762,340
Income from operations 6,661 3,641 968 $ (1,516) (1,650) 8,104
Three months ended
Mar. 31, 2001
Operating revenue $ 635,965 $ 119,118 76,858 $ 452 $ (415) $ 831,978
Income from operations 13,602 (2,302) 2,305 $ (296) (866) 12,443
The first quarter 2001 segment data presented for Meridian IQ represents the
results of operations of other non-asset based services. As previously discussed
in note 3, Transportation.com was accounted for under the equity method of
accounting during the first quarter of 2001. Accordingly, nonoperating expenses
include losses from Transportation.com of $2.5 million in the first quarter of
2001. If Meridian IQ had been consolidated in the first quarter 2001 revenue
would have been $6.7 million and operating losses would have been $5.0 million.
6. The difference between average common shares outstanding used in the
computation of basic earnings per share and fully diluted earnings per
share is attributable to outstanding common stock options.
7. The company's comprehensive income includes net income, changes in the fair
value of interest rate swaps and foreign currency translation adjustments.
Comprehensive income for the first quarter ended March 31, 2002 and 2001
was $(71.6) million and $.03 million, respectively.
8. Net cash from operating activities includes increases to cash of $30.5
million in 2002 and $9.0 million in 2001 of net accounts receivable
securitization activity.
9. On June 30, 2001, the Financial Accounting Standards Board (FASB) issued
Statement No. 142, Goodwill and Other Intangible Assets, that was adopted
by the company on January 1, 2002. Statement No. 142 requires that upon
adoption and at least annually thereafter, the company assess goodwill
impairment by applying a fair value based test. With the adoption of
Statement No. 142, goodwill will no longer be subject to amortization
resulting in an increase in annualized operating income and net income of
$3.3 million.
8
At December 31, 2001 the Company had $100.6 million of goodwill on its
consolidated balance sheet, consisting primarily of $75.2 million remaining
from the acquisition of Jevic. In valuing the goodwill of Jevic the company
used an estimate of business unit's discounted cash flows in measuring
whether goodwill was recoverable. Based on this estimate, the company has
determined that 100 percent of the Jevic goodwill was impaired due to lower
business volumes, compounded by a weak economy, and an increasingly
competitive business environment. As a result, the company recorded a
non-cash charge of $75.2 million in the first quarter 2002, which was
reflected as a cumulative change in accounting principle.
The carrying amount of goodwill attributed to each reportable operating
segment with goodwill balances and changes follows (in thousands):
December 31,2001 Impairment March 31, 2002
Adjustment
-------------------------------------------------
Saia $ 14,796 $ - $ 14,796
Jevic 75,175 (75,175) -
Meridian IQ 10,600 - 10,600
-------------------------------------------------
$ 100,571 $(75,175) $ 25,396
In connection with adopting Statement No. 142, the company also reassessed
the useful lives and the classification of its identifiable intangible
assets and determined that they continue to be appropriate. The components
of amortized intangible assets follow (in thousands):
March 31, 2002 December 31, 2001
Gross Carrying Accumulated Gross Carrying Accumulated
Amount Amortization Amount Amortization
------------------------------------------------------------------------
Contract Based $2,238 $866 $2,238 $843
Technology Based 231 33 231 19
Other 42 6 42 3
------------------------------------------------------------------------
$2,511 $905 $2,511 $865
</Table>
Amortization expense for intangible assets during the first quarter ended
March 31,2002 was $39,755 and is estimated to be $422,505 for the full year
2002. Estimated amortization expense for the next five fiscal years follows
(in thousands):
Estimated
Amortization
Expense
----------------
2003 $ 423
2004 392
2005 297
2006 111
2007 -
9
Actual results of operations before cumulative effect of accounting change
for the first quarter 2002 and proforma results of operations for the first
quarter of 2001 had the company applied the nonamortization provisions of
Statement No. 142 in those periods follow (in thousands, except per share
amounts):
Three Months Ended
March 31,
2002 2001
--------------------------
Reported income before cumulative
effect of accounting change $2,139 $ 1,746
Add: Goodwill amortization - 740
--------------------------
Adjusted income before cumulative
effect of accounting change $2,139 $ 2,486
Basic earnings per share:
Reported income before cumulative
effect of accounting change $ .09 $ .07
Goodwill amortization - .03
--------------------------
Adjusted income before cumulative
effect of accounting change $ .09 $ .10
Diluted earnings per share:
Reported income before cumulative
effect of accounting change $ .08 $ .07
Goodwill amortization - .03
--------------------------
Adjusted income before cumulative
effect of accounting change $ .08 $ .10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
FINANCIAL CONDITION
March 31, 2002 Compared to December 31, 2001
The company's liquidity needs arise primarily from capital investment in new
equipment, land and structures and information technology, as well as funding
working capital requirements. To ensure short-term and longer-term liquidity,
the company maintains capacity under a bank credit agreement and an asset backed
securitization (ABS) agreement involving Yellow Transportation accounts
receivables. These facilities provide adequate capacity to fund working capital
and capital expenditure requirements.
10
At March 31, 2002, the company had outstanding borrowings of $60 million against
the $300 million bank credit agreement, which expires in April 2004. This
facility is also used to provide letters of credit ($116 million outstanding at
March 31, 2002) that reduce available capacity under the credit agreement. The
available unused capacity under the bank credit agreement was $124 million at
March 31, 2002. The company intends to refinance under this facility all other
debt maturing within one year and classified these amounts as long term on the
March 31, 2002 balance sheet.
In mid April 2002, the company completed the equity offering of 3.4 million
shares and a fifteen percent over-allotment of .5 million shares. The company
received $93.7 million of net proceeds from the offering and the funds will be
used to repay debt and invest in the company's growth strategy.
Working capital is impacted by changes in outstanding borrowings under the $200
million Yellow Transportation ABS agreement. Accounts receivable at March 31,
2002 and December 31, 2001 are reduced by $172.0 million and $141.5 million,
respectively, due to the sale of receivables under the ABS agreement.
Working capital decreased $13.0 million during the first three months of 2002.
This resulted in a working capital deficit of $69.8 million at March 31, 2002
compared to an $56.8 million working capital deficit at December 31, 2001.
Decreases in accounts receivable, excluding the effects of ABS transactions and
decreases in prepaids were largely offset by decreases in accounts payable and
checks outstanding. The company can operate with a deficit working capital
position because of rapid turnover of accounts receivable, effective cash
management and ready access to funding.
The pricing and availability of most forms of insurance, including surety
bonds, have recently been impacted by the events of September 11 and by several
well-publicized bankruptcies of large companies. The company expects continued
access to appropriate insurance coverage; however, the premiums paid for this
coverage have increase significantly. In 2001, insurance premiums represented
less than one-half percent of consolidated revenue. Given the size and financial
strength of the company, the additional premium expenses are not expected to
have a material adverse impact on financial position or results of operations.
The lack of availability of surety bonds has required the company to issue
additional letters of credit, which reduce available capacity under the
revolving credit facility.
Net capital expenditures for property and equipment during the first three
months of 2002 were $27.2 million.
11
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 2002 and 2001
Net income for the first quarter ended March 31, 2002 was $(73.0) million, or
$(2.89) per share, compared with net income of $1.7 million, or $.07 per share
in the 2001 first quarter. The first quarter of 2002 included a non-cash charge
of $75.2 million for the impairment of goodwill associated with the Jevic, which
was recorded as a cumulative effect of change in accounting for goodwill.
Consolidated operating revenue was $762 million, down 8.4 percent from $832
million in the 2001 first quarter. Consolidated operating income was $8.1
million, compared to $12.4 million in the prior year period. First quarter 2001
results included $6.0 million of unusual item costs, primarily related to the
integration of WestEx, Inc. and Action Express into Saia.
Yellow Transportation, the company's largest subsidiary, reported first quarter
operating income of $6.7 million down from $13.6 million in the 2001 first
quarter.
Yellow Transportation revenue for the first quarter was $565 million, down 9.8
percent on a per-day basis from $636 million in the prior year period. First
quarter revenue trends were negatively impacted primarily by lower volumes. The
2002 first quarter operating ratio was 98.8, compared with 97.9 a year earlier.
The lower revenue trends were partially offset by lower fuel product costs and
effective cost management.
Yellow Transportation first quarter LTL tonnage decreased by 7.2 percent on a
per-day basis and the number of LTL shipments decreased 7.8 percent on a per-day
basis. LTL revenue per hundred weight, excluding fuel surcharge, was up .1
percent over the 2001 first quarter.
Yellow Transportation is focused on a portfolio of services and in particular
the penetration of its customer base with premium services. Yellow
Transportation continues to have growth with premium services such as Exact
Express (time definite, guaranteed service offering) and Definite Delivery
(guarantee on Standard Ground service standards).
Meridian IQ was formed earlier this year, and formally launched in March, as the
Yellow platform for non-asset-based transportation services. These capabilities
include international and domestic freight forwarding services, multi-modal
brokerage services and transportation management solutions.
12
Meridian IQ operating revenue for the first quarter of 2002 was $15 million and
operating losses were $1.5 million, consistent with company expectations for
this newly formed entity.
Consolidated operating revenue for SCS Transportation was $184 million for the
first quarter of 2002, down 4.3 percent on a per-day basis from $196 million a
year ago. Operating income was $4.9 million compared to breakeven operating
income in the previous year. First quarter of 2001 operating income included
$5.4 million of unusual item costs related to the March 2001 integration of
WestEx, Inc. and Action Express into Saia. All prior period amounts for Saia
have been restated to reflect this merger.
At Saia, first quarter 2002 revenue was $115 million and operating income was
$3.6 million, compared with revenue of $119 million and operating loss of $2.3
million in the 2001 first quarter, which included $5.4 million of integration
costs. The 2002 first quarter operating ratio was 96.8, compared with 97.4
(exluding integration costs) in the year-earlier quarter. Saia LTL tonnage was
up 1.1 percent and LTL shipments were up 2.3 percent on a per-day basis over the
2001 first quarter. However, Saia revenue per hundred weight, excluding fuel
surcharge was down .9 percent over the prior period quarter due to changes in
customer mix and competitive factors.
Jevic reported first quarter 2002 revenue of $69 million and operating income of
$1.0 million. On a comparative basis, Jevic had first quarter 2001 revenue of
$77 million and operating income of $2.3 million. The 2002 first quarter
operating ratio for Jevic was 98.6, compared with 97.0 in the 2001 first
quarter. A combination of the slowing economy, mix changes and competitive
conditions continue to impact top line revenue and pricing continues to be
unfavorable though the percentage declines are narrowing from the prior year.
Jevic LTL tonnage was down 2.1 percent on a per-day basis over the 2001 first
quarter. Jevic LTL shipments decreased .9 percent on a per-day basis over the
2001 first quarter.
Both Saia and Jevic had effective cost controls in place to mitigate the
weakness in the economy and both maintained high levels of customer service.
Corporate and other business development expenses were $1.9 million in the 2002
first quarter, compared to $1.2 million in the first quarter of 2001.
13
Nonoperating expenses were $4.5 million in the first quarter of 2002 compared to
$9.3 million in the first quarter of 2001. The first quarter of 2001 had $2.5
million of Transportation.com business development costs and $2.1 million higher
ABS borrowing costs due to higher interest rates. The effective tax rate was
40.9 percent in the 2002 first quarter compared to 44.0 percent in the 2001
first quarter.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The company is exposed to a variety of market risks, including the effects of
interest rates, fuel prices and foreign currency exchange rates. To ensure
adequate funding through seasonal business cycles and minimize overall borrowing
costs, the company utilizes a variety of both fixed rate and variable rate
financial instruments with varying maturities. At March 31, 2002 approximately
66 percent of the company's debt and off balance sheet financing is at variable
rates with the balance at fixed rates. The company uses interest rate swaps to
hedge a portion of its exposure to variable interest rates. The company has
hedged approximately 25 percent of its variable debt.
The company's revenues and operating expenses, assets and liabilities of its
Canadian and Mexican subsidiaries are denominated in foreign currencies, thereby
creating exposures to changes in exchange rates, however the risks related to
foreign currency exchange rates are not material to the company's consolidated
financial position or results of operations.
The following table provides information about the company's financial
instruments as of March 31, 2002. The table presents principal cash flows (in
millions) and related weighted average interest rates by contractual maturity
dates. For interest rate swaps the table presents notional amounts (in millions)
and weighted average interest rates by contractual maturity. Weighted average
variable rates are based on the 30-day LIBOR rate.
Debt Instrument Information
There- Fair
2002 2003 2004 2005 2006 After Total Value
---------- ----------- ----------- ---------- --------- --------- -------- ---------
Fixed Rate Debt $ 22.1 $ 24.5 $ 16.3 $ 17.9 $ 8.7 $ 34.5 $ 124.0 $ 129.4
Average interest rate 7.34% 6.02% 6.78% 6.62% 6.79% 6.85%
Variable Rate Debt $ 5.7 $ 0.1 $ 60.2 $ 4.6 - - $ 70.6 $ 70.6
Average interest rate 2.52% 4.17% 4.10% 4.17% - -
Off Balance Sheet ABS $ 172.0 $ 172.0 $ 172.0
Average interest rate 1.95%
Interest Rate Swaps
Notional amount $ 5.7 $ 50.1 $ .2 $ 4.6 - - $ 60.6 $ 62.9
Ave. pay rate (fixed) 5.70% 6.06% 7.65% 7.65% N/A N/A
Ave. receive rate
(variable) 2.52% 1.99% 4.17% 4.17% N/A N/A
The company also maintained fuel inventories for use in normal operations at
March 31, 2002, which were not material to the company's financial position and
represented no significant market exposure.
Statements contained in, and preceding management's discussion and analysis that
are not purely historical are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including statements
regarding the company's expectations, hopes, beliefs and intentions on
strategies regarding the future. 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 but not
limited to inflation, labor relations, inclement weather, price and availability
of fuel, competitor pricing activity, expense volatility, changes in and
customer acceptance of new technology, changes in equity and debt markets and a
downturn in general or regional economic activity.
14
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting of Stockholders on April 18, 2002
(b) The following directors were elected with the indicated number of votes set
forth below.
For Withheld
--- --------
Cassandra C. Carr 21,283,634 20,848
Howard M. Dean 20,972,115 332,367
Dennis E. Foster 21,096,728 207,754
Richard C. Green, Jr. 21,227,794 76,688
John C. McKelvey 21,096,287 208,195
William L. Trubeck 21,281,922 22,560
Carl W. Vogt 21,096,269 208,213
William D. Zollars 21,283,560 20,922
(c) The proposal for the adoption of the 2002 Stock Option and Share Award Plan
was voted on and approved at the meeting by the following vote. For:
16,961,184, Against: 1,859,196
(d) The proposal for the Company's annual Cash Incentive Compensation, or
Bonus, Program was voted on and approved at the meeting by the following
vote. For: 18,226,018, Against: 580,675
(e) The proposal for the Company's Executive Performance Plan was voted on and
approved at the meeting by the following vote. For: 17,539,142, Against:
1,258,476
15
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Restricted Stock Agreements
(1) Donald G. Barger
(2) William F. Martin, Jr.
(3) Greg Reid
(4) William D. Zollars
(b) Reports on Form 8-K
January 29, 2002 - Yellow Corporation announced its adoption of a Rule
10B5-1 Trading Plan Option and potential impairment of Jevic goodwill under
FASB Statement of Financial Accounting Standards No. 142.
February 25, 2002 - Yellow Corporation announced adoption of FASB Statement
of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets", effective January 1, 2002. The Company has determined that 100
percent of the Jevic goodwill is impaired and will record a non-cash charge
of $75.2 million in the first quarter of 2002, which will be reflected as a
cumulative change in accounting principle.
April 8, 2002 - The Company issued a supplement to its proxy statement to
stockholders entitled to vote at the annual meeting scheduled for April 18,
2002, to indicate that, because of recent events involving Arthur Andersen,
the Company's independent public accountants, the Audit Committee of the
Board of Directors is reconsidering whether to appoint Arthur Andersen as
the Company's independent public accountants for 2002.
This supplement to the proxy statement accordingly indicates that the Board
of Directors has removed item 5, the proposal to approve appointment of
independent public accountants, from the agenda for the annual meeting of
stockholders and that no stockholder votes are required or requested with
respect to the approval of Arthur Andersen as the Company's independent
public accountants for the 2002 fiscal year.
16
Yellow Transportation, Inc.
Financial Information
For the Three Months Ended March 31, 2002 and 2001
(Amounts in thousands)
First Quarter
-------------
2002 2001 %
--------------------------------------
Operating revenue 564,643 635,965 (11.2)
Operating income -
Before unusual items 7,231 14,228
Operating income - as reported 6,661 13,601
Operating ratio -
Before unusual items 98.7 97.8
Operating ratio - as reported 98.8 97.9
Total assets at March 31 724,229 708,448
First Quarter
---------------------
First Quarter Amount/Workday
-------------------- ---------------------
2002 2001 % 2002 2001 %
-----------------------------------------------------------------------------------
Workdays 63 64
Financial statement LTL 526,659 589,056 (10.6) 8,359.7 9,204.0 (9.2)
Revenue TL 40,469 47,120 (14.1) 642.4 736.3 (12.8)
Other (2,485) (211) NM (39.4) (3.3) NM
Total 564,643 635,965 (11.2) 8,962.7 9,937.0 (9.8)
Revenue excluding LTL 526,659 589,056 (10.6) 8,359.7 9,204.0 (9.2)
Revenue recognition TL 40,469 47,120 (14.1) 642.4 736.2 (12.8)
Adjustment Other (5) 414 NM (0.1) 6.5 NM
Total 567,123 636,590 (10.9) 9,002.0 9,946.7 (9.5)
Tonnage LTL 1,401 1,533 (8.6) 22.23 23.96 (7.2)
TL 267 297 (9.9) 4.24 4.63 (8.5)
Total 1,668 1,830 (8.9) 26.47 28.59 (7.4)
Shipments LTL 2,814 3,099 (9.2) 44.66 48.43 (7.8)
TL 37 41 (9.5) 0.59 0.64 (8.0)
Total 2,851 3,140 (9.2) 45.25 49.07 (7.8)
Revenue/cwt. LTL 18.80 19.21 (2.1)
TL 7.57 7.94 (4.7)
Total 17.00 17.38 (2.2)
Revenue/cwt.
(excl fuel surcharge) LTL 18.66 18.64 0.1
Revenue/shipment LTL 187.18 190.07 (1.5)
TL 1,098.85 1,158.20 (5.1)
Total 198.96 202.61 (1.8)
17
Saia Motor Freight Line, Inc.
Financial Information
For the Three Months Ended March 31, 2002 and 2001
(Amounts in thousands)
First Quarter
-------------------------
2002 2001 %
-------------------------------------
Operating revenue 115,028 119,118 (3.4)
Operating income -
Before unusual items 3,840 3,050
Operating income - as reported 3,641 (2,302) *
Operating ratio -
Before unusual items 96.7 97.4
Operating ratio - as reported 96.8 101.9
Total assets at March 31 278,778 296,866
First Quarter
---------------------------
First Quarter Amount/Workday
----------------------- ---------------------------
2002 2001 % 2002 2001 %
-------------------------------------------------------------------------------------
Workdays 63 64
Financial statement LTL 105,230 108,895 (3.4) 1,670.3 1,701.5 (1.8)
Revenue TL 9,798 10,223 (4.2) 155.5 159.7 (2.6)
Total 115,028 119,118 (3.4) 1,825.8 1,861.2 (1.9)
Revenue excluding LTL 105,378 109,190 (3.5) 1,672.7 1,706.1 (2.0)
Revenue recognition TL 9,812 10,251 (4.3) 155.7 160.2 (2.8)
Adjustment Total 115,190 119,441 (3.6) 1,828.4 1,866.3 (2.0)
Tonnage LTL 545 548 (0.5) 8.65 8.56 1.1
TL 134 154 (12.5) 2.13 2.40 (11.1)
Total 679 702 (3.1) 10.78 10.96 (1.6)
Shipments LTL 1,027 1,020 0.7 16.31 15.94 2.3
TL 16 17 (5.6) 0.26 0.27 (4.1)
Total 1,043 1,037 0.6 16.57 16.21 2.2
Revenue/cwt. LTL 9.67 9.97 (3.0)
TL 3.65 3.33 9.4
Total 8.48 8.52 (0.4)
Revenue/cwt.
(excl fuel surcharge) LTL 9.56 9.64 (0.9)
Revenue/shipment LTL 102.58 107.04 (4.2)
TL 609.90 601.80 1.3
Total 110.40 115.17 (4.1)
* - Includes $5,385,000 in one-time integration costs associated with the
merger of WestEx and Action into Saia.
18
Jevic Transportation, Inc.
Financial Information
For the Three Months Ended March 31, 2002 and 2001
(Amounts in thousands)
First Quarter
---------------------------
2002 2001 %
----------------------------------------
Operating revenue 68,510 76,858 (10.9)
Operating income -
Before unusual items 1,033 2,318
Operating income - as reported 968 2,305
Operating ratio -
Before unusual items 98.5 97.0
Operating ratio - as reported 98.6 97.0
Total assets at March 31 158,141 252,589
First Quarter
First Quarter Amount/Workday
---------------------------- ---------------------------
2002 2001 % 2002 2001 %
----------------------------------------------------------------------------------------
Workdays 62 64
Financial statement LTL 45,002 49,082 (8.3) 725.8 766.9 (5.4)
Revenue TL 22,495 26,268 (14.4) 362.8 410.4 (11.6)
Other 1,013 1,508 (32.8) 16.3 23.6 (30.7)
Total 68,510 76,858 (10.9) 1,104.9 1,200.9 (8.0)
Revenue excluding LTL 45,049 49,245 (8.5) 726.6 769.5 (5.6)
Revenue recognition TL 22,521 26,356 (14.6) 363.2 411.8 (11.8)
Adjustment Other 1,013 1,508 (32.8) 16.3 23.6 (30.7)
Total 68,583 77,109 (11.1) 1,106.1 1,204.9 (8.2)
Tonnage LTL 249 262 (5.2) 4.02 4.10 (2.1)
TL 295 330 (10.7) 4.76 5.16 (7.8)
Total 544 592 (8.2) 8.78 9.26 (5.3)
Shipments LTL 209 217 (4.0) 3.36 3.39 (0.9)
TL 33 36 (8.4) 0.54 0.57 (5.4)
Total 242 253 (4.6) 3.90 3.96 (1.5)
Revenue/cwt. LTL 9.05 9.38 (3.6)
TL 3.81 3.99 (4.3)
Total 6.21 6.37 (2.6)
Revenue/cwt. LTL 8.98 9.08 (1.1)
(excl fuel surcharge) TL 3.79 3.86 (1.9)
Revenue/shipment LTL 216.03 226.72 (4.7)
TL 673.07 721.79 (6.7)
Total 279.23 297.97 (6.3)
19
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.
YELLOW CORPORATION
--------------------------------
Registrant
Date: May 14, 2002 /s/ William D. Zollars
----------------- --------------------------------
William D. Zollars
Chairman of the Board of
Directors, President & Chief
Executive Officer
Date: May 14, 2002 /s/ Donald G. Barger, Jr.
----------------- --------------------------------
Donald G. Barger, Jr.
Senior Vice President
& Chief Financial Officer
20