EXHIBIT 99.1
10990 Roe Avenue
Overland Park, KS 66211-1213
(913) 696-6100
(913) 696-6116 FAX
NEWS RELEASE
YELLOW CORPORATION
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OCTOBER 23, 2003
FOR IMMEDIATE RELEASE
YELLOW CORPORATION MORE THAN DOUBLES THIRD QUARTER 2003 EPS
>> YELLOW TRANSPORTATION OPERATING INCOME UP 86% OVER 3RD QUARTER 2002;
BEST QUARTERLY OPERATING INCOME SINCE 1988, AND SECOND BEST EVER
>> MERIDIAN IQ REVENUE GROWTH OF 56 PERCENT OVER 3RD QUARTER 2002;
ACQUISITION OF GPS US ASSETS
>> EXACT EXPRESS, AN EXPEDITED SERVICE, GROWS REVENUE BY 65 PERCENT OVER
3RD QUARTER 2002
OVERLAND PARK, KAN. --- Yellow Corporation (NASDAQ: YELL) today reported
third quarter 2003 income of $17.4 million, up substantially from $7.3
million in the third quarter of 2002. Third quarter 2003 results were
$.75 per share, excluding $7.8 million of pre-tax costs, or $.17 per
share, primarily associated with the proposed acquisition of Roadway
Corporation (NASDAQ: ROAD). Including these costs, third quarter 2003
earnings per share was $.58. Third quarter 2002 results from continuing
operations were $.37 per share, excluding pre-tax costs of $5.7 million,
or $.12 per share, related primarily to the spin-off of SCS
Transportation, Inc. Including these costs, third quarter 2002 earnings
per share from continuing operations was $.25.
Yellow Corporation reported the following consolidated results for the
third quarter of 2003:
- Revenue of $771 million, up 12.9% from $682 million in third quarter
2002
- Operating income of $37.8 million, up almost three times from $13.5
million in third quarter 2002
"We experienced improving economic conditions during the third quarter,"
said Bill Zollars, Chairman, President and CEO of Yellow Corporation. "We
grew consolidated revenue by almost 13 percent, even though we had a
challenging comparison to last year due to a September 2002 business
surge created by the closure of Consolidated Freightways (CF). Revenue
growth came from increased business volumes, effective yield management
and growth in premium services. Exact Express, our expedited,
time-definite service, continues to grow rapidly, posting a 65% revenue
improvement compared to third quarter 2002."
"By leveraging our cost structure and premium services, operating income
for the quarter more than doubled from the third quarter of 2002,"
Zollars stated.
For the nine months ended September 30, 2003, Yellow Corporation reported
the following consolidated results:
- Diluted earnings per share from continuing operations of $1.39
compared to $.35 in the same period of 2002. Excluding acquisition and
spin-off costs, results were $1.56 per share compared to $.51 per
share in the same period of 2002.
- Revenue of $2.17 billion, up 13.5% from $1.91 billion in the same
period of 2002
- Operating income of $81.9 million, almost four times the $22.3 million
earned in the same period of 2002. Excluding acquisition and spin-off
costs, operating income was $83.2 million, compared to $29.8 million
earned in the same period of 2002.
Yellow Corporation 2003 Third Quarter Financial Results // Page Two
YELLOW TRANSPORTATION
Yellow Transportation third quarter 2003 highlights include:
- Revenue of $738 million, up 11.5% from $662 million in third quarter
2002
- Operating income of $42.8 million, the most profitable quarter in 15
years, up from $23.0 million in third quarter 2002.
- Operating ratio of 94.2%, a 2.3 percentage point improvement from the
third quarter 2002
"Yellow Transportation continues to excel at yield management, cost
management and service quality," said Zollars. "Maintaining the right
balance between business volumes and yield resulted in significant profit
improvement."
Less-than-truckload (LTL) revenue per day, for the third quarter of 2003,
was up 12.1% over the third quarter of 2002, primarily reflecting a 7.3%
increase in LTL tonnage per day and a 4.5% improvement in LTL revenue per
hundred weight (3.7% excluding fuel surcharge). Third quarter 2003
business volumes benefited from an improving economy, the September 2002
closure of CF and the continued growth of premium services, such as Exact
Express and Definite Delivery.
For the nine months ended September 30, 2003, Yellow Transportation
reported the following:
- Revenue of $2.09 billion, up 12.7% from $1.86 billion in the same
period of 2002
- Operating income of $98.7 million, up from $40.2 million in the same
period of 2002
- Operating ratio of 95.3% compared to 97.8% in the same period of 2002
- Operating income was up $58 million, while revenue was up $235 million
from the same period of 2002, resulting in 25% incremental margins
MERIDIAN IQ
Meridian IQ reported the following third quarter 2003 results:
- Revenue of $33 million, up 56% from $22 million in third quarter 2002
- Operating income of $0.6 million, excluding costs related to the
acquisition of certain domestic assets of global logistics service
provider GPS Logistics (GPS). Including these costs, operating income
was $0.2 million compared to breakeven results in third quarter 2002.
Approximately half of the third quarter revenue improvement came from
organic growth at existing service offerings, with the remainder from the
recent GPS acquisition.
"Meridian IQ continues to show significant progress. We expect continued
revenue growth and improved profitability in the coming quarters," said
Zollars.
For the nine months ended September 30, 2003, Meridian IQ reported the
following results:
- Revenue of $79 million, up 41% from $56 million in the same period of
2002
- Operating loss of $0.7 million compared to a $1.9 million loss in the
same period of 2002
Yellow Corporation 2003 Third Quarter Financial Results // Page Three
OUTLOOK
"As a result of the strong performance at Yellow Transportation and
Meridian IQ, we expect fourth quarter earnings to be between $.70 and
$.80 per share, excluding costs related to the pending Roadway
acquisition. For the full year 2003, we expect earnings to be between
$2.25 to $2.35 per share, consistent with our previous guidance," Zollars
stated. "We are assuming that current economic activity, seasonally
adjusted, will continue throughout the fourth quarter. With our
significant operating leverage, we are well positioned to take advantage
of improving economic conditions."
UPDATE ON PENDING ROADWAY TRANSACTION
Since the July 8, 2003 announcement of the acquisition of Roadway, Yellow
has provided updates on the progress of the transaction. Below are recent
highlights:
October 17 Yellow and Roadway certify responses to Department of
Justice second requests
October 17 Special meetings of stockholders announced; to be held
December 9
October 16 Record date for stockholders
September 17 Yellow quantifies third quarter costs of Roadway
acquisition
August 18 Yellow and Roadway receive second requests from the
Department of Justice
August 18 Yellow completes offering of $250 million 5% contingent
convertible senior notes
Pending stockholder approvals, receipt of all regulatory clearances and
the successful completion of financing, the Roadway transaction could
close as early as December 11, 2003.
REVIEW OF FINANCIAL RESULTS
A teleconference review of Yellow Corporation third quarter 2003
financial results has been scheduled for Friday, October 24, 2003,
beginning at 9:30 a.m. Eastern, 8:30 a.m. Central. Hosting the conference
call will be: Bill Zollars, Chairman, President and CEO of Yellow
Corporation; Don Barger, CFO of Yellow Corporation; James Welch,
President of Yellow Transportation; and Jim Ritchie, President of
Meridian IQ.
To participate, please dial 1-888-609-3912 and allow five to ten minutes
prior to the start of the call. The conference call will be webcast live
via StreetEvents at www.streetevents.com and via the Yellow Corporation
Internet site www.yellowcorp.com. An audio playback will be available
until October 31, 2003 by calling 1-800-642-1687 then dialing the access
code 2845435. In addition, an audio playback will be available for 30
days via the StreetEvents and Yellow Corporation web sites.
Yellow Corporation 2003 Third Quarter Financial Results // Page Four
This news release (and oral statements made regarding the subjects of
this release, including on the conference call announced herein) 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 "expect," "believe,"
"intend," and similar expressions are intended to identify
forward-looking statements. 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
(without limitation), labor relations, inclement weather, price and
availability of fuel, competitor pricing activity, expense volatility,
changes in and customer acceptance of new technology and a downturn in
general or regional economic activity.
The per share and operating income amounts included in this news release
that exclude property disposals, acquisition, spin-off and reorganization
charges are representative of our ongoing business in the current period.
Management does not consider these items when evaluating base financial
performance and results in the current period.
Yellow Corporation, a Fortune 500 company, is a holding company that
through wholly owned operating subsidiaries offers its customers a wide
range of asset and non-asset-based transportation services integrated by
technology. Its largest subsidiary, Yellow Transportation, offers a full
range of regional, national and international services for the movement
of industrial, commercial and retail goods. Meridian IQ is a non-asset
global transportation management company that plans and coordinates the
movement of goods worldwide. Yellow Technologies provides innovative
technology solutions and services exclusively for Yellow Corporation
companies. Headquartered in Overland Park, Kansas, Yellow Corporation
employs approximately 23,000 people.
Analyst Contact: Stephen Bruffett
Yellow Corporation
913-696-6108
steve.bruffett@yellowcorp.com
Media Contact: Suzanne Dawson
Linden Alschuler & Kaplan
212-329-1420
sdawson@lakpr.com
CONSOLIDATED BALANCE SHEETS
Yellow Corporation and Subsidiaries
(Amounts in thousands except per share data)
(Unaudited)
September 30, December 31,
2003 2002
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 226,514 $ 28,714
Accounts receivable 372,761 327,913
Prepaid expenses and other 30,856 68,726
----------- -----------
Total current assets 630,131 425,353
----------- -----------
Property and equipment, net of accumulated
depreciation of $1,137,938 and $1,114,120 579,384 564,976
Goodwill and other assets 65,708 52,656
----------- -----------
Total assets $ 1,275,223 $ 1,042,985
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 96,753 $ 114,989
Wages, vacations, and employees' benefits 166,448 159,998
Other current and accrued liabilities 127,723 101,111
ABS borrowings 50,000 50,000
Current maturities of long-term debt 5,008 24,261
----------- -----------
Total current liabilities 445,932 450,359
----------- -----------
OTHER LIABILITIES:
Long-term debt, less current portion 263,963 50,024
Claims and other liabilities 161,793 182,644
----------- -----------
Total other liabilities 425,756 232,668
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value per share 31,947 31,825
Capital surplus 82,849 80,610
Retained earnings 366,829 325,474
Accumulated other comprehensive loss (33,178) (35,596)
Unamortized restricted stock awards (689) (1,053)
Treasury stock, at cost (2,359 and 2,244 shares) (44,223) (41,302)
----------- -----------
Total shareholders' equity 403,535 359,958
----------- -----------
Total liabilities and shareholders' equity $ 1,275,223 $ 1,042,985
=========== ===========
STATEMENTS OF CONSOLIDATED OPERATIONS
Yellow Corporation and Subsidiaries
For the Three Months and Nine Months Ended September 30
(Amounts in thousands except per share data)
(Unaudited)
Three Months Nine Months
--------------------------- ---------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
OPERATING REVENUE $ 770,705 $ 682,473 $ 2,165,251 $ 1,907,336
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Salaries, wages and employees' benefits 489,277 444,659 1,386,061 1,264,680
Operating expenses and supplies 106,490 97,808 320,341 271,629
Operating taxes and licenses 20,251 18,849 59,510 55,950
Claims and insurance 16,518 14,881 39,972 45,103
Depreciation and amortization 21,120 20,517 62,206 58,928
Purchased transportation 77,992 66,559 213,971 181,276
Losses on property disposals, net 381 351 422 1,257
Acquisition, spin-off and reorganization charges 864 5,367 864 6,164
----------- ----------- ----------- -----------
Total operating expenses 732,893 668,991 2,083,347 1,884,987
----------- ----------- ----------- -----------
OPERATING INCOME 37,812 13,482 81,904 22,349
----------- ----------- ----------- -----------
NONOPERATING (INCOME) EXPENSES:
Interest expense 6,525 1,306 11,796 5,053
ABS facility charges -- 756 -- 2,225
Other, net 2,414 (54) 1,978 (256)
----------- ----------- ----------- -----------
Nonoperating expenses, net 8,939 2,008 13,774 7,022
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 28,873 11,474 68,130 15,327
INCOME TAX PROVISION 11,504 4,177 26,775 5,549
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS 17,369 7,297 41,355 9,778
Loss from discontinued operations, net -- (48,578) -- (117,875)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 17,369 $ (41,281) $ 41,355 $ (108,097)
=========== =========== =========== ===========
AVERAGE SHARES OUTSTANDING-BASIC 29,565 29,175 29,578 27,525
=========== =========== =========== ===========
AVERAGE SHARES OUTSTANDING-DILUTED 29,843 29,523 29,832 27,882
=========== =========== =========== ===========
BASIC EARNINGS (LOSS) PER SHARE:
Income from continuing operations $ 0.59 $ 0.25 $ 1.40 $ 0.35
Loss from discontinued operations -- (1.66) -- (4.28)
----------- ----------- ----------- -----------
Net income (loss) $ 0.59 $ (1.41) $ 1.40 $ (3.93)
----------- ----------- ----------- -----------
DILUTED EARNINGS (LOSS) PER SHARE:
Income from continuing operations $ 0.58 $ 0.25 $ 1.39 $ 0.35
Loss from discontinued operations -- (1.65) -- (4.23)
----------- ----------- ----------- -----------
Net income (loss) $ 0.58 $ (1.40) $ 1.39 $ (3.88)
----------- ----------- ----------- -----------
STATEMENTS OF CONSOLIDATED CASH FLOWS
Yellow Corporation and Subsidiaries
For the Nine Months Ended September 30
(Amounts in thousands)
(Unaudited)
2003 2002
--------- ---------
OPERATING ACTIVITIES:
Net income (loss) $ 41,355 $(108,097)
Noncash items included in net income (loss):
Depreciation and amortization 62,206 58,928
Loss from discontinued operations -- 117,875
Deferred income tax provision, net 15,758 (3,186)
Losses on property disposals, net 422 1,257
Changes in assets and liabilities, net:
Accounts receivable (44,848) (73,060)
Accounts receivable securitizations -- (82,000)
Accounts payable (18,236) (25,777)
Other working capital items 22,351 85,093
Claims and other 11,606 15,357
Other (3,144) 1,978
Net change in operating activities of discontinued operations -- 17,250
--------- ---------
Net cash from operating activities 87,470 5,618
--------- ---------
INVESTING ACTIVITIES:
Acquisition of property and equipment (77,172) (59,338)
Proceeds from disposal of property and equipment 1,468 1,789
Acquisition of companies -- (18,712)
Net capital expenditures of discontinued operations -- (24,372)
--------- ---------
Net cash used in investing activities (75,704) (100,633)
--------- ---------
FINANCING ACTIVITIES:
Increase (decrease) in long-term debt 187,187 (119,533)
ABS borrowings, net -- --
Proceeds from issuance of common stock -- 93,792
Dividend from subsidiary upon spin-off -- 110,790
Treasury stock purchases (2,921) --
Proceeds from exercise of stock options 1,768 6,950
--------- ---------
Net cash used in financing activities 186,034 91,999
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 197,800 (3,016)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 28,714 19,214
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 226,514 $ 16,198
========= =========
SUPPLEMENTAL FINANCIAL INFORMATION
Yellow Corporation and Subsidiaries
For the Three Months and Nine Months Ended September 30
(Amounts in thousands except per share data)
(Unaudited)
Three Months Nine Months
-------------------------------- --------------------------------------
2003 2002 % 2003 2002 %
-------------------------------- --------------------------------------
Operating revenue:
Yellow Transportation $ 738,311 $ 662,163 11.5 $ 2,089,885 $1,855,021 12.7
Meridian IQ 33,476 21,522 55.5 78,744 55,866 41.0
Corporate/Other (1,082) (1,212) 10.7 (3,378) (3,551) 4.9
--------- --------- ----- ----------- ---------- ------
Consolidated 770,705 682,473 12.9 2,165,251 1,907,336 13.5
Operating income (loss):
Yellow Transportation 42,835 22,989 86.3 98,696 40,176 145.7
Meridian IQ 156 26 n/m (673) (1,943) 65.4
Corporate/Other (5,179) (9,533) 45.7 (16,119)(a) (15,884) (1.5)
--------- --------- ----------- ----------
Consolidated 37,812 13,482 180.5 81,904 22,349 266.5
Losses on property disposals and acquisition,
spin-off and reorganization charges (b):
Yellow Transportation 342 285 379 1,325
Meridian IQ 419 159 425 243
Corporate/Other 484 5,274 482 5,853
--------- --------- ----------- ----------
Consolidated 1,245 5,718 1,286 7,421
Operating income (loss) excluding property
disposals, acquisition, spin-off and
reorganization charges(b):
Yellow Transportation 43,177 23,274 85.5 99,075 41,501 138.7
Meridian IQ 575 185 210.8 (248) (1,700) 85.4
Corporate/Other (4,695) (4,259) (10.2) (15,637) (10,031) (55.9)
--------- --------- ----------- ----------
Consolidated 39,057 19,200 103.4 83,190 29,770 179.4
Operating ratio:
Yellow Transportation 94.2% 96.5% 95.3% 97.8%
Consolidated 95.1% 98.0% 96.2% 98.8%
Operating ratio excluding property disposals,
acquisition, spin-off and reorganization
charges:
Yellow Transportation 94.2% 96.5% 95.3% 97.8%
Consolidated 94.9% 97.2% 96.2% 98.4%
Diluted EPS from continuing operations $ 0.58 $ 0.25 $ 1.39 $ 0.35
Diluted EPS from property disposals, acquisition,
spin-off and reorganization charges - operating 0.03 0.12 0.03 0.16
Diluted EPS from acquisition charges - nonoperating (c) 0.14 -- 0.14 --
--------- --------- ----------- ----------
Diluted EPS from continuing operations excluding
property disposals, acquisition, spin-off and
reorganization charges 0.75 0.37 1.56 0.51
Pro forma stock option expense (after tax) (d) 486 343 1,587 1,048
Pro forma stock option impact on diluted EPS from
continuing operations 0.02 0.01 0.05 0.04
(a) Includes approximately $4 million for an industry conference that Yellow
Corporation hosts every other year.
(b) Management does not consider these items a component of recurring
operations and excludes them when evaluating operating income.
(c) Includes $6.6 million of interest and fees (after tax impact of $4.2
million) for acquisition-related financing.
(d) The fair value in accordance with SFAS 123, Accounting for Stock-Based
Compensation, not reflected in income.
STATISTICAL INFORMATION
Yellow Transportation, Inc.
For the Three Months Ended September 30
(Amounts in thousands except per unit data)
Three Months Amount/Workday
----------------------------------- -----------------------------------
2003 2002 % 2003 2002 %
----------------------------------- -----------------------------------
Workdays 64 64
Revenue:
LTL $ 692,955 $617,988 12.1 $ 10,827.4 $ 9,656.1 12.1
TL 48,157 45,399 6.1 752.5 709.3 6.1
--------- -------- ---------- ---------
Subtotal - pickup basis 741,112 663,387 11.7 11,579.9 10,365.4 11.7
Revenue recognition adjustment (2,801) (1,224) 128.8 (43.8) (19.1) 128.8
--------- -------- ---------- ---------
Total - as reported 738,311 662,163 11.5 11,536.1 10,346.3 11.5
Tonnage - pickup basis:
LTL 1,708 1,592 7.3 26.69 24.88 7.3
TL 303 290 4.6 4.74 4.53 4.6
Total 2,011 1,882 6.8 31.43 29.41 6.8
Shipments - pickup basis:
LTL 3,480 3,195 8.9 54.37 49.93 8.9
TL 41 40 3.2 0.65 0.62 3.2
Total 3,521 3,235 8.8 55.02 50.55 8.8
Revenue/cwt. - pickup basis:
LTL $ 20.29 $ 19.41 4.5
TL 7.94 7.82 1.5
Total 18.42 17.62 4.5
Revenue/cwt. - pickup basis:
(excluding fuel surcharge)
LTL 19.73 19.02 3.7
TL 7.74 7.70 0.5
Total 17.92 17.28 3.7
Revenue/shipment - pickup basis:
LTL 199.14 193.39 3.0
TL 1,170.93 1,139.38 2.8
Total 210.49 205.04 2.7