http://insight.yrcw.com/archive_faqs.html
Q. When will Q2 2010 results be announced?
A. Full second quarter results will be announced on Aug. 3, 2010. YRC Worldwide provided an update on second quarter results July 12, reporting that:
* We expect second quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in a range of $35 million to $45 million, excluding YRC Logistics, which will be reported as discontinued operations.
* Even including those charges, we expect to exceed the $5 million covenant for our lending agreement
Q. What is the cash flow situation?
A. As announced in the update issued on July 12: At June 30, our cash and cash equivalents, unrestricted availability and restricted revolver reserves were $279 million compared to $241 million on March 31.
Q. What were the company's Q1 2010 results?
A. Our operating results improved sequentially throughout the quarter, continuing our year-over-year improvement and positive momentum. We removed additional cost from the business and more effectively managed our working capital.
YRC National reported another quarter of improvement in year-over-year adjusted EBITDA. YRC Regional reported a third straight quarter of positive adjusted EBITDA.
For the quarter ending March 31, 2010, YRC Worldwide announced a loss per share of ($0.33) when excluding a previously announced charge of ($0.20) per share for union employee equity based awards and ($0.53) loss per share when including those items. By comparison, the company reported a $4.61 loss per share in the first quarter of 2009.
Q. What steps is YRCW taking to continue its momentum?
A. We are working with our stakeholders to gain financial stability, and we are focused on serving our customers through our supply chain solutions expertise - these are the strategies that helped us manage through past challenges, and they're the strategies that are fueling our growth. Additional steps recently taken to support progress:
* Joint committees have been formed between the Teamsters and YRC Worldwide to address pension re-entry and market competitiveness, and those discussions are active.
* In June, we amended our asset-backed securitization (ABS) facility to increase our borrowing capacity to provide additional liquidity. Our growth strategy requires working capital, and the ABS amendment was necessary for us to fund the growth that we are experiencing until a longer-term solution can be developed with our lenders and the Teamsters.
* Also in June, YRC Worldwide entered into an agreement with Austin Ventures for the acquisition of a portion of YRC Logistics. Customers will retain seamless access to our full portfolio of supply chain services, with no change in the way their business is handled. As we continue to offer full global logistics solutions for our customers, incremental liquidity from the transaction will support our business growth.
Q. When YRC Worldwide announced Q1 results, you also announced a new bank amendment. What did the amendment accomplish?
A. The support of our lender group continues to play a key role in our progress. We plan to raise equity and increase liquidity through such actions as issuing a portion of the shares authorized at the special February 2010 shareholders' meeting. Our lender group has modified our credit agreement to allow us to retain 100% of the first $100 million of cash proceeds, further improving the potential liquidity benefit from this equity program.
Q. What factors are impacting the per-share price of YRC Worldwide stock?
A. Factors unrelated to actual company performance can impact the price and trading volumes of YRCW stock. In anticipation of our results and ongoing steps in our growth plan, the pershare price of YRCW stock has been low. Multiple factors impact stock price and don't have anything to do with business progress, and per-share price doesn't impact our ability to serve you.
Q. Are there changes to the YRCW board of directors?
A. The successful note exchange in December 2009 allowed us to begin 2010 with a significantly improved balance sheet, additional liquidity and positive momentum. It also changed the ownership of the company and the composition of our board. Six new members have joined our board of directors, bringing with them a range of skills and experience, including an understanding of capital markets, pension planning and operations. For detailed information on our new board members, we encourage you to read these two news releases in the yrcw.com media room:
http://investors.yrcw.com/releasedetail.cfm?ReleaseID=466434
http://investors.yrcw.com/releasedetail.cfm?ReleaseID=472721
Q. What is the status of YRC Worldwide 2010 note obligations following a court ruling to keep put rights in place?
A. Following our debt-for-equity exchange at the end of 2009, about $70 million in 2010 note obligations remained. As part of our comprehensive financial recovery plan, in February, YRC Worldwide reached a definitive agreement with investors for private placement of $70 million in new 6 percent convertible notes to satisfy those remaining obligations.
* In February, we closed on the first part of the transaction for $49.8 million of new notes, which were issued to satisfy USF notes due April 15. The issuing of notes for the remaining $20.2 million has been dependent on litigation to determine whether we could remove Aug. 9 put rights for $20 million of outstanding contingent convertible notes. As reported in our 8-K filing on July 6, a court has determined that the put rights should remain in place.
* We're working with investors to issue the second tranche of 6 percent 2014 notes to satisfy the August put rights. The new 6 percent notes would be issued from the $20.2 million remaining on deposit in escrow related to the February 2010 $70 million private placement transaction.
* Resolving the funding of the notes does not impact our operations or our ability to serve our customers.
As with most reports filed with the SEC on company activities, our 8-K about the put rights decision and expected next steps included cautionary language, which is simply part of the requirement to keep our investors informed of potential risks.
Q. What is the status of long-term pension reform?
A. The current multi-employer system forces YRC Worldwide and many other businesses to support retirees who never worked for them. This was a problem that was largely hidden until the recession hit, but the existing system is unfair and unsustainable. We want to support the retirement of our own employees, and we're pleased that legislation has now been introduced in both the House and the Senate. The issue has bi-partisan support, the attention of the administration, and we're optimistic about the timing and growing momentum to bring about the needed reforms.
Q. What's the business outlook at YRC Worldwide?
A. We appreciate the continued confidence customers demonstrated in us by increasing their shipments during the latter part of the first quarter and into April. Our update on second quarter results indicted that tonnage per day for second quarter was up 11 percent for national transportation and up 15.2 percent for our regional brands over the first quarter.
The boost in shipments supports the results of a 2010 business-outlook survey we conducted in January with 5,700 customers. The results fell right in line with economic forecasts for modest growth and a stabilizing economy: 62 percent said they were optimistic their business volumes would increase this year; 85 percent said they intended to increase or maintain their YRC Worldwide shipments.
Positive feedback from customers continues to confirm the trends we're seeing. We have grown business with existing customers and are building business with new customers. We are focused on creating an exceptional customer experience.
Q. Why is YRC Worldwide no longer included on the Russell 3000 index?
A. Due to the current market capitalization of YRC Worldwide (shares outstanding multiplied by current share price), YRCW is not included on the Russell 3000 Index and sub-set indexes (Russell 2000, Russell Microcap) as of June 25, 2010. The Russell Indexes track market segments; specifically, the Russell 3000 measures the stock performance of the largest 3,000 U.S. companies. The Russell Indexes are rebalanced each year in June to reflect overall market changes and changes in segment characteristics. The Russell indexes does not impact our Nasdaq stock market listing, and changes in these indexes do not impact our ability to operate and to serve our customers.
Q. The 2009 YRCW annual report and other recent filings have included cautionary language about the future. Why?
A. It is important to keep in mind that the 10-K focused on 2009 - not the progress we've been making. The auditors included language that is indicative of the challenges we faced in 2009 as well as uncertainties posed by the operating environment and overall economy. In addition, there are accounting and auditing requirements that require cautionary language when there is uncertainty of future events, but it is not unexpected in our case. This language appears in other filings and is similar to language disclosed by other companies significantly impacted by the recession.
It's important for you to know that we will continue to deliver on our customer commitments. We continue taking aggressive actions through our plans to keep our organization headed in the right direction and help us achieve profitability. We're seeing positive trends and we're using every opportunity to build on them.
Q. How will organizational changes made in the spring help YRC achieve profitability?
A. Our intent is to create an exceptional customer experience with every customer, every shipment and at each touchpoint. To help us achieve our goal, we are better integrating YRC field sales and operations, improving alignment across YRC Worldwide operating companies, and placing decision-making and accountability closer to the customer. This will enable us to more efficiently provide high-quality, consistent service while developing stronger business relationships. An exceptional customer experience will help us grow and retain profitable business.
Q. Can customers continue to rely on YRC Worldwide now and in the future?
A. Yes. We have decades of experience across our brands and have managed through downturns before. We are committed to our customers. YRC Worldwide has taken important steps through the implementation of our comprehensive recovery plan to improve the health of our company. We have the operational ability to deliver on our promises to our customers. With our organizational structure and closer alignment of YRC sales and operations, we expect to see continual improvements.
The efficiency and effectiveness improvements at our regional companies should further enhance our industry-leading next-day and regional services. Our regional companies consistently outperform industry benchmarks in on-time deliveries, damage-free service and accurate invoices.
Q. Why should I care if YRC Worldwide survives when there are other choices out there?
A. Choice in the marketplace gives you a competitive advantage. Choice means you have better options. We're good for your business. Strong YRC Worldwide brands provide you with comprehensive, flexible transportation and logistics solutions. We bring you the most comprehensive network in North America, run by the finest experts in the business.
Forward-Looking Statements:
This document contains 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 "will," "expects," 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 (among others) our ability to generate sufficient cash flows and liquidity to fund operations, which raises substantial doubt about our ability to continue as a going concern, 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 multiemployer 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.
The company's expectations regarding multi-employer pension plan reform are only its expectations regarding this matter. The impact to the company and the multi-employer pension plans to which it contributes of such reform is subject to a number of conditions, including (among others) whether Congress passes legislation to reform multiemployer pension plans and the timing of, and provisions included in, such legislation.
The company's expectations regarding liquidity are only its expectations regarding this matter. Actual liquidity levels will depend upon (among other things) the company's operating results, the timing of its receipts and disbursements, the company's access to credit facilities or credit markets, the company's ability to continue to defer interest and fees under the company's credit agreement and ABS facility and interest and principal under the company's contribution deferral agreement, the continuation of the existing union wage reductions and temporary cessation of pension contributions, and the factors identified in the preceding paragraphs.
The closing of the remaining $20 million of 6 percent notes is subject to a number of conditions, including (among others), that all the representations and warranties made by the company therein must continue to be true and correct in all material respects as of the second closing date.
The company's expectations regarding the closing of the transaction with Austin Ventures and the additional liquidity the transaction will provide are only its expectations regarding these matters. The closing is subject to a number of conditions, including (among others), normal and customary closing conditions, the consent of the company's lenders under its credit agreement and the consent of the pension funds a party to the company's contribution deferral agreement. -----------
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