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 September 30, 2001 ------------------ 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 ------- 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 --------------------------------------------------------------- (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 October 31, 2001 ----- ------------------------------- Common Stock, $1 Par Value 24,789,287 shares
YELLOW CORPORATION INDEX Item Page - ---- ---- PART I ------ 1. Financial Statements Consolidated Balance Sheets - September 30, 2001 and December 31, 2000 3 Statements of Consolidated Operations - Quarter and Nine Months Ended September 30, 2001 and 2000 4 Statements of Consolidated Cash Flows - Nine Months Ended September 30, 2001 and 2000 5 Notes to Consolidated Financial Statements 6 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 3. Quantitative and Qualitative Disclosures About Market Risk 13 PART II 4. Exhibits and Reports on Form 8-K 15 Signatures 19
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- --------------------- CONSOLIDATED BALANCE SHEETS Yellow Corporation and Subsidiaries (Amounts in thousands except share data) (Unaudited) September 30, December 31, 2001 2000 ------------- ------------- ASSETS CURRENT ASSETS: Cash $ 22,255 $ 25,799 Accounts receivable 231,706 222,926 Prepaid expenses and other 41,578 64,680 ------------- ------------- Total current assets 295,539 313,405 ------------- ------------- PROPERTY AND EQUIPMENT: Cost 2,141,095 2,128,937 Less - Accumulated depreciation 1,258,477 1,240,359 ------------- ------------- Net property and equipment 882,618 888,578 ------------- ------------- GOODWILL AND OTHER ASSETS 120,758 106,494 ------------- ------------- $ 1,298,915 $ 1,308,477 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and checks outstanding $ 103,280 $ 140,882 Wages and employees' benefits 141,135 173,332 Other current liabilities 114,267 119,194 Current maturities of long-term debt 1,749 68,792 ------------- ------------- Total current liabilities 360,431 502,200 ------------- ------------- OTHER LIABILITIES: Long-term debt 232,465 136,645 Deferred income taxes 96,457 92,413 Claims, insurance and other 122,419 117,443 ------------- ------------- Total other liabilities 451,341 346,501 ------------- ------------- SHAREHOLDERS' EQUITY: Common stock, $1 par value 30,878 29,959 Capital surplus 38,893 23,304 Retained earnings 536,612 522,195 Accumulated other comprehensive income (6,268) (2,710) Treasury stock (112,972) (112,972) ------------- ------------- Total shareholders' equity 487,143 459,776 ------------- ------------- $ 1,298,915 $ 1,308,477 ============= ============= The accompanying notes are an integral part of these statements. 3
STATEMENTS OF CONSOLIDATED OPERATIONS Yellow Corporation and Subsidiaries For the Quarter and Nine Months Ended September 30, 2001 and 2000 (Amounts in thousands except per share data) (Unaudited) Third Quarter Nine Months -------------------- ---------------------- 2001 2000 2001 2000 --------- --------- ---------- ---------- OPERATING REVENUE $ 834,614 $ 918,898 $2,491,361 $2,705,150 --------- --------- ---------- ---------- OPERATING EXPENSES: Salaries, wages and benefits 528,324 564,569 1,574,786 1,674,782 Operating expenses and supplies 135,807 143,933 416,436 436,097 Operating taxes and licenses 26,563 27,513 81,221 83,965 Claims and insurance 19,624 20,332 57,226 60,928 Depreciation and amortization 31,100 32,062 94,530 95,179 Purchased transportation 74,933 87,425 210,587 254,939 Unusual items loss/(gains) (974) (297) 7,260 (15,391) --------- --------- ---------- ---------- Total operating expenses 815,377 875,537 2,442,046 2,590,499 --------- --------- ---------- ---------- INCOME FROM OPERATIONS 19,237 43,361 49,315 114,651 --------- --------- ---------- ---------- NONOPERATING (INCOME) EXPENSES: Interest expense 4,302 5,127 12,461 15,071 Loss on equity method investment 1,344 1,600 5,741 1,600 Other, net 1,294 2,120 5,599 5,027 --------- --------- ---------- ---------- Nonoperating expenses, net 6,940 8,847 23,801 21,698 --------- --------- ---------- ---------- INCOME BEFORE INCOME TAXES 12,297 34,514 25,514 92,953 INCOME TAX PROVISION 5,819 14,961 11,634 39,412 --------- --------- ---------- ---------- NET INCOME $ 6,478 $ 19,553 $ 13,880 $ 53,541 ========= ========= ========== ========== AVERAGE SHARES OUTSTANDING-BASIC 24,497 24,427 24,234 24,949 ========= ========= ========== ========== AVERAGE SHARES OUTSTANDING-DILUTED 24,854 24,503 24,533 25,075 ========= ========= ========== ========== BASIC EARNINGS PER SHARE $ .26 $ .80 $ .57 $ 2.15 DILUTED EARNINGS PER SHARE $ .26 $ .80 $ .57 $ 2.14 The accompanying notes are an integral part of these statements. 4
STATEMENTS OF CONSOLIDATED CASH FLOWS Yellow Corporation and Subsidiaries For the Nine Months Ended September 30, 2001 and 2000 (Amounts in thousands) (Unaudited) 2001 2000 ---------- --------- OPERATING ACTIVITIES: Net cash from operating activities $ 63,137 $ 151,993 ---------- ---------- INVESTING ACTIVITIES: Acquisition of property and equipment (96,501) (141,489) Proceeds from disposal of property and equipment 7,812 29,899 Other (20,678) (1,343) ---------- ---------- Net cash used in investing activities (109,367) (112,933) ---------- ---------- FINANCING ACTIVITIES: Treasury stock purchases - (21,868) Proceeds from stock options and other, net 13,983 5,951 Increase (decrease) in long-term debt 28,703 (16,830) ---------- ---------- Net cash provided by (used in) financing activities 42,686 (32,747) ---------- ---------- NET (DECREASE) INCREASE IN CASH (3,544) 6,313 CASH, BEGINNING OF PERIOD 25,799 22,581 ---------- ---------- CASH, END OF PERIOD $ 22,255 $ 28,894 ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid, net $ 4,812 $ 36,304 ========== ========== Interest paid $ 10,987 $ 12,862 ========== ========== 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 2000 Annual Report to Shareholders. 2. The company is a world-wide transportation service provider, with its primary activity being the less-than-truckload (LTL) market in North America through its subsidiaries, Yellow Freight System, Inc. (Yellow Freight), Saia Motor Freight Line, Inc. (Saia), and Jevic Transportation, Inc. (Jevic). On March 4, 2001, two LTL subsidiaries of the company, WestEx Inc. and Action Express, Inc. were integrated into the Saia subsidiary and now operate under the Saia name. Yellow Technologies, Inc. is a subsidiary that provides information technology and other services to the company and its subsidiaries. For the quarter ended September 30, 2001 Yellow Freight comprised approximately 76 percent of total revenue while Saia comprised approximately 15 percent and Jevic approximately 8 percent of total revenue. 3. In the third quarter of 2001, Yellow Corporation acquired the 35 percent minority ownership in Transportation.com that it did not own from its venture capital partners. The purchase price of approximately $14.3 million will be substantially allocated to intangible assets. The company began consolidating Transportation.com subsequent to the acquisition. The company's revenues and operating expense reflect the results of Transportation.com subsequent to the acquisition date. Transportation.com is a non-asset based global logistics company that delivers services through its internet technology. Unusual items include integration costs and property gains and losses. 6
4. 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 three reportable segments, which are strategic business units that offer different products and services. Yellow Freight is a unionized carrier that provides comprehensive national LTL service as well as international service worldwide. 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 service primarily in northeastern states. The segments are managed separately because each requires different operating, technology and marketing strategies and processes. 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 2000 Annual Report to Shareholders. The company charges a trade name fee to Yellow Freight for use of the company's trademark. Interest and intersegment transactions are recorded at current market rates. Income taxes are allocated in accordance with a tax sharing agreement in proportion to each segment's contribution to the parent's consolidated tax status. The following table summarizes the company's operations by business segment (in thousands): Yellow Corporate Con- Freight Saia Jevic and other solidated --------- -------- -------- --------- ---------- As of Sept. 30, 2001 Identifiable assets $ 703,432 $288,635 $242,113 $ 64,735 $1,298,915 As of December 31, 2000 Identifiable assets $ 722,808 $296,539 $257,451 $ 31,679 $1,308,477 Three months ended Sept. 30, 2001 Operating revenue $ 636,153 $125,072 $ 70,080 $ 3,309 $ 834,614 Income from operations 17,307 5,077 1,060 (4,207) 19,237 Three months ended Sept. 30, 2000 Operating revenue $ 715,138 $121,993 $ 74,866 $ 6,901 $ 918,898 Income from operations 39,450 3,584 3,055 (2,728) 43,361 Nine months ended Sept. 30, 2001 Operating revenue $1,900,299 $367,179 $219,585 $ 4,298 $2,491,361 Income from operations 45,318 6,578 4,919 (7,500) 49,315 Nine months ended Sept. 30, 2000 Operating revenue $2,092,165 $362,105 $230,008 $ 20,872 $2,705,150 Income from operations 104,434 10,843 9,819 (10,445) 114,651 7
5. 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. 6. The company's comprehensive income includes net income, changes in the fair value of interest rate swap's and foreign currency translation adjustments. Comprehensive income for the third quarter ended September 2001 and 2000 was $4.6 million and $19.4 million, respectively. Comprehensive income for the nine months ended September 30, 2001 and 2000 was $10.3 million and $53.1 million, respectively. 7. On June 30, 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 142, Goodwill and Other Intangible Assets, that will be 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 of $3.3 million. The company is in the process of determining the impact of this new statement to the goodwill currently recorded of $107.1 million. With the downturn in the economy and the highly competitive nature of its business, the company believes there may be impairment of Jevic's goodwill, which was $75.7 million at September 30, 2001. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION September 30, 2001 Compared to December 31, 2000 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 Freight's accounts receivables. These facilities provide adequate capacity to fund working capital and capital expenditure requirements. At September 30, 2001 available unused capacity under the bank credit agreement was $114 million. The company renewed its bank credit agreement in April 2001, which has a new maturity date of April 2004. Debt previously classified as current under this agreement at December 31, 2000 of $68.8 million has been reclassified to long-term. In addition, the company intends to refinance under this facility all other debt maturing within one year. 8
Working capital is reduced through Yellow Freight's asset backed securitization agreement (ABS). Capacity under the ABS agreement is $200 million. Accounts receivable at September 30, 2001 and December 31, 2000 are net of $185.5 million and $177.0 million of receivables sold under the ABS agreement. Working capital increased $123.9 million during the first nine months of 2001 caused primarily by the reclassification of current debt of $68.8 million discussed above. Accounts receivable and prepaids decreased approximately $14 million from December 31, 2000, while accounts payable and other accrued liabilities decreased almost $75 million, due to lower volumes and decreases in payroll and incentive compensation accruals. This resulted in a working capital deficit of $64.9 million at September 30, 2001 compared to an $188.8 million working capital deficit at December 31, 2000. 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. Net capital expenditures for property and equipment during the first nine months of 2001 were $88.7 million. RESULTS OF OPERATIONS Comparison of Three Months Ended September 30, 2001 and 2000 Net income for the third quarter ended September 30, 2001 was $6.5 million, or $.26 per share, compared with net income of $19.6 million, or $.80 per share in the 2000 third quarter. Consolidated operating revenue was $834.6 million, down 9.2 percent from $918.9 million in the 2000 third quarter. Consolidated operating income was $19.2 million, compared with $43.4 million in the prior year period. Yellow Freight, the company's largest subsidiary, reported third quarter operating income of $17.3 million down 56.1 percent from $39.5 million in the 2000 third quarter. Yellow Freight's revenue for the third quarter was $636.2 million, down 11.0 percent from $715.1 million in the prior year's period. Yellow Freight's third quarter revenue trends were negatively impacted by the continuing economic slowdown, the increase in competitive pricing and a shift in the business mix to increase market share. To offset these negative revenue trends, Yellow Freight proactively managed costs with business levels, while maintaining close attention to the details of providing transportation services to meet the needs of the customer. The 2001 third quarter operating ratio was 97.3, compared with 94.5 a year earlier. 9
Yellow Freight's third quarter less-than-truckload (LTL) tonnage decreased by 12.2 percent and the number of LTL shipments decreased 13.3 percent. However, LTL revenue per hundred weight improved by 1.1 percent over the 2000 third quarter and LTL revenue per shipment improved 2.4 percent over the 2000 third quarter. Yellow Freight's rollout of their Standard Ground Regional Advantage service is seeing stronger business levels, on average, than the rest of the system. Since moving into the two- and three- day service markets the average days in transit continue to be below three days and the on-time service percentages are staying consistent. During the 2001 third quarter, the two carriers comprising the Yellow Corporation Regional Carrier Group - Saia Motor Freight Line and Jevic Transportation - reported a combined operating income of $6.1 million. All prior period amounts for Saia have been restated to reflect the March 4, 2001, integration of WestEx and Action Express into Saia. The combined regional carrier group reported operating income of $6.6 million in the 2000 third quarter. Revenue for the regional group was $195.2 million compared with $196.9 million in the 2000 third quarter. Revenue decreased by 1.0 percent over the prior year's period. At Saia, third quarter 2001 revenue was $125.1 million and operating income was $5.1 million, compared with revenue of $122.0 million and operating income of $3.6 million in the 2000 third quarter. The 2001 third quarter operating ratio was 95.9 compared with 97.1 in the year-earlier quarter. Saia's LTL tonnage was down 2.5 percent and LTL shipments were down 1.7 percent over the 2000 third quarter. However, Saia's LTL revenue per hundred weight was up 6.1 percent over the prior period quarter as stable pricing at Saia more than offset economy driven volume declines. Jevic reported third quarter 2001 revenue of $70.1 million and operating income of $1.1 million compared to third quarter 2000 revenue of $74.9 million and operating income of $3.1 million. The 2001 third quarter operating ratio for Jevic was 98.5, compared with 95.9 in the 2000 third quarter. The decline in Jevic's profitability resulted from the net effect of an overall decrease in tonnage, weight per shipment and LTL pricing combined with an increase in employee benefit costs over prior year. Jevic's tonnage was down 5.9 percent over the 2000 third quarter. Jevic's shipments decreased 5.7 percent over the 2000 third 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. 10
Corporate and other business development expenses were $4.2 million in the 2001 third quarter, up from $2.7 million in the third quarter of 2000. 2001 results include $0.8 million related to ongoing business development activities of Transportation.com, subsequent to the acquisition and consolidation of results. Nonoperating expenses decreased to $6.9 million in the third quarter of 2001 compared to $8.8 million in the third quarter of 2000 due primarily to a $.8 million decrease in interest expense and a $.6 million decrease in foreign currency transaction gains/losses. The effective tax rate was 47.3 percent in the 2001 third quarter compared to 43.3 percent in the 2000 third quarter. The effective tax rate increase was largely because of the decrease in pre-tax income between quarters. Comparison of Nine Months Ended September 30, 2001 and 2000 Net income for the nine months ended September 30, 2001 was $13.9 million or $.57 per share (diluted), a 73.4 percent decrease over earnings per share in the first nine months of 2000. Net income for the nine months ended September 30, 2000 was $53.5 million or $2.14 per share (diluted). Consolidated operating revenue for the first nine months of 2001 was $2,491.4 million, a decrease of 7.9 percent over operating revenue of $2,705.2 million for the first nine months of 2000. Consolidated operating income was $49.3 million compared with $114.7 million in the prior year period. Yellow Freight had operating income of $45.3 million for the first nine months of 2001. Yellow Freight recorded operating income of $104.4 million in the first nine months of 2000 which includes a $14.2 million non-recurring pre-tax gain primarily from the sale of real estate in Manhattan, New York. Yellow Freight's operating ratio was 97.6 in the nine months of 2001, and excluding the nonrecurring net gain, their operating ratio was 95.7 in the nine months of 2000. Yellow Freight's operating revenue for the first nine months of 2001 was $1,900.3 million, a 9.2 percent decrease over operating revenue of $2,092.2 million in the first nine months of 2000. Less-than-truckload (LTL) tonnage decreased by 13.8 percent on a per-day basis over the first nine months of 2000 and the number of LTL shipments was down 14.0 percent on a per-day basis. LTL revenue per hundred weight was up by 5.3 percent over the first nine months of 2000. Yellow Freight benefited from an announced general rate increase averaging 4.9 percent effective August 1, 2001 for customers not currently on contract rates. Business volumes for the first nine months of 2001 were weak compared to prior year as a result of the slow economy, increase in competitive pricing and the shift in business mix. The aggressive 11
rollout of Yellow Freight's Regional Advantage service is starting to result in some positive business trends. Business volumes at the nine primary Regional Advantage distribution centers continue to show increased improvement. Yellow Freight is now moving more than 70 percent of its shipments in three days or less. Cost reduction efforts, including staff reductions, and pricing increases allowed Yellow Freight to reduce operating expenses by approximately 77% of the decrease in revenue. During the first nine months of 2001, the two carriers - Saia Motor Freight Line and Jevic Transportation - reported combined operating income of $11.5 million, which is net of $6.7 million of non-recurring integration costs. Operating income for the regional companies was $20.7 million in the first nine months of 2000. Revenue for the regional group was $586.8 million, down 0.9 percent from $592.1 million. Saia reported revenue of $367.2 million and operating income was $6.6 million, which included $6.7 million of one-time costs related to the WestEx and Action integration for the first nine months of 2001. Revenue was $362.1 million and operating income was $10.8 million for the first nine months of 2000. Saia's operating ratio for the first nine months of 2001 (excluding the impact of the integration costs) was 96.6, compared with 97.0 for the first nine months of 2000. The results of the first nine months of 2000 have been restated to reflect the integration that took place on March 4, 2001, with WestEx and Action merged into Saia. Year-to-date 2001 results were supported by strong productivity trends, the continuing benefits of the successful integration of the western companies and improved revenue yield. These gains were partially offset by higher wages from planned wage increases in the second quarter of 2001 and higher accident and purchased transportation costs. Saia experienced some decline in volume early in the second quarter, however, volume in the third quarter has increased 2.0 percent from the second quarter. Saia benefited from a general rate increase averaging 5.9 percent effective July 30, 2001 for customers not currently on contract rates. Jevic reported revenue of $219.6 million and operating income of $4.9 million for the first nine months of 2001. On a comparative basis, Jevic reported revenue of $230.0 million and operating income of $9.8 million for the first nine months of 2000. The 2001 year-to-date operating ratio for Jevic was 97.8, compared with 95.7 for the first nine months of 2000. Jevic experienced volume declines as a result of the economic slowdown as well as increased competition. While Jevic has aggressively reduced variable costs, these reductions only partially offset the revenue decline. In addition, Jevic's employee benefits increased as a result of planned increases for 2001. 12
Corporate and other business development expenses were $7.5 million in the first nine months of 2001, down from $10.5 million in the first nine months of 2000. The company continues to evaluate a number of strategic initiatives to increase shareholder value. Nonoperating expenses increased to $23.8 million in the first nine months of 2001 compared to $21.7 million in the first nine months of 2000 due to a decrease in financing costs of approximately $2.6 which was offset by $4.2 million in losses relating to the company's investment in Transportation.com. The effective tax rate was 45.6 percent in the first nine months of 2001 compared to 42.4 percent in the first nine months of 2000. The effective tax rate increase was largely because of the decrease in pre-tax income between periods. 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 September 30, 2001 approximately 74 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 20 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 September 30, 2001. 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. 13
Debt Instrument Information 2001 2000 ---- ---- There- Fair Fair 2001 2002 2003 2004 2005 After Total Value Total Value ------ ------ ------ ------ ------ ------ ----- ------ ------ ----- Fixed Rate Debt $ 0.4 $ 22.4 $ 19.5 $ 16.2 $ 13.4 $ 38.6 $110.5 $124.2 $131.6 $129.0 Average interest rate 6.17% 7.34% 6.29% 6.62% 7.06% 6.94% Variable Rate Debt $ 1.9 $ 4.6 $ 5.2 $ 97.2 $ 8.9 $ 6.0 $123.8 $123.8 $128.0 $128.0 Average interest rate 3.15% 3.09% 4.24% 3.89% 4.28% 6.05% Off Balance Sheet ABS $185.5 $185.5 $185.5 $172.5 $172.5 Average interest rate 3.61% Interest Rate Swaps Notional amount $ 1.9 $ 4.6 $ 50.2 $ 0.2 $ 4.5 $ 0.0 $ 61.4 $ 64.7 $ 12.6 $ 12.5 Ave. pay rate (fixed) 5.78% 5.72% 6.06% 7.65% 7.65% N/A Ave. receive rate (variable) 3.15% 3.09% 3.15% 4.65% 4.65% N/A The company also maintained fuel inventories for use in normal operations at September 30, 2001, 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 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 - None Item 6. Exhibits and Reports on Form 8-K 15
Yellow Freight System, Inc. Financial Information For the Quarter Ended September 30 (Amounts in thousands) Third Quarter Nine Months -------------------- --------------------- 2001 2000 % 2001 2000 % -------- -------- ----- --------- --------- ----- Operating revenue 636,153 715,138 (11.0) 1,900,299 2,092,165 (9.2) Operating income 17,307 39,450 45,318 104,434 Operating ratio 97.3 94.5 97.6 95.0 Total assets at September 30 703,432 785,879 Third Quarter Third Quarter Amount/Workday -------------------- --------------------- 2001 2000 % 2001 2000 % -------- -------- ----- --------- --------- ----- Workdays (63) (63) Financial statement LTL 582,464 656,101 (11.2) 9,245.5 10,414.3 (11.2) revenue TL 50,237 54,842 (8.4) 797.4 870.5 (8.4) Other 3,452 4,194 (17.7) 54.8 66.6 (17.7) Total 636,153 715,137 (11.0) 10,097.7 11,351.4 (11.0) Revenue excluding LTL 582,464 656,101 (11.2) 9,245.5 10,414.3 (11.2) revenue recognition TL 50,237 54,842 (8.4) 797.4 870.5 (8.4) adjustment Other (1) (1) NM 0.0 0.0 NM Total 632,700 710,942 (11.0) 10,042.9 11,284.8 (11.0) Tonnage LTL 1,539 1,752 (12.2) 24.43 27.82 (12.2) TL 327 346 (5.6) 5.18 5.49 (5.6) Total 1,866 2,098 (11.1) 29.61 33.31 (11.1) Shipments LTL 3,046 3,514 (13.3) 48.35 55.78 (13.3) TL 44 47 (6.6) 0.70 0.75 (6.6) Total 3,090 3,561 (13.2) 49.05 56.53 (13.2) Revenue/cwt. LTL 18.93 18.72 1.1 TL 7.69 7.93 (3.0) Total 16.96 16.94 0.1 Revenue/shipment LTL 191.21 186.72 2.4 TL 1,135.45 1,157.49 (1.9) Total 204.73 199.63 2.6 16
Saia Motor Freight Line, Inc. Financial Information For the Quarter Ended September 30 (Amounts in thousands) Third Quarter Nine Months -------------------- --------------------- 2001 2000 % 2001 2000 % -------- -------- ----- --------- --------- ----- Operating revenue 125,072 121,993 2.5 367,179 362,105 1.4 Operating income *** 5,077 3,584 13,282 10,843 ** Operating ratio 95.9 97.1 96.4 97.0 Total assets at September 30 288,635 298,399 Third Quarter --------------------- Third Quarter Amount/Workday -------------------- --------------------- 2001 2000 % 2001 2000 % -------- -------- ----- --------- --------- ----- Workdays (63) (63) Financial statement LTL 115,093 111,065 3.6 1,826.9 1,762.9 3.6 Revenue TL 9,979 10,928 (8.7) 158.4 173.5 (8.7) Total 125,072 121,993 2.5 1,985.3 1,936.4 2.5 Revenue excluding LTL 115,083 111,254 3.4 1,826.7 1,765.9 3.4 Revenue recognition TL 9,978 10,947 (8.9) 158.4 173.8 (8.9) Adjustment Total 125,061 122,201 2.3 1,985.1 1,939.7 2.3 Tonnage LTL 574 588 (2.5) 9.10 9.34 (2.5) TL 136 167 (18.9) 2.16 2.66 (18.9) Total 710 755 (6.1) 11.26 12.00 (6.1) Shipments LTL 1,076 1,095 (1.7) 17.09 17.38 (1.7) TL 16 19 (17.0) .25 .30 (17.0) Total 1,092 1,114 (2.0) 17.34 17.68 (2.0) Revenue/cwt. LTL 10.03 9.46 6.1 TL 3.67 3.27 12.3 Total 8.82 8.09 9.0 Revenue/shipment LTL 106.91 101.58 5.2 TL 636.64 580.07 9.8 Total 114.51 109.69 4.4 **YTD - 2001 operating income is before $6,705,000 in one-time integration costs due to the merger with WestEx and Action. ***Restated for merger and reflects current and prior period amounts as if merger of WestEx and Action into Saia was effective at the earliest period presented. 17
Jevic Transportation, Inc. Financial Information For the Quarter Ended September 30 (Amounts in thousands) Third Quarter YTD -------------------- --------------------- 2001 2000 % 2001 2000 % -------- -------- ----- --------- --------- ----- Operating revenue 70,080 74,866 (6.4) 219,585 230,008 (4.5) Operating income 1,060 3,055 4,919 9,819 Operating ratio 98.5 95.9 97.8 95.7 Total assets at September 30 242,113 259,318 Third Quarter Third Quarter Amount/Workday -------------------- --------------------- 2001 2000 % 2001 2000 % -------- -------- ----- --------- --------- ----- Workdays 63 62 Financial statement LTL 45,385 48,547 (6.5) 720.4 783.0 (8.0) revenue TL 24,695 26,319 (6.2) 392.0 424.5 (7.7) Total 70,080 74,866 (6.4) 1,112.4 1,207.5 (7.9) Revenue excluding LTL 45,516 48,634 (6.4) 722.5 784.4 (7.9) revenue recognition TL 24,765 26,361 (6.1) 393.1 425.2 (7.5) adjustment Total 70,281 74,995 (6.3) 1,115.6 1,209.6 (7.8) Tonnage LTL 245 259 (5.2) 3.89 4.17 (6.7) TL 315 336 (6.4) 5.00 5.43 (7.9) Total 560 595 (5.9) 8.89 9.60 (7.4) Shipments LTL 202 214 (5.8) 3.20 3.46 (7.3) TL 35 37 (5.0) 0.55 0.59 (6.6) Total 237 251 (5.7) 3.75 4.05 (7.2) Revenue/cwt. LTL 9.28 9.40 (1.3) TL 3.93 3.92 0.4 Total 6.27 6.30 (0.5) Revenue/shipment LTL 225.53 226.91 (0.6) TL 711.86 719.52 (1.1) Total 297.03 298.83 (0.6) 18
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: November 8, 2001 /s/ William D. Zollars --------------------- ------------------------------ William D. Zollars Chairman of the Board of Directors, President & Chief Executive Officer Date: November 8, 2001 /s/ Donald G. Barger, Jr. --------------------- ---------------------------- Donald G. Barger, Jr. Senior Vice President & Chief Financial Officer 19