UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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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:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class |
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Outstanding at July 30, 2020 |
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Common Stock, $0.01 par value per share |
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INDEX
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Item |
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Page |
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1 |
3 |
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Consolidated Balance Sheets – June 30, 2020 and December 31, 2019 |
3 |
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Statements of Consolidated Comprehensive Loss - Three and Six Months Ended June 30, 2020 and 2019 |
4 |
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Statements of Consolidated Cash Flows - Six Months Ended June 30, 2020 and 2019 |
5 |
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Statements of Consolidated Shareholders’ Deficit - Three and Six Months Ended June 30, 2020 and 2019 |
6 |
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7 |
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2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
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3 |
25 |
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4 |
25 |
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1 |
26 |
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1A |
26 |
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2 |
27 |
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3 |
Not Applicable |
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4 |
Not Applicable |
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5 |
Not Applicable |
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6 |
28 |
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29 |
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
YRC Worldwide Inc. and Subsidiaries
(Amounts in millions except share and per share data)
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June 30, 2020 |
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December 31, 2019 |
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(Unaudited) |
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Assets |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted amounts held in escrow |
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Accounts receivable, net |
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Prepaid expenses and other |
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Total current assets |
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Property and Equipment: |
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Cost |
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Less – accumulated depreciation |
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( |
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Net property and equipment |
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Deferred income taxes, net |
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Operating lease right-of-use assets |
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Other assets |
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Total Assets |
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$ |
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$ |
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Liabilities and Shareholders’ Deficit |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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Wages, vacations and employee benefits |
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Current operating lease liabilities |
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Claims and insurance accruals |
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Other accrued taxes |
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Other current and accrued liabilities |
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Current maturities of long-term debt |
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Total current liabilities |
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Other Liabilities: |
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Long-term debt and financing, less current portion |
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Pension and postretirement |
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Operating lease liabilities |
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Claims and other liabilities |
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Commitments and contingencies |
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Shareholders’ Deficit: |
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Cumulative preferred stock, $ |
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Common stock, $ |
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Capital surplus |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Treasury stock, at cost ( |
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Total shareholders’ deficit |
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( |
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Total Liabilities and Shareholders’ Deficit |
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$ |
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$ |
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The accompanying notes are an integral part of these statements.
3
STATEMENTS OF CONSOLIDATED COMPREHENSIVE LOSS
YRC Worldwide Inc. and Subsidiaries
For the Three and Six Months Ended June 30
(Amounts in millions except per share data, shares in thousands)
(Unaudited)
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Three Months |
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Six Months |
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2020 |
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2019 |
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2020 |
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2019 |
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Operating Revenue |
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$ |
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$ |
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$ |
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$ |
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Operating Expenses: |
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Salaries, wages and employee benefits |
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Fuel, operating expenses and supplies |
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Purchased transportation |
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Depreciation and amortization |
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Other operating expenses |
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Gains on property disposals, net |
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( |
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( |
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( |
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Impairment charges |
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Total operating expenses |
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Operating Income (Loss) |
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( |
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( |
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Nonoperating Expenses: |
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Interest expense |
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Non-union pension and postretirement benefits |
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( |
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( |
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Other, net |
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( |
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( |
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Nonoperating expenses, net |
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Loss before income taxes |
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( |
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( |
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( |
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( |
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Income tax expense (benefit) |
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( |
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( |
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( |
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Net loss |
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( |
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( |
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( |
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( |
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Other comprehensive income, net of tax |
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Comprehensive Loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Average Common Shares Outstanding - Basic |
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Average Common Shares Outstanding - Diluted |
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Loss Per Share - Basic |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Loss Per Share - Diluted |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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The accompanying notes are an integral part of these statements.
4
STATEMENTS OF CONSOLIDATED CASH FLOWS
YRC Worldwide Inc. and Subsidiaries
For the Six Months Ended June 30
(Amounts in millions)
(Unaudited)
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2020 |
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2019 |
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Operating Activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to cash flows from operating activities: |
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Depreciation and amortization |
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Lease amortization and accretion expense |
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Lease payments |
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( |
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( |
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Paid-in-kind interest |
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Equity-based compensation and employee benefits expense |
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Gains losses on property disposals, net |
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( |
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( |
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Impairment charges |
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Deferred income tax benefit, net |
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( |
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Other noncash items, net |
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Changes in assets and liabilities, net: |
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Accounts receivable |
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( |
) |
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( |
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Accounts payable |
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Other operating assets |
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( |
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Other operating liabilities |
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Net cash provided by (used in) operating activities |
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( |
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Investing Activities: |
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Acquisition of property and equipment |
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( |
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( |
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Proceeds from disposal of property and equipment |
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Net cash provided by (used in) investing activities |
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( |
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Financing Activities: |
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Repayment of long-term debt |
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( |
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( |
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Debt issuance costs |
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( |
) |
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Payments for tax withheld on equity-based compensation |
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( |
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( |
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Net cash used in financing activities |
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( |
) |
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( |
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Net Increase (Decrease) In Cash and Cash Equivalents and Restricted Amounts Held in Escrow |
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( |
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Cash and Cash Equivalents and Restricted Amounts Held in Escrow, Beginning of Period |
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Cash and Cash Equivalents and Restricted Amounts Held in Escrow, End of Period |
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$ |
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$ |
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Supplemental Cash Flow Information: |
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Interest paid |
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$ |
( |
) |
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$ |
( |
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Income tax payment |
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( |
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( |
) |
The accompanying notes are an integral part of these statements.
5
STATEMENT OF CONSOLIDATED SHAREHOLDERS’ DEFICIT
YRC Worldwide Inc. and Subsidiaries
For the Three and Six Months Ended June 30
(Amounts in millions)
(Unaudited)
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Preferred Stock |
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Common Stock |
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Capital Surplus |
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Accumulated Deficit |
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Accumulated Other Comprehensive Loss |
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Treasury Stock, At Cost |
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Total Shareholders' Deficit |
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Balances at December 31, 2019 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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Pension, net of tax: |
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Amortization of prior net losses |
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— |
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— |
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— |
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— |
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Amortization of prior service credit |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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Balances at March 31, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Pension, net of tax: |
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Amortization of prior net losses |
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— |
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— |
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— |
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— |
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Amortization of prior service credit |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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— |
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Balances at June 30, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
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Preferred Stock |
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Common Stock |
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Capital Surplus |
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Accumulated Deficit |
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Accumulated Other Comprehensive Loss |
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Treasury Stock, At Cost |
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Total Shareholders' Deficit |
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Balances at December 31, 2018 |
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$ |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Pension, net of tax: |
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Amortization of prior net losses |
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— |
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— |
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— |
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— |
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|
Amortization of prior service credit |
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— |
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— |
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— |
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( |
) |
|
— |
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( |
) |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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— |
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|
Balances at March 31, 2019 |
|
$ |
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|
$ |
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|
$ |
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|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
|
Equity-based compensation |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
Net loss |
|
|
|
|
|
— |
|
|
— |
|
|
( |
) |
|
— |
|
|
— |
|
|
( |
) |
|
Pension, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior net losses |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
Amortization of prior service credit |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
( |
) |
|
— |
|
|
( |
) |
|
Foreign currency translation adjustments |
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
Balances at June 30, 2019 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
The accompanying notes are an integral part of these statements.
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YRC Worldwide Inc. and Subsidiaries
(Unaudited)
1. Description of Business
YRC Worldwide Inc. (also referred to as “YRC Worldwide,” the “Company,” “we,” “us” or “our”) is a holding company that, through its operating subsidiaries, offers its customers a wide range of transportation services. We have one of the largest, most comprehensive less-than-truckload (“LTL”) networks in North America with local, regional, national and international capabilities. Through our team of experienced service professionals, we offer expertise in LTL shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence.
YRC Worldwide provides for the movement of industrial, commercial and retail goods through our LTL subsidiaries including USF Holland LLC (“Holland”), New Penn Motor Express LLC (“New Penn”), USF Reddaway Inc. (“Reddaway”), YRC Inc. and YRC Freight Canada Company (both doing business as, and herein referred to as, “YRC Freight”). Our LTL companies provide regional, national and international services through a consolidated network of facilities located across the United States, Canada, and Puerto Rico. We also offer services through HNRY Logistics, Inc. (“HNRY Logistics”), our customer-specific logistics solutions provider, specializing in truckload, residential, and warehouse solutions.
At June 30, 2020, approximately
2. Basis of Presentation
The accompanying consolidated financial statements include the accounts of YRC Worldwide and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We report on a calendar year basis. The quarters of Holland and Reddaway consist of thirteen weeks that end on a Saturday either before or after the end of March, June and September, whereas all other companies’ quarters end on the natural calendar quarter end.
Segments
As noted in our 2019 annual report on Form 10-K, our Chief Operating Decision Maker began evaluating performance and business results, as well as making resource and operating decisions under the single segment view as a result of the business transformation that began during 2019. As such, a single segment view is presented in this Form 10-Q. See further details in our 2019 annual report as filed March 11, 2020.
Revenue Disaggregation
We considered the disclosure requirements for revenue disaggregation guidance in ASC Topic 606, Revenue from Contracts with Customers, and noted that our business transformation has led to one consolidated LTL network as we joined our national and regional operations and no longer measure revenues by geographies.
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Three Months |
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Six Months |
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Disaggregated Revenue (in millions) |
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2020 |
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2019 |
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2020 |
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|
2019 |
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||||
|
LTL revenue |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Total revenue |
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$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Fair Value of Financial Instruments
The following table summarizes the fair value hierarchy of our financial assets and liabilities carried at fair value on a recurring basis as of June 30, 2020:
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