10-Q
0000716006Q1false--12-310000716006us-gaap:CarryingReportedAmountFairValueDisclosureMemberyell:LeaseFinancingObligationsMember2022-03-310000716006yell:LTLRevenueMember2021-01-012021-03-310000716006us-gaap:AdditionalPaidInCapitalMember2021-03-3100007160062022-02-042022-02-040000716006us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000716006us-gaap:CarryingReportedAmountFairValueDisclosureMemberyell:LeaseFinancingObligationsMember2021-12-310000716006us-gaap:PensionPlansDefinedBenefitMemberyell:QualifiedAndNonQualifiedMember2021-01-012021-03-310000716006us-gaap:RetainedEarningsMember2022-01-012022-03-310000716006yell:SecondARCDAMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000716006us-gaap:AdditionalPaidInCapitalMember2022-03-310000716006us-gaap:CarryingReportedAmountFairValueDisclosureMemberyell:TermLoanMember2021-12-310000716006us-gaap:TreasuryStockMember2022-03-3100007160062022-03-090000716006us-gaap:RetainedEarningsMember2021-12-310000716006yell:TermLoanMember2022-03-310000716006us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000716006us-gaap:CommonStockMember2022-03-310000716006yell:USTreasuryLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000716006yell:TermLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000716006us-gaap:LondonInterbankOfferedRateLIBORMemberyell:USTreasuryLoanMember2022-01-012022-03-310000716006yell:SecondARCDAMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000716006us-gaap:TreasuryStockMember2021-12-310000716006yell:UnsecuredSecondARCDMember2022-03-310000716006us-gaap:RetainedEarningsMember2021-03-310000716006yell:USTreasuryLoanMemberyell:TrancheAMember2022-03-310000716006yell:LeaseFinancingObligationsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000716006yell:A2014ABLFacilityCreditAgreementMemberus-gaap:LineOfCreditMember2022-03-310000716006yell:OtherRevenueMember2022-01-012022-03-310000716006us-gaap:EstimateOfFairValueFairValueDisclosureMemberyell:TermLoanMember2022-03-310000716006us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000716006yell:AntidilutiveOptionsAndSharesMember2021-01-012021-03-310000716006us-gaap:RetainedEarningsMember2021-01-012021-03-310000716006us-gaap:RetainedEarningsMember2022-03-310000716006us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000716006us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-3100007160062021-12-062021-12-060000716006yell:SecuredSecondARCDAMember2022-03-310000716006yell:SecuredAndUnsecuredSecondARCdaMember2022-03-310000716006yell:LTLRevenueMember2022-01-012022-03-310000716006yell:SecondARCDAMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000716006us-gaap:LondonInterbankOfferedRateLIBORMemberyell:TermLoanMember2022-01-012022-03-310000716006us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310000716006yell:OtherRevenueMember2021-01-012021-03-310000716006us-gaap:PensionPlansDefinedBenefitMemberyell:QualifiedAndNonQualifiedMember2022-01-012022-03-310000716006yell:LeaseFinancingObligationsMember2022-03-310000716006yell:USTreasuryLoanMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-3100007160062022-01-012022-03-310000716006us-gaap:CommonStockMember2021-12-310000716006us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000716006us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-03-310000716006us-gaap:AdditionalPaidInCapitalMember2021-12-3100007160062022-03-310000716006us-gaap:TreasuryStockMember2021-03-3100007160062020-12-3100007160062021-12-310000716006yell:LeaseFinancingObligationsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-3100007160062022-03-092022-03-090000716006us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000716006us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000716006us-gaap:LondonInterbankOfferedRateLIBORMemberyell:USTreasuryLoanMember2022-03-310000716006us-gaap:CommonStockMember2020-12-310000716006us-gaap:TreasuryStockMember2020-12-3100007160062022-05-050000716006yell:USTreasuryLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000716006us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100007160062021-03-310000716006us-gaap:AdditionalPaidInCapitalMember2020-12-310000716006us-gaap:LondonInterbankOfferedRateLIBORMemberyell:TermLoanMember2022-03-310000716006us-gaap:CarryingReportedAmountFairValueDisclosureMemberyell:TermLoanMember2022-03-3100007160062021-01-012021-03-310000716006us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000716006yell:USTreasuryLoanMemberyell:TrancheBMember2022-03-310000716006yell:AntidilutiveOptionsAndSharesMember2022-01-012022-03-310000716006yell:USTreasuryLoanMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310000716006us-gaap:CommonStockMember2021-03-310000716006yell:SecondARCDAMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310000716006us-gaap:RetainedEarningsMember2020-12-31xbrli:purexbrli:sharesiso4217:USDxbrli:sharesiso4217:USD

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

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

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

501 Commerce Street, Suite 1120, Nashville, Tennessee

 

37203

(Address of principal executive offices)

 

(Zip Code)

 

(913) 696-6100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value per share

 

YELL

 

The NASDAQ Stock Market LLC

 

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.

 

Large accelerated filer

 

 

 

 

Accelerated filer

 

 

 

 

 

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

Emerging growth company

 

 

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 ☐ 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 May 5, 2022

Common Stock, $0.01 par value per share

 

51,517,731 shares

 

 


 

INDEX

 

Item

 

Page

 

PART I – FINANCIAL INFORMATION

 

1

Financial Statements

3

 

Consolidated Balance Sheets – March 31, 2022 and December 31, 2021

3

 

Statements of Consolidated Comprehensive Income (Loss) – Three Months Ended March 31, 2022 and 2021

4

 

Statements of Consolidated Cash Flows - Three Months Ended March 31, 2022 and 2021

5

 

Statements of Consolidated Shareholders’ Deficit - Three Months Ended March 31, 2022 and 2021

6

 

Notes to Consolidated Financial Statements

7

2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

3

Quantitative and Qualitative Disclosures About Market Risk

19

4

Controls and Procedures

19

 

 

PART II – OTHER INFORMATION

 

1

Legal Proceedings

20

1A

Risk Factors

20

2

Not Applicable

 

3

Not Applicable

 

4

Not Applicable

 

5

Not Applicable

 

6

Exhibits

20

 

Signatures

21

 

2


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

Yellow Corporation and Subsidiaries

 

(Amounts in millions except share and per share data)

 

March 31, 2022

 

 

December 31, 2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

233.8

 

 

$

310.7

 

Restricted amounts held in escrow

 

 

8.3

 

 

 

4.1

 

Accounts receivable, net

 

 

741.3

 

 

 

663.7

 

Prepaid expenses and other

 

 

54.0

 

 

 

65.0

 

Total current assets

 

 

1,037.4

 

 

 

1,043.5

 

Property and Equipment:

 

 

 

 

 

 

Cost

 

 

3,152.2

 

 

 

3,164.6

 

Less – accumulated depreciation

 

 

(2,014.0

)

 

 

(2,032.3

)

Net property and equipment

 

 

1,138.2

 

 

 

1,132.3

 

Deferred income taxes, net

 

 

1.4

 

 

 

1.4

 

Pension

 

 

41.2

 

 

 

40.5

 

Operating lease right-of-use assets

 

 

164.9

 

 

 

184.8

 

Other assets

 

 

22.6

 

 

 

23.1

 

Total Assets

 

$

2,405.7

 

 

$

2,425.6

 

Liabilities and Shareholders’ Deficit

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

210.6

 

 

$

178.4

 

Wages, vacations and employee benefits

 

 

227.4

 

 

 

252.5

 

Current operating lease liabilities

 

 

70.6

 

 

 

76.5

 

Claims and insurance accruals

 

 

140.3

 

 

 

125.9

 

Other accrued taxes

 

 

77.6

 

 

 

72.8

 

Other current and accrued liabilities

 

 

49.0

 

 

 

45.7

 

Current maturities of long-term debt

 

 

70.7

 

 

 

72.3

 

Total current liabilities

 

 

846.2

 

 

 

824.1

 

Other Liabilities:

 

 

 

 

 

 

Long-term debt, less current portion

 

 

1,482.1

 

 

 

1,482.2

 

Pension and postretirement

 

 

86.3

 

 

 

88.2

 

Operating lease liabilities

 

 

103.5

 

 

 

118.9

 

Claims and other liabilities

 

 

274.5

 

 

 

275.7

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ Deficit:

 

 

 

 

 

 

Cumulative preferred stock, $1 par value per share - authorized 5,000,000 shares

 

 

 

 

 

 

Common stock, $0.01 par value per share - authorized 95,000,000 shares, issued 51,296,000 and 50,955,000 shares, respectively

 

 

0.5

 

 

 

0.5

 

Capital surplus

 

 

2,390.1

 

 

 

2,388.3

 

Accumulated deficit

 

 

(2,502.5

)

 

 

(2,475.0

)

Accumulated other comprehensive loss

 

 

(182.3

)

 

 

(184.6

)

Treasury stock, at cost

 

 

(92.7

)

 

 

(92.7

)

Total shareholders’ deficit

 

 

(386.9

)

 

 

(363.5

)

Total Liabilities and Shareholders’ Deficit

 

$

2,405.7

 

 

$

2,425.6

 

 

The accompanying notes are an integral part of these statements.

3


 

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

Yellow Corporation and Subsidiaries

For the Three Months Ended March 31

(Unaudited)

 

 

(Amounts in millions except per share data; shares in thousands)

 

2022

 

 

2021

 

 

Operating Revenue

 

$

1,260.4

 

 

$

1,198.4

 

 

Operating Expenses:

 

 

 

 

 

 

 

Salaries, wages and employee benefits

 

 

711.0

 

 

 

723.8

 

 

Fuel, operating expenses and supplies

 

 

243.6

 

 

 

203.5

 

 

Purchased transportation

 

 

185.4

 

 

 

200.0

 

 

Depreciation and amortization

 

 

35.7

 

 

 

33.3

 

 

Other operating expenses

 

 

81.0

 

 

 

64.4

 

 

(Gains) losses on property disposals, net

 

 

(5.5

)

 

 

1.0

 

 

Total operating expenses

 

 

1,251.2

 

 

 

1,226.0

 

 

Operating Income (Loss)

 

 

9.2

 

 

 

(27.6

)

 

Nonoperating Expenses:

 

 

 

 

 

 

 

Interest expense

 

 

37.7

 

 

 

35.9

 

 

Non-union pension and postretirement benefits

 

 

(0.4

)

 

 

(1.3

)

 

Other, net

 

 

0.2

 

 

 

 

 

Nonoperating expenses, net

 

 

37.5

 

 

 

34.6

 

 

Loss before income taxes

 

 

(28.3

)

 

 

(62.2

)

 

Income tax expense (benefit)

 

 

(0.8

)

 

 

1.1

 

 

Net loss

 

 

(27.5

)

 

 

(63.3

)

 

Other comprehensive income, net of tax

 

 

2.3

 

 

 

3.6

 

 

Comprehensive Loss

 

$

(25.2

)

 

$

(59.7

)

 

 

 

 

 

 

 

 

 

Average Common Shares Outstanding - Basic

 

 

51,091

 

 

 

50,358

 

 

Average Common Shares Outstanding - Diluted

 

 

51,091

 

 

 

50,358

 

 

 

 

 

 

 

 

 

 

Loss Per Share - Basic

 

$

(0.54

)

 

$

(1.26

)

 

Loss Per Share - Diluted

 

$

(0.54

)

 

$

(1.26

)

 

The accompanying notes are an integral part of these statements.

4


 

STATEMENTS OF CONSOLIDATED CASH FLOWS

Yellow Corporation and Subsidiaries

For the Three Months Ended March 31

(Unaudited)

 

(in millions)

 

2022

 

 

2021

 

Operating Activities:

 

 

 

 

 

 

Net loss

 

$

(27.5

)

 

$

(63.3

)

Adjustments to reconcile net loss to cash flows from operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

35.7

 

 

 

33.3

 

Lease amortization and accretion expense

 

 

27.2

 

 

 

36.9

 

Lease payments

 

 

(28.6

)

 

 

(37.7

)

Paid-in-kind interest

 

 

2.3

 

 

 

2.3

 

Debt-related amortization

 

 

5.9

 

 

 

5.7

 

Equity-based compensation and employee benefits expense

 

 

4.3

 

 

 

5.1

 

(Gains) losses on property disposals, net

 

 

(5.5

)

 

 

1.0

 

Deferred income taxes, net

 

 

 

 

 

(1.0

)

Other non-cash items, net

 

 

0.2

 

 

 

0.7

 

Changes in assets and liabilities, net:

 

 

 

 

 

 

Accounts receivable

 

 

(77.5

)

 

 

(74.9

)

Accounts payable

 

 

36.1

 

 

 

36.1

 

Other operating assets

 

 

9.3

 

 

 

(4.0

)

Other operating liabilities

 

 

(15.4

)

 

 

21.0

 

Net cash provided by (used in) operating activities

 

 

(33.5

)

 

 

(38.8

)

Investing Activities:

 

 

 

 

 

 

Acquisition of property and equipment

 

 

(36.4

)

 

 

(202.4

)

Proceeds from disposal of property and equipment

 

 

6.6

 

 

 

0.4

 

Net cash provided by (used in) investing activities

 

 

(29.8

)

 

 

(202.0

)

Financing Activities:

 

 

 

 

 

 

Issuance of long-term debt, net

 

 

 

 

 

176.5

 

Repayment of long-term debt

 

 

(8.9

)

 

 

(0.5

)

Debt issuance costs

 

 

 

 

 

(0.1

)

Payments for tax withheld on equity-based compensation

 

 

(0.5

)

 

 

(0.3

)

Net cash provided by (used in) financing activities

 

 

(9.4

)

 

 

175.6

 

Net Increase (Decrease) In Cash and Cash Equivalents and Restricted Amounts Held in Escrow

 

 

(72.7

)

 

 

(65.2

)

Cash and Cash Equivalents and Restricted Amounts Held in Escrow, Beginning of Period

 

 

314.8

 

 

 

478.0

 

Cash and Cash Equivalents and Restricted Amounts Held in Escrow, End of Period

 

$

242.1

 

 

$

412.8

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

Interest paid

 

$

(30.9

)

 

$

(27.3

)

 

The accompanying notes are an integral part of these statements.

 

5


 

STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ DEFICIT

Yellow Corporation and Subsidiaries

For the Three Months ended March 31

(Unaudited)

 

(in millions)

 

Preferred Stock

 

Common Stock

 

Capital Surplus

 

Accumulated Deficit

 

Accumulated Other Comprehensive Loss

 

Treasury Stock, At Cost

 

Total Shareholders' Deficit

 

Balances at December 31, 2021

 

$

 

$

0.5

 

$

2,388.3

 

$

(2,475.0

)

$

(184.6

)

$

(92.7

)

$

(363.5

)

Equity-based compensation

 

 

 

 

 

 

1.8

 

 

 

 

 

 

 

 

1.8

 

Net loss

 

 

 

 

 

 

 

 

(27.5

)

 

 

 

 

 

(27.5

)

Pension, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior net losses

 

 

 

 

 

 

 

 

 

 

2.2

 

 

 

 

2.2

 

Amortization of prior service credit

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

 

(0.1

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

0.2

 

 

 

 

0.2

 

Balances at March 31, 2022

 

$

 

$

0.5

 

$

2,390.1

 

$

(2,502.5

)

$

(182.3

)

$

(92.7

)

$

(386.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Preferred Stock

 

Common Stock

 

Capital Surplus

 

Accumulated Deficit

 

Accumulated Other Comprehensive Loss

 

Treasury Stock, At Cost

 

Total Shareholders' Deficit

 

Balances at December 31, 2020

 

$

 

$

0.5

 

$

2,383.6

 

$

(2,365.9

)

$

(148.8

)

$

(92.7

)

$

(223.3

)

Equity-based compensation

 

 

 

 

 

 

1.8

 

 

 

 

 

 

 

 

1.8

 

Net loss

 

 

 

 

 

 

 

 

(63.3

)

 

 

 

 

 

(63.3

)

Pension, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior net losses

 

 

 

 

 

 

 

 

 

 

3.0

 

 

 

 

3.0

 

Amortization of prior service credit

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

 

(0.1

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

0.7

 

 

 

 

0.7

 

Balances at March 31, 2021

 

$

 

$

0.5

 

$

2,385.4

 

$

(2,429.2

)

$

(145.2

)

$

(92.7

)

$

(281.2

)

 

The accompanying notes are an integral part of these statements.

6


 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Yellow Corporation and Subsidiaries

(Unaudited)

1. Description of Business

Yellow Corporation (also referred to as “Yellow,” 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.

Yellow 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 primarily across the United States and Canada. We also offer services through Yellow Logistics, Inc. (“Yellow Logistics”), our customer-specific logistics solutions provider, specializing in truckload, residential, and warehouse solutions.

The Company's labor force is subject to collective bargaining agreements, which predominantly expire on March 31, 2024.

 

2. Basis of Presentation

 

The accompanying unaudited consolidated financial statements include the accounts of Yellow and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We report on a calendar year basis.

 

All normal recurring adjustments necessary for a fair presentation of the consolidated financial statements for the interim periods included herein have been made. These unaudited interim consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information, the instructions to Quarterly Report on Form 10-Q and the applicable rules and regulations. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted from these statements. The accompanying consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“the 2021 Form 10-K”). Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results of operations that may be expected for the year ended December 31, 2022 or other reporting periods.

Use of Estimates

Management makes estimates and assumptions when preparing the financial statements in conformity with U.S. generally accepted accounting principles which affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Disaggregation of Revenue

The Company’s revenue is summarized below with LTL shipments defined as shipments less than 10,000 pounds that move in our network:

(in millions)

 

Three Months Ended March 31, 2022

 

 

Three Months Ended March 31, 2021

 

LTL revenue

 

$

1,129.6

 

 

$

1,083.5

 

Other revenue (a)

 

 

130.8

 

 

 

114.9

 

Total revenue

 

$

1,260.4

 

 

$

1,198.4

 

(a) Other revenue is primarily comprised of truckload shipments by the LTL operating companies.

Accounting Standards

 

While there are recently issued accounting standards that are applicable to the Company, none of these standards are expected to have a material impact on our consolidated financial statements and accompanying notes.

7


 

3. Debt and Financing

Our outstanding debt as of March 31, 2022, consisted of the following:

(in millions)

 

Par Value

 

 

Discount

 

 

Commitment
Fee

 

 

Debt
Issuance
Costs

 

 

Book Value

 

 

Effective
Interest
Rate

 

UST Loan Tranche A(a)

 

$

313.8

 

 

$

 

 

$

(11.8

)

 

$

(3.1

)

 

$

298.9

 

(b)

 

6.4

%

UST Loan Tranche B

 

 

400.0

 

 

 

 

 

 

(15.7

)

 

 

(4.1

)

 

 

380.2

 

(b)

 

6.5

%

Term Loan (a)

 

 

605.3

 

 

 

(13.3

)

 

 

 

 

 

(6.0

)

 

 

586.0

 

(c)

 

9.5

%

ABL Facility

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured Second A&R CDA

 

 

23.5

 

 

 

 

 

 

 

 

 

 

 

 

23.5

 

 

 

7.7

%

Unsecured Second A&R CDA

 

 

42.5

 

 

 

 

 

 

 

 

 

 

 

 

42.5

 

 

 

7.7

%

Lease financing obligations

 

 

221.8

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

221.7

 

(d)

 

17.4

%

Total debt

 

$

1,606.9

 

 

$

(13.3

)

 

$

(27.5

)

 

$

(13.3

)

 

$

1,552.8

 

 

 

 

Current maturities of Second A&R CDA

 

 

(66.0

)

 

 

 

 

 

 

 

 

 

 

 

(66.0

)

 

 

 

Current maturities of lease financing obligations

 

 

(4.7

)

 

 

 

 

 

 

 

 

 

 

 

(4.7

)

 

 

 

Long-term debt

 

$

1,536.2

 

 

$

(13.3

)

 

$

(27.5

)

 

$

(13.3

)

 

$

1,482.1

 

 

 

 

 

(a) The Par Value and the Book Value both reflect the accumulated cash funds that have been drawn, plus the accumulated paid-in-kind interest.

(b) Variable interest rate based on the Eurodollar rate, which is currently determined by the 1, 2, 3 or 6-month USD LIBOR, with a floor of 1.0%, plus a fixed margin of 3.5%.

(c) Variable interest rate based on the Eurodollar rate, which is currently determined by the 1, 3 or 6-month USD LIBOR, with a floor of 1.0%, plus a fixed margin of 7.5%.

(d) Interest rate for lease financing obligations is derived from the difference between total rent payment and calculated principal amortization over the life of lease agreements.

 

Maturities

 

The principal maturities over the next five years and thereafter of total debt as of March 31, 2022 are as follows:

(in millions)

 

Principal Maturity Amount

 

2022 - remaining portion

 

$

69.3

 

2023

 

 

5.7

 

2024

 

 

1,323.2

 

2025

 

 

3.6

 

2026

 

 

0.3

 

Thereafter

 

 

204.8

 

Total

 

$

1,606.9

 

Fair Value Measurement

The book value and estimated fair values of our long-term debt, including current maturities, are summarized as follows:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

(in millions)

 

Book Value

 

 

Fair Value

 

 

Book Value

 

 

Fair Value

 

UST Loans

 

$

679.1

 

 

$

645.3

 

 

$

673.3

 

 

$

636.5

 

Term Loan

 

 

586.0

 

 

 

605.3

 

 

 

590.9

 

 

 

612.9

 

Second A&R CDA

 

 

66.0

 

 

 

66.0

 

 

 

66.5

 

 

 

66.6

 

Lease financing obligations

 

 

221.7

 

 

 

220.7

 

 

 

223.8

 

 

 

223.7

 

Total debt

 

$

1,552.8

 

 

$

1,537.3

 

 

$

1,554.5

 

 

$

1,539.7

 

 

The fair values of the Term Loan and Second A&R CDA are estimated based on observable prices (level two inputs for fair value measurements). The fair value of the UST Loans is estimated using certain inputs that are unobservable (level three input for fair value measurement), which are based on the discounted amount of future cash flows using our current estimated incremental rate of borrowing for similar liabilities or assets. The fair value of the lease financing obligations are estimated using a publicly traded secured loan with similar characteristics (level three input for fair value measurement).