Yellow Corporation Solidly Profitable in Challenging First Quarter
-- Successful equity offering provides funds for growth strategy and debt reduction
-- Premium services and cost management enhance Yellow Transportation results
-- Meridian IQ formally launched in March, and has early successes
-- Spin-off of SCS Transportation on track for third quarter 2002
OVERLAND PARK, Kan., Apr 18, 2002 -- Yellow Corporation (Nasdaq: YELL) today reported first quarter 2002 income, before unusual items and the cumulative effect of a change in accounting principle, of $2.7 million, or $.11 per share. On a comparable basis, income for the first quarter of 2001 was $5.4 million, or $.22 per share. Including unusual items, income before the cumulative effect of a change in accounting principle was $2.1 million, or $.08 per share, compared to $1.7 million, or $.07 per share, in the first quarter of last year.
Consolidated operating revenue for the first quarter was $762 million, down 8.4 percent, from $832 million last year. Consolidated operating income, before unusual items, was $9.1 million this quarter, compared to $18.4 million in the first quarter of last year. Including unusual items, consolidated operating income was $8.1 million compared to $12.4 million last year.
"We have added to our momentum by successfully completing an equity offering, by advancing the spin-off of SCS Transportation, and through the continued solid performance of our operating and technology companies in a difficult environment," said Bill Zollars, Yellow Corporation Chairman, President and CEO. "In addition, proceeds from the equity offering, which include the 15 percent over-allotment option, provide additional financial flexibility to accelerate our growth strategies in the asset-based and non-asset-based areas of our business. We are well positioned for the future and to benefit from economic recovery."
The first quarter of 2002 included a previously announced non-cash charge of $75.2 million, or $2.97 per share, for the impairment of goodwill associated with Jevic Transportation. The charge was recorded as a cumulative effect of change in accounting principle.
Yellow Transportation
Yellow Transportation reported first quarter revenue of $565 million, down 9.8 percent on a per-day basis from $636 million in the 2001 first quarter. First quarter total tonnage was down 7.4 percent on a per-day basis from the first quarter of 2001, with LTL tonnage down 7.2 percent. LTL revenue per hundred weight, excluding fuel surcharge, was up .1 percent from the first quarter of last year, a quarter in which yields improved nearly 8 percent on a comparable basis.
Operating income, before unusual items, was $7.2 million, down from $14.2 million in the 2001 first quarter. The first quarter operating ratio, excluding unusual items, was 98.7 compared with 97.8 a year earlier.
"Yellow Transportation has maintained excellent cost controls while preserving service quality," Zollars said. "In addition, our ongoing focus on offering value-added premium services continues to enhance our results. Even with the growth we have experienced to date, further opportunities exist to grow these value-added services. The fact that revenues for both Exact Express and Definite Delivery are up nearly 15 percent in this challenging environment is evidence of that potential."
Meridian IQ
Meridian IQ was formed earlier this year, and formally launched in March, as the Yellow platform for non-asset-based transportation services. These capabilities include international and domestic freight forwarding services, multi-modal brokerage services, and transportation management solutions.
"Meridian IQ has enjoyed some early successes by leveraging its unique business model to deliver higher ROI to their customers," Zollars said. "Offering customers fast and easy-to-implement solutions to their transportation needs, without all the upfront costs, gives us a competitive advantage."
Operating revenue was $15 million for the first quarter of 2002, and operating losses excluding unusual items were $1.4 million, consistent with our expectations for this newly formed entity.
SCS Transportation
Consolidated operating revenue for SCS Transportation was $184 million for the first quarter of 2002, down 4.3 percent on a per-day basis from $196 million a year ago. Operating income, before unusual items, was $5.1 million, down only about 5 percent from $5.4 million last year.
"Our operating performance speaks not only to our ability to manage costs," said Bert Trucksess, President and CEO of SCS Transportation, "but also to the response of the market to our consistently high quality of service."
At Saia, first quarter revenue was $115 million, down 1.9 percent on a per-day basis from $119 million in the first quarter of last year. Operating income, excluding unusual items, was $3.8 million up from $3.1 million in the first quarter of 2001. The first quarter operating ratio, excluding unusual items, was 96.7 compared with 97.4 the prior year.
Jevic reported first quarter revenue of $69 million, down 8.0 percent on a per-day basis from $77 million a year ago. Operating income, before unusual items, was $1.0 million in the first quarter of 2001 compared to $2.3 million in the same period last year. The operating ratio, before unusual items, was 98.5 in the 2002 first quarter and 97.0 last year.
"We are moving ahead to complete the remaining steps required to spin-off SCS Transportation," stated Zollars. "Subject to market conditions and final board of directors approval, we anticipate completing the spin-off in the third quarter of this year."
Outlook
"We have experienced modest improvement in our business volumes, with each month of the first quarter improving over the prior month," Zollars stated. "Assuming that economic trend continues throughout the second quarter and the pricing environment shows modest improvement, our expectations for earnings per share are currently in the range of $.15 to $.20."
Review of Financial Results
A teleconference review of Yellow Corporation first quarter 2002 financial results has been scheduled for Friday, April 19, 2002, beginning at 9:30 (EDT), 8:30 (CDT). Hosting the teleconference will be: Bill Zollars, Chairman, President and CEO, Yellow Corporation; Don Barger, Chief Financial Officer, Yellow Corporation; James Welch, President, Yellow Transportation; Jim Ritchie, President, Meridian IQ; and Bert Trucksess, President, SCS Transportation.
To participate, please dial 1-888-609-3912. Callers should dial in 5 to 10 minutes prior to the start of the call. The conference call will be webcast live via StreetEvents at www.streetevents.com and via the Yellow Corporation Internet site www.yellowcorp.com. An audio playback will be available until April 29 by calling 1-800-642-1687 and then dialing the access code 3691363. An audio playback also will be available for 30 days after the call via the StreetEvents, and Yellow Corporation web sites.
Statements contained in this release 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.
Yellow Corporation, a Fortune 500 Company, is a holding company with wholly owned operating subsidiaries. Its largest subsidiary, Yellow Transportation, Inc., offers a full range of national, regional and international services for the movement of industrial, commercial and retail goods. SCS Transportation provides overnight and second-day LTL and selected TL services to a broad range of industries. Meridian IQ is a non-asset based company using web-based technology to provide customers a single source for transportation management solutions and global shipment management. Headquartered in Overland Park, Kansas, Yellow Corporation employs approximately 28,000 people.
CONSOLIDATED BALANCE SHEETS
Yellow Corporation and Subsidiaries
(Amounts in thousands except per share data)
(Unaudited)
March 31, December 31,
2002 2001
ASSETS
CURRENT ASSETS:
Cash $18,817 $20,694
Accounts receivable 203,286 208,267
Prepaid expenses and other 67,811 83,449
Total current assets 289,914 312,410
PROPERTY AND EQUIPMENT:
Cost 2,133,528 2,133,406
Less - Accumulated depreciation 1,272,729 1,267,834
Net property and equipment 860,799 865,572
GOODWILL AND OTHER ASSETS 32,449 107,795
$1,183,162 $1,285,777
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and checks outstanding $98,455 $128,343
Wages and employees' benefits 138,310 130,806
Other current liabilities 117,006 103,778
Current maturities of long-term debt 5,929 6,281
Total current liabilities 359,700 369,208
OTHER LIABILITIES:
Long-term debt 188,679 213,745
Deferred income taxes 91,606 92,817
Claims, insurance and other 121,516 119,018
Total other liabilities 401,801 425,580
SHAREHOLDERS' EQUITY:
Common stock, $1 par value 31,144 31,028
Capital surplus 43,867 41,689
Retained earnings 464,460 537,496
Accumulated other comprehensive income (4,838) (6,252)
Treasury stock (112,972) (112,972)
Total shareholders' equity 421,661 490,989
$1,183,162 $1,285,777
STATEMENTS OF CONSOLIDATED OPERATIONS
Yellow Corporation and Subsidiaries
For the Three Months ended March 31, 2002 and 2001
(Amounts in thousands except per share data)
(Unaudited)
2002 2001
OPERATING REVENUE $762,340 $831,978
OPERATING EXPENSES:
Salaries, wages and benefits 496,341 523,344
Operating expenses and supplies 110,895 143,930
Operating taxes and licenses 26,047 28,237
Claims and insurance 18,885 18,491
Depreciation and amortization 30,181 31,865
Purchased transportation 70,919 67,677
Unusual Items(A) 968 5,991
Total operating expenses 754,236 819,535
INCOME FROM OPERATIONS 8,104 12,443
NONOPERATING (INCOME) EXPENSES:
Interest expense 3,903 4,065
Loss in Transportation.com - 2,536
Other, net 581 2,725
Nonoperating expenses, net 4,484 9,326
INCOME BEFORE INCOME TAXES 3,620 3,117
INCOME TAX PROVISION 1,481 1,371
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 2,139 1,746
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR GOODWILL (75,175) -
NET INCOME (LOSS) $(73,036) $1,746
AVERAGE SHARES OUTSTANDING-BASIC 24,934 24,036
AVERAGE SHARES OUTSTANDING-DILUTED 25,259 24,399
BASIC EARNINGS (LOSS) PER SHARE:
Income before cumulative effect of
accounting change $0.09 $0.07
Cumulative effect of change in
accounting for goodwill (3.02) -
Net income $(2.93) $0.07
DILUTED EARNINGS (LOSS) PER SHARE:(B)
Income before cumulative effect of
accounting change $0.08 $0.07
Cumulative effect of change in
accounting for goodwill (2.97) -
Net income $(2.89) $0.07
Notes:
(A) Unusual items include integration and business reorganization costs
and property gains and losses.
(B) Diluted EPS before accounting change and unusual items was $.11 per
share for the first quarter 2002 and $.22 for the first quarter 2001.
The attached supplemental financial information schedule provides the
reconciliation between these EPS amounts and the GAAP EPS amounts.
STATEMENTS OF CONSOLIDATED CASH FLOWS
Yellow Corporation and Subsidiaries
For the Three Months Ended March 31, 2002 and 2001
(Amounts in thousands)
(Unaudited)
2002 2001
OPERATING ACTIVITIES:
Net cash from operating activities $48,737 $46,873
INVESTING ACTIVITIES:
Acquisition of property and equipment (28,419) (48,263)
Proceeds from disposal of
property and equipment 1,184 975
Other - (2,500)
Net cash used in investing activities (27,235) (49,788)
FINANCING ACTIVITIES:
Proceeds from stock options and
other, net 2,039 5,168
Increase (decrease) in long-term
debt (25,418) 13,574
Net cash provided by (used
in) financing activities (23,379) 18,742
NET INCREASE (DECREASE) IN CASH (1,877) 15,827
CASH, BEGINNING OF PERIOD 20,694 25,799
CASH, END OF PERIOD $18,817 $41,626
Note: Net cash from operating activities includes $30,500 in 2002 and
$9,000 in 2001 of net accounts receivable securitization activity.
Yellow Corporation
Supplemental Consolidated Financial Information
For the Three Months Ended March 31
(Amounts in thousands except per share data)
(Unaudited)
First Quarter
2002 2001 %
OPERATING INCOME:
Operating income _ as reported $8,104 $12,443 (34.9)
Unusual (gains) / losses 968 5,991
Operating income _ as adjusted $9,072 $18,434 (50.8)
OPERATING RATIO:
Operating ratio _ as reported 98.9% 98.5%
Operating ratio _ as adjusted 98.8% 97.8%
INCOME:
Income before accounting change - as
reported $2,139 $1,746 22.5
Unusual (gains) / losses 594 3,678
Income before accounting change - as
adjusted $2,733 $5,424 (49.6)
DILUTED EARNINGS PER SHARE:
EPS before accounting change _ as
reported $0.08 $0.07 14.3
Unusual (gains) / losses 0.03 0.15
EPS before accounting change _ as
adjusted $0.11 $0.22 (50.0)
Yellow Transportation, Inc.
Financial Information
For the Three Months Ended March 31
(Amounts in thousands)
First Quarter
2002 2001 %
Operating revenue 564,643 635,965 (11.2)
Operating income - before unusual items 7,231 14,228
Operating income - as reported 6,661 13,601
Operating ratio - before unusual items 98.7 97.8
Operating ratio - as reported 98.8 97.9
Total assets at March 31 724,229 708,448
First Quarter
First Quarter Amount/Workday
2002 2001 % 2002 2001 %
Workdays 63 64
Financial
statement LTL 526,659 589,056 (10.6) 8,359.7 9,204.0 (9.2)
revenue TL 40,469 47,120 (14.1) 642.4 736.3 (12.8)
Other (2,485) (211) n/m (39.4) (3.3) n/m
Total 564,643 635,965 (11.2) 8,962.7 9,937.0 (9.8)
Revenue
excluding LTL 526,659 589,056 (10.6) 8,359.7 9,204.0 (9.2)
revenue
recognition TL 40,469 47,120 (14.1) 642.4 736.2 (12.8)
adjustment Other (5) 414 n/m (0.1) 6.5 n/m
Total 567,123 636,590 (10.9) 9,002.0 9,946.7 (9.5)
Tonnage LTL 1,401 1,533 (8.6) 22.23 23.96 (7.2)
TL 267 297 (9.9) 4.24 4.63 (8.5)
Total 1,668 1,830 (8.9) 26.47 28.59 (7.4)
Shipments LTL 2,814 3,099 (9.2) 44.66 48.43 (7.8)
TL 37 41 (9.5) 0.59 0.64 (8.0)
Total 2,851 3,140 (9.2) 45.25 49.07 (7.8)
Revenue/cwt. LTL 18.80 19.21 (2.1)
TL 7.57 7.94 (4.7)
Total 17.00 17.38 (2.2)
Revenue/cwt.
(excluding
fuel
surcharge) LTL 18.66 18.64 0.1
Revenue/
shipment LTL 187.18 190.07 (1.5)
TL 1,098.85 1,158.20 (5.1)
Total 198.96 202.61 (1.8)
Saia Motor Freight Line, Inc.
Financial Information
For the Three Months Ended March 31
(Amounts in thousands)
First Quarter
2002 2001 %
Operating revenue 115,028 119,118 (3.4)
Operating income - before unusual items 3,840 3,050
Operating income - as reported 3,641 (2,302)*
Operating ratio - before unusual items 96.7 97.4
Operating ratio - as reported 96.8 101.9
Total assets at March 31 278,778 296,866
First Quarter
First Quarter Amount/Workday
2002 2001 % 2002 2001 %
Workdays 63 64
Financial LTL 105,230 108,895 (3.4) 1,670.3 1,701.5 (1.8)
statement TL 9,798 10,223 (4.2) 155.5 159.7 (2.6)
revenue Total 115,028 119,118 (3.4) 1,825.8 1,861.2 (1.9)
Revenue
excluding LTL 105,378 109,190 (3.5) 1,672.7 1,706.1 (2.0)
revenue
recognition TL 9,812 10,251 (4.3) 155.7 160.2 (2.8)
adjustment Total 115,190 119,441 (3.6) 1,828.4 1,866.3 (2.0)
Tonnage LTL 545 548 (0.5) 8.65 8.56 1.1
TL 134 154 (12.5) 2.13 2.40 (11.1)
Total 679 702 (3.1) 10.78 10.96 (1.6)
Shipments LTL 1,027 1,020 0.7 16.31 15.94 2.3
TL 16 17 (5.6) 0.26 0.27 (4.1)
Total 1,043 1,037 0.6 16.57 16.21 2.2
Revenue/cwt. LTL 9.67 9.97 (3.0)
TL 3.65 3.33 9.4
Total 8.48 8.52 (0.4)
Revenue/cwt.
(excluding
fuel
surcharge) LTL 9.56 9.64 (0.9)
Revenue/
shipment LTL 102.58 107.04 (4.2)
TL 609.90 601.80 1.3
Total 110.40 115.17 (4.1)
* - Includes $5,385,000 in one-time integration costs associated with the
merger of WestEx and Action into Saia.
Jevic Transportation, Inc.
Financial Information
For the Three Months Ended March 31
(Amounts in thousands)
First Quarter
2002 2001 %
Operating revenue 68,510 76,858 (10.9)
Operating income - before unusual items 1,033 2,318
Operating income - as reported 968 2,305
Operating ratio - before unusual items 98.5 97.0
Operating ratio - as reported 98.6 97.0
Total assets at March 31 158,141 252,589
First Quarter
First Quarter Amount/Workday
2002 2001 % 2002 2001 %
Workdays 62 64
Financial
statement LTL 45,002 49,082 (8.3) 725.8 766.9 (5.4)
revenue TL 22,495 26,268 (14.4) 362.8 410.4 (11.6)
Other 1,013 1,508 (32.8) 16.3 23.6 (30.7)
Total 68,510 76,858 (10.9) 1,104.9 1,200.9 (8.0)
Revenue
excluding LTL 45,049 49,245 (8.5) 726.6 769.5 (5.6)
revenue
recognition TL 22,521 26,356 (14.6) 363.2 411.8 (11.8)
adjustment Other 1,013 1,508 (32.8) 16.3 23.6 (30.7)
Total 68,583 77,109 (11.1) 1,106.1 1,204.9 (8.2)
Tonnage LTL 249 262 (5.2) 4.02 4.10 (2.1)
TL 295 330 (10.7) 4.76 5.16 (7.8)
Total 544 592 (8.2) 8.78 9.26 (5.3)
Shipments LTL 209 217 (4.0) 3.36 3.39 (0.9)
TL 33 36 (8.4) 0.54 0.57 (5.4)
Total 242 253 (4.6) 3.90 3.96 (1.5)
Revenue/cwt. LTL 9.05 9.38 (3.6)
TL 3.81 3.99 (4.3)
Total 6.21 6.37 (2.6)
Revenue/cwt. LTL 8.98 9.08 (1.1)
(excluding
fuel
surcharge) TL 3.79 3.86 (1.9)
Revenue/
shipment LTL 216.03 226.72 (4.7)
TL 673.07 721.79 (6.7)
Total 279.23 297.97 (6.3)
SOURCE Yellow Corporation
CONTACT: Analysts, Stephen Bruffett of Yellow Corporation,
+1-913-696-6108, or steve.bruffett@yellowcorp.com, or Media, Suzanne Dawson of
Linden Alschuler & Kaplan, +1-212-575-4545, or sdawson@lakpr.com
(YELL)