1
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 March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-12255
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YELLOW CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 48-0948788
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10777 Barkley, P.O. Box 7563, Overland Park, Kansas 66207
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(Address of principal executive offices) (Zip Code)
(913) 967-4300
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(Registrant's telephone number, including area code)
No changes.
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(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
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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 April 30, 1995
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Common Stock, $1 Par Value 28,105,856 shares
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YELLOW CORPORATION
INDEX
Item Page
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PART I
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1. Financial Statements
Consolidated Balance Sheets -
March 31, 1995 and December 31, 1994 3
Statements of Consolidated Income -
Three Months Ended March 31, 1995 and 1994 4
Statements of Consolidated Cash Flows -
Three Months Ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II
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4. Submission of Matters to a Vote of Security Holders 8
6. Exhibits and Reports on Form 8-K 8
Signatures 8
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3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
Yellow Corporation and Subsidiaries
March 31, 1995 and December 31, 1994
(Amounts in thousands except share data)
(Unaudited)
March 31 December 31
1995 1994
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ASSETS
CURRENT ASSETS:
Cash $ 18,297 $ 17,613
Short-term investments 7,238 7,305
Accounts receivable 325,045 295,332
Other current assets 89,448 83,107
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Total current assets 440,028 403,357
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OPERATING PROPERTY:
Cost 1,897,017 1,866,565
Less - Accumulated depreciation 1,005,237 989,281
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Net operating property 891,780 877,284
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OTHER ASSETS 26,616 26,580
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$1,358,424 $1,307,221
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 106,886 $ 118,412
Wages and employees' benefits 134,260 118,364
Other current liabilities 137,330 131,474
Current maturities of long-term debt 7,708 7,741
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Total current liabilities 386,184 375,991
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OTHER LIABILITIES:
Long-term debt 278,299 240,019
Deferred income taxes 54,990 54,481
Claims, insurance and other 181,753 175,887
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Total other liabilities 515,042 470,387
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SHAREHOLDERS' EQUITY:
Common stock, $1 par value 28,858 28,858
Capital surplus 6,678 6,678
Retained earnings 444,242 447,887
Shares held by Stock Sharing Plan (4,961) (4,961)
Treasury stock (17,619) (17,619)
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Total shareholders' equity 457,198 460,843
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$1,358,424 $1,307,221
========== ==========
The accompanying notes are an integral part of these statements.
3
4
STATEMENTS OF CONSOLIDATED INCOME
Yellow Corporation and Subsidiaries
For the Three Months Ended March 31, 1995 and 1994
(Amounts in thousands except per share data)
(Unaudited)
1995 1994
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OPERATING REVENUE $ 764,998 $ 748,159
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OPERATING EXPENSES:
Salaries, wages and employees' benefits 502,097 506,710
Operating expenses and supplies 115,838 114,903
Operating taxes and licenses 28,959 29,769
Claims and insurance 20,414 22,627
Communications and utilities 11,469 10,939
Depreciation 34,106 33,523
Purchased transportation 43,514 34,106
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Total operating expenses 756,397 752,577
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INCOME (LOSS) FROM OPERATIONS 8,601 (4,418)
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NONOPERATING (INCOME) EXPENSES:
Interest expense 5,057 4,524
Other, net (2,282) (32)
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Nonoperating expenses, net 2,775 4,492
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INCOME (LOSS) BEFORE INCOME TAXES 5,826 (8,910)
INCOME TAX PROVISION (BENEFIT) 2,628 (2,526)
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NET INCOME (LOSS) $ 3,198 $ (6,384)
========= =========
AVERAGE COMMON SHARES OUTSTANDING 28,106 28,105
========= =========
EARNINGS (LOSS) PER SHARE $ .11 $ (.23)
========= =========
The accompanying notes are an integral part of these statements.
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5
STATEMENTS OF CONSOLIDATED CASH FLOWS
Yellow Corporation and Subsidiaries
For the Three Months Ended March 31, 1995 and 1994
(Amounts in thousands)
(Unaudited)
1995 1994
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OPERATING ACTIVITIES:
Net cash from operating activities $ 6,019 $ 39,708
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INVESTING ACTIVITIES:
Acquisition of operating property (54,006) (64,257)
Proceeds from disposal of operating property 7,019 2,770
Purchases of short-term investments (2,959) (2,168)
Proceeds from maturities of short-term investments 3,026 2,404
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Net cash used in investing activities (46,920) (61,251)
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FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt - 14,000
Repayment of long-term debt (662) (1,561)
Commercial paper borrowings, net 38,852 14,936
Proceeds from unsecured bank credit lines, net 10,000 -
Cash dividends paid to shareholders (6,605) (6,604)
Other, net - 111
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Net cash from financing activities 41,585 20,882
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NET INCREASE (DECREASE) IN CASH 684 (661)
CASH, BEGINNING OF PERIOD 17,613 13,937
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CASH, END OF PERIOD $ 18,297 $ 13,276
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 3,647 $ 1,587
========= =========
Interest paid $ 2,173 $ 1,683
========= =========
The accompanying notes are an integral part of these statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Yellow Corporation and Subsidiaries
1. The accompanying consolidated financial statements include the accounts
of Yellow Corporation and its wholly-owned subsidiaries (the company)
and 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 1994 Annual Report to Shareholders.
2. The company provides freight transportation services through its
subsidiaries, Yellow Freight System, Inc. (Yellow Freight), Preston
Trucking Company, Inc. (Preston Trucking), Saia Motor Freight Line, Inc.
(Saia), CSI/Reeves, Inc. (CSI/Reeves), WestEx, Inc. (WestEx) and Yellow
Logistics Services, Inc. (Yellow Logistics). Yellow Technology
Services, Inc. (Yellow Technology) supports the company's subsidiaries -
primarily Yellow Freight - with information technology. Yellow Freight,
the company's principal subsidiary, comprises approximately 77% of total
revenue while Preston Trucking comprises approximately 14% and Saia
comprises approximately 6%.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
March 31, 1995 Compared to December 31, 1994
Working capital increased by $26.4 million during the first three months of
1995, resulting in a $53.8 million positive working capital position at March
31, 1995. The increase is primarily due to growth in accounts receivable which
grew at a faster rate than revenue during the quarter.
The company increased its total debt level by $48.2 million in the first
quarter of 1995 compared to that of December 31, 1994 with borrowings from
commercial paper and unsecured bank credit lines. These borrowings were used
to fund capital expenditures during the quarter as accounts receivable growth
mostly offset cash flows from other operating activities. Most of the capital
expenditures were for revenue equipment at Yellow Freight. It is anticipated
that the remaining capital expenditures for 1995 will be financed through
internally-generated funds and additional borrowings. In response to weaker
business levels at Yellow Freight, 1995 net capital expenditures have been
reduced from $175 million to $146 million.
The Board of Directors of the company declared a quarterly dividend of $.235
per share of common stock on April 19, 1995, payable on May 15 to shareholders
of record on May 1.
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RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 1995 and 1994
Operating revenue for the company was $765.0 million in the first quarter of
1995, an increase of 2.3% compared to $748.2 million in the same quarter last
year. Net income for the quarter was $3.2 million, or $.11 per share, a
significant improvement over the net loss of $6.4 million, or $.23 per share,
recorded in the first quarter of 1994. Mainly due to lower expenses, March
results were better than expected, partially offsetting lower levels of
profitability in January and February. The March improvement caused the
quarterly earnings to be somewhat better than the break-even expectation
announced on March 9. The net loss in last year's first quarter was primarily
due to severe winter weather experienced during that period.
Yellow Freight recorded operating income of $9.1 million in the current
quarter, substantially higher than the $1.7 million in the first quarter last
year. Operating revenue for the first quarter was $592.0 million, down .8%
from $596.6 million last year. Total tonnage was down 2.2% compared to the
first quarter of 1994, primarily as a result of a decreased number of shipments
handled. This softening in business levels reflects a slowing economy as well
as ongoing competitive pressures.
During the quarter the employees of Yellow Freight again proved their ability
to provide added value for their customers by achieving record levels in
on-time service. With continued improvement in its terminal network and
operating processes, Yellow Freight will accelerate and expand its penetration
into the second day service markets. Yellow Freight remains committed to
continuing high levels of customer service and maintaining stable pricing
management.
Preston Trucking had significantly improved operating performance, recording
its second consecutive profitable quarter. Operating revenue for the first
quarter was $103.4 million, a 2.6% increase compared to $100.7 million in the
first quarter last year. Expenses were managed well and margins improved
considerably in March. Operating income was $1.7 million, or an operating
ratio of 98.4 compared to an operating loss of $5.8 million with an operating
ratio of 105.7 in the first quarter of 1994. Preston Trucking benefited from
mild winter weather this year, improved expense controls and positive customer
response to its improved operations and service. On-time reliability reached
98% in March while the new Super Region has reduced overall transit times by
11% since its initiation in October 1994.
Saia experienced strong revenue growth of 20.2% in the first quarter reaching
$49.2 million compared to $41.0 million last year as it continues to increase
market penetration in its current nine state service territory. Operating
income was essentially flat at $2.7 million for the first quarter of 1995 with
an operating ratio of 94.6 compared to 93.8 in the first quarter of 1994.
Expansion costs negatively impacted the operating ratio in the current quarter.
Additional revenue growth will come from Saia's expansion into North and South
Carolina this summer, further adding to the most comprehensive coverage in the
region.
WestEx, the company's newest subsidiary, is also expanding its operation with
the opening of its first California terminal April 3 in the Los Angeles area.
Full coverage of California will be in place by the end of this summer.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting on April 19, 1995.
(b) A stockholder proposal for confidential voting on matters submitted
for stockholder vote and the appointment of independent inspectors of
election was voted on and approved at the meeting. Affirmative votes:
11,744,831, Negative votes: 9,732,298, Abstention votes:
153,299.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit (27) - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
On March 14, 1995, a Form 8-K was filed under Item 5, Other Events,
which reported that the company announced on March 9, 1995, that based
on business activity in January and February, it expects to report
near break-even results for the first quarter ended March 31, 1995.
Comparatively, the company had a net loss for the first quarter of
1994 of $6.4 million, or $.23 per share.
On March 21, 1995, a Form 8-K was filed under Item 5, Other Events,
which reported that the company announced on March 14, 1995, that its
Board of Directors voted not to renew the company's Share Purchase
Rights Plan upon the Plan's scheduled expiration in 1996.
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
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Registrant
Date: May 9, 1995 /s/ H. A. Trucksess, III
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H. A. Trucksess, III
Senior Vice President - Finance
Date: May 9, 1995 /s/ Phillip A. Spangler
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Phillip A. Spangler
Vice President and Treasurer
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5
1,000
3-MOS
DEC-31-1995
JAN-01-1995
MAR-31-1995
18,297
0
325,045
0
0
440,028
1,897,017
1,005,237
1,358,424
386,184
278,299
28,858
0
0
428,340
1,358,424
0
764,998
0
756,397
0
0
5,057
5,826
2,628
3,198
0
0
0
3,198
.11
.11
