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 June 30, 2001 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to _______________________ Commission file number 0-12255 ------- YELLOW CORPORATION ------------------ (Exact name of registrant as specified in its charter) Delaware 48-0948788 - ----------------------------------------- ------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10990 Roe Avenue, P.O. Box 7563, Overland Park, Kansas 66207 ------------------------------------------------------ --------- (Address of principal executive offices) (Zip Code) (913) 696-6100 -------------- (Registrant's telephone number, including area code) No Changes ----------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -- -- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at July 31, 2001 ----- ---------------------------- Common Stock, $1 Par Value 24,403,287 shares
2 YELLOW CORPORATION INDEX Item Page - ---- ---- PART I 1. Financial Statements Consolidated Balance Sheets - June 30, 2001 and December 31, 2000 3 Statements of Consolidated Operations - Quarter and Six Months Ended June 30, 2001 and 2000 4 Statements of Consolidated Cash Flows - Six Months Ended June 30, 2001 and 2000 5 Notes to Consolidated Financial Statements 6 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 3. Quantitative and Qualitative Disclosures About Market Risk 13 PART II 4. Exhibits and Reports on Form 8-K 15 Signatures 19
3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- --------------------- CONSOLIDATED BALANCE SHEETS Yellow Corporation and Subsidiaries (Amounts in thousands except share data) (Unaudited) June 30, December 31, 2001 2000 ---------- ------------ ASSETS CURRENT ASSETS: Cash $ 32,927 $ 25,799 Accounts receivable 218,584 222,926 Prepaid expenses and other 43,700 64,680 ---------- ---------- Total current assets 295,211 313,405 ---------- ---------- PROPERTY AND EQUIPMENT: Cost 2,135,833 2,128,937 Less - Accumulated depreciation 1,244,933 1,240,359 ---------- ---------- Net property and equipment 890,900 888,578 ---------- ---------- GOODWILL AND OTHER ASSETS 106,676 106,494 ---------- ---------- $1,292,787 $1,308,477 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and checks outstanding $ 103,578 $ 140,882 Wages and employees' benefits 153,874 173,332 Other current liabilities 112,366 119,194 Current maturities of long-term debt 1,819 68,792 ---------- ---------- Total current liabilities 371,637 502,200 ---------- ---------- OTHER LIABILITIES: Long-term debt 231,810 136,645 Deferred income taxes 89,751 92,413 Claims, insurance and other 127,175 117,443 ---------- ---------- Total other liabilities 448,736 346,501 ---------- ---------- SHAREHOLDERS' EQUITY: Common stock, $1 par value 30,334 29,959 Capital surplus 29,343 23,304 Retained earnings 530,134 522,195 Accumulated other comprehensive income (4,425) (2,710) Treasury stock (112,972) (112,972) ---------- ---------- Total shareholders' equity 472,414 459,776 ---------- ---------- $1,292,787 $1,308,477 ========== ========== The accompanying notes are an integral part of these statements. 3
4 STATEMENTS OF CONSOLIDATED OPERATIONS Yellow Corporation and Subsidiaries For the Quarter and Six Months Ended June 30, 2001 and 2000 (Amounts in thousands except per share data) (Unaudited) <TABLE> <CAPTION> Second Quarter Six Months -------------------------- -------------------------- 2001 2000 2001 2000 ----------- ----------- ----------- ----------- <S> <C> <C> <C> <C> OPERATING REVENUE $ 824,770 $ 904,166 $ 1,656,748 $ 1,786,252 ----------- ----------- ----------- ----------- OPERATING EXPENSES: Salaries, wages and benefits 523,117 562,311 1,046,461 1,110,214 Operating expenses and supplies 136,698 144,971 280,629 292,163 Operating taxes and licenses 26,422 28,258 54,659 56,451 Claims and insurance 19,111 19,629 37,602 40,596 Depreciation and amortization 31,566 31,657 63,430 63,117 Purchased transportation 67,978 86,230 135,655 167,514 Unusual items loss/(gains) (1) 2,243 (14,893) 8,234 (15,093) ----------- ----------- ----------- ----------- Total operating expenses 807,135 858,163 1,626,670 1,714,962 ----------- ----------- ----------- ----------- INCOME FROM OPERATIONS 17,635 46,003 30,078 71,290 ----------- ----------- ----------- ----------- NONOPERATING (INCOME) EXPENSES: Interest expense 4,094 5,060 8,158 9,945 Loss on Transportation.com 1,861 -- 4,397 -- Other, net 1,579 1,258 4,305 2,907 ----------- ----------- ----------- ----------- Nonoperating expenses, net 7,534 6,318 16,860 12,852 ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 10,101 39,685 13,218 58,438 INCOME TAX PROVISION 4,444 16,174 5,816 24,450 ----------- ----------- ----------- ----------- NET INCOME $ 5,657 $ 23,511 $ 7,402 $ 33,988 =========== =========== =========== =========== AVERAGE SHARES OUTSTANDING-BASIC 24,164 25,271 23,968 25,212 =========== =========== =========== =========== AVERAGE SHARES OUTSTANDING-DILUTED 24,342 25,429 24,238 25,364 =========== =========== =========== =========== BASIC EARNINGS PER SHARE: $ .23 $ .93 $ .31 $ 1.35 DILUTED EARNINGS PER SHARE: $ .23 $ .92 $ .31 $ 1.34 </TABLE> Note: (1) Unusual items include integration costs and property gains and losses. The accompanying notes are an integral part of these statements. 4
5 STATEMENTS OF CONSOLIDATED CASH FLOWS Yellow Corporation and Subsidiaries For the Six Months Ended June 30, 2001 and 2000 (Amounts in thousands) (Unaudited) <TABLE> <CAPTION> 2001 2000 --------- --------- <S> <C> <C> OPERATING ACTIVITIES: Net cash from operating activities $ 47,002 $ 69,263 --------- --------- INVESTING ACTIVITIES: Acquisition of property and equipment (73,203) (93,032) Proceeds from disposal of property and equipment 3,996 29,598 Other (4,113) (973) --------- --------- Net cash used in investing activities (73,320) (64,407) --------- --------- FINANCING ACTIVITIES: Treasury stock purchases - (2,551) Proceeds from stock options and other, net 5,304 5,724 Increase (decrease) in long-term debt 28,142 (5,833) --------- --------- Net cash provided by (used in) financing activities 33,446 (2,660) --------- --------- NET INCREASE IN CASH 7,128 2,196 CASH, BEGINNING OF PERIOD 25,799 22,581 --------- --------- CASH, END OF PERIOD $ 32,927 $ 24,777 ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid, net $ 4,434 $ 35,333 ========= ========= Interest paid $ 8,278 $ 9,914 ========= ========= </TABLE> The accompanying notes are an integral part of these statements. 5
6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Yellow Corporation and Subsidiaries (unaudited) 1. The accompanying consolidated financial statements include the accounts of Yellow Corporation and its wholly owned subsidiaries (the company). The company accounts for its investment in Transportation.com under the equity method of accounting. The consolidated financial statements have been prepared by the company, without audit by independent public accountants, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the results of operations for the interim periods included herein have been made. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from these statements pursuant to such rules and regulations. Accordingly, the accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements included in the company's 2000 Annual Report to Shareholders. 2. The company is a world wide transportation service provider, with its primary activity being the less-than-truckload (LTL) market in North America through its subsidiaries, Yellow Freight System, Inc. (Yellow Freight), Saia Motor Freight Line, Inc. (Saia), and Jevic Transportation, Inc. (Jevic). On March 4, 2001, two LTL subsidiaries of the company, WestEx Inc. and Action Express, Inc. were integrated into the Saia subsidiary and operate under the Saia name. Yellow Technologies, Inc. is a subsidiary that provides information technology and other services to the company and its subsidiaries. For the quarter ended June 30, 2001 Yellow Freight comprised approximately 76 percent of total revenue while Saia comprised approximately 15 percent and Jevic approximately 9 percent of total revenue. 3. The company has approximately 65 percent ownership interest in Transportation.com. Transportation.com is a non-asset based global logistics company that delivers services through its internet technology. Transportation.com is funded by Yellow Corporation and three other venture capital firms. 6
7 4. The company reports financial and descriptive information about its reportable operating segments on a basis consistent with that used internally for evaluating segment operating performance and allocating resources to segments. The company has three reportable segments, which are strategic business units that offer different products and services. Yellow Freight is a unionized carrier that provides comprehensive national LTL service as well as international service worldwide. Saia is a regional LTL carrier that provides overnight and second-day service in twenty-one states and Puerto Rico. On March 4, 2001, WestEx and Action Express were integrated into the Saia segment. Comparative prior year segment data has been restated to reflect the integration. Jevic is a hybrid regional heavy LTL and TL carrier that provides service primarily in northeastern states. The segments are managed separately because each requires different operating, technology and marketing strategies and processes. The company evaluates performance primarily on operating income and return on capital. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in the company's 2000 Annual Report to Shareholders. The company charges a trade name fee to Yellow Freight for use of the company's trademark. Interest and intersegment transactions are recorded at current market rates. Income taxes are allocated in accordance with a tax sharing agreement in proportion to each segment's contribution to the parent's consolidated tax status. The following table summarizes the company's operations by business segment (in thousands): <TABLE> <CAPTION> Yellow Corporate Con- Freight Saia Jevic and Other solidated --------- -------- -------- --------- --------- <S> <C> <C> <C> <C> <C> As of Jun. 30, 2001 Identifiable assets $ 709,768 $287,494 $249,840 $ 45,685 $1,292,787 As of December 31, 2000 Identifiable assets $ 722,808 $296,539 $257,451 $ 31,679 $1,308,477 Three months ended Jun. 30, 2001 Operating revenue $ 628,596 $122,988 $ 72,647 $ 539 $ 824,770 Income from operations 14,409 3,802 1,554 (2,130) 17,635 Three months ended Jun. 30, 2000 Operating revenue $ 696,658 $122,128 76,727 $ 8,653 $ 904,166 Income from operations 43,328 3,724 2,748 (3,797) 46,003 Six months ended Jun. 30, 2001 Operating revenue $1,264,146 $242,107 $149,505 $ 990 $1,656,748 Income from operations 28,011 1,501 3,859 (3,293) 30,078 Six months ended Jun. 30, 2000 Operating revenue $1,377,027 $240,110 155,142 $ 13,973 $1,786,252 Income from operations 64,984 7,261 6,764 (7,719) 71,290 </TABLE> 7
8 5. The difference between average common shares outstanding used in the computation of basic earnings per share and fully diluted earnings per share is attributable to outstanding common stock options. 6. The company's comprehensive income includes net income, changes in the fair value of the hedging instrument and foreign currency translation adjustments. Comprehensive income for the second quarter ended June 30, 2001 and 2000 was $5.7 million and $23.2 million, respectively. Comprehensive income for the six months ended June 30, 2001 and 2000 was $5.7 million and $33.8 million, respectively. 7. On June 30, 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 142, Goodwill and Other Intangible Assets that will be adopted by the company on January 1, 2002. Statement No. 142 requires that at least annually, the company assess goodwill impairment by applying a fair value based test. With the adoption of Statement No. 142, goodwill will no longer be subject to amortization resulting in an increase in annualized operating income of $3.3 million. The company is in the process of determining the impact of this new statement to the goodwill currently recorded of $92.8 million. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION June 30, 2001 Compared to December 31, 2000 ------------------------------------------- The company's liquidity needs arise primarily from capital investment in new equipment, land and structures and information technology, as well as funding working capital requirements. To ensure short-term and longer-term liquidity, the company maintains capacity under a bank credit agreement and an asset backed securitization (ABS) agreement involving Yellow Freight's accounts receivables. These facilities provide adequate capacity to fund working capital and capital expenditure requirements. At June 30, 2001 available unused capacity under the bank credit agreement was $114 million. The company renewed its bank credit agreement in April 2001, which has a new maturity date of April 2004. Debt previously classified as current under this agreement at December 31, 2000 of $68.8 million has been reclassified to long-term. In addition, the company intends to refinance under this facility all other debt maturing within one year. 8
9 Working capital is reduced through Yellow Freight's asset backed securitization agreement (ABS). Capacity under the ABS agreement is $200 million. Accounts receivable at June 30, 2001 and December 31, 2000 are net of $163.5 million and $177 million of receivables sold under the ABS agreement. Working capital increased $112.4 million during the first six months of 2001 caused primarily by the reclassification of current debt of $68.8 million discussed above. Accounts receivable and prepaids decreased approximately $25 million from December 31, 2000, while accounts payable and other accrued liabilities decreased almost $64 million, due to lower volumes and decreases in payroll and incentive compensation accruals. This resulted in a working capital deficit of $76.4 million at June 30, 2001 compared to an $188.8 million working capital deficit at December 31, 2000. The company can operate with a deficit working capital position because of rapid turnover of accounts receivable, effective cash management and ready access to funding. Net capital expenditures for property and equipment during the first six months of 2001 were $69.2 million. RESULTS OF OPERATIONS Comparison of Three Months Ended June 30, 2001 and 2000 ------------------------------------------------------- Net income for the second quarter ended June 30, 2001 was $5.6 million, or $.23 per share, compared with net income of $23.5 million, or $.92 per share in the 2000 second quarter. Consolidated operating revenue was $824.8 million, down 8.8 percent from $904.2 million in the 2000 second quarter. Consolidated operating income was $17.6 million, which included $2.2 million of unusual costs, primarily for the integration of WestEx and Action Express into Saia, compared with $46.0 million in the prior year period which included gains from unusual items of $14.9 million, primarily a gain on the sale of real estate in Manhattan, New York. The second quarter 2000 results included a nonrecurring after-tax net gain at Yellow Freight of $8.7 million primarily resulting from the sale of real estate in Manhattan, New York. Second quarter 2000 results also include an after-tax loss of $1.5 million pertaining to business development expenses for Transportation.com, an Internet-based transportation venture. Yellow Freight, the company's largest subsidiary, reported second quarter operating income of $14.4 million down 66.7 percent from $43.3 million in the 2000 second quarter. Yellow Freight's revenue for the second quarter was $628.6 million, down 9.8 percent from $696.7 million in the prior year's period. Yellow Freight's second quarter revenue trends were negatively 9
10 impacted by the economic slowdown, however, pricing remained strong on these lower volumes. The 2001 second quarter operating ratio was 97.7, compared with 93.8 a year earlier. Proactive cost management and improvement in pricing yields partially offset lower revenue trends. Yellow Freight's second quarter less-than-truckload (LTL) tonnage decreased by 15.4 percent and the number of LTL shipments decreased 15.1 percent. However, LTL revenue per hundred weight improved by 6.3 percent over the 2000 second quarter. Yellow Freight continued to expand their Standard Ground Regional Advantage in the second quarter to the eastern half of the country, adding this service to five more distribution centers, for a total of nine. Since moving into the two- and three-day service markets the average days in transit dropped below three days and the on-time service percentages are staying consistently at or above 95 percent. During the 2001 second quarter, the two carriers comprising the Yellow Corporation Regional Carrier Group - Saia Motor Freight Line and Jevic Transportation - reported a combined operating income of $5.2 million. Second quarter operating income was net of a $1.4 million unusual charge related to the integration of WestEx and Action Express into Saia. On March 4, 2001, WestEx and Action were merged into Saia. All prior period amounts for Saia have been restated to reflect this merger. The combined regional carrier group reported operating income of $6.5 million in the 2000 second quarter. Revenue for the regional group was $195.6 million compared with $198.9 million in the 2000 second quarter. Revenue decreased by 1.6 percent over the prior year's period. At Saia, second quarter 2001 revenue was $123.0 million and operating income was $3.8 million, which included $1.3 million of integration costs, compared with revenue of $122.1 million and operating income of $3.7 million in the 2000 second quarter. The 2001 second quarter operating ratio was 95.8 (excluding the impacts of the integration costs), compared with 96.9 in the year-earlier quarter. Saia's LTL tonnage was down 2.8 percent and LTL shipments were down 5.4 percent over the 2000 second quarter. However, Saia's LTL revenue per hundred weight was up 5.7 percent over the prior period quarter as stable pricing at Saia more than offset economy driven volume declines. Jevic reported second quarter 2001 revenue of $72.6 million and operating income of $1.6 million compared to second quarter 2000 revenue of $76.7 million and operating income of $2.7 million. The 2001 second quarter operating ratio for Jevic was 97.9, compared with 96.4 in the 2000 second quarter. The decline in Jevic's profitability resulted from the net effect of an overall decrease in tonnage, weight per shipment and LTL pricing combined with an increase in employee benefit costs over prior year. Jevic's tonnage 10
11 was down 8.4 percent over the 2000 second quarter. Jevic's shipments decreased 6.4 percent over the 2000 second quarter. Both Saia and Jevic had effective cost controls in place to mitigate the weakness in the economy and both maintained high levels of customer service. Corporate expenses were $2.1 million in the 2001 second quarter, down from $3.8 million in the second quarter of 2000. Nonoperating expenses increased to $7.5 million in the second quarter of 2001 compared to $6.3 million in the second quarter of 2000 due primarily to a $1.9 million pre-tax loss pertaining to ongoing business development expenses at Transportation.com. The effective tax rate was 44.0 percent in the 2001 second quarter compared to 40.8 percent in the 2000 second quarter. The effective tax rate increase was largely because of the decrease in pre-tax income between quarters. Comparison of Six Months Ended June 30, 2001 and 2000 ----------------------------------------------------- Net income for the six months ended June 30, 2001 was $7.4 million or $.31 per share (diluted), a 76.9 percent decrease over earnings per share in the 2000 first half. Net income for the six months ended June 30, 2000 was $34.0 million or $1.34 per share (diluted). Consolidated operating revenue for the 2001 first half was $1,656.7 million, a decrease of 7.3 percent over operating revenue of $1,786.3 million for the 2000 first half. Consolidated operating income was $30.1 million compared with $71.3 million in the prior year period. Yellow Freight had operating income of $28.0 million for the first half of 2001. Yellow Freight recorded operating income of $65.0 million in the first half of 2000 which includes a $14.2 million non-recurring pre-tax gain primarily from the sale of real estate in Manhattan, New York. Yellow Freight's operating ratio was 97.8 in the first half of 2001, and excluding the nonrecurring net gain, their operating ratio was 96.2 in the first half of 2000. Yellow Freight's first half 2001 operating revenue was $1,264.1 million, a 8.2 percent decrease over operating revenue of $1,377.0 million in the first half of 2000. First half less-than-truckload (LTL) tonnage decreased by 14.7 percent over the 2000 half and the number of LTL shipments was down 14.4 percent. First half LTL revenue per hundred weight was up by 7.4 percent over the 2000 first half. Business volumes for the first half of 2001 were weak compared to prior year as a result of the slow economy, partially offset by improved pricing. The aggressive rollout of Yellow Freight's Regional 11
12 Advantage service is starting to result in some positive business trends. June business volumes at the nine primary Regional Advantage distribution centers showed marked improvement. Yellow Freight is now moving more than 70 percent of its shipments in two and three days. Lower volume and cost reduction efforts, including staff reductions, and pricing increases allowed Yellow Freight to reduce operating expenses by approximately 89% of the decrease in revenue. During the first half of 2001, the two carriers - Saia Motor Freight Line and Jevic Transportation - reported combined operating income of $5.1 million, which is net of $6.8 million of non-recurring integration costs. Operating income for the regional companies was $14.0 million in the 2000 first half. Revenue for the regional group was $391.6 million, down 0.9 percent from $395.3 million. Saia reported first half 2001 revenue of $242.1 million and operating income was $1.5 million which included $6.7 million of one-time costs related to the WestEx and Action integration. Revenue was $240.0 million and operating income was $7.3 million in the 2000 first half. The 2000 first half, operating ratio (excluding the impact of the integration costs) was 96.6, compared with 97.0 in the year-earlier half. The results of the first half of 2000 have been restated to reflect the combination that took place on March 4, 2001, the WestEx and Action merge into Saia. First half 2001 results were supported by strong productivity trends and revenue yield. These gains were partially offset by higher wages from planned wage increases in the second quarter of 2001 and higher accident and purchased transportation costs. Saia experienced some decline in volume early in the second quarter and took aggressive steps to reduce costs. Jevic reported first half revenue of $149.5 million and operating income of $3.9 million. In the first half of 2000, Jevic reported revenue of $155.1 million and operating income of $6.8 million. The 2001 first half, operating ratio for Jevic was 97.4, compared with 95.6 in the 2000 first half. Jevic experienced volume declines as a result of the economic slowdown as well as increased competition. While Jevic has aggressively reduced variable costs, these reductions only partially offset the revenue decline. In addition, Jevic's employee benefits increased as a result of planned increases for 2001. Corporate and other business development expenses were $3.3 million in the 2001 first half, down from $7.7 million in the first half of 2000. The company continues to evaluate a number of strategic initiatives to increase shareholder value. 12
13 Nonoperating expenses increased to $16.9 million in the first half of 2001 compared to $12.9 million in the first half of 2000 due to a decrease in financing costs of approximately $1.2 which was offset by $4.4 million in losses relating to the company's investment in Transportation.com. The effective tax rate was 44.0 percent in the 2001 first half compared to 41.8 percent in the 2000 first half. The effective tax rate increase was largely because of the decrease in pre-tax income between periods. Item 3. Quantitative and Qualitative Disclosures About Market Risk - ------- ---------------------------------------------------------- The company is exposed to a variety of market risks, including the effects of interest rates, fuel prices and foreign currency exchange rates. To ensure adequate funding through seasonal business cycles and minimize overall borrowing costs, the company utilizes a variety of both fixed rate and variable rate financial instruments with varying maturities. At June 30, 2001 approximately 71% percent of the company's debt and off balance sheet financing is at variable rates with the balance at fixed rates. The company uses interest rate swaps to hedge a portion of its exposure to variable interest rates. The company has hedged approximately 22 percent of its variable debt. The company's revenues and operating expenses, assets and liabilities of its Canadian and Mexican subsidiaries are denominated in foreign currencies, thereby creating exposures to changes in exchange rates, however the risks related to foreign currency exchange rates are not material to the company's consolidated financial position or results of operations. The following table provides information about the company's financial instruments as of June 30, 2001. The table presents principal cash flows (in millions) and related weighted average interest rates by contractual maturity dates. For interest rate swaps the table presents notional amounts (in millions) and weighted average interest rates by contractual maturity. Weighted average variable rates are based on the 30-day LIBOR rate. 13
14 Debt Instrument Information <TABLE> <CAPTION> 2001 2000 ---- ---- There- Fair Fair 2001 2002 2003 2004 2005 After Total Value Total Value ------ ------ ------ ------ ------ ------ ------ ------ ------ ----- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Fixed Rate Debt $ 6.5 $ 22.4 $ 19.5 $ 16.2 $ 13.4 $ 38.6 $116.6 $118.4 $142.3 $138.2 Average interest rate 8.62% 7.35% 6.29% 6.62% 7.06% 6.94% Variable Rate Debt $ 1.6 $ 5.2 $ 5.1 $ 90.2 $ 8.9 $ 6.0 $117.0 $117.0 $128.3 $128.3 Average interest rate 4.44% 4.35% 4.28% 5.92% 4.92% 6.05% Off Balance Sheet ABS $163.5 $163.5 $163.5 $142.0 $142.0 Average interest rate 4.16% Interest Rate Swaps Notional amount $ 1.6 $ 5.2 $ 50.1 $ 0.2 $ 4.5 $ 0.0 $ 61.6 $ 63.4 $ 12.9 $ 12.8 Ave. pay rate (fixed) 5.81% 5.71% 6.06% 7.65% 7.65% N/A Ave. receive rate (variable) 4.44% 4.35% 3.88% 5.91% 5.91% N/A </TABLE> The company also maintained fuel inventories for use in normal operations at June 30, 2001, which were not material to the company's financial position and represented no significant market exposure. Statements contained in, and preceding management's discussion and analysis that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including but not limited to inflation, labor relations, inclement weather, price and availability of fuel, competitor pricing activity, expense volatility, changes in and customer acceptance of new technology and a downturn in general or regional economic activity. 14
15 PART II - OTHER INFORMATION - --------------------------- Item 4. Submission of Matters to a Vote of Security Holders - None - ------- --------------------------------------------------- Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- (a) Exhibits (10) - Supplemental Retirement Income Agreement (b) Reports on Form 8-K On July 20, 2001, Yellow Freight System, a Yellow Corporation subsidiary announced that it will implement a general rate increase averaging 4.9 percent effective August 1, 2001 for customers not currently on contract rates. 15
16 Yellow Freight System, Inc. Financial Information For the Quarter and Six Months Ended June 30 (Amounts in thousands) <TABLE> <CAPTION> Second Quarter Six Months -------------------- --------------------- 2001 2000 % 2001 2000 % ------- -------- --- --------- -------- --- <S> <C> <C> <C> <C> <C> <C> Operating revenue 628,596 696,658 (9.8) 1,264,146 1,377,027 (8.2) Operating income 14,409 43,328 28,011 64,984 Operating ratio 97.7 93.8 97.8 95.3 Total assets at June 30 709,768 759,660 </TABLE> <TABLE> <CAPTION> Second Quarter Second Quarter Amount/Workday ------------------- ------------------- 2001 2000 % 2001 2000 % -------- -------- --- -------- -------- --- <S> <C> <C> <C> <C> <C> <C> <C> Workdays (64) (64) Financial statement LTL 580,462 645,405 (10.1) 9,069.7 10,084.5 (10.1) revenue TL 48,369 54,905 (11.9) 755.8 857.9 (11.9) Other (235) (3,652) NM (3.7) (57.1) NM Total 628,596 696,658 (9.8) 9,821.8 10,885.3 (9.8) Revenue excluding LTL 580,462 645,405 (10.1) 9,069.7 10,084.5 (10.1) revenue recognition TL 48,369 54,905 (11.9) 755.8 857.9 (11.9) adjustment Other (4) 5 NM (0.1) 0.1 NM Total 628,827 700,315 (10.2) 9,825.4 10,942.5 (10.2) Tonnage LTL 1,516 1,792 (15.4) 23.69 28.00 (15.4) TL 308 352 (12.4) 4.82 5.50 (12.4) Total 1,824 2,144 (14.9) 28.51 33.50 (14.9) Shipments LTL 3,051 3,594 (15.1) 47.68 56.16 (15.1) TL 42 48 (12.7) 0.66 0.75 (12.7) Total 3,093 3,642 (15.1) 48.34 56.91 (15.1) Revenue/cwt. LTL 19.14 18.01 6.3 TL 7.85 7.80 0.6 Total 17.23 16.33 5.5 Revenue/shipment LTL 190.23 179.56 5.9 TL 1,150.57 1,139.55 1.0 Total 203.28 192.26 5.7 </TABLE> 16
17 Saia Motor Freight Line, Inc. Financial Information For the Quarter and Six Months Ended June 30 (Amounts in thousands) <TABLE> <CAPTION> Second Quarter Six Months -------------------- ---------------------- 2001 2000 % 2001 2000 % ------- -------- --- --------- --------- --- <S> <C> <C> <C> <C> <C> <C> Operating revenue 122,988 122,128 .7 242,107 240,011 .8 Operating income *** 5,123 3,724 * 8,206 7,261 ** Operating ratio 95.8 96.9 96.6 97.0 Total assets at June 30 287,494 294,011 </TABLE> <TABLE> <CAPTION> Second Quarter Second Quarter Amount/Workday ------------------- ------------------- 2001 2000 % 2001 2000 % -------- -------- --- -------- -------- --- <S> <C> <C> <C> <C> <C> <C> <C> Workdays (64) (64) Financial statement LTL 113,132 110,145 2.7 1,767.7 1,721.0 2.7 Revenue TL 9,856 11,983 (17.8) 154.0 187.2 (17.8) Total 122,988 122,128 .7 1,921.7 1,908.2 .7 Revenue excluding LTL 113,151 110,209 2.7 1,768.0 1,722.0 2.7 Revenue recognition TL 9,858 11,990 (17.8) 154.0 187.3 (17.8) Adjustment Total 123,009 122,199 .7 1,922.0 1,909.3 .7 Tonnage LTL 569 586 (2.8) 8.90 9.16 (2.8) TL 143 185 (23.0) 2.23 2.89 (23.0) Total 712 771 (7.7) 11.13 12.05 (7.7) Shipments LTL 1,072 1,134 (5.4) 16.75 17.71 (5.4) TL 16 21 (23.0) .25 .32 (23.0) Total 1,088 1,155 (5.8) 17.00 18.03 (5.8) Revenue/cwt. LTL 9.94 9.40 5.7 TL 3.46 3.24 6.7 Total 8.64 7.92 9.0 Revenue/shipment LTL 105.56 97.22 8.6 TL 619.26 579.79 6.8 Total 113.08 105.86 6.8 </TABLE> *QTR - 2001 operating income is before $1,440,000 in one-time integration costs due to the merger with Westex and Action. **YTD - 2001 operating income is before $6,825,000 in one-time integration costs due to the merger with Westex and Action. ***Restated for merger and reflects current and prior period amounts as if merger of WestEx and Action into Saia was effective at the earliest period presented. 17
18 Jevic Transportation, Inc. Financial Information For the Quarter Ended June 30 (Amounts in thousands) <TABLE> <CAPTION> Second Quarter Six Months -------------------- ---------------------- 2001 2000 % 2001 2000 % ------- -------- --- --------- --------- --- <S> <C> <C> <C> <C> <C> <C> Operating revenue 72,647 76,727 (5.3) 149,505 155,142 (3.6) Operating income 1,554 2,748 (43.5) 3,859 6,764 (43.0) Operating ratio 97.9 96.4 97.4 95.6 Total assets at June 30 249,840 262,411 </TABLE> <TABLE> <CAPTION> Second Quarter Second Quarter Amount/Workday ------------------- ------------------- 2001 2000 % 2001 2000 % -------- -------- --- -------- -------- --- <S> <C> <C> <C> <C> <C> <C> <C> Workdays 63 63 Financial statement LTL 47,242 49,307 (4.2) 749.9 782.7 (4.2) revenue TL 25,405 27,420 (7.3) 403.3 435.2 (7.3) Total 72,647 76,727 (5.3) 1153.2 1,217.9 (5.3) Revenue excluding LTL 47,117 49,552 (4.9) 747.9 786.5 (4.9) revenue recognition TL 25,338 27,557 (8.1) 402.2 437.4 (8.1) adjustment Total 72,455 77,109 (6.0) 1150.1 1,223.9 (6.0) Tonnage LTL 254 267 (4.7) 4.04 4.24 (4.7) TL 317 357 (11.2) 5.03 5.66 (11.2) Total 571 624 (8.4) 9.07 9.90 (8.4) Shipments LTL 208 222 (6.3) 3.31 3.53 (6.3) TL 35 38 (7.3) .56 0.61 (7.3) Total 243 260 (6.4) 3.87 4.14 (6.4) Revenue/cwt. LTL 9.27 9.29 (0.2) TL 4.00 3.86 3.5 Total 6.34 6.18 2.6 Revenue/shipment LTL 226.15 222.95 1.4 TL 716.17 721.92 (0.8) Total 297.28 296.09 0.4 </TABLE> 18
19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. YELLOW CORPORATION ---------------------- Registrant Date: August 6, 2001 /s/ William D. Zollars ------------------- ------------------------------ William D. Zollars Chairman of the Board of Directors, President & Chief Executive Officer Date: August 6, 2001 /s/ Donald G. Barger, Jr. ------------------- ---------------------------- Donald G. Barger, Jr. Senior Vice President & Chief Financial Officer 19