YRC Worldwide Transitions CFO Responsibilities

YRC Worldwide Inc. today announced that Sheila Taylor, Executive Vice President and Chief Financial Officer, has decided to leave the company effective March 31 to pursue opportunities outside of the less-than-truckload industry. Ms. Taylor has been CFO since October 2009 and prior to that was Vice President of Investor Relations and Treasurer.

"Sheila has been instrumental in the company's financial restructuring over the last few years, including the significant turnaround in operating results and the generation and preservation of liquidity," stated Bill Zollars, Chairman, President and CEO of YRC Worldwide. "I personally appreciate what we have accomplished under her leadership and wish her well as she takes her career in a different direction."

William Trubeck, a member of the Board of Directors since 1994, will take over as interim Executive VP & CFO while the company completes its restructuring efforts.

Trubeck has over 30 years experience in executive leadership positions for Fortune 500 companies including specific experience as the CFO at H&R Block, Waste Management, and International Multi-Foods. In addition, he has led a variety of restructuring efforts during his career.

"We are extremely fortunate to have a person of Bill's executive experience and capability, as well as a long-term member of our Board, step into this interim role as CFO. We fully expect him to play an important role in completing the final steps in the restructuring efforts of YRCW," stated John Lamar, Chief Restructuring Officer.

Trubeck has served in various corporate director positions including WellCare Health Plans, Dynegy, Ceridian Corporation and The Federal Home Loan Bank of Des Moines and is currently vice chairman of the board of trustees of Monmouth College, Monmouth, Ill. Trubeck received his Bachelor of Arts in Business Administration from Monmouth College and a Master of Business Administration from the University of Connecticut.

YRC’s top spot isn’t easy to fill

As bumpy as the road remains, Overland Park-based trucker YRC Worldwide Inc. has made it to the start of 2011, though some industry observers continue to doubt its future. But whether YRC’s trucks are on America’s highways at the end of the year could hinge on who becomes its lead driver.

In late September, YRC head Bill Zollars announced he would be retiring from the company, where he took over as chairman and chief executive officer in 1999. Under Zollars, the company grew immensely through two big acquisitions in 2003 and 2004, but the resulting huge debt load became a handicap in 2007, when the freight economy began its deep, downward spiral. Full Story.......

YRC Worldwide Advances Functional Organization Structure with Leadership Changes

Company continues to implement comprehensive plan, with focus on customer service, sales and finance

YRC Worldwide today announced the appointment of a chief operating officer and subsequent changes to its senior leadership alignment. The modifications are an advancement of the functional organization structure introduced in June across YRC Worldwide to streamline decision-making, eliminate duplicate efforts and costs while maintaining focus on critical customer-impacting areas.

"As we continue to work our comprehensive plan to restore financial strength and position our company for future growth, the most critical interdependencies rest between finance, operations and sales," stated Bill Zollars, chairman, president and chief executive officer - YRC Worldwide. "Today's actions ensure these key functions are working directly together to meet our service commitments to customers and attain our strategic goals."

The following YRC Worldwide appointments are effective immediately:

Tim Wicks, formerly executive vice president and chief financial officer, assumes the role of chief operating officer - YRC Worldwide, reporting to Zollars. In this new role, Wicks is responsible for sales, marketing, pricing, operations and financial strategy results across the company. Reporting directly to Wicks are Mike Smid, president - YRC Inc., and chief operations officer - YRC Worldwide and John Garcia, executive vice president and chief sales officer - YRC Worldwide. In addition, Greg Reid, executive vice president and chief marketing officer along with Andy Slusher, vice president pricing will report to Wicks.

Also reporting to Wicks is Sheila Taylor, who will assume a new role as executive vice president and chief financial officer - YRC Worldwide. Prior to this position, Taylor served as vice president - Investor Relations and Treasurer. Taylor now leads a consolidated organization comprised of all strategic and operational finance activities across YRC Worldwide. Paul Liljegren will lead Investor Relations and Treasury, and Phil Gaines will assume the role of chief accounting officer, in addition to his other finance duties. Both will report to Taylor, along with Terry Gerrond, vice president -Taxation.

Mike Naatz, executive vice president and chief information and service officer - YRC Worldwide, will take on an expanded role leading revenue management, in addition to billing, quality, information technology and customer service, as the company sharpens its focus on the end-to-end customer experience. Naatz will continue to report to Zollars.

Dan Churay, executive vice president, general counsel and secretary; Jim Kissinger, executive vice president - Human Resources; and John Carr, president - YRC Logistics, remain in their current roles, reporting to Zollars.

Teamster's vote only a start on YRC Worldwide overhaul

YRC Worldwide Inc.’s union workers unloaded at least $45 million in monthly costs for the company when they approved a second round of concessions.

“This is an important step forward in our comprehensive recovery plan,” YRC Chairman and CEO Bill Zollars said in an online video to customers.

But the vote probably means only about a $7 million a month incremental cash benefit, leaving the trucking titan with plenty of weight to shift — including improving its freight volumes — to roll out from under its financial woes. Some analysts still doubt YRC can avoid bankruptcy much past the end of the year.

On Aug. 7, International Brotherhood of Teamsters members agreed, among other things, to forfeit 18 months of pension payments and take an extra 5 percent pay cut, for a total 15 percent cut this year. Because YRC already deferred about $128 million in pension payments in the second quarter, the concessions bring only an incremental cash benefit, analysts said. Other variables, some of which YRC has little control of, have to cooperate for it to survive and head to black.

Results must improve each quarter, shipping volumes need to stabilize or recover each quarter, and cost-saving measures and cash-building arrangements have to proceed as expected, YRC said in an Aug. 10 Securities and Exchange Commission filing. A key hurdle — without which the union can terminate concessions — is resolving almost $387 million of bonds in the first half of 2010. Pension funds also must allow YRC to skip 18 months of pension payments.

Key unknowns remain: customer decisions about continuing to ship with YRC and freight economy recovery, particularly the less-than-truckload (LTL) segment in which YRC leads.

An area third-party logistics provider, who asked not to be named, said a local client shipped about 40 percent of freight with YRC last year and by June had cut that to 25 percent, with the intention of reaching zero. The shift began because of service concerns and now is based on YRC’s finances, the source said.

Should YRC fail, the source said, it would be “unbelievably devastating to the local economy.”

YRC senior managers are spending the second and third weeks of August on the road, trying to reassure key customers.

Freight tonnages have yet to show promise. In June, the most recent month for which data is available, the American Trucking Associations’ truck tonnage index fell 2.4 percent, after a 3.2 percent rise in May.

“We did a dramatic fall off a cliff, and it appears we’re just sort of bouncing around on the bottom now,” ATA Chief Economist Bob Costello said. “But it’s a volatile bottom if we’re really at the bottom.”

He predicted a slow recovery, with growth beginning sometime this year and remaining slow into next year.

Recovery for the hard-hit LTL industry, which hauls consolidated small loads, probably will lag the overall industry, Costello said.

John Wagner Jr., president of North Kansas City logistics company Wagner Industries Inc., said he’s seeing stabilization in the freight market.

Although he said he expects a mild seasonal uptick in the fall, it would be up to YRC to recapture business and demonstrate improvement.

He said he’s heard stories of “dirty sales tactics” by carriers trying to scare customers away from YRC. However, small and midsize shippers are swayed more by price and service.

“Right now, price is the name of the game,” Wagner said.

Is November the End for YRC Worldwide?

YRC Worldwide, the nation's largest trucking company by revenue, continues to post huge losses on declining revenue. The Overland Park, Kan.-based LTL carrier posted a $309 million loss in the second quarter, compared with $35.8 million earnings in the year-ago period, on a 45 percent decline in revenue to $1.33 billion. YRC CEO and Chairman Bill Zollars says he continues to have "guarded optimism" about the future of his company.

YRC Worldwide continues to bleed red ink. Its second-quarter loss of $309 million means the company has lost in excess of $2.1 billion in the last 10 operating quarters.

How long can this continue?

YRC Chairman and CEO Bill Zollars says in a press release announcing the results that he has "guarded optimism" and that his LTL company "appears to have stabilized." Yet he candidly admitted there is no growth prospects for either this year or 2010.

Which begs the question: if not now, when?

The second and third quarters are usually the best times for trucking companies. Most of YRC's rivals either have swung back to profitability (Con-way, for instance) or have narrowed their losses (Arkansas Best Corp.'s ABF Freight System unit)s. YRC has done either.

Zollars insisted to the Wall Street Journal that his company has retained "the vast majority" of its customer base. Yet, his own revenue figures would seem to belie that fact. Revenue fell 45 percent in the second quarter to $1.33 billion. That would mean on an annual basis that YRC, which was about a $9.6 billion company just two years ago, is now on a 12-month run rate to post just over $5 billion in sales.

Perhaps Zollars knows something we don't know. Perhaps at $5 billion YRC will be more profitable than it was at $9.6 billion.

But I know this: the market place is alive with rumors. Competitors are viciously selling against YRC to customers, warning of a possible fourth-quarter shutdown of what is still the nation's largest trucking company.

Respected trucking analyst David Ross of Baltimore-based Stifel Nicolaus, who has long had the best read on YRC's rather murky financial projections, is warning in a note to investors that unless YRC's terminal and other asset sales "come through big," the company may run aground of its minimum liquidity covenants in November. That basically means YRC runs out of cash.

YRC's lenders have been more than patient. Even now, they have allowed YRC to waive the minimum $100 million liquidity covenant for August and will allow YRC to keep all (up to $50 million) of its proceeds from ongoing asset sales. This will allow further "wiggle room" as YRC decides if it can sell more assets (its Holland and New Penn regional LTL units might fetch a suitor but industry overcapacity means any sales price will be depressed).

The company's 33,000 active Teamsters currently are voting on another wage concession and pension freeze package. Together, this might save the company as much as $900 million over the next 12 months.

Look for the Teamsters to approve the wage cut, but not by the overwhelming 82 percent majority that the early 10 percent wage cut passed. This will be closer, but will still pass, according to sources within the union. Results will be announced around Aug. 6. But even with those concessions, YRC is far from being "out of the woods" as its financial noose continues to tighten.

YRC chief pulls back statements in letter to Teamsters

YRC Worldwide Inc. CEO Bill Zollars appears to be pulling back from recent comments that have sparked the ire of union workers.

The International Brotherhood of Teamsters on its Web site has posted a Tuesday letter from Zollars. In the letter, he apologizes for comments to the Kansas City Business Journal that nonunion workers probably would not take further compensation cuts, even if union workers agree to an extra 5 percent wage cut and the forfeiture of 18 months of pension payments, because current cuts had been extended and nonunion workers took more of a cut to health and benefits.

Teamsters members are voting on whether to accept the new concessions package, valued at $825 million.

“YRCW is committed to the principle of ‘equal sacrifice’ and will require that our nonunion employees take as much, if not more, cuts in wages and benefits” as outlined in the tentative concessions agreement, Zollars wrote.

The Teamsters had explained to members that the concessions package included provisions that nonunion employees would “have further adjustments made to their total compensation package to bring their total wage and benefit package in line with what reductions are proposed” in the concessions.

The Teamsters Web site said Zollars’ note was a response to a Monday letter from union General President James Hoffa demanding “an immediate clarification” about public statements that contradicted the tentative agreement. A Teamsters spokesman said the union wouldn’t comment beyond what it posted online.

Zollars also said in the letter that YRC was retracting a Monday announcement about extending its delivery services to homes and businesses through a partnership with Specialized Transportation Inc. (STI), forming YRC Residential Solutions.

“YRCW will not subcontract bargaining unit work to Specialized Transportation Inc. or any other company” in violation of union agreements, Zollars wrote. “We recognize that, with more than 8,000 Teamsters on lay-off, residential delivery work must be offered to the bargaining unit.”

The Overland Park-based trucking company (Nasdaq: YRCW) has laid off thousands, closed facilities, sold property, amended bank agreements and taken other steps to avoid bankruptcy amid a drawn-out freight recession.

BILL ZOLLARS' RESPONSE TO GENERAL PRESIDENT HOFFA

General President Hoffa contacted Bill Zollars at YRCW yesterday concerning recent statements and announcements that are contrary to the NMFA and the recent MOUS and demanded an immediate clarification.

The response from Zollars to Hoffa’s letter is here.

YRC chairman: Nonunion workers probably won’t take further cuts

YRC Worldwide Inc.’s nonunion employees probably won’t take further cuts if International Brotherhood of Teamsters workers approve another round of concessions, company Chairman and CEO Bill Zollars said.

The nonunion workers, who constitute about 14,000 of YRC’s 49,000 total employees — or about 29 percent of the work force — early this year took a 10 percent wage cut that now has been extended, along with the suspension of 401(k) matches and benefits cuts.

The Overland Park-based trucking company (Nasdaq: YRCW) has laid off thousands, closed facilities, sold property, amended bank agreements and taken other steps to avoid bankruptcy amid a drawn-out freight recession.

Nonunion workers have taken more of a cut to health and benefits, Zollars said in a Thursday interview.

On Friday, the Teamsters mailed YRC union workers ballots about accepting concessions that include an extra 5 percent wage cut until 2013 and deferral of 18 months of pension contributions. The union workers would get options for an additional 20 percent stake in outstanding YRC stock, along with considerations such as an appointee on the YRC board.

The concessions, which would bring the total union wage cut this year to 15 percent and the total options available to union workers to 35 percent, would save YRC an estimated $825 million through the end of 2010.

In documents distributed to union members last week, the Teamsters said nonunion employees would “have further adjustments made to their total compensation package to bring their total wage and benefit package in line with what reductions are proposed” in the concessions.

“Increases to wages, if any, can only be made in proportion to increases Teamsters will receive each April under the revised agreement,” the Teamsters said.

The company also tried to balance opportunities for union and nonunion employees. Although union employees would get stock options, non-union employees potentially could get raises, Zollars said.

“Union employees will benefit through stock appreciation,” he said. “(Nonunion workers) will benefit from incentive-based compensation as we recover.”

YRCW AND IBT REACH TENTATIVE AGREEMENT - FROM BILL ZOLLARS

The Teamsters will soon be voting on the tentative agreement to modify the terms of the current labor agreement. Bill Zollars has more in this new YRC Worldwide Insight video.

YRC’s Performance Improving as Firm Cuts Costs, Zollars Say

This story appears in the May 25 print edition of Transport Topics.

YRC Worldwide Inc. has received relief from lenders who waived an earnings target for the second quarter, and company head William Zollars said the less-than-truckload carrier’s performance is improving because of several cost-cutting moves, including potential pension-payment relief from the Teamsters union.

The company acknowledged reports that the unionized less-than-truckload carrier also is considering an application for $1 billion in aid from the federal Troubled Assets Relief Program to defray pension costs that currently are a cash drain.

“We are in the process of finishing negotiations with pension funds,” said Zollars, chief executive officer. He declined to give a date when he expected those talks would conclude. YRC hopes to save cash by replacing cash pension payments, now ranging from $34 million to $45 million a month, with pledging of real estate collateral.

Zollars, who spoke May 19 at the Wolfe Research Global Transportation Conference here, said the company was making progress in recovering business diverted when its Roadway and Yellow Transportation LTL units were integrated two months ago. The company has regained three to four percentage points of the 11% business reduction attributed to concerns about the integration process, he said.

“We would expect, as we move through the second quarter, more and more business will return,” Zollars said. He said the company’s operating loss was “60-ish” million dollars in April. Full Story.........

Trucking firm’s parent in trouble

New Penn Motor Express’ parent company is in dire financial straits, leaving the future of the South Lebanon Township trucking firm in doubt.
Late last week, Kansas-based YRC Worldwide Inc. said it will ask for $1 billion in federal bailout funds.

Two analysts don’t believe the nation’s largest publicly traded trucking company can survive.

“We have a difficult time seeing how the math works here to restore the company to profitability,” David Ross and John Larkin wrote in a Stifel Nicolaus research report. “It has already had its employees take a 10 percent wage cut. Plus, we do not see industry volumes rebounding this year and industry pricing remains very competitive.”

Ross told The Associated Press on Friday that the chance YRC will get bailout money is “very slim.”

“TARP (Troubled Asset Relief Program) was made for financial institutions, not to bail out a trucking company,” Ross told AP. “If YRC (received a bailout) that would just open up the floodgates for other struggling companies to ask for money, too.”

New Penn employs more than 2,000 people and operates a fleet of more than 750 tractors and 1,700 trailers. It is “widely regarded as one of the most efficiently operated carriers in the industry,” according to a YRC statement issued Tuesday in response to questions from the Lebanon Daily News.

New Penn has a network of 23 service centers in the northeastern

U.S., Quebec and Puerto Rico.
YRC had $8.9 billion in revenue in 2008. It employs about 49,000 people. Included among its operating companies are Yellow Transportation and Roadway Express, which are being integrated, New Penn Motor Express, USF Reddaway, USF Holland, USF Glen Moore and YRC Logistics.

On May 11, YRC reported a $257 million quarterly loss, compared to a loss of $46 million in the first quarter of 2008. YRC booked $164 million in charges for the quarter related to integrating its Yellow and Roadway divisions and laid off more than 3,000 workers.

On Friday, YRC announced it had reached an agreement with its banking group that will enable it to stay within the terms of its debt.

While the amendment with its lenders will help, the company is still staring at about $2 billion in pension obligations from a multi-employer plan, the Wall Street Journal reported. Bill Zollars, chief executive officer for YRC, said those obligations are unfair because YRC must pay for employees who never worked for the company.

Ross disagreed that seeking TARP money to solve the pension problem “is the way to go about it.”

Another analyst, Jon Langenfeld of Robert W. Baird & Co., wrote in a research note that the TARP fund application could backfire.

“Despite the fact that the union pension is not relevant to YRC’s near-term viability, shippers have already misinterpreted this move as an act of desperation, which could make share recovery more challenging,” wrote Langenfeld, who kept a “neutral” rating on the YRC stock.

YRC’s survival is dependent on “how much rope the banks want to give (YRC),” Ross told AP.

Stifel Nicolaus is maintaining a “hold” rating on YRC stock, with a “strong negative bias.”

In a recent note to clients, Ross said YRC continues to lose business to competitors and that YRC’s volumes in April were down 35 to 40 percent compared with a a year earlier.

YRC’s stock price has been hammered, closing at $3.18 on Tuesday. In mid-July, the stock price stood at $22.52.

On Friday, Zollars said that “volumes that were temporarily diverted have begun to return,” but added, “it has not been at the level and speed that we initially expected.”

YRC’s statement issued Tuesday said the firm is “making significant progress in strengthening our competitive and financial position. With our unrivaled networks, we are well-positioned to continue providing service that is simply reliable. On the financial side of our business, we are confident that we are taking the right steps by actively managing cash flow and engaging in constructive discussions with our lenders so that (we) can continue to meet our obligations and serve our customers. The most recent example is our bank amendment announced on Friday.”

You Have to Give YRC Points for Creative Thinking

Implications
YRC Worldwide, the nation's largest trucking company which has lost close to $2 billion over the last nine quarters, is applying for $1 billion in bailout funds under the government's Troubled Asset Relief Program (TARP).

YRC Chairman and CEO William Zollars says the funds are necessary "to get the conversation started" about the company's estimated $2 billion in pension obligations to various multi-employer pension plans, including the Teamsters' Central States plan. While YRC is not a financial institution and its odds of receiving the bailout are considered slim, Zollars says it's unfair for YRC to be paying billions of pension payments when roughly half its contributions are going to workers who never were employees of YRC companies.

Analysis

Creativity is a wonderful thing. It has given us modern art, rap music, the sport of Ultimate Fighting Championship and thousands of other off-the-mainstream elements of our society.

Now comes William D. Zollars, who wants to magically change the nation's largest trucking company into a financial institution.

Zollars is chairman and CEO of YRC Worldwide, the nation's largest trucker with $8.9 billion in revenue last year. YRC has about a 20 percent market share in the less-than-truckload (LTL) sector of the industry. It has lost $1.869 billion the last nine quarters, including a pre-tax loss of $415 million in the 2009 first quarter.

YRC has admitted its losses and high debt load may cause it to run aground of its bank covenants. Those agreements state that YRC's debt cannot exceed 3.5 times earnings before interest, taxes, depreciation and amortization (EBITA).

Zollars says he plans on applying for $1 billion in TARP funds because his company is obligated to pay an estimated $2 billion this year into various pension plans.

Like most unionized trucking companies, YRC belongs to various Teamsters' multi-employer pension plans. Because more than 600 Teamsters-covered trucking companies have gone bankrupt since deregulation in 1980, YRC is in the untenable position of being one of the last surviving contributors to these multi-employer plans.

In fact, Zollars tells the Wall Street Journal in this scoop, that nearly half of YRC's annual pension contributions are going to fund workers who never worked a day in their lives at companies controlled by YRC units.

That's unfair. Hence, Zollars says, YRC deserves the bailout.

Analysts, lawyers and others who have dealt with the government in applying for TARP funds say Zollars' quest is a longshot at best. I tend to agree. After all, YRC simply is not a bank, financial or lending institution.

I do agree with Zollars that it's unfair YRC is stuck with paying for pensions of workers who never worked for his company. But unfortunately, that's how multi-employer pension plans were designed to work.

Ask UPS. The nation's largest transportation company also belongs to many multi-employer pension plans. But it saw this liability coming years ago. As a result, UPS two years ago made a decision to exit the Teamsters' largest multi-employer plan, Central States, because of the "overhang" of this liability.

As a result, UPS made a one-time payment of $6.1 billion (about half that, after taxes) to Central States in exchange for getting out from underneath its obligations to that fund. UPS could do that because that $50 billion company is profitable--even in the worst freight environment in more than 30 years.

YRC could opt to do the same thing. I estimate its withdrawal liability to be perhaps as large as $3 billion--an impossibly high figure, given YRC's precarious financial condition.

With that option off the table, YRC evidently feels it has to try the next-best thing. That's TARP.

Prediction: This will be approved the day pigs fly and Dick Cheney applies to be a fund raiser for Barack Obama's re-election bid.

I don't really believe Zollars even thinks this will fly. But as he tells the Journal, it's a way "to get the dialogue started about the pension issue."

I give Zollars points for thinking outside the box. And if it works to shave YRC's pension obligations by a substantial amount and keeps his company afloat, it was worth it.

As the 50-to-1 winner of the Kentucky Derby proved a few weeks ago, longshots do come in. At least at the race track

USF Holland trucks 45 jobs out of Mansfield

In a statement released Tuesday, the Holland, Mich.-based trucking company said its facility at 792 Fifth Ave. will be shuttered and operations consolidated elsewhere in Holland’s regional network.

Currently 45 employees work out of the Mansfield terminal, although the Holland officials did not say how many are drivers and how many are support personnel. The statement said the majority of employees will have the opportunity to transfer to the surrounding Holland facilities.

“We made significant investments in our company during the first quarter to enhance our position in the market and improve our future operating performance,” said Bill Zollars, Chairman, President and CEO of YRC Worldwide, which owns USF Holland. “Unfortunately, the economy progressively weakened throughout the quarter, making it more challenging to get ahead of the volume declines.”

Shifting operations out of Mansfield, Holland plans to serve customers from its Buffalo, Cleveland and Youngstown service centers “in order to support ongoing efforts to improve service performance, reduce costs and maintain competitiveness,” the statement said.

No closing date for the Mansfield terminal was released, though the company said it is currently planning action for the first half of June.

The announcement comes on the heels of a March report that USF Holland was closing 11 terminals in Maryland, New York, Pennsylvania, Virginia and Kansas, affecting 350 employees. This week, the transportation service provider named five additional facilities to be shut down, including the Mansfield operation.

Overland Park-based YRC Worldwide rolls with economy’s changes

YRC Worldwide Inc. cut more than 10 percent of its work force in the first three months of the year.

While discussing its first-quarter financial results with analysts last week, officials said YRC Worldwide laid off about 5,700 employees companywide in the period. The job reductions were due to the weak economy affecting business and also because of operations merging as YRC combined its two national carriers, Yellow Transportation and Roadway.

YRC has its headquarters in Overland Park and operates three truck terminals in the area. A company spokesman said a breakdown of the layoffs by area was not yet available.

YRC Worldwide had about 55,000 employees at the end of 2008, according to a recent regulatory filing. The employment level after the most recent reductions also means the company has about 11,000 fewer employees than it did this time last year, said Bill Zollars, YRC’s chairman and chief executive.

Although the size of YRC’s local work force has declined, the area has managed to avoid any facility closings. YRC, the name of the merged national trucking firm, continues to operate two area terminals. USF Holland, a regional carrier operated by the company, also has kept an area terminal.

USF Holland, which operates mainly in the Midwest, has been hit particularly hard by the production cuts and plant closings in the auto industry. Zollars said the company recently announced that Holland would close five more terminals.

One analyst asked whether the decision by General Motors Corp. to close many plants in the spring and summer, along with the potential of GM and Chrysler filing bankruptcy, would affect YRC Worldwide’s results.

“Our corporate exposure to the auto industry is not significant, but there is more exposure in Holland,” Zollars said. As a result, Holland is trying to diversify its customer base, he said.

Zollars said it was unclear whether business had bottomed out for the freight industry, a sector that usually acts as a leading indicator for the overall economy.

With the recent merger, YRC has made strides in customer service and productivity, both of which should continue to improve, he said.

“But the wild card is the economy,” he said. “We’ve sort of seen a couple of head fakes in the past when we thought the economy stabilized, and then it took another step down. There are a lot of new parts here, and it’s too early to make any kind of call on the second quarter.”

YRC Worldwide is in talks to put up real estate as collateral in place of pension contributions

YRC Worldwide Inc. is negotiating with the Teamsters union and its lending group about putting up real estate as collateral in place of monthly pension contributions.

In a regulatory filing, YRC said it makes $34 million to $45 million in monthly pension payments depending on employment levels at three trucking subsidiaries, YRC Inc., USF Holland Inc. and New Penn Motor Express Inc.

The company said any agreement would not affect the current or future benefits of those participating in the pension plans.

YRC Worldwide said it has asked it lending group to release some of the $1.5 billion in assets put up as collateral last fall following a credit-rating downgrade. The company said further details will be released once an agreement is reached.

The Overland Park-based trucking company has thousands of current workers and retirees who belong to the Central States Pension Fund, run by the Teamsters. YRC Worldwide is the biggest contributor to the multi-employer plan.

Teamsters officials declined to comment on YRC’s disclosure.

However, an internal Teamsters memo to locals nationwide said YRC was seeking payment deferrals to pension funds for several months, according to a report on the Journal of Commerce’s Web site.

In its annual report, the Central States fund reported $17.3 billion in pension assets at the end of 2008, down from $26.8 billion a year earlier. Much of that loss was blamed on the stock-market collapse last year.

The report of YRC Worldwide’s talks with the union comes a week after Bill Zollars, YRC’s chairman and chief executive, told analysts that freight demand remained very weak.

One Company, Yes, But Will It Be Profitable?

Analysis by: John Schulz
Analysis of: Yellow and Roadway Now One Company
Published at: www.joc.com

Implications

YRC Worldwide says it has fully integrated the operations of long-haul national units Roadway Express and Yellow Transportation. The move comes five years after YRC bought Roadway for $1.1 billion. It also comes after YRC has lost a reported $1.612 billion in the last two years as the nation's largest trucking company by volume struggles with sales, operations and efficiency in the economic downturn.

Analysis

Well, better late than never.

Five years after then Yellow Transportation bought out rival Roadway Express for a whopping $1.1 billion, the two unionized long-haul carriers have finally merged.

In a press release, YRC Worldwide Chairman Bill Zollars trumpets the move as a "game-changing event for our company."

Maybe, maybe not.

As one who called the Roadway Express purchase a mistake from the get-go, I do applaud Zollars and his team for getting this done in the face of the most wicked industrial and economic downturn in perhaps 75 years.

Transportation mergers are never easy. This one never was. Despite how attractive it looked on paper, merging some 600-plus terminals and 45,000 Teamsters into one functional company is no mean trick. YRC deserves kudos for doing it.

Now, will it work?

It almost has to. If it doesn't, YRC probably won't be around to pick up the pieces.

YRC is dancing a slow dance with its lenders, buying time at each quarter with terminal sales and lease-backs, wage concessions from its Teamsters, and discounting levels that are hitting a reported 80 percent off listed tariff rates, according to shipper sources.

But there is a payday in all this. For one thing, YRC is down to about 450 terminals. This source story says that is about "100 more than either Roadway or Yellow did individually," although that is not really the way to look at it.

The way to properly frame this exercise is it closed or otherwise disposed of nearly 150 duplicative terminals in the carriers' combined networks. That is real money savings. YRC can now sell the terminals for hard cash (it outright owns most of them, and the real estate underneath them), provided some company has the credit line to buy them.

Already, non-union Estes Express has purchased one for millions of dollars. That is going directly to YRC's bottom line, to keep its bankers happy by staying within the parameters of its loan covenants.

Shippers really hold the key to all this. If the combined Yellow-Roadway network suffers any noticeable service glitches, shippers are going to vote with their feet, no matter what level of discounts they are getting.

I've long felt this operation could cover the contiguous 48-state network with fewer terminals and real estate. ABF Freight System does the same thing with about 250 or so terminals. Although YRC's national network is perhaps two or three times larger than ABF's, I think with freight levels so depressed right now, 450 is about the right number for YRC.

If YRC has to shrink to survive, so be it. If it earns more money as a $6 billion company than it did as a $9.6 billion company, shrink it and be happy. After $1.613 billion in losses in two years, YRC would probably be happy with any level of profitability right now.

YRC CEO: Volume May Be Bottoming; Rules Out Bankruptcy

Trucking giant YRC Worldwide Inc. weighed in on the steep slump in freight volumes Friday, with Chief Executive Bill Zollars voicing some optimism that the industry-wide trend at least may be bottoming.

"The percentage declines year-over-year have started to stabilize" in the early weeks of 2009, Zollars said in an interview. "Believe me, we're looking really hard for any sign of improvement."

Meanwhile, Zollars reiterated that bankruptcy isn't being considered as an option for debt-laden YRC. He said talks aimed at relaxing some debt covenants have been proceeding well with lenders and should be successfully completed by mid-February.

YRC shares were trading recently at $3.01, off 3.8%, after falling about 20% Thursday.

Shipping volumes have been on the wane for some time industry wide, but freight haulers - including fellow trucking companies J.B. Hunt Transport Services Inc. and Con-way Inc., as well as top U.S. railroads - have reported that the trend accelerated in the fourth quarter, in line with the deteriorating economy. Most have been hesitant to call a bottom.

Zollars concurred that the overall economy "definitely decelerated" in the fourth quarter, noting that YRC's freight volumes "progressively weakened" each month. Per-day tonnage for YRC's national segment dropped 15% in the quarter, with its regional business seeing a 14% drop when adjusted for network changes that took place early this year.

But Zollars said the trend "looks like it has stabilized" since the end of the year, particularly when adjusted for poorer weather conditions this winter.

Still, he said YRC isn't planning for an economic recovery in 2009 and still assumes freight volumes will be down overall from 2008 levels. YRC has been experiencing pricing pressure as well - with prices down an average 1.5% in the fourth quarter - although Zollars said he expects YRC to do better on pricing than the trucking sector overall this year.

Additional insight on the outlook for industry freight volumes likely will come Tuesday, when United Parcel Service Inc. (UPS), the largest U.S. package shipper, posts fourth-quarter earnings.

The UPS results are coming on the heels of a report Thursday indicating that international air cargo fell 23% in December from a year earlier, signaling a broader slump in global trade. The report from the International Air Transport Association includes freight on both passenger carriers and all-cargo carriers.

YRC, created through a 2003 combination of the Yellow and Roadway trucking brands, logged fourth-quarter results late Thursday, posting a narrower net loss on fewer write-downs.

The company's net loss came in at $244.4 million, or $4.14 a share, compared with a year-earlier net loss of $735.8 million, or $12.99 a share. Excluding write-downs, which in the latest quarter included charges related to the Roadway trade name, the loss was $1.63 a share.

Revenue dropped 18% to $1.93 billion.

On average, analysts surveyed by Thomson Reuters projected a 66-cent-a-share loss and revenue of $2.04 billion.

YRC has $1.36 billion in debt, a portion of which it has been struggling to refinance. But because of a sinking bottom line, the company is at risk of falling out of compliance with credit lines and has been working to renegotiate covenant

YRCW announces next steps in Yellow Transportation, Roadway network intregration

More than four months after announcing plans to integrate its two largest subsidiaries—Yellow Transportation and Roadway—less-than-truckload transportation services providers YRC Worldwide Inc. announced the new brand name for the combined Yellow Transportation and Roadway network is YRC.

Last September, YRCW announced its intention to hasten the integration strategies of Yellow Transportation and Roadway, due to what company Chairman, President, and CEO Bill Zollars described as a positive customer response from meshing its sales teams, coupled with the economic downturn creating the capacity in the company’s networks that is needed to effectively integrate its operations, while improving service reliability and speed. And he added at the time that by offering a comprehensive service portfolio though one network would be a better tool to effectively serve customers.

YRCW officials said the YRC is “ahead of schedule to successfully integrate its national networks by early spring.” They added that since October approximately 80 shared service centers have been opened to manage the combined network and serve as a single interface fore Roadway and Yellow Transportation customers.

And when the network integration is complete, there will be around 450 YRC service centers, representing roughly 100 more service centers than the individual Roadway and Yellow networks. Company officials noted that in major metropolitan areas, the nearest YRC facility will be 20 percent closer to customers, allowing for quicker pick-ups and deliveries, increased flexibility, and reduced emissions, and they said that as part of the integration process YRC has added more than 21,000 direct new service points.

While the Yellow Transportation/Roadway integration has been in motion since September, the original plan was to keep the Yellow Transportation and Roadway names to maintain their own brands and presence in the LTL sector. And by operating one national network, YRCW said last year that it expects to increase its network density, with the result being lower fixed-costs and service improvements. The integration is expected to last through 2009 and result in more than $200 million in annual operating savings.

In a September interview with Logistics Management,YRC North American Transportation President and CEO Mike Smid said these savings will come from various sources. One being consolidating the number of facilities it operates out of from 650 to roughly 450, as it combines capacity in existing facilities as part of YRCW’s “one network, one operation” approach with this integration. Another area where savings will come from, said Smid, is local pickup and delivery handling.

YRC receives extension to amend debt terms

YRC Worldwide Inc. said it received an extension from its lending group to amend its debt terms.

One of the country's biggest trucking firms, Overland Park-based YRC said the banking group has allowed it to waive certain debt-compliance issues till mid-February. That will allow the company to report its 2008 results after the market's close on Jan. 29 as scheduled, the company said.

"This is another indication that our banking group supports the strategic actions we are taking and is working with us to provide the flexibility we need during the economic recession," YRC chairman and chief executive Bill Zollars said in a statement.

YRC has taken a series of steps to try and conserve cash as it tries to survive the typically slow winter months in the middle of a historical economic slowdown. The company's union workers have agreed to take a 10 percent wage cut, and its nonunion workforce has also reduced its total compensation.

The company also is in the midst of a sale-leaseback transaction for many of its terminals, including a pending deal expected to generate $150 million.

YRC Worldwide Schedules Fourth Quarter Conference Call

YRC Worldwide Inc. will host a conference call for shareholders and the investment community on Friday, January 30, 2009, beginning at 9:30am ET, 8:30am CT. Fourth quarter and full-year earnings will be released after the market close on Thursday, January 29, 2009.

Hosting the teleconference will be: Bill Zollars, Chairman, President and CEO, YRC Worldwide; Tim Wicks, Executive Vice President and CFO, YRC Worldwide; Mike Smid, President, YRC National Transportation; and Jim Ritchie, CEO, YRC Logistics.

The conference call will be open to listeners through a live webcast via StreetEvents at streetevents.com and via the YRC Worldwide Internet site yrcw.com.

An audio playback will be available via the StreetEvents and YRC Worldwide web sites.