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YRC Worldwide Inc. Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

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YRC Worldwide Inc. (YRCW) filed Quarterly Report for the period ended 2010-06-30.

Yrc Worldwide Inc. has a market cap of $328 million; its shares were traded at around $0.3109 with and P/S ratio of 0.06. YRCW is in the portfolios of David Tepper of APPALOOSA MANAGEMENT LP, Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Nonoperating expenses decreased $23.2 million in the second quarter of 2010 compared to the same period in 2009. The 2010 amount consisted primarily of a $12.3 million impairment of our equity investment in Jiayu in the second quarter of 2010 compared to $30.4 million impairment in the second quarter of 2009. The adjustment was required as the estimated fair value, using a discounted cash flow model, was less than our investment. The impairment charge is reflective of a change in revenue growth assumptions in the fair value model. Offsetting the reduced equity investment impairment was an increase in interest expense of $3.1 million attributable to increased amortization of deferred debt cost of $5.3 million, additional interest expense related to new lease financing obligations of $5.5 million and additional interest expense on our deferred pension obligations of $0.9 million all offset by a $1.7 million decrease in interest expense for the ABS facility and a $7.1 million decrease in interest expense related to the 8.5% USF senior notes and the 5% and 3.375% contingent convertible senior notes for the three months ended June 30, 2010 as compared to the same period in 2009. Finally, the additional decrease in nonoperating expenses is related to a net foreign exchange gain of $7.2 million for the three months ended June 30, 2010 versus a gain of $0.7 million for the same period in 2009 of which approximately $5.5 million relates to the recognition of the foreign currency translation adjustment from the dissolution of a certain wholly owned subsidiary.

Consolidated operating loss improved $488.0 million during the six months ended June 30, 2010 as compared to the operating loss for the same period in 2009. Revenue decreased $510.7 million in the first half of 2010 compared to the same period in 2009 while operating expenses decreased $998.7 million as compared to the same period in 2009. Expense reductions were comprised of a $756.2 million decrease in salaries, wages and benefits, a $139.8 million decrease in operating expenses and supplies, a $38.1 million decrease in purchased transportation, which is attributable to declining volumes, a $22.1 million decrease in depreciation and amortization due to reduced facilities and reduced fleet size, and a $55.4 million decrease in other operating expenses.

Nonoperating expenses decreased $15.5 million in the second quarter of 2010 compared to the same period in 2009. The 2010 balance consisted primarily of a $12.3 million impairment of our equity investment in Jiayu in the second quarter of 2010 compared to $30.4 million impairment in the second quarter of 2009. The adjustment was required as the estimated current fair value, using a discounted cash flow model, was less than our investment. The impairment charge is reflective of a change in revenue growth assumptions in the fair value model. Offsetting the reduced equity investment impairment was an increase in interest expense attributable to increased net deferred debt cost amortization of $12.2 million, additional interest expense related to our lease financing obligations of $12.5 million and an increase in interest expense on our deferred pension obligations of $2.8 million all offset by a $1.4 million decrease in interest expense related to the ABS facility and a $13.6 million decrease in interest expense for the to the 8.5% USF senior notes and the 5% and 3.375% contingent convertible senior notes for the six months ended June 30, 2010 as compared to the same period in 2009. Finally, the additional decrease in nonoperating expenses is related to a net foreign exchange gain of $7.2 million for the six months ended June 30, 2010 versus a gain of $0.2 million for the same period in 2009 of which approximately $5.5 million relates to the recognition of the foreign currency translation adjustment from the dissolution of a certain wholly owned subsidiary.

Operating income for National Transportation was $33.1 million in the second quarter of 2010 compared to operating loss of $239.5 million in the same period in 2009. Revenue was lower by $132.1 million while total costs decreased by $404.7 million. The cost declines consisted primarily of lower salaries, wages and benefits of $320.1 million, lower operating expenses and supplies of $47.8 million, lower purchased transportation costs of $12.5 million, and lower other operating expenses of $24.2 million.

Operating income for Regional Transportation was $22.4 million for the second quarter 2010, compared to $48.3 million operating loss for the second quarter 2009, consisting of a $13.6 million improvement in revenue and a $57.1 million decrease in operating expenses. Regional Transportation has reduced most operating expenses in proportion to lower business volumes. Expense decreases in the second quarter 2010 were comprised of salaries, wages and benefits of $62.7 million, depreciation and amortization of $1.1 million and other operating expenses of $0.4 million. Expense increases in the second quarter 2010 included operating expenses and supplies of $6.1 million and purchased transportation of $1.2 million.

Operating loss for Regional Transportation was $17.3 million for the first six months of 2010, an improvement of $105.2 million from the first six months of 2009, consisting of a $32.4 million decline in revenue and a $137.6 million reduction in operating expenses. Regional Transportation has reduced most operating expenses in proportion to lower tonnage and shipment volumes and has benefited from our comprehensive recovery plan, including cost reduction initiatives as described below. Material expense decreases were comprised of salaries, wages and benefits of $123.1 million, purchased transportation of $0.7 million, depreciation and amortization of $1.4 million, and other operating expenses of $19.5 million. Expense increases included operating expenses and supplies of $1.9 million.

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