10-Q 1 yrcw-2013331x10q.htm 10-Q YRCW-2013.3.31-10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013
OR
o
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
 
 
YRC Worldwide Inc.
(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, Overland Park, Kansas
 
66211
(Address of principal executive offices)
 
(Zip Code)
(913) 696-6100
(Registrant’s telephone number, including area code)
None
(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 Section 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  ý    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
 
o
  
Accelerated filer
 
ý
 
 
 
 
Non-accelerated filer
 
o  (Do not check if a smaller reporting company)
  
Smaller reporting company
 
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes  o    No  ý
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, 2013
Common Stock, $0.01 par value per share
 
9,396,860 shares



INDEX
 


2


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
YRC Worldwide Inc. and Subsidiaries
(Amounts in millions except share and per share data) 
 
March 31,
2013
 
December 31,
2012
 
(Unaudited)
 
 
Assets
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
182.4

 
$
208.7

Restricted amounts held in escrow
15.5

 
20.0

Accounts receivable, net
505.0

 
460.1

Prepaid expenses and other
87.9

 
85.3

Total current assets
790.8

 
774.1

Property and Equipment:
 
 
 
Cost
2,850.4

 
2,869.0

Less – accumulated depreciation
(1,683.2
)
 
(1,677.6
)
Net property and equipment
1,167.2

 
1,191.4

Intangibles, net
94.3

 
99.2

Restricted amounts held in escrow
102.5

 
102.5

Other assets
46.1

 
58.3

Total Assets
$
2,200.9

 
$
2,225.5

Liabilities and Shareholders’ Deficit
 
 
 
Current Liabilities:
 
 
 
Accounts payable
$
171.0

 
$
162.0

Wages, vacations and employees’ benefits
216.1

 
190.9

Other current and accrued liabilities
218.9

 
233.2

Current maturities of long-term debt
73.7

 
9.1

Total current liabilities
679.7

 
595.2

Other Liabilities:
 
 
 
Long-term debt, less current portion
1,296.0

 
1,366.3

Pension and postretirement
538.1

 
548.8

Claims and other liabilities
329.7

 
344.3

Shareholders’ Deficit:
 
 
 
Preferred stock, $1 par value per share

 

Common stock, $0.01 par value per share
0.1

 
0.1

Capital surplus
1,934.4

 
1,926.5

Accumulated deficit
(2,095.1
)
 
(2,070.6
)
Accumulated other comprehensive loss
(389.3
)
 
(392.4
)
Treasury stock, at cost (410 shares)
(92.7
)
 
(92.7
)
Total YRC Worldwide Inc. shareholders’ deficit
(642.6
)
 
(629.1
)
Total Liabilities and Shareholders’ Deficit
$
2,200.9

 
$
2,225.5

The accompanying notes are an integral part of these statements.

3


STATEMENTS OF CONSOLIDATED COMPREHENSIVE LOSS
YRC Worldwide Inc. and Subsidiaries
For the Three Months Ended March 31
(Amounts in millions except per share data, shares in thousands)
(Unaudited)
 
 
2013
 
2012
Operating Revenue
$
1,162.5

 
$
1,194.3

Operating Expenses:
 
 
 
Salaries, wages and employees’ benefits
681.0

 
704.8

Operating expenses and supplies
267.8

 
293.2

Purchased transportation
114.9

 
119.7

Depreciation and amortization
43.6

 
49.0

Other operating expenses
49.8

 
68.1

(Gains) losses on property disposals, net
(4.5
)
 
8.3

Total operating expenses
1,152.6

 
1,243.1

Operating Income (Loss)
9.9

 
(48.8
)
Nonoperating Expenses:
 
 
 
Interest expense
39.2

 
36.4

Other, net
(0.3
)
 
(0.4
)
Nonoperating expenses, net
38.9

 
36.0

Loss before income taxes
(29.0
)
 
(84.8
)
Income tax benefit
(4.5
)
 
(3.2
)
Net loss
(24.5
)
 
(81.6
)
Less: net income attributable to non-controlling interest

 
3.9

Net Loss Attributable to YRC Worldwide Inc.
(24.5
)
 
(85.5
)
Other comprehensive income, net of tax
3.1

 
5.7

Comprehensive Loss Attributable to YRC Worldwide Inc. Shareholders
$
(21.4
)
 
$
(79.8
)
 
 
 
 
Average Common Shares Outstanding – Basic
8,380

 
6,893

Average Common Shares Outstanding – Diluted
8,380

 
6,893

 
 
 
 
Net Loss Per Share – Basic
$
(2.93
)
 
$
(12.40
)
Net Loss Per Share – Diluted
$
(2.93
)
 
$
(12.40
)
The accompanying notes are an integral part of these statements.

4


STATEMENTS OF CONSOLIDATED CASH FLOWS
YRC Worldwide Inc. and Subsidiaries
For the Three Months Ended March 31
(Amounts in millions)
(Unaudited) 
 
2013
 
2012
Operating Activities:
 
 
 
Net loss
$
(24.5
)
 
$
(81.6
)
Noncash items included in net loss:
 
 
 
Depreciation and amortization
43.6

 
49.0

Paid-in-kind interest on Series A Notes and Series B Notes
7.6

 
6.3

(Gains) losses on property disposals, net
(4.5
)
 
8.3

Other noncash items, net
3.6

 
0.1

Changes in assets and liabilities, net:
 
 
 
Accounts receivable
(45.2
)
 
(16.4
)
Accounts payable
(2.0
)
 
22.2

Other operating assets
9.1

 
(19.2
)
Other operating liabilities
(1.6
)
 
14.2

Net cash used in operating activities
(13.9
)
 
(17.1
)
Investing Activities:
 
 
 
Acquisition of property and equipment
(17.2
)
 
(15.1
)
Proceeds from disposal of property and equipment
0.6

 
10.0

Restricted escrow receipts, net
4.5

 
10.1

Other, net
1.8

 

Net cash (used in) provided by investing activities
(10.3
)
 
5.0

Financing Activities:
 
 
 
Issuance of long-term debt
0.3

 
45.0

Repayments of long-term debt
(2.4
)
 
(6.0
)
Debt issuance costs

 
(1.1
)
Net cash (used in) provided by financing activities
(2.1
)
 
37.9

Net (Decrease) Increase In Cash and Cash Equivalents
(26.3
)
 
25.8

Cash and Cash Equivalents, Beginning of Period
208.7

 
200.5

Cash and Cash Equivalents, End of Period
$
182.4

 
$
226.3

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Interest paid
$
(28.5
)
 
$
(31.5
)
Income tax refund, net
$
14.6

 
$
7.8

The accompanying notes are an integral part of these statements.

5


STATEMENT OF CONSOLIDATED SHAREHOLDERS’ DEFICIT
YRC Worldwide Inc. and Subsidiaries
For the Three Months Ended March 31, 2013
(Amounts in millions)
(Unaudited)
 
Common Stock
 
Beginning and ending balance
$
0.1

Capital Surplus
 
Beginning balance
$
1,926.5

Share-based compensation
0.6

Issuance of equity upon conversion of Series B Notes
7.3

Ending balance
$
1,934.4

Accumulated Deficit
 
Beginning balance
$
(2,070.6
)
Net loss attributable to YRC Worldwide Inc.
(24.5
)
Ending balance
$
(2,095.1
)
Accumulated Other Comprehensive Loss
 
Beginning balance
$
(392.4
)
Reclassification of net pension actuarial losses to net loss, net of tax
3.7

Foreign currency translation adjustments
(0.6
)
Ending balance
$
(389.3
)
Treasury Stock, At Cost
 
Beginning and ending balance
$
(92.7
)
Total Shareholders’ Deficit
$
(642.6
)
The accompanying notes are an integral part of these statements.

6


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YRC Worldwide Inc. and Subsidiaries
(Unaudited)

Certain of these Notes to Consolidated Financial Statements contain forward-looking statements, as described in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Cautionary Note Regarding Forward-Looking Statements" below.

1. Description of Business

YRC Worldwide Inc. (also referred to as “YRC Worldwide,” the “Company,” “we,” “us” or “our”), one of the largest transportation service providers in the world, is a holding company that, through wholly owned operating subsidiaries and its interest in a Chinese joint venture, offers its customers a wide range of transportation services. We have one of the largest, most comprehensive less-than-truckload ("LTL") networks in North America with local, regional, national and international capabilities. Through our team of experienced service professionals, we offer industry-leading expertise in heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence. Our reporting segments include the following:

YRC Freight is the reporting segment that focuses on longer haul business opportunities in national, regional and international services. YRC Freight provides for the movement of industrial, commercial and retail goods, primarily through centralized management and customer facing organizations. This unit includes our LTL subsidiary YRC Inc. and Reimer Express, a subsidiary located in Canada that specializes in shipments into, across and out of Canada. In addition to the United States and Canada, YRC Freight also serves parts of Mexico, Puerto Rico and Guam.

Regional Transportation is the reporting segment for our transportation service providers focused on business opportunities in the regional and next-day delivery markets. Regional Transportation is comprised of USF Holland Inc. (“Holland”), New Penn Motor Express, Inc. (“New Penn”) and USF Reddaway Inc. (“Reddaway”). These companies each provide regional, next-day ground services in their respective regions through a network of facilities located across the United States, Canada, Mexico and Puerto Rico.

At March 31, 2013, approximately 77% of our labor force is subject to collective bargaining agreements, which predominantly expire in March 2015.

2. Principles of Consolidation

The accompanying Consolidated Financial Statements include the accounts of YRC Worldwide and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Investments in non-majority owned affiliates, or those in which we do not have control where the entity is either not a variable interest entity or we are not the primary beneficiary, are accounted for on the equity method.

We make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes. Actual results could differ from those estimates. We have prepared the Consolidated Financial Statements, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods included in these financial statements herein have been made. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles ("GAAP") have been condensed or omitted from these statements pursuant to SEC rules and regulations. Accordingly, the accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012.

Assets Held for Sale

When we plan to dispose of property or equipment by sale, the asset is recorded in the financial statements at the lower of the carrying amount or estimated fair value, less cost to sell, and is reclassified to assets held for sale. Additionally, after such reclassification, there is no further depreciation taken on the asset. For an asset to be classified as held for sale, management must approve and commit to a formal plan, the sale should be anticipated during the ensuing year and the asset must be actively marketed, be available for immediate sale, and meet certain other specified criteria. We use level 3 inputs to determine the fair value of each property considered held for sale.


7


At March 31, 2013 and December 31, 2012, the net book value of assets held for sale was $6.4 million and $7.3 million, respectively. This amount is included in “Property and Equipment” in the accompanying consolidated balance sheets. We recorded charges of $0.6 million for the three months ended March 31, 2013 and $10.5 million for the three months ended March 31, 2012 to reduce properties held for sale to estimated fair value, less cost to sell. These charges are included in “(Gains) losses on property disposals, net” in the accompanying statements of consolidated comprehensive loss.

Fair Value of Financial Instruments

The following table summarizes the fair value hierarchy of our financial assets and liabilities carried at fair value on a recurring basis as of March 31, 2013: 

 
 
 
Fair Value Measurement Hierarchy
(in millions)
Total Carrying
Value
 
Quoted prices
in active market
(Level 1)
 
Significant
other
observable
inputs (Level 2)
 
Significant
unobservable
inputs
(Level 3)
Restricted amounts held in escrow-current
$
15.5

 
$
15.5

 
$

 
$

Restricted amounts held in escrow-long term
$
102.5

 
$
102.5

 
$

 
$

Total assets at fair value
$
118.0

 
$
118.0

 
$

 
$


Restricted amounts held in escrow are invested in money market accounts and are recorded at fair value on quoted market prices. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates their fair value due to the short-term nature of these instruments.

Reclassifications Out of Accumulated Other Comprehensive Loss

For the three months ended March 31, 2013, we reclassified the amortization of our net pension loss totaling $3.7 million from accumulated other comprehensive loss to net loss. This reclassification is a component of net periodic pension cost and is discussed in the "Employee Benefits" footnote.

3. Liquidity

For a description of our outstanding debt, please refer to the "Debt and Financing" footnote to our consolidated financial statements.

Credit Facility Covenants

Our amended and restated credit agreement has certain covenants that require us to maintain a minimum Consolidated EBITDA, a maximum Total Leverage Ratio and a minimum Interest Coverage Ratio (as defined in the amended and restated credit agreement).

The covenants for each of the remaining test periods are as follows:
 
Four Consecutive Fiscal Quarters Ending
Minimum Consolidated
EBITDA
 
Maximum Total
Leverage Ratio
 
Minimum Interest
Coverage Ratio
March 31, 2013
$200,000,000
 
7.4 to 1.00
 
1.20 to 1.00
June 30, 2013
$235,000,000
 
6.5 to 1.00
 
1.45 to 1.00
September 30, 2013
$260,000,000
 
6.0 to 1.00
 
1.60 to 1.00
December 31, 2013
$275,000,000
 
5.7 to 1.00
 
1.65 to 1.00
March 31, 2014
$300,000,000
 
5.1 to 1.00
 
1.80 to 1.00
June 30, 2014
$325,000,000
 
4.8 to 1.00
 
1.90 to 1.00
September 30, 2014
$355,000,000
 
4.6 to 1.00
 
2.10 to 1.00
December 31, 2014
$365,000,000
 
4.4 to 1.00
 
2.15 to 1.00

Minimum Consolidated EBITDA, as defined in our credit facilities, is a non-GAAP measure that reflects our earnings before interest, taxes, depreciation, and amortization expense, and further adjusted for letter of credit fees, equity-based compensation

8


expense, net gains or losses on property disposals and certain other items, including restructuring professional fees and results of permitted dispositions and discontinued operations.

We are also required to maintain a minimum cash balance (as defined in our credit facilities) of at least $50.0 million. This requirement increases starting in August of 2013 and, by November 2013, the minimum cash balance requirement is $119.4 million. This increase is required to ensure we have sufficient liquidity to pay the outstanding balance of our 6% convertible senior notes, which mature in February of 2014. We were in compliance with each of these covenants as of March 31, 2013.

We believe that our minimum cash balance covenant represents our highest risk of default. If our future operating results indicate that we will not meet our minimum cash balance covenant, we will take actions to improve our liquidity, which may include (without limitation) deferring the timing of our capital expenditures and our discretionary workers' compensation settlement payments. We believe that these actions, if deemed necessary, will allow us to meet any shortfall in our minimum cash balance.

In the event that we fail to meet this or any other financial covenant, we would be considered in default under our credit facilities, which would enable lenders thereunder to accelerate the repayment of amounts outstanding and exercise remedies with respect to collateral and we would need to seek an amendment or waiver from our lenders. In the event that our lenders under our credit facilities demand payment, we will not have sufficient cash to repay such indebtedness. In addition, a default under our credit facilities or the lenders exercising their remedies thereunder would trigger cross-default provisions in our other indebtedness and certain other operating agreements. Our ability to amend our credit facilities or otherwise obtain waivers from our lenders depends on matters that are outside of our control and there can be no assurance that we will be successful in that regard.

Risks and Uncertainties Regarding Future Liquidity

Our principal sources of liquidity are cash and cash equivalents, available borrowings under our $400 million ABL facility and any prospective net operating cash flows from operations. As of March 31, 2013, we had cash and cash equivalents and availability under the ABL facility of $214.8 million and the borrowing base under our ABL facility was $359.0 million. For the three months ended March 31, 2013, our cash flow from operating activities used net cash of $13.9 million.

Our principal uses of cash are to fund our operations, including making contributions to our single-employer pension plans and the multi-employer pension funds, and to meet our other cash obligations including, but not limited to, paying cash interest and principal on our funded debt, payments on our equipment leases, letter of credit fees under our credit facilities and funding capital expenditures.

We have a considerable amount of indebtedness, a substantial portion of which will mature in late 2014 or early 2015. As of March 31, 2013, we had $1,369.7 million in aggregate principal amount of outstanding indebtedness, which will increase over time as a portion of our indebtedness accrues paid-in-kind interest. We intend to refinance or restructure the portions of our debt that mature in late 2014 and early 2015. The refinancing or restructuring of these debt obligations is outside of our control and there can be no assurance that such transaction will occur, or if it does occur, on what terms. We also have considerable future funding obligations for our single-employer pension plans and the multi-employer pension funds. We expect our funding obligations for the remainder of the year for our single-employer pension plans and multi-employer pension funds will be $50.4 million and $60.9 million, respectively. In addition, we have, and will continue to have, substantial operating lease obligations. As of March 31, 2013, our minimum rental expense under operating leases for the remainder of the year is $37.0 million. As of March 31, 2013, our operating lease obligations through 2025 totaled $136.8 million and is expected to increase as we lease additional revenue equipment.

Our capital expenditures for the three months ended March 31, 2013 and 2012 were $17.2 million and $15.1 million, respectively. These amounts were principally used to fund replacement engines and trailer refurbishments for our revenue fleet and capitalized costs for our network facilities and technology infrastructure. In light of our recent operating results and liquidity needs, we have deferred the majority of capital expenditures and expect to continue to do so for the foreseeable future, including the remainder of 2013. As a result, the average age of our fleet is increasing, which may affect our maintenance costs and operational efficiency unless we are able to obtain suitable lease financing to meet our replacement equipment needs.

We believe that our cash and cash equivalents, results of operations and availability under our credit facilities will be sufficient for us to comply with the covenants in our credit facilities, fund our operations, increase working capital as necessary to support our planned revenue growth and fund capital expenditures for the foreseeable future, including the next twelve months. Our ability to satisfy our liquidity needs beyond the next twelve months is dependent on a number of factors, some of which are outside of our control. These factors include:

continuing to achieve improvements in our operating results which rely upon pricing and shipping volumes;

9


continuing to comply with covenants and other terms of our credit facilities so as to have access to the borrowings available to us under such credit facilities;
securing suitable lease financing arrangements to replace revenue equipment;
continuing to implement and realize cost saving measures to match our costs with business levels and in a manner that does not harm operations, and our productivity and efficiency initiatives must be successful;
generating operating cash flows that are sufficient to meet the minimum cash balance requirement under our credit facilities, cash requirements for pension contributions to our single-employer pension plan and our multi-employer pension funds, cash interest and principal payments on our funded debt, payments on our equipment leases, letter of credit fees under our credit facilities and for capital expenditures or additional lease payments for new revenue equipment; and
restructuring or refinancing our debt obligations prior to scheduled maturities in 2014 and 2015.


10


4. Debt and Financing

Total debt as of March 31, 2013 and December 31, 2012 consisted of the following:

As of March 31, 2013 (in millions)
Par Value
 
Premium/
(Discount)
 
Book
Value
 
Stated
Interest Rate
 
Effective
Interest Rate
Restructured Term Loan
$
298.7

 
$
60.1

 
$
358.8

 
10.0
%
 
%
Term A Facility (capacity $175.0, borrowing base $137.4, availability $32.4)
105.0

 
(4.2
)
 
100.8

 
8.5
%
 
15.8
%
Term B Facility (capacity $225.0, borrowing base $221.6, availability $0.0)
221.6

 
(7.4
)
 
214.2

 
11.25
%
 
15.0
%
Series A Notes
165.2

 
(25.6
)
 
139.6

 
10.0
%
 
18.3
%
Series B Notes
87.9

 
(21.8
)
 
66.1

 
10.0
%
 
25.6
%
6% Notes
69.4

 
(5.1
)
 
64.3

 
6.0
%
 
15.5
%
A&R CDA
125.0

 
(0.4
)
 
124.6

 
3.0-18.0%

 
7.0
%
Lease financing obligations
301.0

 

 
301.0

 
10.0-18.2%

 
11.9
%
Other
0.3

 

 
0.3

 


 


Total debt
$
1,374.1

 
$
(4.4
)
 
$
1,369.7

 
 
 
 
Current maturities of Term B Facility
$
(2.3
)
 
$

 
$
(2.3
)
 
 
 
 
Current maturities of 6% Notes
(69.4
)
 
5.1

 
(64.3
)
 
 
 
 
Current maturities of lease financing obligations
(6.8
)
 

 
(6.8
)
 
 
 
 
Current maturities of other
(0.3
)
 

 
(0.3
)
 
 
 
 
Long-term debt
$
1,295.3

 
$
0.7

 
$
1,296.0

 
 
 
 
As of December 31, 2012 (in millions)
Par Value
 
Premium/
(Discount)
 
Book
Value
 
Stated
Interest Rate
 
Effective
Interest Rate
Restructured Term Loan
$
298.7

 
$
67.6

 
$
366.3

 
10.0
%
 
%
Term A Facility (capacity $175.0, borrowing base $147.6, availability $42.6)
105.0

 
(4.8
)
 
100.2

 
8.5
%
 
15.8
%
Term B Facility (capacity $225.0, borrowing base $222.2, availability $0.0)
222.2

 
(8.5
)
 
213.7

 
11.25
%
 
15.0
%
Series A Notes
161.2

 
(27.8
)
 
133.4

 
10.0
%
 
18.3
%
Series B Notes
91.5

 
(25.4
)
 
66.1

 
10.0
%
 
25.6
%
6% Notes
69.4

 
(6.3
)
 
63.1

 
6.0
%
 
15.5
%
A&R CDA
125.8

 
(0.4
)
 
125.4

 
3.0-18.0%

 
7.1
%
Lease financing obligations
306.9

 

 
306.9

 
10.0-18.2%

 
11.9
%
Other
0.3

 

 
0.3

 
 
 
 
Total debt
$
1,381.0

 
$
(5.6
)
 
$
1,375.4

 
 
 
 
Current maturities of Term B Facility
(2.3
)
 

 
(2.3
)
 
 
 
 
Current maturities of lease financing obligations
(6.5
)
 

 
(6.5
)
 
 
 
 
Current maturities of other
(0.3
)
 

 
(0.3
)
 
 
 
 
Long-term debt
$
1,371.9

 
$
(5.6
)
 
$
1,366.3

 
 
 
 

Conversions

Our 10% Series A Convertible Senior Secured Notes due 2015 (the "Series A Notes") are convertible into our common stock beginning July 22, 2013 at the conversion price per share of $34.0059 and a conversion rate of 29.4067 common shares per $1,000 of Series A Notes. As of March 31, 2013 and April 30, 2013, there was $165.2 million and $166.5 million, respectively, in aggregate principal amount of Series A Notes outstanding that are convertible into approximately 5.9 million shares of our common stock at the maturity date.


11


As of March 31, 2013, the effective conversion price and conversion rate for our 10% Series B Convertible Senior Secured Notes due 2015 (the "Series B Notes") (after taking into account the make whole premium) was $15.2475 and 65.5847 common shares per $1,000 of Series B Notes, respectively. During the three months ended March 31, 2013, $5.8 million of aggregate principal amount of Series B Notes were converted into 398,000 shares of our common stock, which includes the make whole premium.  Upon conversion, during the three months ended March 31, 2013, we recorded $3.4 million of additional interest expense representing the $1.6 million make whole premium and $1.8 million of accelerated amortization of the discount on converted Series B Notes. As of March 31, 2013, there was $87.9 million in aggregate principal amount of Series B Notes outstanding that are convertible into approximately 5.8 million shares of our common stock (after taking into account the make whole premium). There were no Series B Note conversions from March 31, 2013 through April 30, 2013.

As of March 31, 2013 and April 30, 2013, a maximum of 17,600 shares of our common stock is available for future issuance upon conversion of 6% Notes.  The limitation on the number of shares of common stock issuable upon conversion of the 6% Notes applies on a pro rata basis to the $69.4 million in aggregate principal amount of outstanding 6% Notes. 

Fair Value Measurement

The carrying amounts and estimated fair values of our long-term debt, including current maturities and other financial instruments, are summarized as follows:
 
 
March 31, 2013
 
December 31, 2012
(in millions)
Carrying amount
 
Fair Value
 
Carrying amount
 
Fair Value
Restructured Term Loan
$
358.8

 
$
263.5

 
$
366.3

 
$
197.5

ABL Facility
315.0

 
330.4

 
313.9

 
325.8

Series A Notes and Series B Notes
205.7

 
132.1

 
199.5

 
81.5

Lease financing obligations
301.0

 
301.0

 
306.9

 
306.9

Other
189.2

 
141.6

 
188.8

 
99.5

Total debt
$
1,369.7

 
$
1,168.6

 
$
1,375.4

 
$
1,011.2


The fair values of the Restructured Term Loan, ABL Facility, Series A Notes, Series B Notes, 6% Notes (included in “Other” above) and A&R CDA (included in “Other” above) were estimated based on observable prices (level two inputs for fair value measurements). The carrying amount of the lease financing obligations approximates fair value.

5. Employee Benefits

The following table presents the components of our company-sponsored pension costs for the three months ended March 31:
 
(in millions)
2013
 
2012
Service cost
$
1.1

 
$
1.0

Interest cost
14.0

 
14.8

Expected return on plan assets
(13.9
)
 
(11.6
)
Amortization of net loss
3.7

 
2.9

Total periodic pension cost
$
4.9

 
$
7.1


We expect to contribute $62.6 million to our company-sponsored pension plans in 2013 of which we have contributed $12.2 million through March 31, 2013.

6. Income Taxes

Our effective tax rate for the three months ended March 31, 2013 was 15.5% compared to 3.8%, for the three months ended March 31, 2012. The significant items impacting the rate for the three months ended March 31, 2013 include a net state tax provision, certain permanent items and a change in the valuation allowance established for the net deferred tax asset balance projected for December 31, 2013. We recognize valuation allowances on deferred tax assets if, based on the weight of the evidence, we determine it is more likely than not such assets will not be realized. Changes in valuation allowances are included in our tax provision in the period of change. In determining whether a valuation allowance is warranted, we evaluate factors such as prior years’ earnings

12


history, expected future earnings, loss carry-back and carry-forward periods, reversals of existing deferred tax liabilities and tax planning strategies that potentially enhance the likelihood of the realization of a deferred tax asset. At March 31, 2013 and December 31, 2012, substantially all of our net deferred tax assets were subject to a valuation allowance.

7. Shareholders’ Deficit

The following reflects the activity in the shares of our common stock for the three months ended March 31, 2013:
 
(in thousands)
2013
Beginning balance
7,976

Issuance of equity awards, net
204

Issuance of common stock upon conversion of Series B Notes
398

Ending balance
8,578


8. Loss Per Share

Given our net loss position for the three months ended March 31, 2013 and March 31, 2012, there were no dilutive securities for these periods.

Anti-dilutive options and share units were 857,600 and 781,100 at March 31, 2013 and 2012, respectively. Anti-dilutive 6% Note conversion shares, including the make whole premium, were 17,600 at March 31, 2013 and 2012. Anti-dilutive Series A Note conversion shares were 4,857,000 and 4,406,000 at March 31, 2013 and 2012, respectively. Anti-dilutive Series B Note conversion shares, including the make whole premiums, were 5,751,000 and 7,199,000 at March 31, 2013 and 2012, respectively.

9. Business Segments

We report financial and descriptive information about our reporting segments on a basis consistent with that used internally for evaluating segment performance and allocating resources to segments. We evaluate segment performance primarily on revenue and operating income.

We have the following reportable segments, which are strategic business units that offer complementary transportation services to their customers:

YRC Freight is the reporting segment for our transportation service providers focused on business opportunities in national, regional and international services. YRC Freight provides for the movement of industrial, commercial and retail goods, primarily through centralized management and customer facing organizations. This unit includes our LTL subsidiary YRC Inc. and Reimer Express, a subsidiary located in Canada that specializes in shipments into, across and out of Canada. In addition to the United States and Canada, YRC Freight also serves parts of Mexico, Puerto Rico and Guam.
Regional Transportation is the reporting segment for our transportation service providers focused on business opportunities in the regional and next-day delivery markets. The Regional Transportation companies each provide regional, next-day ground services in their respective regions through a network of facilities located across the United States, Canada, Mexico and Puerto Rico.

We charge management fees and other corporate services to our segments based on the direct benefits received or an overhead allocation basis. Corporate and other operating losses represent residual operating expenses of the holding company. Corporate identifiable assets primarily consist of cash, cash equivalents, an investment in an equity method affiliate and deferred debt issuance costs. Intersegment revenue primarily relates to transportation services between our segments.


13


The following table summarizes our operations by business segment:
 
(in millions)
YRC Freight
 
Regional
Transportation
 
Corporate/
Eliminations
 
Consolidated
As of March 31, 2013
 
 
 
 
 
 
 
Identifiable assets
$
1,342.5

 
$
774.5

 
$
83.9

 
$
2,200.9

As of December 31, 2012
 
 
 
 
 
 
 
Identifiable assets
$
1,315.4

 
$
745.5

 
$
164.6

 
$
2,225.5

Three Months Ended March 31, 2013
 
 
 
 
 
 
 
External revenue
$
753.8

 
$
408.7

 
$

 
$
1,162.5

Intersegment revenue
$

 
$

 
$

 
$

Operating income (loss)
$
2.4

 
$
12.0

 
$
(4.5
)
 
$
9.9

Three Months Ended March 31, 2012
 
 
 
 
 
 
 
External revenue
$
789.1

 
$
402.0

 
$
3.2

 
$
1,194.3

Intersegment revenue
$

 
$
0.1

 
$
(0.1
)
 
$

Operating income (loss)
$
(56.1
)
 
$
11.4

 
$
(4.1
)
 
$
(48.8
)

10. Network Optimization

In April 2013, our YRC Freight reporting segment committed to a plan to optimize its freight network. This optimization will reduce the number of handling and relay locations in an effort to improve customer service, increase linehaul density and load average, reduce empty miles and improve our ability to direct load with less handling. Costs associated with this plan, which consist of lease termination costs, employee separation costs and other exit costs, will be recorded at either their contractual amounts or their fair value. We estimate that these costs will total between $8.0 million and $12.0 million, substantially all of which we expect to be recorded in the second and third quarters of 2013 in the YRC Freight reporting segment. The projected timing and range of total costs is an estimate and may vary depending upon the actual exit transactions.

11. Commitments, Contingencies, and Uncertainties

ABF Lawsuit

On November 1, 2010, ABF Freight System, Inc. (“ABF”) filed a complaint in the U.S. District Court for the Western District of Arkansas against several parties, including our subsidiaries YRC Inc., New Penn Motor Express, Inc. and USF Holland Inc. and the International Brotherhood of Teamsters and the local Teamster unions that are party to the National Master Freight Agreement (“NMFA”), alleging violation of the NMFA due to modifications to the NMFA that provided relief to our subsidiaries without providing the same relief to ABF. The complaint sought to have the modifications to the NMFA declared null and void and damages of $750.0 million from the named defendants. We believe the allegations are without merit.

On December 17, 2010, the District Court dismissed the complaint. ABF appealed the dismissal on January 18, 2011 to the U.S. Court of Appeals for the 8th Circuit. On July 6, 2011, the Court of Appeals vacated the District Court's dismissal of the litigation on jurisdictional grounds and remanded the case back to the District Court for further proceedings. ABF filed an amended complaint on October 12, 2011, containing allegations consistent with the original complaint. Our subsidiaries filed a motion to dismiss the amended complaint. On August 1, 2012, the District Court dismissed ABF's amended complaint without prejudice. ABF has appealed the dismissal to the Court of Appeals, and oral arguments were conducted on April 10, 2013. Although we believe we have meritorious defenses to this case, the ultimate outcome of this matter cannot be reasonably estimated at this time. Therefore, we have not recorded any liability for this matter.

Bryant Holdings Securities Litigation

On February 7, 2011, a putative class action was filed by Bryant Holdings LLC ("Bryant") in the U.S. District Court for the District of Kansas on behalf of purchasers of our common stock between April 24, 2008 and November 2, 2009, inclusive (the "Class Period"), seeking damages under the federal securities laws for statements and/or omissions allegedly made by us and the individual defendants during the Class Period which plaintiffs claimed to be false and misleading.

The individual defendants are former officers of our Company. No current officers or directors were named in the lawsuit.

14



The parties participated in voluntary mediation between March 11, 2013 and April 15, 2013. The mediation resulted in an agreement in principle, which is subject to the execution of a mutually acceptable definitive agreement and approval by the court.  Court approval cannot be assured. Substantially all of the payments contemplated by the settlement will be covered by our liability insurance. The self-insured retention on this matter has been accrued as of March 31, 2013.

Other Legal Matters

We are involved in other litigation or proceedings that arise in ordinary business activities. We insure against these risks to the extent we deem prudent, but no assurance can be given that the nature or amount of such insurance will be sufficient to fully indemnify us against liabilities arising out of pending and future legal proceedings. Many of these insurance policies contain self-insured retentions in amounts we deem prudent. Based on our current assessment of information available as of the date of these financial statements, we believe that our financial statements include adequate provisions for estimated costs and losses that may be incurred within the litigation and proceedings to which we are a party.

12. Condensed Consolidating Financial Statements

Guarantees of the 6% Convertible Senior Notes Due 2014

On February 23, 2010, and August 3, 2010, we issued $70 million in aggregate principal amount of 6% convertible senior notes due 2014 (the “6% Notes”). In connection with the 6% Notes, the following wholly owned subsidiaries of YRC Worldwide have issued guarantees in favor of the holders of the notes: YRC Inc., YRC Enterprise Services, Inc., Roadway LLC, Roadway Next Day Corporation, YRC Regional Transportation, Inc., USF Holland Inc., USF Reddaway Inc., USF Glen Moore Inc. and YRC Logistics Services, Inc. Each of the guarantees is full and unconditional and joint and several, subject to customary release provisions.

The condensed consolidating financial statements are presented in lieu of separate financial statements and other related disclosures of the subsidiary guarantors and issuer because we do not believe that such separate financial statements and related disclosures would be material to investors. There are currently no significant restrictions on the ability of YRC Worldwide or any guarantor to obtain funds from its subsidiaries by dividend or loan. Certain prior period amounts have been reclassified to conform to current presentation.

The following represents condensed consolidating financial information as of March 31, 2013 and December 31, 2012, with respect to the financial position and for the three months ended March 31, 2013 and 2012, for results of operations and for the cash flows of YRC Worldwide and its subsidiaries. The Parent column presents the financial information of YRC Worldwide, the primary obligor of the 6% Notes. The Guarantor Subsidiaries column presents the financial information of all guarantor subsidiaries of the 6% Notes. The Non-Guarantor Subsidiaries column presents the financial information of all non-guarantor subsidiaries, including those subsidiaries that are governed by foreign laws and YRCW Receivables LLC, the special-purpose entity that is associated with our ABL facility.

15


Condensed Consolidating Balance Sheets
 
As of March 31, 2013 (in millions)
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
138.6

 
$
17.7

 
$
26.1

 
$

 
$
182.4

Intercompany advances receivable

 
(34.6
)
 
34.6

 

 

Accounts receivable, net
3.5

 
(3.1
)
 
504.6

 

 
505.0

Prepaid expenses and other
75.6

 
24.6

 
3.2

 

 
103.4

Total current assets
217.7

 
4.6

 
568.5

 

 
790.8

Property and equipment
0.5

 
2,663.3

 
186.6

 

 
2,850.4

Less – accumulated depreciation
(0.2
)
 
(1,576.9
)
 
(106.1
)
 

 
(1,683.2
)
Net property and equipment
0.3

 
1,086.4

 
80.5

 

 
1,167.2

Investment in subsidiaries
1,744.2

 
206.8

 
(0.1
)
 
(1,950.9
)
 

Receivable from affiliate
(407.5
)
 
338.7

 
418.8

 
(350.0
)
 

Intangibles and other assets
127.7

 
50.2

 
65.0

 

 
242.9

Total Assets
$
1,682.4

 
$
1,686.7

 
$
1,132.7

 
$
(2,300.9
)
 
$
2,200.9

Intercompany advances payable
$
(11.8
)
 
$
(310.9
)
 
$
322.7

 
$

 
$

Accounts payable
42.6

 
115.0

 
13.4

 

 
171.0

Wages, vacations and employees’ benefits
14.3

 
188.6

 
13.2

 

 
216.1

Other current and accrued liabilities
180.4

 
33.6

 
4.9

 

 
218.9

Current maturities of long-term debt
71.5

 

 
2.2

 

 
73.7

Total current liabilities
297.0

 
26.3

 
356.4

 

 
679.7

Payable to affiliate

 
200.0

 
150.0

 
(350.0
)
 

Long-term debt, less current portion
981.9

 
1.3

 
312.8

 

 
1,296.0

Deferred income taxes, net
226.4

 
(222.8
)
 
(3.6
)
 

 

Pension and postretirement
537.9

 

 
0.2

 

 
538.1

Claims and other liabilities
292.3

 
36.1

 
1.3

 

 
329.7

Commitments and contingencies

 

 

 

 

Shareholders’ equity (deficit)
(653.1
)
 
1,645.8

 
315.6

 
(1,950.9
)
 
(642.6
)
Total Liabilities and Shareholders’ Equity (Deficit)
$
1,682.4

 
$
1,686.7

 
$
1,132.7

 
$
(2,300.9
)
 
$
2,200.9


16


As of December 31, 2012 (in millions)
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
151.9

 
$
13.6

 
$
43.2

 
$

 
$
208.7

Intercompany advances receivable

 
(28.8
)
 
28.8

 

 

Accounts receivable, net
3.3

 
(7.4
)
 
464.2

 

 
460.1

Prepaid expenses and other
93.7

 
9.7

 
1.9

 

 
105.3

Total current assets
248.9

 
(12.9
)
 
538.1

 

 
774.1

Property and equipment
0.7

 
2,681.7

 
186.6

 

 
2,869.0

Less – accumulated depreciation
(0.2
)
 
(1,572.5
)
 
(104.9
)
 

 
(1,677.6
)
Net property and equipment
0.5

 
1,109.2

 
81.7

 

 
1,191.4

Investment in subsidiaries
1,463.5

 
162.7

 
(17.6
)
 
(1,608.6
)
 

Receivable from affiliate
(392.8
)
 
318.6

 
424.2

 
(350.0
)
 

Intangibles and other assets
154.1

 
53.6

 
52.3

 

 
260.0

Total Assets
$
1,474.2

 
$
1,631.2

 
$
1,078.7

 
$
(1,958.6
)
 
$
2,225.5

Intercompany advances payable
$
(11.8
)
 
$
(294.5
)
 
$
306.3

 
$

 
$

Accounts payable
42.1

 
107.6

 
12.3

 

 
162.0

Wages, vacations and employees’ benefits
13.2

 
163.9

 
13.8

 

 
190.9

Other current and accrued liabilities
193.5

 
30.3

 
9.4

 

 
233.2

Current maturities of long-term debt
6.8

 

 
2.3

 

 
9.1

Total current liabilities
243.8

 
7.3

 
344.1

 

 
595.2

Payable to affiliate

 
200.0

 
150.0

 
(350.0
)
 

Long-term debt, less current portion
1,054.7

 

 
311.6

 

 
1,366.3

Deferred income taxes, net
228.2

 
(224.6
)
 
(3.6
)
 

 

Pension and postretirement
548.8

 

 

 

 
548.8

Claims and other liabilities
302.9

 
40.1

 
1.3

 

 
344.3

Commitments and contingencies

 

 

 

 

Shareholders’ equity (deficit)
(904.2
)
 
1,608.4

 
275.3

 
(1,608.6
)
 
(629.1
)
Total Liabilities and Shareholders’ Equity (Deficit)
$
1,474.2

 
$
1,631.2

 
$
1,078.7

 
$
(1,958.6
)
 
$
2,225.5



17


Condensed Consolidating Comprehensive Income (Loss)
 
Three Months Ended March 31, 2013 (in millions)
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Operating Revenue
$

 
$
1,065.7

 
$
96.8

 
$

 
$
1,162.5

Operating Expenses:
 
 
 
 
 
 
 
 
 
Salaries, wages and employees’ benefits
9.5

 
621.9

 
49.6

 

 
681.0

Operating expenses and supplies
(7.8
)
 
252.4

 
23.2

 

 
267.8

Purchased transportation

 
101.9

 
13.0

 

 
114.9

Depreciation and amortization

 
39.9

 
3.7

 

 
43.6

Other operating expenses
0.1

 
47.1

 
2.6

 

 
49.8

Gains on property disposals, net

 
(4.5
)
 

 

 
(4.5
)
Total operating expenses
1.8

 
1,058.7

 
92.1

 

 
1,152.6

Operating Income (Loss)
(1.8
)
 
7.0

 
4.7

 

 
9.9

Nonoperating Expenses (Income):
 
 
 
 
 
 
 
 
 
Interest expense (income)
27.9

 
(1.0
)
 
12.3

 

 
39.2

Other, net
17.5

 
13.4

 
(31.2
)
 

 
(0.3
)
Nonoperating expenses (income), net
45.4

 
12.4

 
(18.9
)
 

 
38.9

Income (loss) before income taxes
(47.2
)
 
(5.4
)
 
23.6

 

 
(29.0
)
Income tax benefit
(4.1
)
 
(0.4
)
 

 

 
(4.5
)
Net income (loss)
(43.1
)
 
(5.0
)
 
23.6

 

 
(24.5
)
Other comprehensive income (loss), net of tax
0.5

 
3.4

 
(0.8
)
 

 
3.1

Comprehensive Income (Loss) Attributable to YRC Worldwide Inc. Shareholders
$
(42.6
)
 
$
(1.6
)
 
$
22.8

 
$

 
$
(21.4
)


18


Three Months Ended March 31, 2012 (in millions)
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Operating Revenue
$

 
$
1,088.8

 
$
105.5

 
$

 
$
1,194.3

Operating Expenses:
 
 
 
 
 
 
 
 
 
Salaries, wages and employees’ benefits
9.7

 
646.9

 
48.2

 

 
704.8

Operating expenses and supplies
(9.4
)
 
279.4

 
23.2

 

 
293.2

Purchased transportation

 
98.9

 
20.8

 

 
119.7

Depreciation and amortization

 
45.4

 
3.6

 

 
49.0

Other operating expenses
0.9

 
61.9

 
5.3

 

 
68.1

Losses (gains) on property disposals, net

 
8.4

 
(0.1
)
 

 
8.3

Total operating expenses
1.2

 
1,140.9

 
101.0

 

 
1,243.1

Operating Income (Loss)
(1.2
)
 
(52.1
)
 
4.5

 

 
(48.8
)
Nonoperating Expenses (Income):
 
 
 
 
 
 
 
 
 
Interest expense
24.6

 

 
11.8

 

 
36.4

Other, net
73.9

 
(46.3
)
 
(28.0
)
 

 
(0.4
)
Nonoperating expenses (income), net
98.5

 
(46.3
)
 
(16.2
)
 

 
36.0

Income (loss) before income taxes
(99.7
)
 
(5.8
)
 
20.7

 

 
(84.8
)
Income tax benefit
(2.1
)
 

 
(1.1
)
 

 
(3.2
)
Net income (loss)
(97.6
)
 
(5.8
)
 
21.8

 

 
(81.6
)
Less: Net income attributable to non-controlling interest

 

 
3.9

 

 
3.9

Net Income (Loss) Attributable to YRC Worldwide Inc.
(97.6
)
 
(5.8
)
 
17.9

 

 
(85.5
)
Other comprehensive income, net of tax
0.7

 
2.7

 
2.3

 

 
5.7

Comprehensive Income (Loss) Attributable to YRC Worldwide Inc. Shareholders
$
(96.9
)
 
$
(3.1
)
 
$
20.2

 
$

 
$
(79.8
)


19



Condensed Consolidating Statements of Cash Flows
 
Three Months Ended March 31, 2013 (in millions)
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Operating Activities:
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
(41.2
)
 
$
49.2

 
$
(21.9
)
 
$

 
$
(13.9
)
Investing Activities:
 
 
 
 
 
 
 
 
 
Acquisition of property and equipment

 
(16.9
)
 
(0.3
)
 

 
(17.2
)
Proceeds from disposal of property and equipment

 
0.6

 

 

 
0.6

Restricted escrow receipts, net
4.5

 

 

 

 
4.5

Other, net
1.8

 

 

 

 
1.8

Net cash provided by (used in) investing activities
6.3

 
(16.3
)
 
(0.3
)
 

 
(10.3
)
Financing Activities:
 
 
 
 
 
 
 
 
 
Issuance of long-term debt

 
0.3

 

 

 
0.3

Repayments of long-term debt
(1.9
)
 

 
(0.5
)
 

 
(2.4
)
Intercompany advances (repayments)
23.5

 
(29.1
)
 
5.6

 

 

Net cash provided by (used in) financing activities
21.6

 
(28.8
)
 
5.1

 

 
(2.1
)
Net Increase (Decrease) in Cash and Cash Equivalents
(13.3
)
 
4.1

 
(17.1
)
 

 
(26.3
)
Cash and Cash Equivalents, Beginning of Period
151.9

 
13.6

 
43.2

 

 
208.7

Cash and Cash Equivalents, End of Period
$
138.6

 
$
17.7

 
$
26.1

 
$

 
$
182.4

 
Three Months Ended March 31, 2012 (in millions)
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Operating Activities:
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
(86.8
)
 
$
76.1

 
$
(6.4
)
 
$

 
$
(17.1
)
Investing Activities:
 
 
 
 
 
 
 
 
 
Acquisition of property and equipment

 
(14.9
)
 
(0.2
)
 

 
(15.1
)
Proceeds from disposal of property and equipment

 
10.1

 
(0.1
)
 

 
10.0

Restricted escrow receipts, net
10.1

 

 

 

 
10.1

Net cash provided by (used in) investing activities
10.1

 
(4.8
)
 
(0.3
)
 

 
5.0

Financing Activities:
 
 
 
 
 
 
 
 
 
Issuance of long-term debt

 

 
45.0

 

 
45.0

Repayments of long-term debt
(5.4
)
 

 
(0.6
)
 

 
(6.0
)
Debt issuance cost

 

 
(1.1
)
 

 
(1.1
)
Intercompany advances (repayments)
109.9

 
(76.1
)
 
(33.8
)
 

 

Net cash provided by (used in) financing activities
104.5

 
(76.1
)
 
9.5

 

 
37.9

Net Increase (Decrease) in Cash and Cash Equivalents
27.8

 
(4.8
)
 
2.8

 

 
25.8

Cash and Cash Equivalents, Beginning of Period
142.0

 
20.0

 
38.5

 

 
200.5

Cash and Cash Equivalents, End of Period
$
169.8

 
$
15.2

 
$
41.3

 
$

 
$
226.3



20


Guarantees of the Series A Notes and the Series B Notes
On July 22, 2011, we issued $140 million in aggregate principal amount of our Series A Notes and $100 million in aggregate principal amount of our Series B Notes (collectively, the “Convertible Secured Notes”). In connection with the Convertible Secured Notes, the following wholly owned subsidiaries of YRC Worldwide issued guarantees in favor of the holders of the New Convertible Secured Notes: YRC Inc., YRC Enterprise Services, Inc., Roadway LLC, Roadway Reverse Logistics, Inc., Roadway Express International, Inc., Roadway Next Day Corporation, New Penn Motor Express Inc., YRC Regional Transportation, Inc., USF Holland Inc., USF Reddaway Inc., USF Glen Moore Inc., YRC Logistics Services, Inc., USF Bestway Inc., USF Dugan Inc., USF RedStar LLC, YRC Mortgages, LLC, YRC Association Solutions Inc., YRC International Investments Inc., and Express Lane Services Inc. Each of the guarantees is full and unconditional and joint and several, subject to customary release provisions.
The condensed consolidating financial statements are presented in lieu of separate financial statements and other related disclosures of the subsidiary guarantors and issuer because we do not believe that such separate financial statements and related disclosures would be material to investors. There are currently no significant restrictions on the ability of YRC Worldwide or any guarantor to obtain funds from its subsidiaries by dividend or loan. Certain prior period amounts have been reclassified to conform to current presentation.
The following represents condensed consolidating financial information as of March 31, 2013 and December 31, 2012, with respect to the financial position and for the three months ended March 31, 2013 and 2012, for results of operations and for the statement of cash flows of YRC Worldwide and its subsidiaries. The Parent column presents the financial information of YRC Worldwide, the primary obligor of the New Convertible Secured Notes. The Guarantor Subsidiaries column presents the financial information of all guarantor subsidiaries of the New Convertible Secured Notes. The Non-Guarantor Subsidiaries column presents the financial information of all non-guarantor subsidiaries, including those subsidiaries that are governed by foreign laws and YRCW Receivables LLC, the special-purpose entity that is associated with our ABL facility.

21


Condensed Consolidating Balance Sheets
 
As of March 31, 2013 (in millions)
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
138.6

 
$
18.6

 
$
25.2

 
$

 
$
182.4

Intercompany advances receivable

 
(34.6
)
 
34.6

 

 

Accounts receivable, net
3.5

 
26.8

 
474.7

 

 
505.0

Prepaid expenses and other
75.6

 
47.3

 
(19.5
)
 

 
103.4

Total current assets
217.7

 
58.1

 
515.0

 

 
790.8

Property and equipment
0.5

 
2,797.5

 
52.4

 

 
2,850.4

Less – accumulated depreciation
(0.2
)
 
(1,644.9
)
 
(38.1
)
 

 
(1,683.2
)
Net property and equipment
0.3

 
1,152.6

 
14.3

 

 
1,167.2

Investment in subsidiaries
1,744.2

 
206.7

 

 
(1,950.9
)
 

Receivable from affiliate
(407.5
)
 
375.4

 
232.1

 
(200.0
)
 

Intangibles and other assets
127.7

 
82.3

 
32.9

 

 
242.9

Total Assets
$
1,682.4

 
$
1,875.1

 
$
794.3

 
$
(2,150.9
)
 
$
2,200.9

Intercompany advances payable
$
(11.8
)
 
$
(310.9
)
 
$
322.7

 
$

 
$

Accounts payable
42.6

 
120.5

 
7.9

 

 
171.0

Wages, vacations and employees’ benefits
14.3

 
198.8

 
3.0

 

 
216.1

Other current and accrued liabilities
180.4

 
30.3

 
8.2

 

 
218.9

Current maturities of long-term debt
71.5

 

 
2.2

 

 
73.7

Total current liabilities
297.0

 
38.7

 
344.0

 

 
679.7

Payable to affiliate

 
200.0

 

 
(200.0
)
 

Long-term debt, less current portion
981.9

 
1.3

 
312.8

 

 
1,296.0

Deferred income taxes, net
226.4

 
(229.0
)
 
2.6

 

 

Pension and postretirement
537.9

 

 
0.2

 

 
538.1

Claims and other liabilities
292.3

 
36.9

 
0.5

 

 
329.7

Commitments and contingencies

 

 

 

 

Shareholders’ equity (deficit)
(653.1
)
 
1,827.2

 
134.2

 
(1,950.9
)
 
(642.6
)
Total Liabilities and Shareholders’ Equity (Deficit)
$
1,682.4

 
$
1,875.1

 
$
794.3

 
$
(2,150.9
)
 
$
2,200.9


22


As of December 31, 2012 (in millions)
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
151.9

 
$
15.5

 
$
41.3

 
$

 
$
208.7

Intercompany advances receivable

 
(28.8
)
 
28.8

 

 

Accounts receivable, net
3.3

 
20.6

 
436.2

 

 
460.1

Prepaid expenses and other
93.7

 
31.8

 
(20.2
)
 

 
105.3

Total current assets
248.9

 
39.1

 
486.1

 

 
774.1