UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to

Commission file number: 0-12255

YRC Worldwide Inc.

(Exact name of registrant as specified in its charter)

Delaware	48-0948788
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer 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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	YRCW	The NASDAQ Stock Market LLC

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐			Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at October 29, 2020
Common Stock, $0.01 par value per share	53,280,855 shares

INDEX

Item		Page
	PART I – FINANCIAL INFORMATION
1	Financial Statements	3
	Consolidated Balance Sheets – September 30, 2020 and December 31, 2019	3
	Statements of Consolidated Comprehensive Income (Loss) - Three and Nine Months Ended September 30, 2020 and 2019	4
	Statements of Consolidated Cash Flows - Nine Months Ended September 30, 2020 and 2019	5
	Statements of Consolidated Shareholders’ Deficit - Three and Nine Months Ended September 30, 2020 and 2019	6
	Notes to Consolidated Financial Statements	8
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
3	Quantitative and Qualitative Disclosures About Market Risk	28
4	Controls and Procedures	28
	PART II – OTHER INFORMATION
1	Legal Proceedings	29
1A	Risk Factors	29
2	Not Applicable
3	Not Applicable
4	Not Applicable
5	Other Information	29
6	Exhibits	31
	Signatures	32

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)

	September 30, 2020			December 31, 2019
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	434.1		$	109.2
Restricted amounts held in escrow		4.4			—
Accounts receivable, net		541.3			464.4
Prepaid expenses and other		53.3			44.6
Total current assets		1,033.1			618.2
Property and Equipment:
Cost		2,709.8			2,761.6
Less – accumulated depreciation		(2,012.0	)		(1,991.3	)
Net property and equipment		697.8			770.3
Deferred income taxes, net		0.5			0.6
Operating lease right-of-use assets		299.4			386.0
Other assets		77.5			56.5
Total Assets	$	2,108.3		$	1,831.6
Liabilities and Shareholders’ Deficit
Current Liabilities:
Accounts payable	$	196.9		$	163.7
Wages, vacations and employee benefits		234.3			195.9
Current operating lease liabilities		115.9			120.8
Claims and insurance accruals		110.8			120.4
Other accrued taxes		28.0			25.8
Other current and accrued liabilities		21.6			21.3
Current maturities of long-term debt		4.0			4.1
Total current liabilities		711.5			652.0
Other Liabilities:
Long-term debt and financing, less current portion		1,099.2			858.1
Pension and postretirement		104.2			236.5
Operating lease liabilities		196.2			246.3
Claims and other liabilities		320.3			279.9
Commitments and contingencies		—			—
Shareholders’ Deficit:
Cumulative preferred stock, $1 par value per share		—			—
Common stock, $0.01 par value per share		0.5			0.3
Capital surplus		2,383.1			2,332.9
Accumulated deficit		(2,347.2	)		(2,312.4	)
Accumulated other comprehensive loss		(266.8	)		(369.3	)
Treasury stock, at cost (410 shares)		(92.7	)		(92.7	)
Total shareholders’ deficit		(323.1	)		(441.2	)
Total Liabilities and Shareholders’ Deficit	$	2,108.3		$	1,831.6

The accompanying notes are an integral part of these statements.

3

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

YRC Worldwide Inc. and Subsidiaries

For the Three and Nine Months Ended September 30

(Amounts in millions except per share data, shares in thousands)

(Unaudited)

	Three Months						Nine Months
	2020			2019			2020			2019
Operating Revenue	$	1,183.4		$	1,256.8		$	3,349.2		$	3,711.7
Operating Expenses:
Salaries, wages and employee benefits		720.6			756.2			2,088.7			2,256.7
Fuel, operating expenses and supplies		175.4			218.9			546.1			683.1
Purchased transportation		177.1			160.7			439.3			465.0
Depreciation and amortization		32.5			37.2			102.4			115.7
Other operating expenses		58.4			59.0			175.2			180.2
(Gains) losses on property disposals, net		—			1.0			(45.3	)		(3.6	)
Impairment charges		—			—			—			8.2
Total operating expenses		1,164.0			1,233.0			3,306.4			3,705.3
Operating Income		19.4			23.8			42.8			6.4
Nonoperating Expenses:
Interest expense		33.4			27.9			101.9			83.1
Loss on extinguishment of debt		—			11.2			—			11.2
Non-union pension and postretirement benefits		(1.1	)		2.0			(4.3	)		2.8
Other, net		—			(0.8	)		(1.2	)		(0.9	)
Nonoperating expenses, net		32.3			40.3			96.4			96.2
Loss before income taxes		(12.9	)		(16.5	)		(53.6	)		(89.8	)
Income tax benefit		(10.9	)		(0.5	)		(18.8	)		(1.1	)
Net loss		(2.0	)		(16.0	)		(34.8	)		(88.7	)
Other comprehensive income, net of tax		98.0			3.6			102.5			9.1
Comprehensive Income (Loss)	$	96.0		$	(12.4	)	$	67.7		$	(79.6	)
Average Common Shares Outstanding - Basic		48,672			33,259			38,864			33,098
Average Common Shares Outstanding - Diluted		48,672			33,259			38,864			33,098
Loss Per Share - Basic	$	(0.04	)	$	(0.48	)	$	(0.90	)	$	(2.68	)
Loss Per Share - Diluted	$	(0.04	)	$	(0.48	)	$	(0.90	)	$	(2.68	)

The accompanying notes are an integral part of these statements.

4

STATEMENTS OF CONSOLIDATED CASH FLOWS

YRC Worldwide Inc. and Subsidiaries

For the Nine Months Ended September 30

(Amounts in millions)

(Unaudited)

	2020			2019
Operating Activities:
Net loss	$	(34.8	)	$	(88.7	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization		102.4			115.7
Lease amortization and accretion expense		122.7			124.7
Lease payments		(94.6	)		(113.4	)
Paid-in-kind interest		40.5			—
Equity-based compensation and employee benefits expense		14.4			14.4
Non-union pension settlement charge		1.9			1.7
Gains on property disposals, net		(45.3	)		(3.6	)
Loss on extinguishment of debt		—			11.2
Impairment charges		—			8.2
Deferred income tax benefit, net		(11.1	)		(2.3	)
Other noncash items, net		11.6			4.1
Changes in assets and liabilities, net:
Accounts receivable		(76.9	)		(42.8	)
Accounts payable		24.8			(3.1	)
Other operating assets		(9.3	)		0.6
Other operating liabilities		62.2			(13.3	)
Net cash provided by operating activities		108.5			13.4
Investing Activities:
Acquisition of property and equipment		(41.4	)		(111.5	)
Proceeds from disposal of property and equipment		55.3			9.9
Net cash provided by (used in) investing activities		13.9			(101.6	)
Financing Activities:
Issuance of long-term debt, net		245.0			570.0
Repayment of long-term debt		(29.1	)		(576.2	)
Debt issuance costs		(8.4	)		(11.1	)
Payments for tax withheld on equity-based compensation		(0.6	)		(0.8	)
Net cash provided by (used in) financing activities		206.9			(18.1	)
Net Increase (Decrease) In Cash and Cash Equivalents and Restricted Amounts Held in Escrow		329.3			(106.3	)
Cash and Cash Equivalents and Restricted Amounts Held in Escrow, Beginning of Period		109.2			227.6
Cash and Cash Equivalents and Restricted Amounts Held in Escrow, End of Period	$	438.5		$	121.3

Supplemental Cash Flow Information:
Interest paid	$	(47.2	)	$	(77.8	)
Income tax payment, net		(0.7	)		(2.6	)

The accompanying notes are an integral part of these statements.

5

STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ DEFICIT

YRC Worldwide Inc. and Subsidiaries

For the Three and Nine Months Ended September 30

(Amounts in millions)

(Unaudited)

	Preferred Stock		Common Stock		Capital Surplus		Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock, At Cost			Total Shareholders' Deficit
Balances at December 31, 2019	$	—	$	0.3	$	2,332.9	$	(2,312.4	)	$	(369.3	)	$	(92.7	)	$	(441.2	)
Equity-based compensation		—		—		1.8		—			—			—			1.8
Net income		—		—		—		4.3			—			—			4.3
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			3.3			—			3.3
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Foreign currency translation adjustments		—		—		—		—			(1.9	)		—			(1.9	)
Balances at March 31, 2020	$	—	$	0.3	$	2,334.7	$	(2,308.1	)	$	(368.0	)	$	(92.7	)	$	(433.8	)
Equity-based compensation		—		—		0.8		—			—			—			0.8
Net loss		—		—		—		(37.1	)		—			—			(37.1	)
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			2.4			—			2.4
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Foreign currency translation adjustments		—		—		—		—			0.9			—			0.9
Balances at June 30, 2020	$	—	$	0.3	$	2,335.5	$	(2,345.2	)	$	(364.8	)	$	(92.7	)	$	(466.9	)
Equity-based compensation		—		—		1.1		—			—			—			1.1
Equity issuance - UST commitment fee		—		0.2		46.5		—			—			—			46.7
Net loss		—		—		—		(2.0	)		—			—			(2.0	)
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			4.0			—			4.0
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Settlement adjustment		—		—		—		—			1.4			—			1.4
Net actuarial gain		—		—		—		—			92.1			—			92.1
Foreign currency translation adjustments		—		—		—		—			0.6			—			0.6
Balances at September 30, 2020	$	—	$	0.5	$	2,383.1	$	(2,347.2	)	$	(266.8	)	$	(92.7	)	$	(323.1	)

6

	Preferred Stock		Common Stock		Capital Surplus		Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock, At Cost			Total Shareholders' Deficit
Balances at December 31, 2018	$	—	$	0.3	$	2,327.6	$	(2,208.4	)	$	(332.3	)	$	(92.7	)	$	(305.5	)
Equity-based compensation		—		—		1.6		—			—			—			1.6
Net loss		—		—		—		(49.1	)		—			—			(49.1	)
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			3.2			—			3.2
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Foreign currency translation adjustments		—		—		—		—			0.4			—			0.4
Balances at March 31, 2019	$	—	$	0.3	$