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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________________ to _______________________
Commission file number 0-12255
YELLOW CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 48-0948788
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10990 Roe Avenue, P.O. Box 7563,
Overland Park, Kansas 66207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 696-6100
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1 Par Value
Preferred Stock Purchase Rights
(Title of class)
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 X No
--- ---
The aggregate market value of the voting stock held by nonaffiliates of the
registrant at March 9, 2000 was $405,345,604.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 9, 2000
Common Stock, $1 Par Value 25,235,524 shares
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference into the Form 10-K:
1) 1999 Annual Report to Shareholders - Parts I, II and IV
2) Proxy Statement dated March 3, 2000 - Part III
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Yellow Corporation
Form 10-K
Year Ended December 31, 1999
Index
Item Page
PART I
1. Business 3
2. Properties 7
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
Executive Officers of the Registrant (Unnumbered Item) 9
PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters 10
6. Selected Financial Data 10
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
8. Financial Statements and Supplementary Data 10
9. Changes and Disagreements on Accounting and
Financial Disclosure 10
PART III
10. Directors and Executive Officers of the Registrant 11
11. Executive Compensation 11
12. Security Ownership of Certain Beneficial Owners and
Management 11
13. Certain Relationships and Related Transactions 11
PART IV
14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K 12
Report of Independent Public Accountants on Financial
Statement Schedule 14
Financial Statement Schedule II 15
Signatures 16
Employment Agreement of William D. Zollars Exhibit (10)
1999 Annual Report to Shareholders Exhibit (13)
Consent of Independent Public Accountants Exhibit (23)
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PART I
Item 1. Business.
(a) Yellow Corporation and its wholly-owned subsidiaries are collectively
referred to as "the company". The company provides transportation
services primarily to the less-than-truckload (LTL) market throughout
North America and, through partnership alliances, other international
markets. In July 1999, the company acquired Jevic Transportation Inc. a
fully integrated regional and inter-regional LTL and partial TL carrier.
The company expanded their portfolio of transportation services with the
introduction of Definite Delivery in 1999 and Exact Express in 1998. The
company continues to make significant investments in technology. In
April 1999 the company suspended its stock repurchase program as a
result of the Jevic acquisition and internal investment opportunities.
(b) The company provides interstate transportation of general commodity
freight, primarily LTL, primarily by motor vehicle. The operation of the
company is conducted among three primary business segments. Financial
disclosures for these segments are presented in the Business Segments
footnote on page 25 of the 1999 Annual Report to Shareholders which is
incorporated herein by reference.
(c) Yellow Corporation is a holding company providing freight transportation
services through its subsidiaries, Yellow Freight System, Inc. (Yellow
Freight), Saia Motor Freight Line, Inc. (Saia), Jevic Transportation,
Inc. (Jevic), WestEx, Inc. (WestEx), Action Express, Inc. (Action), and
YCS International, (YCS). Yellow Technologies, Inc. (Yellow
Technologies) is a subsidiary that provides information technology
services to the company and its subsidiaries. The company employed an
average of 31,200 persons in 1999.
Yellow Freight, the company's principal subsidiary based in Overland
Park, Kansas, accounted for 81% of total company revenue from continuing
operations in 1999, 86% in 1998 and 88% in 1997. It is one of the
nation's largest providers of LTL transportation services. It provides
comprehensive national LTL service as well as international service to
Mexico, Canada and, via alliances, Europe, the Asia/Pacific region,
South America and Central America.
Saia is a regional LTL carrier headquartered in a suburb of Atlanta,
Georgia provides overnight and second-day service in twelve Southern
states and Puerto Rico. Saia accounted for 11% of total company revenue
from continuing operations in 1999, 12% in 1998 and 11% in 1997.
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Item 1. Business. (cont.)
Jevic is a regional/inter-regional LTL and partial TL carrier
headquartered in the Philadelphia metropolitan area that operates
primarily in the Northeastern states. Jevic, which was acquired on July
9, 1999 accounted for 4% of 1999 revenues.
WestEx is a regional LTL carrier that provides overnight and second-day
service in California and the Southwestern states. WestEx had operating
revenue of $71 million in 1999 and is headquartered in Phoenix, Arizona.
Action is a regional LTL carrier that provides overnight and second-day
service to the Pacific Northwest and Rocky Mountain states. Action had
operating revenue of $36 million in 1999 and is headquartered in Boise,
Idaho.
YCS is an international freight forwarder providing air and ocean/import
and export, customs brokerage and distribution services. It has 24
global partners and is headquartered in Overland Park, Kansas.
Yellow Technologies supports the company's subsidiaries - primarily
Yellow Freight - with information technology. Its headquarters is in
Overland Park, Kansas.
The operations of the freight transportation companies are partially
regulated by the United States Department of Transportation and state
regulatory bodies. The company's competition includes contract motor
carriers, private fleets, railroads, other motor carriers and small
shipment carriers. No single carrier has a dominant share of the motor
freight market.
The company operates in a highly price-sensitive and competitive
industry, making pricing, customer service, effective asset utilization,
and cost control major competitive factors. No single customer accounts
for more than 10% of the company's total revenue. The company's revenue
is subject to seasonal variations throughout the year. The first quarter
is generally the weakest while the third is the strongest.
Operating revenue for the company totaled $3.2 billion in 1999 an 11.2
percent increase over 1998 revenue of $2.9 billion. Operating income for
the year was $107.5 million, an increase of 28.9 percent over 1998
operating income of $83.4 million. Income from continuing operations in
1999 was $50.9 million or $2.02 per share (diluted) compared to income
from continuing operations of $40.1 million or $1.49 per share (diluted)
in 1998.
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Item 1. Business. (cont.)
Yellow Freight's 1999 operating income was $85.4 million, a 27.7
percent increase over 1998 operating income of $66.9 million. Operating
revenue was $2.6 billion for 1999, up 4.8 percent from $2.5 billion in
1998. The 1999 operating ratio was 96.7 compared to 97.3 in 1998.
Saia had operating income of $16.8 million in 1999 compared to $24.7
million in 1998. Saia's revenue grew 2.7 percent in 1999 to $349.3
million compared to $340.1 million in 1998. Saia's 1999 performance was
below 1998 levels due to softer revenue for the early part of 1999 in
Texas and Gulf Coast regions with economies tied to the petroleum
industry. Tonnage increased 1.7 percent and revenue per ton increased
less than one percent. However, revenue and tonnage trends improved
during the last quarter of 1999 due in part to company initiatives to
significantly improve service levels.
Jevic was acquired on July 9, 1999 and is operated as a separate
subsidiary of the company. Jevic is a fully integrated regional and
inter-regional LTL and partial TL carrier. Jevic's operating system
combines the high revenue yield characteristics of LTL carriers with
the operating flexibility and low fixed costs of TL carriers. Jevic is
headquartered in the Philadelphia Metropolitan area. Jevic reported
operating income of $10.1 million and revenue of $137.9 million
resulting in an operating ratio of 92.7 for the partial year 1999.
Operating results for 1999 reflect only contributions since the July 9
acquisition date.
WestEx reported improved operating income of $0.4 million in 1999
compared to an operating loss of $1.2 million in 1998. WestEx had 1999
revenue of $70.9 million, up 9.2 percent from 1998 revenue of $64.9
million.
Action Express was acquired on December 1, 1998. Action Express
reported 1999 operating income of $0.1 million and revenue of $36.5
million, which resulted in an operating ratio of 99.6.
The company's operations are further described in Management's
Discussion and Analysis in the 1999 Annual Report to Shareholders,
which is incorporated herein by reference.
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Item 1. Business. (cont.)
The company's liquidity needs arise primarily from capital investment
in new equipment, land and structures and information technology, as
well as funding working capital requirements. To ensure short-term and
longer-term liquidity, the company maintains capacity under a bank
credit agreement and an asset backed securitization (ABS) agreement
involving Yellow Freight's accounts receivable. Working capital
decreased from a negative $42 million at year-end 1998 to a negative
$83 million at year-end 1999. Borrowings under the ABS facility were
increased by $92 million in 1999. The company can operate with negative
working capital because of the quick turnover of its accounts
receivable and its ready access to sources of short-term liquidity.
Future Outlook
The company is positioned for achieving profitable revenue growth at
Yellow Freight as well as the regional group of companies. All of the
company's subsidiaries are focused on expanding their portfolio of
transportation services. Yellow Freight's introduction of Definite
Delivery, its mid-tier time-definite ground service in 1999 and Exact
Express, its premium tier time-definite expedited air service in 1998
are examples of the value added services our customers have demanded.
All of the company's subsidiaries continue to improve their
productivity levels through implementation of best practices and
investments in technology.
The company will continue to make significant investments in
technology. Timely and accurate information is essential to improve
service quality and meet increasing customer expectations for access to
real-time information. The ability to deliver new transportation
services and improve the quality of those services will be key to the
successful transportation companies of the future.
The 1999 acquisition of Jevic has brought the regional transportation
group to a critical mass, creating a number of options to unlock
shareholder value, which the company will be evaluating. We are
creating a management structure for our regional transportation group
to ensure the regional group is well-focused on long-term strategies as
well as shorter-term revenue and profit improvement.
In addition to the current subsidiaries and businesses, the company
will also evaluate opportunities to grow earnings through e-commerce
and the Internet as well as through future acquisitions. Management
believes the company's balance sheet and access to capital provide it
the flexibility to reinvest in businesses as well as new business
opportunities with attractive growth prospects.
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Item 1. Business. (cont.)
Statements contained herein, that are not purely historical, are
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements regarding the
company's expectations, hopes, beliefs and intentions on strategies
regarding the future. It is important to note that the company's actual
future results could differ materially from those projected in such
forward-looking statements because of a number of factors, including
but not limited to inflation, labor relations, inclement weather,
competitor pricing activity, expense volatility and a downturn in
general economic activity.
(d) Revenue from foreign sources is discussed in the Business
Segments footnote on page 26 of the 1999 Annual Report to Shareholders,
which is incorporated herein by reference. Foreign source revenue was
not material to consolidated financial results in 1999, 1998 and 1997.
Item 2. Properties.
The company's operating subsidiaries each provide their transportation services
through separate networks, principally consisting of a fleet of tractors and
trailers and real estate terminal facilities.
At December 31, 1999, the company operated a total of 508 freight terminals
located in 50 states, Puerto Rico, parts of Canada and Mexico. Of this total,
242 were owned terminals and 266 were leased, generally for terms of three years
or less. The number of vehicle back-in doors totaled 16,864, of which 12,557
were at owned terminals and 4,307 were at leased terminals. The freight
terminals vary in size ranging from one to three doors at small local terminals,
to over 300 doors at Yellow Freight's largest consolidation and distribution
terminal. Substantially all of the larger terminals, containing the greatest
number of doors, are owned. In addition, the company and most of its
subsidiaries own and occupy general office buildings in their headquarters city.
At December 31, 1999, the company's subsidiaries operated 5,347 line-haul
tractors and 7,116 city tractors and trucks. The company operated 46,319
trailers.
The company's facilities and equipment are adequate to meet current business
requirements. The company expects moderate growth in its regional subsidiaries
and lower growth in its Yellow Freight System subsidiary in 2000. The company
has projected only modest increases in its operational capacity. Projected net
capital expenditures for 2000 are $177 million, a decrease over 1999 net capital
expenditures of $314 million. 1999 capital expenditures include $165 million for
the acquisition of Jevic. Net capital for both periods pertain primarily to
replacement of revenue equipment at all subsidiaries, growth capital at Saia,
Jevic, WestEx and Action, and additional investments in information technology.
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Item 3. Legal Proceedings.
The information set forth under the caption "Commitments and Contingencies" in
the Notes to Consolidated Financial Statements of the registrant's Annual Report
to Shareholders for the year ended December 31, 1999, is incorporated by
reference under Item 14 herein.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
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Executive Officers of the Registrant
The names, ages and positions of the executive officers of the company as of
March 24, 2000 are listed below. Officers are appointed annually by the Board of
Directors at their meeting that immediately follows the annual meeting of
shareholders.
Name Age Position(s) Held
William D. Zollars 52 Chairman, President and Chief Executive Officer of the company (since November
1999); President of Yellow Freight System (since September 1996); Senior Vice
President Ryder Integrated Logistics, Inc. (1994 -1996)
William F. Martin, Jr. 52 Senior Vice President - Legal/Corporate Secretary of the company (since December
1993); Vice President and Secretary of the company (prior to December 1993); Vice
President and Secretary of Yellow Freight (prior to May 1992)
H. A. Trucksess, III 50 President of the Regional Transportation Group (since February 2000); Senior Vice
President - Finance and Chief Financial Officer of the company (June 1994 - February
2000), and Treasurer of the company (December 1995 - February 2000); Vice President
and Chief Financial Officer of Preston Corporation (prior to June 1994)
Hiram A. Cox 43 Senior Vice President - Finance and Chief Financial Officer of the company (since
February 2000); Senior Vice President - Finance of Yellow Freight System (since
July 1998); Corporate Controller of Delta Airlines (prior to July 1998).
The terms of each officer of the company designated above are scheduled to
expire April 20, 2000. The terms of each officer of the subsidiary companies are
scheduled to expire on the date of the next annual meeting of shareholders of
that company. No family relationships exist between any of the executive
officers named above.
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PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.
The information set forth under the caption "Common Stock" on page 28 of the
registrant's Annual Report to Shareholders for the year ended December 31, 1999,
is incorporated by reference under Item 14 herein.
Item 6. Selected Financial Data.
The information set forth under the caption "Financial Summary" on pages 8 and 9
of the registrant's Annual Report to Shareholders for the year ended December
31, 1999, is incorporated by reference under Item 14 herein.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," appearing on pages 1 through 7 of the registrant's Annual Report to
Shareholders for the year ended December 31, 1999, is incorporated by reference
under Item 14 herein.
Item 8. Financial Statements and Supplementary Data.
The financial statements and supplementary information, appearing on pages 10
through 28 of the registrant's Annual Report to Shareholders for the year ended
December 31, 1999, are incorporated by reference under Item 14 herein.
Item 9. Changes and Disagreements on Accounting and Financial Disclosure.
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant.
The information regarding Directors of the registrant has previously been
reported in the registrant's definitive proxy statement, filed pursuant to
Regulation 14A, and is incorporated by reference. For information with respect
to the executive officers of the registrant, see "Executive Officers of the
Registrant" at the end of Part I of this report.
Item 11. Executive Compensation.
This information has previously been reported in the registrant's definitive
proxy statement, filed pursuant to Regulation 14A, and is incorporated by
reference. The Employment Agreement between William D. Zollars, Chairman,
President and Chief Executive Officer, and the company, is filed as Exhibit 10
and is incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
This information has previously been reported in the registrant's definitive
proxy statement, filed pursuant to Regulation 14A, and is incorporated by
reference.
Item 13. Certain Relationships and Related Transactions.
This information has previously been reported in the registrant's definitive
proxy statement, filed pursuant to Regulation 14A, and is incorporated by
reference.
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PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.
(a) (1) Financial Statements
The following information appearing in the 1999 Annual Report to
Shareholders is incorporated by reference in this Form 10-K Annual
Report as Exhibit (13):
Page
Management's Discussion and Analysis of
Financial Condition and Results of Operations 1-7
Financial Summary 8-9
Consolidated Financial Statements 10-27
Report of Independent Public Accountants 27
Quarterly Financial Information 28
Common Stock 28
With the exception of the aforementioned information, the 1999 Annual
Report to Shareholders is not deemed filed as part of this report.
Financial statements other than those listed are omitted for the reason
that they are not required or are not applicable. The following
additional financial data should be read in conjunction with the
consolidated financial statements in such 1999 Annual Report to
Shareholders.
(a) (2) Financial Statement Schedule
Page
Report of Independent Public Accountants on
Financial Statement Schedule 14
For the years ended December 31, 1999, 1998 and 1997:
Schedule II - Valuation and Qualifying Accounts 15
Schedules other than those listed are omitted for the reason that they
are not required or are not applicable, or the required information is
shown in the financial statements or notes thereto.
(a) (3) Exhibits
(10) - Employment Agreement of William D. Zollars
(13) - 1999 Annual Report to Shareholders.
(23) - Consent of Independent Public Accountants.
(27) - Financial Data Schedule (for SEC use only).
The remaining exhibits required by Item 7 of Regulation S-K are omitted
for the reason that they are not applicable or have previously been
filed.
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Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.
(b) Reports on Form 8-K
November 9, 1999 - Yellow Corporation announced the resignation of its
Chairman, President and CEO A. Maurice Myers and the appointment of
William D. Zollars as Chairman, President and CEO.
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Report of Independent Public
Accountants on Financial Statement Schedule
To the Shareholders of Yellow Corporation:
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in Yellow
Corporation and Subsidiaries' annual report to shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated January
26, 2000. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedule of valuation and qualifying accounts
(Schedule II) is the responsibility of the company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic consolidated financial statements. This schedule
has been subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
January 26, 2000
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Schedule II
Yellow Corporation and Subsidiaries
Valuation and Qualifying Accounts
For the Years Ended December 31, 1999, 1998 and 1997
COL. A COL. B COL. C COL. D COL. E
------ ------ ------ ------ ------
Additions
Balance, -1- -2- Deductions- Balance,
Description Beginning Charged Charged Describe End Of
Of Period To Costs To Other (1) Period
And Accounts-
Expenses Describe
(In Thousands)
Year ended December 31, 1999:
Deducted from asset account -
Allowance for uncollectible
accounts $14,162 $15,878 $1,330 (2) $15,709 $15,661
======= ======= ====== ======= =======
Year ended December 31, 1998:
Deducted from asset account -
Allowance for uncollectible
accounts $12,264 $14,779 $ - $12,881 $14,162
======= ======= ====== ======= =======
Year ended December 31, 1997:
Deducted from asset account -
Allowance for uncollectible
accounts $10,610 $13,272 $ - $11,618 $12,264
======= ======= ====== ======= =======
(1) Primarily uncollectible accounts written off - net of recoveries.
(2) Estimated uncollectible accounts of Jevic at July 9, 1999 acquisition date.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Yellow Corporation
BY: /s/ William D. Zollars
---------------------------------
William D. Zollars
President, Chief Executive Officer and
March 24, 2000 Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Hiram A. Cox Senior Vice President -- March 24, 2000
---------------------- Finance/Chief Financial
Hiram A. Cox Officer and Treasurer
/s/ Howard M. Dean Director March 24, 2000
----------------------
Howard M. Dean
/s/ Cassandra C. Carr Director March 24, 2000
----------------------
Cassandra C. Carr
/s/ Carl W. Vogt Director March 24, 2000
----------------------
Carl W. Vogt
/s/ Klaus E. Agthe Director March 24, 2000
----------------------
Klaus E. Agthe
/s/ Ronald T. LeMay Director March 24, 2000
----------------------
Ronald T. LeMay
/s/ John C. McKelvey Director March 24, 2000
----------------------
John C. McKelvey
/s/ William L. Trubeck Director March 24, 2000
----------------------
William L. Trubeck
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