Exhibit 99.3

PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements

CONSOLIDATED BALANCE SHEETS

YRC Worldwide Inc. and Subsidiaries

(Amounts in thousands except per share data)

 

		March 31, 2011				December 31, 2010
		(Unaudited)
Assets
Current Assets:
Cash and cash equivalents		$	156,685			$	143,017
Accounts receivable, net			497,915				442,500
Prepaid expenses and other			205,559				182,515
Total current assets			860,159				768,032
Property and Equipment:
Cost			3,210,515				3,237,971
Less – accumulated depreciation			(1,710,077	)			(1,687,397	)
Net property and equipment			1,500,438				1,550,574
Intangibles, net			135,151				139,525
Other assets			128,595				134,802
Total assets		$	2,624,343			$	2,592,933
Liabilities and Shareholders’ Deficit
Current Liabilities:
Accounts payable		$	165,940			$	147,112
Wages, vacations and employees’ benefits			205,517				196,486
Other current and accrued liabilities			482,077				452,226
Current maturities of long-term debt			780,898				222,873
Total current liabilities			1,634,432				1,018,697
Other Liabilities:
Long-term debt, less current portion			334,627				837,262
Deferred income taxes, net			119,588				118,624
Pension and postretirement			452,280				447,928
Claims and other liabilities			371,062				360,439
Commitments and contingencies
Shareholders’ Deficit:
Preferred stock, $1 par value per share			—				—
Common stock, $0.01 par value per share			479				477
Capital surplus			1,644,290				1,643,277
Accumulated deficit			(1,601,294	)			(1,499,514	)
Accumulated other comprehensive loss			(235,988	)			(239,626	)
Treasury stock, at cost (123 shares)			(92,737	)			(92,737	)
Total YRC Worldwide Inc. shareholders’ deficit			(285,250	)			(188,123	)
Non-controlling interest			(2,396	)			(1,894	)
Total shareholders’ deficit			(287,646	)			(190,017	)
Total liabilities and shareholders’ deficit		$	2,624,343			$	2,592,933

The accompanying notes are an integral part of these statements.

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STATEMENTS OF CONSOLIDATED OPERATIONS

YRC Worldwide Inc. and Subsidiaries

For the Three Months Ended March 31

(Amounts in thousands except per share data)

(Unaudited)

 

		2011				2010
Operating Revenue		$	1,122,886			$	987,144
Operating Expenses:
Salaries, wages and employees’ benefits			680,818				651,078
Equity based compensation (benefit) expense			(1,053	)			109,871
Operating expenses and supplies			277,196				237,368
Purchased transportation			119,662				94,100
Depreciation and amortization			49,296				50,633
Other operating expenses			67,900				63,194
(Gains) losses on property disposals, net			(2,959	)			8,799
Impairment charges			—				5,281
Total operating expenses			1,190,860				1,220,324
Operating Loss			(67,974	)			(233,180	)
Nonoperating Expenses:
Interest expense			38,803				40,927
Other, net			43				1,906
Nonoperating expenses, net			38,846				42,833
Loss From Continuing Operations Before Income Taxes			(106,820	)			(276,013	)
Income tax benefit			(4,551	)			(5,878	)
Net Loss from Continuing Operations			(102,269	)			(270,135	)
Net Loss from Discontinued Operations, net of tax			—				(4,004	)
Net Loss			(102,269	)			(274,139	)
Less: Net Loss Attributable to Non-Controlling Interest			(489	)			—
Net Loss Attributable to YRC Worldwide Inc.		$	(101,780	)		$	(274,139	)
Average Common Shares Outstanding – Basic and Diluted			47,638				20,849
Basic and Diluted Loss Per Share
Loss from Continuing Operations		$	(2.14	)		$	(12.96	)
Loss from Discontinued Operations			—				(0.19	)
Net Loss Per Share		$	(2.14	)		$	(13.15	)
Amounts attributable to YRC Worldwide Inc. common shareholders:
Loss from Continuing Operations, net of tax		$	(101,780	)		$	(270,135	)
Loss from Discontinued Operations, net of tax			—				(4,004	)
Net Loss		$	(101,780	)		$	(274,139	)

The accompanying notes are an integral part of these statements.

 

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STATEMENTS OF CONSOLIDATED CASH FLOWS

YRC Worldwide Inc. and Subsidiaries

For the Three Months Ended March 31

(Amounts in thousands)

(Unaudited)

 

		2011				2010
Operating Activities:
Net loss		$	(102,269	)		$	(274,139	)
Noncash items included in net loss:
Depreciation and amortization			49,296				52,261
Amortization of deferred debt costs			9,481				10,516
Impairment charges			—				5,281
Equity based compensation (benefit) expense			(1,053	)			109,871
(Gains) losses on property disposals, net			(2,959	)			8,999
Deferred income tax benefit			(329	)			(5,841	)
Other noncash items			1,799				1,964
Changes in assets and liabilities, net:
Accounts receivable			(55,415	)			(1,317	)
Accounts payable			18,988				15,811
Other operating assets			(21,923	)			71,213
Other operating liabilities			58,130				23,671
Net cash provided by (used in) operating activities			(46,254	)			18,290
Investing Activities:
Acquisition of property and equipment			(10,062	)			(3,731	)
Proceeds from disposal of property and equipment			11,577				7,637
Other			(161	)			—
Net cash provided by investing activities			1,354				3,906
Financing Activities:
Asset backed securitization (payments) borrowings, net			24,449				(28,618	)
Issuance of long-term debt			52,775				119,748
Repayment of long-term debt			(15,130	)			(59,363	)
Debt issuance costs			(3,526	)			(7,030	)
Equity issuance costs			—				(14,458	)
Net cash provided by financing activities			58,568				10,279
Net Increase In Cash and Cash Equivalents			13,668				32,475
Cash and Cash Equivalents, Beginning of Period			143,017				97,788
Cash and Cash Equivalents, End of Period		$	156,685			$	130,263
Supplemental Cash Flow Information:
Income tax refund, net		$	10,573			$	81,272
Pension contribution deferral transfer to long-term debt			—				3,488
Lease financing transactions			8,985				4,700
Interest paid in stock for the 6% Notes			2,082				—

The accompanying notes are an integral part of these statements.

 

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STATEMENT OF CONSOLIDATED SHAREHOLDERS’ DEFICIT

YRC Worldwide Inc. and Subsidiaries

For the Three Months Ended March 31

(Amounts in thousands)

(Unaudited)

 

		2011
Common Stock
Beginning balance		$	477
Interest paid in stock for the 6% Notes			2
Ending balance		$	479
Capital Surplus
Beginning balance		$	1,643,277
Share-based compensation			(1,053	)
Interest paid in stock for the 6% Notes			2,080
Other, net			(14	)
Ending balance		$	1,644,290
Accumulated Deficit
Beginning balance		$	(1,499,514	)
Net loss attributable to YRC Worldwide Inc.			(101,780	)
Ending balance		$	(1,601,294	)
Accumulated Other Comprehensive Loss
Beginning balance		$	(239,626	)
Pension, net of tax:
Amortization of net losses to net income (loss)			1,481
Foreign currency translation adjustments			2,157
Ending balance		$	(235,988	)
Treasury Stock, At Cost
Beginning and ending balance		$	(92,737	)
Noncontrolling Interest
Beginning balance		$	(1,894	)
Net loss attributable to the noncontrolling interest			(489	)
Foreign currency translation adjustments			(13	)
Ending Balance		$	(2,396	)
Total Shareholders’ Deficit		$	(287,646	)

The accompanying notes are an integral part of these statements.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YRC Worldwide Inc. and Subsidiaries

(Unaudited)

 

1.	Description of Business

YRC Worldwide Inc. (also referred to as “YRC Worldwide”, “the Company”, “we” or “our”), one of the largest transportation service providers in the world, is a holding company that through wholly owned operating subsidiaries offers its customers a wide range of transportation services. These services include global, national and regional transportation. Our operating subsidiaries include the following:

 

•

YRC National Transportation (“National Transportation”) is the reporting unit for our transportation service providers focused on business opportunities in regional, national and international services. National Transportation provides for the movement of industrial, commercial and retail goods, primarily through regionalized and centralized management and customer facing organizations. This unit includes our less-than-truckload (“LTL”) subsidiary YRC Inc. (“YRC”), and YRC Reimer, a subsidiary located in Canada that specializes in shipments into, across and out of Canada. In addition to the United States (“U.S.”) and Canada, National Transportation also serves parts of Mexico, Puerto Rico and Guam.

 

•

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

 

•

Truckload (“Truckload”) reflects the results of Glen Moore, a provider of truckload services throughout the U.S.

At March 31, 2011, approximately 77% of our labor force is subject to collective bargaining agreements, which predominantly expire in 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 YRC Worldwide is not the primary beneficiary, are accounted for on the equity method. We own a 65% equity interest in Shanghai Jiayu Logistics Co. Ltd. (“Jiayu”) for which we consolidate the results in our financial statements effective April 1, 2010 and therefore have a noncontrolling (minority) interest included in our consolidated subsidiaries; consequently, a portion of our shareholders’ deficit, net loss and comprehensive loss for the periods presented are attributable to noncontrolling interests.

Management makes 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 management’s 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 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, 2010.

The board of directors approved a reverse stock split effective September 30, 2010 at a ratio of 1:25. All share numbers and per share amounts in the Consolidated Financial Statements and Notes to the Consolidated Financial Statements have been retroactively adjusted to give effect to the reverse stock split.

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Assets Held for Sale

When we plan to dispose of property or equipment by sale, the asset is carried 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.

At March 31, 2011 and December 31, 2010, the net book value of assets held for sale was approximately $62.6 million and $71.2 million, respectively. This amount is included in “Property and Equipment” in the accompanying consolidated balance sheets. We recorded charges of $1.9 million and $11.5 million for the three months ended March 31, 2011 and 2010, respectively, 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 operations.

Impairment of Long-Lived Assets

If facts and circumstances indicate that the carrying amount of held-and-used identifiable amortizable intangibles and property, plant and equipment may be impaired, we perform an evaluation of recoverability in accordance with FASB ASC Topic 360. Our evaluation compares the estimated future undiscounted cash flows associated with the asset or asset group to its carrying amount to determine if a reduction to the carrying amount is required. The carrying amount of an impaired asset would be reduced to fair value if the estimated undiscounted cash flows are insufficient to recover the carrying value of the asset group.

We believe that the accounting estimate related to asset impairment is a critical accounting estimate because: (1) it requires our management to make assumptions about future revenues and expenses over the life of the asset, and (2) the impact that recognizing an impairment would have on our financial position, as well as our results of operations, could be material. Management’s assumptions about future revenues and expenses require significant judgment because actual revenues and expenses have fluctuated in the past and may continue to do so. In estimating future revenues and expenses, we use our internal business forecasts. We develop our forecasts based on recent revenue and expense data for existing services and other industry and economic factors. To the extent that we are unable to achieve forecasted improvements in shipping volumes and pricing initiatives or realize forecasted cost savings, the Company may incur significant impairment losses on property and equipment or intangible assets.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and asset-backed securitization borrowings approximates their fair value due to the short-term nature of these instruments.

 

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3.

Liquidity

The following table provides details of the outstanding components and unused available capacity under the Credit Agreement and ABS Facility (each, as defined below) at March 31, 2011 and December 31, 2010:

 

(in millions)		March 31, 2011				December 31, 2010
Capacity:
Revolving loan		$	706.4			$	713.7
ABS Facility			325.0				325.0
Total capacity			1,031.4				1,038.7
Amounts outstanding:
Revolving loan			(176.0	)			(142.9	)
Letters of credit (3/31/11: $457.0 revolver; $64.7 ABS Facility)			(521.7	)			(515.7	)
ABS Facility borrowings			(147.2	)			(122.8	)
Total outstanding			(844.9	)			(781.4	)
ABS borrowing base restrictions			(107.5	)			(135.7	)
Restricted revolver reserves			(70.9	)			(70.9	)
Total restricted capacity			(178.4	)			(206.6	)
Unrestricted unused capacity (3/31/11: $2.5 revolver; $5.6 ABS Facility)		$	8.1			$	50.7

During April 2011, net availability on our revolver increased by $0.2 million as a result of asset sales, and unused available capacity at April 30, 2011 is $2.7 million. Additionally, the ABS Facility borrowing base has increased by $11.5 million during April, we have drawn down and utilized letters of credit of $17 million and as of April 30, 2011 our unrestricted unused available capacity is $0.1 million.

Comprehensive Recovery Plan

As a part of our comprehensive recovery plan, we have executed on a number of significant initiatives during 2010 and 2011 to improve liquidity.

Certain of these actions in 2011 are further described below. The final execution of our comprehensive recovery plan has a number of risks that are not within our control that may adversely impact our liquidity and compliance with the financial covenants in our credit facilities. Not withstanding our entering into the Lender Support Agreement and the TNFINC Support Agreement as described below, we anticipate that we will continue to face risks and uncertainties regarding our short and medium-term liquidity. There is no assurance that we will be successful in completing our comprehensive recovery plan. See “Risks and Uncertainties Regarding Future Liquidity” below.

The Restructuring

On February 28, 2011, we, the Teamsters National Freight Industry Negotiating Committee (“TNFINC”) of the International Brotherhood of Teamsters (the “IBT”), the Required Lenders (at least 51% of exposure as defined in the Credit Agreement (as defined below)), the Agent and the Steering Group Majority (as defined below) (collectively, the “Consenting Parties”) reached a non-binding agreement in principle in the form of a term sheet entitled “Summary of Principal Terms of Proposed Restructuring” or “Term Sheet” setting forth the material terms of our proposed restructuring (the “Restructuring”).

“Steering Group” means the informal group of unaffiliated Lenders and Participants (as defined in the Credit Agreement) represented by Akin Gump Strauss Hauer & Feld LLP and Houlihan Lokey Howard & Zukin Capital, Inc.; provided, that the Lenders (as defined below) that make up the Steering Group may change from time to time as and when such changes are identified to us and the Agent.

“Steering Group Majority” means the Lenders of the Steering Group representing more than 50% of the Steering Group’s exposure under the Credit Agreement (including participations).

On April 29, 2011, we entered into a support agreement (the “Lender Support Agreement”) with certain lenders (the “participating lenders”) holding claims in outstanding borrowings, deferred interest and fees and letters of credit (“credit agreement claims”) under our credit agreement, dated as of August 17, 2007 (as amended, the “Credit Agreement”), among the

 

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Company, certain of its subsidiaries, JPMorgan Chase Bank, National Association, as agent (the “Agent”), and the other lenders that are parties thereto (the “Lenders”) pursuant to which such participating lenders have agreed, among other things, to support the Restructuring by tendering their credit agreement claims in the Exchange Offer (as defined below). The Term Sheet was also amended. The participating lenders hold more than 95% of the principal amount of outstanding credit agreement claims.

Under the Lender Support Agreement, among other things, we must use our commercially reasonable efforts to support and complete the Restructuring, negotiate related definitive transaction documents, take certain actions related to the Merger (as described below) and file a registration statement related to the Exchange Offer and related transactions with the SEC.

Pursuant to the Lender Support Agreement, the Restructuring contemplates an exchange offer for certain credit agreement claims and related interdependent transactions that will be simultaneously completed at the closing of the exchange offer. The Restructuring contemplates:

 

•

with respect to credit agreement claims,

 

i.

an exchange offer (the “Exchange Offer”), whereby the Lenders under the Credit Agreement would receive in respect of a portion of such claims (a) newly issued Series B Convertible Preferred Stock (the “Series B Preferred Stock”) convertible into approximately 72.5% (subject to dilution as described below) of the restructured Company’s outstanding common stock (the “New Common Stock”) and (b) $140.0 million in aggregate principal amount of our new 10% Series A Convertible Senior Secured Notes due 2015 that are convertible into additional shares of New Common Stock (the “Restructured Convertible Secured Notes”),

 

ii.

the letters of credit facility under the Credit Agreement and outstanding letters of credit would remain in place, and

 

iii.

we and our subsidiaries would enter into an amended term loan facility with the Lenders for a portion of remaining borrowing claims under the Credit Agreement not satisfied in (i) above;

 

•

additionally, the Lenders would purchase and we would sell for cash pursuant to subscription rights issued in connection with the Exchange Offer an aggregate principal amount of $100.0 million of our newly issued 10% Series B Convertible Senior Secured Notes due 2015 (the “New Money Convertible Secured Notes” and together with the Restructured Convertible Secured Notes, the “New Convertible Secured Notes”), the proceeds of which would be retained by us for use in our business;

 

•

the ABS Facility (as defined below) would be refinanced in full with an asset-based lending facility (the “ABL facility”), which is expected to provide additional liquidity through a higher advance rate than the receivable purchase rate under the ABS Facility. As discussed below under “TNFINC Support Agreement,” that agreement requires, among other things, $350 million in lending capacity and $80 million of availability under the ABL facility;

 

•

the note securing our deferred multi-employer pension contributions (the “Pension Note”) would be amended to (i) extend the maturity until March 31, 2015, (ii) defer any accrued interest and fees until maturity, (iii) provide for contract rate cash interest payments and (iv) eliminate any mandatory amortization payments (other than in connection with permitted sales of certain collateral);

 

•

in consideration for consent to the Restructuring by TNFINC on behalf of employees represented by the IBT, shares of newly issued Series B Preferred Stock convertible into approximately 25% (subject to dilution as described below) of our New Common Stock would be issued to a trust or a deferred tax qualified plan (the “Plan”) and allocated among certain eligible employees represented by the IBT; and

 

•

our board of directors would consist of six members nominated by the Steering Group (as defined below), two members nominated by TNFINC and one member that will be the chief executive officer-director (the “New Board”);

The Series B Preferred Stock (and the New Common Stock into which it may be converted) issued in connection with the Exchange Offer to the Lenders and to the Plan would be subject to dilution by a management equity incentive plan to be implemented by the New Board as soon as reasonably practicable after the closing of the Exchange Offer (the “Management Incentive Plan”) and by common stock issued upon conversion of the New Convertible Secured Notes.

Following the closing of the Exchange Offer, we will file a proxy statement with the SEC for the solicitation of votes to approve a merger (the “Merger”) pursuant to which a wholly owned subsidiary of the Company would merge into the Company, with the Company the surviving corporation and having an amended and restated certificate of incorporation permitting the automatic conversion of the Series B Preferred Stock into New Common Stock and providing for sufficient authorized shares of New Common Stock to permit the conversion of the New Convertible Secured Notes into New Common Stock. The Series B Preferred Stock will be permitted to vote on the Merger on an as-converted basis along with the holders of our then outstanding common stock, as a single class. The New Convertible Secured Notes would be permitted to vote on an as-converted basis with our common stock after the Merger is completed.

Our common stock is listed on NASDAQ and is subject to the NASDAQ listing rules. Absent an exception to the NASDAQ listing rule requiring stockholder approval prior to the issuance our Series B Preferred Stock and New Convertible Secured Notes,

 

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our common stock will be subject to delisting if we consummate the Exchange Offer. We intend to apply to NASDAQ for a waiver of the stockholder approval rule under the financial viability exception.

In the event the Exchange Offer and related interdependent transactions as contemplated by the Lender Support Agreement are completed, we anticipate that our current stockholders will hold approximately 2.5% of the restructured Company’s outstanding common stock as of the closing of the Exchange Offer, subject to further dilution by the Management Incentive Plan and the New Convertible Secured Notes.

Obligations of Company and Participating Lenders to Complete the Exchange Offer

The obligations of the Company and the participating lenders to consummate the Exchange Offer are conditioned upon the following to occur:

 

•

the registration statement for the Exchange Offer and related transactions shall have been declared effective by the SEC and shall remain effective, and on or before the closing of the Exchange Offer, we shall have made public any then material nonpublic information theretofore disclosed by us or our representatives to the participating lenders who had agreed to receive private information from us;

 

•

the initial funding under the ABL facility shall have occurred (or shall occur substantially concurrently with completion of the Exchange Offer) and be in form and substance acceptable to the Agent, the Steering Group Majority and the Company, each in their sole discretion;

 

•

the offering of the New Money Convertible Secured Notes, with aggregate net proceeds to us of not less than $100.0 million, shall have closed (or will close simultaneously with completion of the Exchange Offer);

 

•

each of the approved definitive transaction documents, which by their terms are to be effective at or prior to completion of the Exchange Offer, shall have become effective and be in full force and effect;

 

•

certain agreements related to multi-employer pension funds shall be in full force and effect;

 

•

the Plan, in form and substance acceptable to us, the Agent and the Steering Group Majority, shall have been established by the us and be in full force and effect;

 

•

the New Board, other than the IBT director designees, shall have been elected or designated by the existing members of the board of directors as “continuing directors” (provided that the director candidates were selected by the Agent and Steering Group Majority at least ten (10) days prior to the closing of the exchange offer) and a new chief executive officer and chief financial officer shall have commenced employment with us, in each case unless otherwise waived by the Agent and Steering Group Majority; and

 

•

100% of the participating lenders shall have agreed to the Exchange Offer and validly and timely tendered, delivered and not withdrawn their tender into the Exchange Offer and not changed, revoked or withdrawn such agreement or tender.

Termination of Lender Support Agreement

The Lender Support Agreement will terminate under certain circumstances, including, but not limited to (each, a “support termination event”):

 

•

by the mutual written consent of the Company and 66 2/3% of the aggregate amount of outstanding credit agreement claims of the participating lenders;

 

•

at 5:00 p.m. prevailing Eastern Time on July 22, 2011, as to each participating lender who has not agreed to extend such date;

 

•

upon the occurrence of any of the following, unless waived or extended by the Agent and the Steering Group Majority:

 

•

at 5:00 p.m. prevailing Eastern Time on May 17, 2011 if we have not filed with the SEC one or more registration statements and/or other appropriate documents for the Exchange Offer;

 

•

at 5:00 p.m. prevailing Eastern Time on June 15, 2011 if we have not delivered to the Agent and the Steering Group Majority binding commitments with respect to the ABL facility in an aggregate amount not less than $300 million in form and substance acceptable to us, the Agent and the Steering Group Majority;

 

•

at 5:00 p.m. prevailing Eastern Time on June 22, 2011 unless we have commenced the Exchange Offer (the “solicitation commencement date”); or

 

•

if the Exchange Offer has not been consummated within 15 business days after the solicitation commencement date.

 

•

certain events of bankruptcy or dissolution including an involuntary proceeding against us;

 

•

three (3) business days after we furnish the participating lenders with written notice of our intent, in the exercise of our fiduciary duties and based, at least in part, upon the advice of our outside legal counsel to our board of directors, to take any action that is prohibited under the Lender Support Agreement or to refrain from taking any action that is required under the Lender Support Agreement,

 

•

certain events of non-cured material breach by the parties;

 

•

a default or event of default under the Credit Agreement that is not waived or cured as provided in the Credit Agreement;

 

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•

IBT terminating, or threatening in writing to terminate, its memorandum of understanding with respect to the restructuring plan or upon the occurrence of any termination event under TNFINC Support Agreement (as defined below);

 

•

upon the occurrence of a material adverse effect (as defined in the Lender Support Agreement);and

 

•

on June 30, 2011, unless certain agreements relating to contributions to our multi-employer pension funds are reached in writing, or any such agreement is terminated, amended or modified in a manner adverse to us or the participating lenders, or otherwise ceases to be in full force and effect.

A support termination event may be waived only upon the written approval of 75% of the aggregate amount of outstanding credit agreement claims of the participating lenders.

Amendment

Approved definitive transactional documents may be amended, modified or supplemented to the extent that such amendments are not materially inconsistent with the Term Sheet with the written approval of (i) us, (ii) the Agent and (iii) the Steering Group Majority; provided that such amendment, modification or other supplement does not impose less favorable treatment of any participating lender’s credit agreement claims, or any group of participating lenders’ credit agreement claims, or its rights and obligations under the Lender Support Agreement and under the approved definitive transaction documents compared to those of the participating lenders generally, without such participating lender’s, or such group of participating lenders’, express written consent.

The Lender Support Agreement may be amended (to the extent such amendment is consistent with the approved definitive transaction documents) only upon the written approval of (i) us and (ii) 75% of the aggregate amount of outstanding credit agreement claims of the participating lenders. Any other amendment to the Lender Support Agreement will require the written approval of (x) us and (y) each participating lender.

TNFINC Support Agreement

On April 29, 2011, we also entered into a support agreement (the “TNFINC Support Agreement”) with TNFINC pursuant to which TNFINC has agreed, among other things, to support the Restructuring. The conditions to TNFINC’s obligations under the TNFINC Support Agreement are substantially similar to those under the Lender Support Agreement except that, with respect to the ABL facility, the TNFINC Support Agreement requires, among other things, $350 million in lending capacity and $80 million of availability under the ABL facility.

The TNFINC Support Agreement will terminate under certain circumstances, including, but not limited to (i) upon the occurrence of a material adverse effect; (ii) certain events of bankruptcy or dissolution including an involuntary proceeding against us; or (iii) on June 1, 2011, unless certain agreements relating to contributions to our multi-employer pension funds are reached in writing, or any such agreement is terminated, amended or modified in a manner adverse to us or the participating lenders, or otherwise ceases to be in full force and effect.

CREDIT FACILITIES

We have two primary liquidity vehicles:

 

•

the Credit Agreement, and

 

•

an asset-based securitization facility (as amended, the “ABS Facility”), whereby we receive financing through the sale of certain of our accounts receivable.

The Credit Agreement and the ABS Facility are collectively referred to herein as the “credit facilities”.

Credit Agreement

On February 28, 2011 and April 29, 2011, the Company entered into amendments to the Credit Agreement relating to, among other things, the Restructuring.

Credit Agreement Amendment No. 20

On February 28, 2011, we and certain of our subsidiaries entered into Amendment No. 20 (“Credit Agreement Amendment 20”) to the Credit Agreement.

 

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Milestones

Pursuant to the terms of Credit Agreement Amendment 20, the Required Lenders (at least 51% of exposure as defined in the Credit Agreement), the Agent and the Steering Group Majority acknowledged that the Term Sheet satisfied setting forth the material terms of our restructuring (the “AIP Condition”).

In addition, Credit Agreement Amendment 20 amended certain milestones and added a milestone that are conditions to the Company continuing to defer revolver and term loan interest, letters of credit fees and commitment fees as follows:

 

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Credit Agreement Amendment 20 extended the deadline for each document required to effectuate the restructuring of the Company and its subsidiaries contemplated by the AIP to be in final form and acceptable to the Consenting Parties (the “Documentation Condition”) from March 15, 2011 to April 29, 2011 (or such later date approved by the Supermajority Lenders (as defined in the Credit Agreement) but not later than December 31, 2011). Credit Agreement Amendment 20 also amended the Documentation Condition to add the following additional requirements (i) lenders representing at least 90% of exposure (as defined in the Credit Agreement) must sign an agreement supporting the Restructuring, (ii) subject to satisfaction of the Closing Condition (as defined below), TNFINC must consent to the Restructuring and waive any termination, modification similar rights under the Restructuring Plan (as defined below) such that the Restructuring Plan shall be fully binding on the parties thereto, (iii) subject to satisfaction of the Closing Condition, the Specified Pension Fund Deferral Transaction Documents (as defined in the Credit Agreement) must be amended to reflect the terms of the Restructuring and (iv) subject to satisfaction of the Closing Condition and to the extent deemed reasonably necessary, the ABS Facility (as defined below) must be amended to reflect the terms of the Restructuring. The Documentation Condition was satisfied on April 29, 2011 pursuant to Credit Agreement Amendment No 21 (as defined below).

 

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Credit Agreement Amendment 20 extended the deadline for the Restructuring to be effectuated and closed (the “Closing Condition”) from May 13, 2011 to July 22, 2011 (or such later date approved by the Supermajority Lenders but not later than December 31, 2011); provided, that the Closing Condition deadline will be May 31, 2011 if the Pension Fund Amendment Condition is not satisfied on or before that date (the “Restructuring Closing Date”). “Pension Fund Amendment Condition” means that the Specified Pension Fund Deferral Transaction Documents have been amended to extend the deferral of interest and amortization payments from May 31, 2011 to July 22, 2011, subject to earlier termination if the Documentation Condition or the Closing Condition is not satisfied by the applicable required date. The Pension Fund Amendment Condition was satisfied on April 29, 2011 pursuant to CDA Amendment No. 10 (as defined below).

 

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Credit Agreement Amendment 20 added a milestone which required the Company to obtain, by March 10, 2011, the nonbinding agreement (on terms and conditions acceptable to Company, the Agent, the Steering Group Majority and TNFINC) of the Majority Funds (at least a majority of exposure as defined in the Contribution Deferral Agreement) to the terms of the Term Sheet (subject to the conditions included in the Term Sheet as applied to the Funds (the “Pension Fund Condition”)). Because the Pension Fund Condition was not satisfied by the applicable required date, the Required Lenders may declare an event of default under the Credit Agreement. As a result of the Milestone Failure, we have classified our debt under the Credit Agreement as current maturities of long-term debt. We have also classified the 6% Notes and pension contribution deferral obligations as current maturities of long-term debt due to cross-default provisions within the respective lending agreements.

If the Closing Condition is not satisfied by the applicable required date, then (i) the deferral of interest and fees under the Credit Agreement will end on the fifth day (or if the fifth day is not a business day, the immediately following business day) following such failure and (ii) the Required Lenders may declare an event of default under the Credit Agreement.

Minimum Consolidated EBITDA Covenant

Credit Agreement Amendment 20 removed the minimum Consolidated EBITDA (as defined in the Credit Agreement) covenant in respect of the period ending March 31, 2011 and reset the minimum EBITDA covenant for each fiscal quarter thereafter in an amount to be agreed to by the Company, the Agent and the Required Lenders on or prior to April 29, 2011.

Annual Financial Statements

Credit Agreement Amendment 20 modified the affirmative covenant that requires financial statements of the Company for the fiscal year ended 2010 with an audit opinion that does not include a “going concern” qualification to permit an audit opinion with a “going concern” qualification in connection with such financial statements.

 

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Credit Agreement Amendment No. 21

On April 29, 2011, we and certain of our subsidiaries entered into Amendment No. 21 (“Credit Agreement Amendment 21”) to the Credit Agreement. Credit Agreement Amendment 21:

 

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amended the Documentation Condition so that the Lender Support Agreement, the TNFINC Support Agreement and the CDA Amendment 10 (as defined below) collectively satisfied the Documentation Condition;

 

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extended the deadline by which the Consolidated EBITDA (as defined in the Credit Agreement) covenant levels must be set by the Company, the Agent and the Required Lenders to July 22, 2011;

 

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amended the definition of Deferral Suspension Event (as defined in the Credit Agreement) to permit payments to employee benefit pension plans (including multi-employer plans) at the times and in the amounts required by the labor agreement previously reached with the IBT; and

 

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amended the definition of Deferral Termination Date (as defined in the Credit Agreement) to permit the reimbursement of fees and expenses pursuant to the terms of the Contribution Deferral Agreement, as amended by CDA Amendment 10.

Asset-Backed Securitization Amendment

ABS Amendment No. 22

On February 28, 2011, we, as Performance Guarantor, and the parties to the Third Amended and Restated Receivables Purchase Agreement, dated as of April 18, 2008 (as amended, the “ABS Facility”), entered into Amendment No. 22 to the ABS Facility (“ABS Amendment 22”).

Similar to the Credit Agreement Amendment 20, ABS Amendment 22 removed the minimum Consolidated EBITDA (as defined in the Credit Agreement) covenant in respect of the period ending March 31, 2011 and reset the minimum EBITDA covenant for each fiscal quarter thereafter in an amount to be agreed to by the Company, the Administrative Agent and the Required Co-Agents on or prior to April 29, 2011. The Co-Agents consented to Credit Agreement Amendment 20 and agreed to extend the deferral of interest and fees to the fifth day following July 22, 2011 (or if such fifth day is not a business day, the next succeeding business day) (as such date may be extended pursuant to the definition of Deferred Payment Termination Date below) so long as the Amortization Date (as defined in the ABS Facility) or the Deferred Payment Termination Date does not occur prior to that date. If the ABS Facility is refinanced on or before the deferred interest and fees are due, then YRRFC will not have to pay the deferred interest and fees.

ABS Amendment 22 added the Pension Fund Condition milestone that is described above. Because the Pension Fund Condition was not satisfied by the required date, $5 million of deferred commitment fees under the ABS Facility that were due after the required date became payable on May 2, 2011. These fees were deferred until the fifth day following July 22, 2011 pursuant to ABS Amendment 23 (as defined below).

The date that deferred interest and fees are due in the event of a Deferral Suspension Event (as defined in the Credit Agreement) was also extended to the earlier of the Amortization Date (as defined in the ABS Facility) or the Deferred Payment Termination Date.

“Required Co-Agents” means the Administrative Agent and the Co-Agents (other than the Falcon Agent) for two of the Banks Groups (as defined in the ABS Facility).

“Deferred Payment Termination Date” means the earliest of the occurrence of (i) the earliest to occur of (a) the fifth day following February 28, 2011 (or if such fifth day is not a business day, the next succeeding business day) (as such date may be extended pursuant to the terms of this definition) unless the AIP Condition (as defined in the Credit Agreement) has been satisfied on or prior to February 28, 2011 (or such extended date), (b) the fifth day following April 29, 2011 (or if such fifth day is not a business day, the next succeeding business day) (as such date may be extended pursuant to the terms of this definition) unless the Documentation Condition has been satisfied in a manner acceptable to the Agents on or prior to April 29, 2011 (or such extended date) and (c) the fifth day following the Restructuring Closing Date (or if such fifth day is not a business day, the next succeeding business day) (or, in the case of each of the foregoing clauses (a), (b) and (c), such later date as may be agreed to by the Required Co-Agents and YRRFC, but in no event to be later than December 31, 2011) and (ii) any Deferral Termination Event (as defined in the Credit Agreement). Pursuant to the terms of the ABS Amendment 22, the Co-Agents have acknowledged that the Term Sheet satisfied the AIP Condition. The Documentation Condition was satisfied on April 29, 2011 pursuant to ABS Amendment 23 (as defined below).

In connection with ABS Amendment 22, a covenant under the ABS Facility was modified to permit an audit opinion with respect to the Company’s financial statements for the fiscal year ended 2010 to contain a going concern qualification.

 

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ABS Amendment No. 23

On April 29, 2011, we, as Performance Guarantor, and the parties to the ABS Facility, entered into Amendment No. 23 to the ABS Facility ( “ABS Amendment 23”).

Similar to Credit Agreement Amendment 21, ABS Amendment 23 extended the deadline by which the Consolidated EBITDA (as defined in the Credit Agreement) covenant levels must be set by the Company and the Required Co-Agents (as defined in the ABS Facility) to July 22, 2011.

In connection with ABS Amendment 23, the Co-Agents consented to Credit Agreement Amendment 21, confirmed that the Documentation Condition (as defined in the Credit Agreement) had been satisfied and agreed to extend the deferral of the $5 million commitment fee due on May 2, 2011 (as a result of not satisfying the Pension Fund Condition by the required deadline) to the fifth day following July 22, 2011 (or if such fifth day is not a business day, the next succeeding business day); provided that those amounts may become due earlier upon the occurrence of an Amortization Date (as defined in the ABS Facility) or a Deferral Termination Event (as defined in the Credit Agreement). In addition, pursuant to the terms of the ABS Amendment, if a Support Termination Event (as defined in the Lender Support Agreement) occurs under the Lender Support Agreement and any party to the Credit Agreement demands payment of any amount in the nature of fees or interest that have been deferred, suspended or otherwise not paid when due, all deferred interest and fees under the ABS Facility will become due and payable. If the ABS Facility is refinanced on or before the date the deferred interest and commitment fees are due, then we will not have to pay the deferred commitment fees.

Contribution Deferral Agreement

CDA Amendment No 8

On February 28, 2011, YRC Inc., USF Holland Inc., New Penn Motor Express Inc., USF Reddaway Inc. and each of the guarantors party thereto (each a subsidiary of the Company) Wilmington Trust Company, as agent, and Majority Funds (as defined in the Contribution Deferral Agreement) entered into Amendment No. 8 to the Contribution Deferral Agreement (“CDA Amendment 8”).

Pursuant to CDA Amendment 8, the Majority Funds (at least a majority of exposure as defined in the Contribution Deferral Agreement) acknowledged that the Term Sheet satisfied the AIP Condition, which acknowledgement was amended to require only the approval of the Consenting Parties to the Term Sheet.

In addition, CDA Amendment 8 amended certain milestones under the Contribution Deferral Agreement that are a condition to the continued deferral of Monthly Amortization Payments and Monthly Interest Payments (each as defined in the Contribution Deferral Agreement). Such amendments resulted in the milestones under the Contribution Deferral Agreement being conformed to the Documentation Condition and the Closing Condition definitions and deadlines in Credit Agreement, as described above, except that (i) the Documentation Condition did not require further documentation in respect of the ABS Facility and (ii) the Majority Funds must agree to any extension of the deadline applicable to the Documentation Condition or the Closing Condition. The Documentation Condition was satisfied on April 29, 2011 pursuant to CDA Amendment 9 (as defined below).

If the Closing Condition is not satisfied by the applicable required date, then the Majority Funds may accelerate the due date of the Monthly Amortization Payments and Monthly Interest Payments at any time on or after the fifth day (or if the fifth day is not a business day, the immediately following business day) following such failure.

CDA Amendment No 9

On April 29, 2011, YRC Inc., USF Holland Inc., New Penn Motor Express Inc., USF Reddaway Inc. and each of the guarantors party thereto (each a subsidiary of the Company), Wilmington Trust Company, as agent, and Majority Funds entered into Amendment No. 9 to the Contribution Deferral Agreement ( “CDA Amendment 9”).

Pursuant to CDA Amendment 9, the Documentation Condition in connection with the Restructuring was amended so that (i) an amendment to the Contribution Deferral Agreement in respect of the Restructuring, signed by all of the funds party to the Contribution Deferral Agreement, (ii) an agreement to support the Restructuring with respect to the Credit Agreement, signed by at least 90% of the lenders party thereto, and (iii) the TNFINC Support Agreement collectively satisfied the Documentation Condition.

 

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CDA Amendment No. 10

On April 29, 2011, YRC Inc., USF Holland Inc., New Penn Motor Express Inc., USF Reddaway Inc. and each of the guarantors party thereto (each a subsidiary of the Company), the pension funds party to the Contribution Deferral Agreement and Wilmington Trust Company, as agent, entered into Amendment No. 10 to the Contribution Deferral Agreement ( “CDA Amendment 10”).

As of the date of CDA Amendment 10, the Supermajority Funds (as defined in the Contribution Deferral Agreement) approved the extension of the termination date of the deferral of monthly amortization payments and monthly interest payments to July 22, 2011 (or such later date as may be agreed by the Supermajority Funds), and, with all Funds’ (as defined in the Contribution Deferral Agreement) approval, effective upon satisfaction of the conditions precedent therein, including closing of the Exchange Offer, the Contribution Deferral Agreement, including schedules and exhibits thereto, will be amended and restated to effect changes to certain provisions in connection with the Restructuring.

IBT Agreement

On February 28, 2011, TNFINC, YRC Inc., USF Holland Inc. and New Penn Motor Express Inc. entered into a Certification and Second Amendment to TNFINC Term Sheet (the “Second IBT Amendment”) to extend (i) the Documentation Deadline to April 29, 2011 and (ii) the Closing Deadline to July 22, 2011 (or, in the case of each of the foregoing clauses (i) and (ii), such later date as TNFINC may agree in its sole discretion) (the “Extension Period”). Unless TNFINC otherwise agrees, the Extension Period and the wage, work rule and benefit concessions set forth in the Restructuring Plan will terminate upon the occurrence of the events contained in the Second IBT Amendment. In addition, the extensions would terminate (i) April 29, 2011 in the event that the Company fails to enter into definitive documentation that is acceptable to TNFINC (in its sole discretion), or (ii) July 22, 2011 in the event that the Restructuring is not consummated, unless such dates are extended by TNFINC in its sole discretion at such time.

On April 29, 2011, we entered into the TNFINC Support Agreement, as described above, in which TNFINC acknowledged that the Company had satisfied the Documentation Condition.

6% Notes

The 6% Notes indenture provides that the maximum number of shares of our common stock that can be issued in respect of the 6% Notes upon conversion or with respect to the payment of interest or in connection with the make whole premium or otherwise shall be limited to 8,075,200 shares of common stock for $70 million in aggregate principal amount of the 6% Notes, subject to certain adjustments. If the limit is reached, no holder is entitled to any other consideration on account of shares not issued. This limitation terminates if the holders of our common stock approve the termination of this limitation. As of May 10, 2011, a maximum of 5,284,781 shares of the Company’s common stock would be available for future issuances in respect of the 6% Notes. Such limitation on the number of shares of common stock issuable in respect of the 6% Notes applies on a pro rata basis to the approximately $69.4 million in aggregate principal amount of outstanding 6% Notes.

Risks and Uncertainties Regarding Future Liquidity

In light of our recent operating results, we have satisfied our short term liquidity needs through a combination of borrowings under our credit facilities, retained proceeds from asset sales, sale/leaseback financing transactions, issuances of our common stock and 6% Notes and an income tax refund from the IRS. In an effort to further manage liquidity, we have also instituted the deferral of principal and interest payments under the Contribution Deferral Agreement, certain interest and fees due under our Credit Agreement and ABS Facility, and we have received the benefit of wage reductions and other concessions from the modified NMFA (including prior modifications to the NMFA) including continued temporary cessation of pension contributions to multi-employer pension funds. Throughout 2010 we reviewed and into 2011 we continue to review the strategic and financing alternatives available to us and retained legal and financial advisors to assist us in this regard.

As described above, on February 28, 2011, we and the other Consenting Parties reached a non-binding agreement in principle in the form of the Term Sheet. On April 29, 2011, we entered into the Lender Support Agreement under which participating lenders holding more than 95% of the principal amount of outstanding credit agreement claims agreed to support the Restructuring as described above under the caption “—The Restructuring.” On April 29, 2011, we also entered into the TNFINC Support Agreement whereby TNFINC agreed to support the Restructuring. The Restructuring is intended to improve our balance sheet and our liquidity with which to operate.

 

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A Milestone Failure has occurred because the Pension Fund Condition, which required we obtain, by March 10, 2011, the nonbinding agreement (on terms and conditions acceptable to Company, the Agent, the Steering Group Majority and TNFINC) of the Majority Funds (at least a majority of exposure as defined in the Contribution Deferral Agreement) to the terms of the Term Sheet (subject to the conditions included in the Term Sheet as applied to the Funds) was not satisfied by the required date, and, as a result, the Required Lenders have the right, but not the obligation, to declare an event of default under the Credit Agreement. The Required Lenders have not indicated that they intend to declare an event of default under the Credit Agreement, and we worked with the parties to satisfy the Documentation Condition as of April 29, 2011. Neither the Agent nor the Required Lenders have waived the Milestone Failure. We cannot provide any assurance that the Required Lenders will not declare an event of default under the Credit Agreement. If the Required Lenders declare an event of default under the Credit Agreement, we anticipate that we would seek protection under the Bankruptcy Code. As a result of the Milestone Failure, we have classified our debt under the Credit Agreement as current maturities of long-term debt. We have also classified the 6% Notes and pension contribution deferral obligations as current maturities of long-term debt due to cross-default provisions within the respective lending agreements.

In addition to the Pension Fund Condition, other significant milestones and conditions for our Restructuring and the continuation of deferrals (through completion of the Restructuring) under the Credit Agreement, ABS Facility and Contribution Deferral Agreement and the continuation of cost savings under our labor agreements include, but are not limited to the Closing Condition, the deadline for the Restructuring to be effectuated and closed by July 22, 2011 (or such later date approved by the Supermajority Lenders, Required Co-Agents, Majority Funds and TNFINC but not later than December 31, 2011). The obligations of the Company and the participating lenders to complete the Restructuring are subject to significant milestones and conditions as set forth above under the caption “The Restructuring—Obligations of Company and Participating Lenders to Complete the Exchange Offer.” The Lender Support Agreement and the TNFINC Support Agreement are subject to termination as described above under “The Restructuring—Termination of the Lender Support Agreement” and “The Restructuring—TNFINC Support Agreement,” respectively.

To continue to have sufficient liquidity to meet our cash flow requirements prior to completion of the Restructuring and through the remainder of 2011:

 

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we must implement our proposed Restructuring within the milestone conditions as set forth in the Lender Support Agreement, the TNFINC Support Agreement and under our Credit Agreement, ABS Facility, Contribution Deferral Agreement and Second IBT Amendment;

 

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our operating results, pricing and shipping volumes must continue to improve;

 

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we must continue to have access to our credit facilities;

 

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we must continue to defer payment of, in each case through the completion of the Restructuring and thereafter pursuant to the final terms of the Restructuring, as applicable:

 

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interest and fees to our lenders under the Credit Agreement

 

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interest and facility fees to purchasers of our accounts receivable pursuant to the ABS Facility

 

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interest and principal to our pension funds pursuant to the Contribution Deferral Agreement;

 

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the cost savings under our labor agreements, including wage reductions, temporary cessation of multi-employer pension fund contributions and savings due to work rule changes, must continue;

 

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the multi-employer pension funds must allow the Company’s subsidiaries to re-enter the plans at the reduced contribution rate pursuant to the terms of the IBT Agreement or enter into alternative arrangements pursuant to the terms of the Lender Support Agreement;

 

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we must complete real estate sale transactions currently under contract as anticipated; and

 

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we must continue to implement and realize substantial cost savings measures to match our costs with business levels and to continue to become more efficient.

Some or all of these factors are beyond our control and as such we anticipate that we will continue to face risks and uncertainties regarding our short and medium-term liquidity. We cannot provide you with any assurances that the conditions contained in the definitive agreements supporting the Restructuring will be satisfied or that the Restructuring can be completed in the timeframes required under our various agreements with our stakeholders. We cannot provide you with any assurances that any restructuring can be completed out-of-court or whether we will be required to implement the Restructuring under the supervision of a bankruptcy court, in which event, the Company cannot provide you with any assurances that the terms of any such restructuring will not be substantially and materially different from the Term Sheet or any description of the Restructuring in this Quarterly Report on Form 10-Q or that an effort to implement an in-court restructuring would be successful.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The uncertainty regarding the Company’s ability to generate sufficient cash flows and liquidity to fund operations raises substantial doubt about the Company’s ability to continue as a going concern (which contemplates the realization of assets and discharge of

 

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liabilities in the normal course of business for the foreseeable future). Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. If we are unable to fund our operations through operating cash flows, existing credit facilities, sales of non-strategic assets and business lines and other capital market transactions, we would consider in court and out of court restructuring alternatives.

We expect to continue to monitor our liquidity carefully, work to reduce this uncertainty and address our cash needs through a combination of one or more of the following actions:

 

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we continue to, and expect to implement further cost actions and efficiency improvements;

 

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we will continue to aggressively seek additional and return business from customers;

 

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we will continue to attempt to reduce our collateral requirements related to our insurance programs;

 

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if appropriate, we may sell additional equity or pursue other capital market transactions;

 

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we may consider selling non-strategic assets or business lines; and

 

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we expect to carefully manage receipts and disbursements, including amounts and timing, focusing on reducing days sales outstanding and managing days payables outstanding.

We have substantial debt and, as a result, significant debt service obligations. As of March 31, 2011, we had approximately $1.1 billion of secured indebtedness outstanding. We are deferring payment of (i) interest and fees to our lenders under the Credit Agreement, (ii) interest and facility fees to purchasers of our accounts receivable pursuant to the ABS Facility, and (iii) interest and principal to the multi-employer pension funds pursuant to the Contribution Deferral Agreement, and we are receiving the benefit of wage reductions and other concessions from the modified NMFA including continued temporary cessation of pension contributions to the multi-employer pension funds. As of March 31, 2011, the amounts deferred under the Credit Agreement, the ABS Facility and the Contribution Deferral Agreement were approximately $146.3 million, $20.9 million and $68.6 million respectively. In the event the conditions and cross-conditions under the Credit Agreement, the ABS Facility, the Contribution Deferral Agreement and the modified NMFA are not satisfied, and the Restructuring is not completed, the amounts deferred and the benefits realized under such agreements could become payable or reimbursable, as applicable. If we do not complete the Restructuring, is very unlikely we will be able to generate cash sufficient to pay the principal of, interest on and other amounts due in respect of our indebtedness and other obligations when due. In such an event, we would likely be required to reorganize under Chapter 11 or liquidate under Chapter 7 of the Bankruptcy Code.

 

4.	Debt and Financing

Total debt consisted of the following:

 

(in millions)		March 31, 2011				December 31, 2010
Revolving credit facility (capacity $706.4 and $713.7)		$	176.0			$	142.9
Term loan (par value of $254.2 and $257.1)			254.8				257.8
ABS borrowings, secured by accounts receivable (capacity $325.0, borrowing base $217.5 and $189.3)			147.2				122.8
6% convertible senior notes ($69.4 par value)			56.8				56.1
Pension contribution deferral obligations			138.5				139.1
Lease financing obligations			339.2				338.4
5.0% and 3.375% contingent convertible senior notes (stated at par value)			1.9				1.9
Other			1.1				1.1
Total debt			1,115.5				1,060.1
Current maturities of 5.0% and 3.375% contingent convertible senior notes and other			(3.0	)			(2.9	)
Current maturities of lease financing obligations			(4.6	)			(4.4	)
Current maturities of revolving credit facility			(176.0	)			—
Current maturities of term loan			(254.8	)			—
Current maturities of 6% convertible senior notes			(56.8	)			—
Current maturities of pension contribution deferral obligations			(138.5	)			(92.7	)
ABS borrowings			(147.2	)			(122.8	)
Long-term debt		$	334.6			$	837.3

 

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Credit Agreement

Milestone Failure

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010, we failed to satisfy the Pension Fund Condition under the Credit Agreement by March 10, 2011 and therefore have triggered a Milestone Failure and, as a result, the Required Lenders (at least 51% of exposure as defined in the Credit Agreement) have the right, but not the obligation, to declare an event of default under the Credit Agreement. We cannot provide any assurance that the Required Lenders will not declare an event of default under the Credit Agreement. Accordingly we have classified our debt under the Credit Agreement as current maturities of long-term debt. We have also classified the 6% Notes and the pension contribution deferral obligations as current maturities of long-term debt due to cross-default provisions within the respective lending agreements.

If the Required Lenders declare an event of default under the Credit Agreement, we anticipate that we would seek protection under the U.S. Bankruptcy Code (the “Bankruptcy Code”).

Asset-Backed Securitization Facility

At March 31, 2011, our underlying accounts receivable supported a borrowing base under our ABS Facility of $217.5 million. In addition to the $147.2 million outstanding, the ABS facility capacity was also reduced by outstanding letters of credit of $64.7 million resulting in $5.6 million of unrestricted unused capacity at March 31, 2011.

Interest and Fee Deferrals

The following table presents accrued interest and fees that have been deferred under the terms of the Credit Agreement, ABS Facility and Contribution Deferral Agreement and are included in our consolidated balance sheets in “Other current and accrued liabilities”:

 

(in millions)		March 31, 2011				December 31, 2010
Interest deferrals
Credit Agreement		$	114.5			$	96.3
ABS Facility			5.9				2.7
Pension contribution deferral agreement			10.9				9.1
Amendment and commitment fee deferrals
Credit Agreement			31.8				31.8
ABS Facility			15.0				15.0
Total interest and fee deferrals		$	178.1			$	154.9

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, 2011								December 31, 2010
(in millions)		Carrying Amount				Fair Value				Carrying Amount				Fair Value
Credit Agreement and ABS Facility borrowings		$	578.0			$	574.7			$	523.5			$	396.8
Notes and other obligations			198.3				157.5				198.2				116.6
Lease financing obligations			339.2				339.2				338.4				338.4
Total debt		$	1,115.5			$	1,071.4			$	1,060.1			$	851.8

The fair values of our outstanding debt were estimated based on observable prices (level two inputs for fair value measurements), where available, or using the quarter end conversion price for convertible notes (level three inputs for fair value measurements). The carrying amount of the lease financing obligations approximates fair value. The carrying value of debt with an original maturity of less than one year approximates market value.

 

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5.	Employee Benefits

Components of Net Periodic Pension Costs

The following table sets forth the components of our company-sponsored pension costs for the three months ended March 31:

 

		Pension Costs
(in millions)		2011				2010
Service cost		$	0.9			$	0.9
Interest cost			15.2				15.0
Expected return on plan assets			(10.7	)			(13.1	)
Amortization of net loss			2.4				1.6
Total periodic pension cost		$	7.8			$	4.4

We expect to contribute $29.5 million to our pension plans in 2011.

 

6.	Income Taxes

Effective Tax Rate

Our effective tax rate for continuing operations for the three months ended March 31, 2011 and 2010 was 4.3% and 2.1%, respectively. Significant items impacting the 2011 rate include a state tax benefit, certain permanent items and an increase in the valuation allowance established for the net deferred tax asset balance projected for December 31, 2011. We recognize valuation allowances on deferred tax assets if, based on the weight of the evidence, we believe that some or all of our deferred tax 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 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, 2011 and December 31, 2010, substantially all of our net deferred tax assets are 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:

 

(in thousands)		2011
Beginning balance			47,684
Shares forfeited under share-based compensation arrangements			(27	)
Interest paid in stock for the 6% Notes			219
Ending balance			47,876

 

8.	Loss Per Share

Dilutive securities, consisting of preferred stock, options to purchase our common stock, or rights to receive common stock in the future, are included in our calculation of diluted weighted average common shares and, dilutive securities related to our convertible notes are also included in our calculation of diluted weighted average common shares; however, due to our net loss position for the three months ended March 31, 2011 and 2010, there are no dilutive securities for these periods.

Antidilutive options and share units were 11,192,600 and 690,500 for the three months ended March 31, 2011 and 2010, respectively. Antidilutive 6% convertible senior note conversion shares, including the make whole premium, were convertible into 5,284,781 and 5,738,200 common shares at March 31, 2011 and 2010, respectively. For the three months ended March 31, 2010, the antidilutive securities included preferred stock.

 

9.	Business Segments

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

 

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We have the following reportable segments, which are strategic business units that offer complementary transportation services to their customers. National Transportation includes carriers that provide comprehensive regional, national and international transportation services. Regional Transportation is comprised of carriers that focus primarily on business opportunities in the regional and next-day delivery markets. Truckload consists of Glen Moore, a domestic truckload carrier. The results of Jiayu are reflected in our consolidated results as part of the Corporate segment.

The accounting policies of the segments are the same as those described in the Summary of Accounting Policies note in our Annual Report on Form 10-K for the year ended December 31, 2010. We charge management fees and other corporate services to our segments based on the direct benefits received or as a percentage of revenue. Corporate and other operating losses represent residual operating expenses of the holding company, including compensation and benefits and professional services for all periods presented. Corporate identifiable assets primarily refer to cash, cash equivalents, investments in equity method affiliates and deferred debt issuance costs. Intersegment revenue primarily relates to transportation services between our segments.

The following table summarizes our operations by business segment:

 

(in millions)		National Transportation				Regional Transportation				Truckload				Corporate/ Eliminations				Consolidated
As of March 31, 2011 Identifiable assets		$	1,629.4			$	892.8			$	50.4			$	51.7			$	2,624.3
As of December 31, 2010 Identifiable assets			1,612.3				864.3				49.8				66.5				2,592.9
Three months ended March 31, 2011
Operating revenue			730.0				365.7				21.8				5.4				1,122.9
Intersegment revenue			—				0.4				3.4				(3.8	)			—
Operating loss			(51.3	)			(1.2	)			(3.9	)			(11.6	)			(68.0	)
Three months ended March 31, 2010
Operating revenue			663.1				309.0				17.7				(2.7	)			987.1
Intersegment revenue			—				0.2				9.2				(9.4	)			—
Operating loss			(185.1	)			(39.6	)			(3.1	)			(5.4	)			(233.2	)

 

10.	Comprehensive Loss

Comprehensive loss for the three months ended March 31 follows:

 

(in millions)		2011				2010
Net loss attributable to YRC Worldwide Inc.		$	(101.8	)		$	(274.1	)
Other comprehensive loss attributable to YRC Worldwide Inc. , net of tax:
Amortization of net losses to net income (loss)			1.5				1.0
Deferred tax rate adjustments			—				(1.1	)
Changes in foreign currency translation adjustments			2.2				1.8
Other comprehensive income attributable to YRC Worldwide Inc.			3.7				1.7
Comprehensive loss attributable to YRC Worldwide Inc.		$	(98.1	)		$	(272.4	)

Comprehensive loss attributable to our non-controlling interest was not material for any period presented.

 

11.	Discontinued Operations – YRC Logistics

YRC Logistics was reported as a separate segment in our consolidated financial statements. As a result of the sale of the majority of YRC Logistics and the closure of the pooled distribution business line in 2010, we have presented the related financial results of YRC Logistics as discontinued operations in all periods presented.

Shared services and corporate costs previously allocated to this segment, totaled $4.1 million for the three months ended March 31, 2010 and are included in continuing operations in our ‘Corporate and other’ segment.

 

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The financial results included in discontinued operations for the three months ended March 31 are as follows:

 

(in millions)		2010
Revenue		$	76.1
Operating loss			(3.6	)
Loss from operations before income taxes			(4.1	)
Income tax provision			0.1
Net loss from discontinued operations		$	(4.0	)

 

12.	Commitments, Contingencies, and Uncertainties

401(k) Class Action Suit

Four class action complaints were filed in the U.S. District Court for the District of Kansas against the Company and certain of its officers and directors, alleging violations of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), based on similar allegations and causes of action. On November 17, 2009, Eva L. Hanna and Shelley F. Whitson, former participants in the Yellow Roadway Corporation Retirement Plan, filed a class action complaint on behalf of certain persons participating in the plan (or plans that merged with the plan) from April 6, 2009 to the present; on December 7, 2009, Daniel J. Cambra, a participant in the Yellow Roadway Corporation Retirement Savings Plan, filed a class action complaint on behalf of certain persons participating in the plan (or plans that merged with the plan) from October 25, 2007 to the present; on January 15, 2010, Patrick M. Couch, a participant in one of the merged 401(k) plans, filed a class action complaint on behalf of certain persons participating in the plan (or plans that merged with the plan) from March 23, 2006 to the present; and on April 21, 2010, Tawana Franklin, a participant in YRC Worldwide 401(k) Plan, filed a class action complaint on behalf of certain persons participating in the plan (or plans that merged with the plan) from October 25, 2007 to the present.

In general, the complaints allege that the defendants breached their fiduciary duties under ERISA by providing participants Company common stock as part of their matching contributions and by not removing the stock fund as an investment option in the plans in light of the Company’s financial condition. Although some Company matching contributions were made in Company common stock, participants were not permitted to invest their own contributions in the Company stock fund. The complaints allege that the defendants failed to prudently and loyally manage the plans and assets of the plans; imprudently invested in Company common stock; failed to monitor fiduciaries and provide them with accurate information; breached the duty to properly appoint, monitor, and inform the Benefits Administrative Committee; misrepresented and failed to disclose adverse financial information; breached the duty to avoid conflict of interest; and are subject to co-fiduciary liability. Each of the complaints seeks, among other things, an order compelling defendants to make good to the plan all losses resulting from the alleged breaches of fiduciary duty, attorneys’ fees, and other injunctive and equitable relief. Based on the four separate complaints previously filed, the Company believes the allegations are without merit and intends to vigorously defend the claims.

On March 3, 2010, the Court entered an order consolidating three of the four cases and, on April 1, 2010, the plaintiffs filed a consolidated complaint. The consolidated complaint asserts the same claims as the previously-filed complaints but names as defendants certain former officers of the Company in addition to those current officers and directors that have already been named. The fourth case (Franklin) was consolidated with the first three cases on May 12, 2010.

The defendants moved to dismiss the consolidated complaint on June 1, 2010. The court granted the defendants’ motion to dismiss with respect to the claim that defendants breached their fiduciary duties by misrepresenting or failing to disclose information to plan participants but refused to dismiss the remainder of the plaintiffs’ claims.

On April 6, 2011, the court certified a class consisting of all 401(k) Plan participants or beneficiaries who held YRCW stock in their accounts between October 25, 2007 and the present. The parties recently agreed to a four month extension of all deadlines. The new discovery deadline is August 1, 2011, dispositive motions are due March 5, 2012 and the new trial date is July 6, 2012.

The ultimate outcome of this case is not determinable. Therefore, we have not recorded any liability for this matter.

 

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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 YRC Inc., New Penn Motor Express, Inc. and USF Holland Inc. (each a subsidiary of the Company and collectively, the “YRC Defendants”) and the International Brotherhood of Teamsters and the local Teamster unions party to the National Master Freight Agreement (“NMFA”) alleging violation of the NMFA due to modifications to the NMFA that have provided relief to the YRC Defendants without providing the same relief to ABF. The complaint seeks to have the modifications to the NMFA declared null and void and seeks damages of $750 million from the named defendants. The Company believes the allegations are without merit and intends to vigorously defend the claims.

On December 17, 2010, the U.S. District Court for the Western District of Arkansas dismissed the complaint. ABF appealed the dismissal on January 18, 2011 to the U.S. Court of Appeals for the 8^th Circuit. The appeal is now fully briefed, and the Court of Appeals heard oral argument on April 12, 2011. At oral argument, the Court indicated that it would try to decide the case by July 2011.

The ultimate outcome of this case is not determinable. Therefore, we have not recorded any liability for this matter.

Securities Class Action Suit

On February 7, 2011, a putative class action was filed by Bryant Holdings LLC in the United States District Court for the District of Kansas on behalf of purchasers of the Company’s securities between April 24, 2008 and November 2, 2009, inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934, as amended. The complaint alleges that, throughout the Class Period, the Company and certain of its officers failed to disclose material adverse facts about the Company’s true financial condition, business and prospects. Specifically, the complaint alleges that defendants’ statements were materially false and misleading because they misrepresented and overstated the financial condition of the Company and caused shares of the Company’s common stock to trade at artificially inflated levels throughout the Class Period. Bryant Holdings LLC seeks to recover damages on behalf of all purchasers of the Company’s securities during the Class Period. The Company believes the allegations are without merit and intends to vigorously defend the claims. On April 8, 2011, an individual (Stan Better) and a group of investors (including Bryant Holdings LLC) filed competing motions seeking to be named the lead plaintiff in the lawsuit. On May 6, 2011, the parties attempting to be named lead plaintiff filed a stipulation requesting that the Court appoint them as co-lead plaintiffs in the lawsuit. The parties have agreed that the Company will not be required to file an answer or other responsive pleading until such time as the Court has named the lead plaintiff and the lead plaintiff has filed an amended complaint.

The ultimate outcome of this case is not determinable. Therefore, we have not recorded any liability for this matter.

 

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13.	Guarantees of the 5.0% and 3.375% Net Share Settled Contingent Convertible Senior Notes Due 2023

In August 2003, YRC Worldwide issued 5.0% contingent convertible senior notes due 2023. In November 2003, we issued 3.375% contingent convertible senior notes due 2023. In December 2004, we completed exchange offers pursuant to which holders of the contingent convertible senior notes could exchange their notes for an equal amount of new net share settled contingent convertible senior notes. Substantially all notes were exchanged as part of the exchange offers. In connection with the net share settled contingent convertible senior notes, the following 100% owned subsidiaries of YRC Worldwide have issued guarantees in favor of the holders of the net share settled contingent convertible senior notes: YRC Inc., YRC Enterprise Services, Inc., Roadway LLC, and Roadway Next Day Corporation. Each of the guarantees is full and unconditional and joint and several. Effective August 4, 2010, Global.com Lines Inc. was released as a guarantor in connection with its merger with and into YRC Logistics Global, LLC. Effective August 13, 2010 YRC Logistics, Inc. and YRC Logistics Global, LLC were released as guarantors in connection with the sale of YRC Logistics.

The condensed consolidating financial statements are presented in lieu of separate financial statements and other related disclosures of the subsidiary guarantors and issuer because management does not believe that 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.

The following represents condensed consolidating financial information as of March 31, 2011 and December 31, 2010, with respect to the financial position and for the three months ended March 31, 2011 and 2010, for results of operations and cash flows of YRC Worldwide and its subsidiaries. The Parent column presents the financial information of YRC Worldwide, the primary obligor of the net share settled contingent convertible senior notes. The Guarantor Subsidiaries column presents the financial information of all guarantor subsidiaries of the net share settled contingent convertible senior 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 Yellow Roadway Receivables Funding Corporation, the special-purpose entity that is associated with our ABS agreement.

Condensed Consolidating Balance Sheets

 

March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Cash and cash equivalents		$	118			$	10			$	29			$	—			$	157
Intercompany advances receivable			—				(40	)			40				—				—
Accounts receivable, net			10				(8	)			497				(1	)			498
Prepaid expenses and other			(45	)			203				47				—				205
Total current assets			83				165				613				(1	)			860
Property and equipment			—				2,260				950				—				3,210
Less – accumulated depreciation			—				(1,340	)			(370	)			—				(1,710	)
Net property and equipment			—				920				580				—				1,500
Investment in subsidiaries			2,373				(9	)			119				(2,483	)			—
Receivable from affiliate			(548	)			490				58				—				—
Intangibles and other assets			322				184				108				(350	)			264
Total assets		$	2,230			$	1,750			$	1,478			$	(2,834	)		$	2,624
Intercompany advances payable		$	146			$	263			$	(209	)		$	(200	)		$	—
Accounts payable			29				80				58				(1	)			166
Wages, vacations and employees’ benefits			24				122				59				—				205
Other current and accrued liabilities			276				130				76				—				482
Current maturities of long-term debt			632				—				149				—				781
Total current liabilities			1,107				595				133				(201	)			1,634
Payable to affiliate			—				—				150				(150	)			—
Long-term debt, less current portion			335				—				—				—				335
Deferred income taxes, net			113				(90	)			97				—				120
Pension and postretirement			452				—				—				—				452
Claims and other liabilities			365				6				—				—				371
Commitments and contingencies
YRC Worldwide Inc. Shareholders’ equity (deficit)			(142	)			1,239				1,100				(2,483	)			(286	)
Non-controlling interest			—				—				(2	)			—				(2	)
Total Shareholders’ equity (deficit)			(142	)			1,239				1,098				(2,483	)			(288	)
Total liabilities and shareholders’ equity (deficit)		$	2,230			$	1,750			$	1,478			$	(2,834	)		$	2,624

 

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December 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Cash and cash equivalents		$	120			$	9			$	14			$	—			$	143
Intercompany advances receivable			—				(31	)			31				—				—
Accounts receivable, net			9				(5	)			438				—				442
Prepaid expenses and other			(46	)			190				39				—				183
Total current assets			83				163				522				—				768
Property and equipment			—				2,290				948				—				3,238
Less – accumulated depreciation			—				(1,331	)			(356	)			—				(1,687	)
Net property and equipment			—				959				592				—				1,551
Investment in subsidiaries			2,226				(13	)			174				(2,387	)			—
Receivable from affiliate			(549	)			503				46				—				—
Intangibles and other assets			327				185				112				(350	)			274
Total assets		$	2,087			$	1,797			$	1,446			$	(2,737	)		$	2,593
Intercompany advances payable		$	121			$	298			$	(219	)		$	(200	)		$	—
Accounts payable			20				75				52				—				147
Wages, vacations and employees’ benefits			25				120				51				—				196
Other current and accrued liabilities			259				126				68				—				453
Asset-backed securitization borrowings			—				—				123				—				123
Current maturities of long-term debt			99				—				1				—				100
Total current liabilities			524				619				76				(200	)			1,019
Payable to affiliate			—				—				150				(150	)			—
Long-term debt, less current portion			837				—				—				—				837
Deferred income taxes, net			75				(53	)			97				—				119
Pension and postretirement			448				—				—				—				448
Claims and other liabilities			354				6				—				—				360
Commitments and contingencies
YRC Worldwide Inc. Shareholders’ equity (deficit)			(151	)			1,225				1,125				(2,387	)			(188	)
Non-controlling interest			—				—				(2	)			—				(2	)
Total Shareholders’ equity (deficit)			(151	)			1,225				1,123				(2,387	)			(190	)
Total liabilities and shareholders’ equity		$	2,087			$	1,797			$	1,446			$	(2,737	)		$	2,593

 

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Condensed Consolidating Statements of Operations

 

For the three months ended March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating revenue		$	—			$	691			$	436			$	(4	)		$	1,123
Operating expenses:
Salaries, wages and employees’ benefits			—				430				250				—				680
Operating expenses and supplies			6				152				119				—				277
Purchased transportation			—				91				33				(4	)			120
Depreciation and amortization			—				30				19				—				49
Other operating expenses			2				40				26				—				68
Gains on property disposals, net			—				—				(3	)			—				(3	)
Total operating expenses			8				743				444				(4	)			1,191
Operating loss			(8	)			(52	)			(8	)			—				(68	)
Nonoperating (income) expenses:
Interest expense			32				—				7				—				39
Other, net			68				(25	)			(43	)			—				—
Nonoperating (income) expenses, net			100				(25	)			(36	)			—				39
Income (loss) from continuing operations before income taxes			(108	)			(27	)			28				—				(107	)
Income tax benefit			(5	)			—				—				—				(5	)
Net income (loss) from continuing operations			(103	)			(27	)			28				—				(102	)
Net income (loss) from discontinued operations, net of tax			—				—				—				—				—
Net income (loss)		$	(103	)		$	(27	)		$	28			$	—			$	(102	)
For the three months ended March 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating revenue		$	—			$	627			$	372			$	(12	)		$	987
Operating expenses:
Salaries, wages and employees’ benefits			5				506				250				—				761
Operating expenses and supplies			(4	)			138				103				—				237
Purchased transportation			—				83				23				(12	)			94
Depreciation and amortization			—				31				20				—				51
Other operating expenses			1				46				16				—				63
Losses on property disposals, net			—				4				5				—				9
Impairment charges			—				—				5				—				5
Total operating expenses			2				808				422				(12	)			1,220
Operating loss			(2	)			(181	)			(50	)			—				(233	)
Nonoperating (income) expenses:
Interest expense			32				1				8				—				41
Other, net			38				(9	)			(27	)			—				2
Nonoperating (income) expenses, net			70				(8	)			(19	)			—				43
Loss from continuing operations before income taxes			(72	)			(173	)			(31	)			—				(276	)
Income tax benefit			(6	)			—				—				—				(6	)
Net loss from continuing operations			(66	)			(173	)			(31	)			—				(270	)
Net income (loss) from discontinued operations, net of tax			—				2				(6	)			—				(4	)
Net loss		$	(66	)		$	(171	)		$	(37	)		$	—			$	(274	)

 

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Condensed Consolidating Statements of Cash Flows

 

For the three months ended March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating activities:
Net cash provided by (used in) operating activities		$	(52	)		$	12			$	(6	)		$	—			$	(46	)
Investing activities:
Acquisition of property and equipment			—				(5	)			(5	)			—				(10	)
Proceeds from disposal of property And equipment			—				11				—				—				11
Net cash provided by (used in) investing activities			—				6				(5	)			—				1
Financing activities:
Asset backed securitization borrowings, net			—				—				25				—				25
Issuance of long-term debt, net			38				—				—				—				38
Debt issuance cost			(4	)			—				—				—				(4	)
Intercompany advances / repayments			16				(17	)			1				—				—
Net cash provided by (used in) financing activities			50				(17	)			26				—				59
Net increase (decrease) in cash and cash equivalents			(2	)			1				15				—				14
Cash and cash equivalents, beginning of period			120				9				14				—				143
Cash and cash equivalents, end of period		$	118			$	10			$	29			$	—			$	157
For the three months ended March 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating activities:
Net cash provided by (used in) operating activities		$	39			$	(57	)		$	36			$	—			$	18
Investing activities:
Acquisition of property and equipment			—				(3	)			(1	)			—				(4	)
Proceeds from disposal of property And equipment			—				8				—				—				8
Net cash provided by (used in) investing activities			—				5				(1	)			—				4
Financing activities:
Asset backed securitization payments, net			—				—				(29	)			—				(29	)
Issuance (repayment) of long-term debt, net			112				(6	)			(45	)			—				61
Debt issuance cost			(7	)			—				—				—				(7	)
Equity issuance cost			(14	)			—				—				—				(14	)
Intercompany advances / repayments			(97	)			57				40				—				—
Net cash provided by (used in) financing activities			(6	)			51				(34	)			—				11
Net increase (decrease) in cash and cash equivalents			33				(1	)			1				—				33
Cash and cash equivalents, beginning of period			69				9				20				—				98
Cash and cash equivalents, end of period		$	102			$	8			$	21			$	—			$	131

 

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14.	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 our 6% convertible senior notes due 2014 (the “6% Notes”). In connection with the 6% Notes, the following 100% 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 Sales Corporation, USF Holland Inc., USF Reddaway Inc., USF Glen Moore Inc., YRC Logistics Services, Inc. and IMUA Handling Corporation. Each of the guarantees is full and unconditional and joint and several. Effective August 4, 2010, Global.com Lines Inc. was released as a guarantor in connection with its merger with and into YRC Logistics Global, LLC. Effective August 13, 2010, YRC Logistics, Inc. and YRC Logistics Global, LLC were released as guarantors in connection with the sale of YRC Logistics.

The condensed consolidating financial statements are presented in lieu of separate financial statements and other related disclosures of the subsidiary guarantors and issuer because management does 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.

The following represents condensed consolidating financial information as of March 31, 2011 and December 31, 2010, with respect to the financial position and for the three months ended March 31, 2011 and 2010, for results of operations and 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 Yellow Roadway Receivables Funding Corporation, the special-purpose entity that is associated with our ABS agreement.

Condensed Consolidating Balance Sheets

 

March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Cash and cash equivalents		$	118			$	12			$	27			$	—			$	157
Intercompany advances receivable			—				(46	)			46				—				—
Accounts receivable, net			10				(4	)			492				—				498
Prepaid expenses and other			(45	)			261				(11	)			—				205
Total current assets			83				223				554				—				860
Property and equipment			—				3,021				189				—				3,210
Less – accumulated depreciation			—				(1,616	)			(94	)			—				(1,710	)
Net property and equipment			—				1,405				95				—				1,500
Investment in subsidiaries			2,373				125				(15	)			(2,483	)			—
Receivable from affiliate			(548	)			841				(293	)			—				—
Intangibles and other assets			322				227				65				(350	)			264
Total assets		$	2,230			$	2,821			$	406			$	(2,833	)		$	2,624
Intercompany advances payable		$	146			$	215			$	(161	)		$	(200	)		$	—
Accounts payable			29				102				35				—				166
Wages, vacations and employees’ benefits			24				169				12				—				205
Other current and accrued liabilities			276				189				17				—				482
Current maturities of long-term debt			632				—				149				—				781
Total current liabilities			1,107				675				52				(200	)			1,634
Payable to affiliate			—				—				150				(150	)			—
Long-term debt, less current portion			335				—				—				—				335
Deferred income taxes, net			113				(3	)			10				—				120
Pension and postretirement			452				—				—				—				452
Claims and other liabilities			365				6				—				—				371
Commitments and contingencies
YRC Worldwide Inc. Shareholders; equity (deficit)			(142	)			2,143				196				(2,483	)			(286	)
Non-controlling interest			—				—				(2	)			—				(2	)
Total Shareholders’ equity (deficit)			(142	)			2,143				194				(2,483	)			(288	)
Total liabilities and shareholders’ equity (deficit)		$	2,230			$	2,821			$	406			$	(2,833	)		$	2,624

 

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December 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Cash and cash equivalents		$	120			$	10			$	13			$	—			$	143
Intercompany advances receivable			—				(38	)			38				—				—
Accounts receivable, net			9				2				431				—				442
Prepaid expenses and other			(46	)			240				(11	)			—				183
Total current assets			83				214				471				—				768
Property and equipment			—				3,050				188				—				3,238
Less – accumulated depreciation			—				(1,596	)			(91	)			—				(1,687	)
Net property and equipment			—				1,454				97				—				1,551
Investment in subsidiaries			2,226				130				31				(2,387	)			—
Receivable from affiliate			(549	)			840				(291	)			—				—
Intangibles and other assets			327				230				67				(350	)			274
Total assets		$	2,087			$	2,868			$	375			$	(2,737	)		$	2,593
Intercompany advances payable		$	121			$	269			$	(190	)		$	(200	)		$	—
Accounts payable			20				96				31				—				147
Wages, vacations and employees’ benefits			25				158				13				—				196
Other current and accrued liabilities			259				183				11				—				453
Asset-back securitization borrowings			—				—				123				—				123
Current maturities of long-term debt			99				—				1				—				100
Total current liabilities			524				706				(11	)			(200	)			1,019
Payable to affiliate			—				—				150				(150	)			—
Long-term debt, less current portion			837				—				—				—				837
Deferred income taxes, net			75				34				10				—				119
Pension and postretirement			448				—				—				—				448
Claims and other liabilities			354				6				—				—				360
Commitments and contingencies
YRC Worldwide Inc. Shareholders; equity (deficit)			(151	)			2,122				228				(2,387	)			(188	)
Non-controlling interest			—				—				(2	)			—				(2	)
Total Shareholders’ equity (deficit)			(151	)			2,122				226				(2,387	)			(190	)
Total liabilities and shareholders’ equity (deficit)		$	2,087			$	2,868			$	375			$	(2,737	)		$	2,593

 

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Condensed Consolidating Statements of Operations

 

For the three months ended March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating revenue		$	—			$	1,022			$	101			$	—			$	1,123
Operating expenses:
Salaries, wages and employees’ benefits			—				627				53				—				680
Operating expenses and supplies			6				248				23				—				277
Purchased transportation			—				101				19				—				120
Depreciation and amortization			—				45				4				—				49
Other operating expenses			2				62				4				—				68
Gains on property disposals, net			—				(3	)			—				—				(3	)
Total operating expenses			8				1,080				103				—				1,191
Operating loss			(8	)			(58	)			(2	)			—				(68	)
Nonoperating (income) expenses:
Interest expense			32				1				6				—				39
Other, net			68				(47	)			(21	)			—				—
Nonoperating (income) expenses, net			100				(46	)			(15	)			—				39
Income (loss) from continuing operations before income taxes			(108	)			(12	)			13				—				(107	)
Income tax benefit			(5	)			—				—				—				(5	)
Net income (loss) from continuing operations			(103	)			(12	)			13				—				(102	)
Net loss from discontinued operations, net of tax			—				—				—				—				—
Net income (loss)		$	(103	)		$	(12	)		$	13			$	—			$	(102	)
For the three months ended March 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating revenue		$	—			$	904			$	86			$	(3	)		$	987
Operating expenses:
Salaries, wages and employees’ benefits			5				701				55				—				761
Operating expenses and supplies			(4	)			221				20				—				237
Purchased transportation			—				84				13				(3	)			94
Depreciation and amortization			—				47				4				—				51
Other operating expenses			1				59				3				—				63
Losses on property disposals, net			—				7				2				—				9
Impairment charges			—				—				5				—				5
Total operating expenses			2				1,119				102				(3	)			1,220
Operating loss			(2	)			(215	)			(16	)			—				(233	)
Nonoperating (income) expenses:
Interest expense			32				2				7				—				41
Other, net			38				(21	)			(15	)			—				2
Nonoperating (income) expenses, net			70				(19	)			(8	)			—				43
Loss from continuing operations before income taxes			(72	)			(196	)			(8	)			—				(276	)
Income tax benefit			(6	)			—				—				—				(6	)
Net loss from continuing operations			(66	)			(196	)			(8	)			—				(270	)
Net loss from discontinued operations, net of tax			—				(4	)			—				—				(4	)
Net loss		$	(66	)		$	(200	)		$	(8	)		$	—			$	(274	)

 

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Condensed Consolidating Statements of Cash Flows

 

For the three months ended March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating activities:
Net cash provided by (used in) operating activities		$	(52	)		$	46			$	(40	)		$	—			$	(46	)
Investing activities:
Acquisition of property and equipment			—				(10	)			—				—				(10	)
Proceeds from disposal of property And equipment			—				11				—				—				11
Net cash provided (used in) by investing activities			—				1				—				—				1
Financing activities:
Asset backed securitization borrowings , net			—				—				25				—				25
Issuance of long-term debt, net			38				—				—				—				38
Debt issuance cost			(4	)			—				—				—				(4	)
Intercompany advances / repayments			16				(45	)			29				—				—
Net cash provided by (used in) financing activities			50				(45	)			54				—				59
Net increase (decrease) in cash and cash equivalents			(2	)			2				14				—				14
Cash and cash equivalents, beginning of period			120				10				13				—				143
Cash and cash equivalents, end of period		$	118			$	12			$	27			$	—			$	157

 

For the three months ended March 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating activities:
Net cash provided by (used in) operating activities		$	39			$	(36	)		$	15			$	—			$	18
Investing activities:
Acquisition of property and equipment			—				(4	)			—				—				(4	)
Proceeds from disposal of property and equipment			—				8				—				—				8
Net cash provided by investing activities			—				4				—				—				4
Financing activities:
Asset backed securitization payments, net			—				—				(29	)			—				(29	)
Issuance (repayment) of long-term debt, net			112				(51	)			—				—				61
Debt issuance cost			(7	)			—				—				—				(7	)
Equity issuance costs			(14	)			—				—				—				(14	)
Intercompany advances / repayments			(97	)			82				15				—				—
Net cash provided by (used in) financing activities			(6	)			31				(14	)			—				11
Net increase (decrease) in cash and cash equivalents			33				(1	)			1				—				33
Cash and cash equivalents, beginning of period			69				10				19				—				98
Cash and cash equivalents, end of period		$	102			$	9			$	20			$	—			$	131

 

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15.	Guarantees of the 10% Series A Convertible Senior Secured Notes and the 10% Series B Convertible Senior Secured Notes

On April 29, 2011, we entered into a support agreement with certain of our lenders pursuant to which the lenders agreed, subject to the terms and conditions set forth therein, to support our restructuring, including, among other things, a registered offer to exchange their claims under our credit agreement for newly issued debt securities and other exchange consideration. Such newly issued debt securities would include $140 million in aggregate principal amount of new 10% series A convertible senior secured notes and the participating lender’s purchase for cash of $100 million in aggregate principal amount of new 10% series B convertible senior secured notes both due 2015 (collectively the “New Convertible Secured Notes”). In connection with the New Convertible Secured Notes , the following 100% owned subsidiaries of YRC Worldwide would issue 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 Sales Corporation, USF Holland Inc., USF Reddaway Inc., USF Glen Moore Inc., YRC Logistics Services, Inc., IMUA Handling Corporation, USF Bestway Inc., USF Dugan Inc., USF RedStar LLC, USF Technology Services Inc., USF Canada Inc., USF Mexico Inc., USFreightways Corporation, YRC Mortgages, LLC, YRC Association Solutions Inc., YRC International Investments Inc., and Express Lane Services Inc. Each of the guarantees would be full and unconditional and joint and several.

The condensed consolidating financial statements are presented in lieu of separate financial statements and other related disclosures of the subsidiary guarantors and issuer because management does 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.

The following represents condensed consolidating financial information as of March 31, 2011 and December 31, 2010, with respect to the financial position and for the three months ended March 31, 2011 and 2010, for results of operations and 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 Yellow Roadway Receivables Funding Corporation, the special-purpose entity that is associated with our ABS agreement.

Condensed Consolidating Balance Sheets

 

March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Cash and cash equivalents		$	118			$	14			$	25			$	—			$	157
Intercompany advances receivable			—				(46	)			46				—				—
Accounts receivable, net			10				27				461				—				498
Prepaid expenses and other			(45	)			243				7				—				205
Total current assets			83				238				539				—				860
Property and equipment			—				3,151				59				—				3,210
Less – accumulated depreciation			—				(1,670	)			(40	)			—				(1,710	)
Net property and equipment			—				1,481				19				—				1,500
Investment in subsidiaries			2,373				119				(9	)			(2,483	)			—
Receivable from affiliate			(548	)			953				(405	)			—				—
Intangibles and other assets			322				269				23				(350	)			264
Total assets		$	2,230			$	3,060			$	167			$	(2,833	)		$	2,624
Intercompany advances payable		$	146			$	215			$	(161	)		$	(200	)		$	—
Accounts payable			29				108				29				—				166
Wages, vacations and employees’ benefits			24				178				3				—				205
Other current and accrued liabilities			276				192				14				—				482
Current maturities of long-term debt			632				—				149				—				781
Total current liabilities			1,107				693				34				(200	)			1,634
Payable to affiliate			—				150				—				(150	)			—
Long-term debt, less current portion			335				—				—				—				335
Deferred income taxes, net			113				—				7				—				120
Pension and postretirement			452				—				—				—				452
Claims and other liabilities			365				6				—				—				371
Commitments and contingencies
YRC Worldwide Inc. Shareholders’ equity (deficit)			(142	)			2,211				128				(2,483	)			(286	)
Non-controlling interest			—				—				(2	)			—				(2	)
Total Shareholders’ equity (deficit)			(142	)			2,211				126				(2,483	)			(288	)
Total liabilities and shareholders’ equity (deficit)		$	2,230			$	3,060			$	167			$	(2,833	)		$	2,624

 

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December 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Cash and cash equivalents		$	120			$	9			$	14			$	—			$	143
Intercompany advances receivable			—				(38	)			38				—				—
Accounts receivable, net			9				31				402				—				442
Prepaid expenses and other			(46	)			222				7				—				183
Total current assets			83				224				461				—				768
Property and equipment			—				3,180				58				—				3,238
Less – accumulated depreciation			—				(1,649	)			(38	)			—				(1,687	)
Net property and equipment			—				1,531				20				—				1,551
Investment in subsidiaries			2,226				145				16				(2,387	)			—
Receivable from affiliate			(549	)			946				(397	)			—				—
Intangibles and other assets			327				274				23				(350	)			274
Total assets		$	2,087			$	3,120			$	123			$	(2,737	)		$	2,593
Intercompany advances payable		$	121			$	269			$	(190	)		$	(200	)		$	—
Accounts payable			20				100				27				—				147
Wages, vacations and employees’ benefits			25				167				4				—				196
Other current and accrued liabilities			259				186				8				—				453
Asset-back securitization borrowings			—				—				123				—				123
Current maturities of long-term debt			99				—				1				—				100
Total current liabilities			524				722				(27	)			(200	)			1,019
Payable to affiliate			—				150				—				(150	)			—
Long-term debt, less current portion			837				—				—				—				837
Deferred income taxes, net			75				38				6				—				119
Pension and postretirement			448				—				—				—				448
Claims and other liabilities			354				6				—				—				360
Commitments and contingencies
YRC Worldwide Inc. Shareholders’ equity (deficit)			(151	)			2,204				146				(2,387	)			(188	)
Non-controlling interest			—				—				(2	)			—				(2	)
Total Shareholders’ equity (deficit)			(151	)			2,204				144				(2,387	)			(190	)
Total liabilities and shareholders’ equity (deficit)		$	2,087			$	3,120			$	123			$	(2,737	)		$	2,593

 

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Condensed Consolidating Statements of Operations

 

For the three months ended March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating revenue		$	—			$	1,080			$	43			$	—			$	1,123
Operating expenses:
Salaries, wages and employees’ benefits			—				663				17				—				680
Operating expenses and supplies			6				260				11				—				277
Purchased transportation			—				106				14				—				120
Depreciation and amortization			—				48				1				—				49
Other operating expenses			2				64				2				—				68
Gains on property disposals, net			—				(3	)			—				—				(3	)
Total operating expenses			8				1,138				45				—				1,191
Operating loss			(8	)			(58	)			(2	)			—				(68	)
Nonoperating (income) expenses:
Interest expense			32				1				6				—				39
Other, net			68				(53	)			(15	)			—				—
Nonoperating (income) expenses, net			100				(52	)			(9	)			—				39
Income (loss) from continuing operations before income taxes			(108	)			(6	)			7				—				(107	)
Income tax benefit			(5	)			—				—				—				(5	)
Net income (loss) from continuing operations			(103	)			(6	)			7				—				(102	)
Net loss from discontinued operations, net of tax			—				—				—				—				—
Net income (loss)		$	(103	)		$	(6	)		$	7			$	—			$	(102	)
For the three months ended March 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating revenue		$	—			$	955			$	35			$	(3	)		$	987
Operating expenses:
Salaries, wages and employees’ benefits			5				739				17				—				761
Operating expenses and supplies			(4	)			232				9				—				237
Purchased transportation			—				89				8				(3	)			94
Depreciation and amortization			—				49				2				—				51
Other operating expenses			1				61				1				—				63
Losses on property disposals, net			—				8				1				—				9
Impairment charges			—				2				3				—				5
Total operating expenses			2				1,180				41				(3	)			1,220
Operating loss			(2	)			(225	)			(6	)			—				(233	)
Nonoperating (income) expenses:
Interest expense			32				2				7				—				41
Other, net			38				(22	)			(14	)			—				2
Nonoperating (income) expenses, net			70				(20	)			(7	)			—				43
Income (loss) from continuing operations before income taxes			(72	)			(205	)			1				—				(276	)
Income tax benefit			(6	)			—				—				—				(6	)
Net income (loss) from continuing operations			(66	)			(205	)			1				—				(270	)
Net loss from discontinued operations, net of tax			—				(4	)			—				—				(4	)
Net income (loss)		$	(66	)		$	(209	)		$	1			$	—			$	(274	)

 

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Condensed Consolidating Statements of Cash Flows

 

For the three months ended March 31, 2011 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating activities:
Net cash provided by (used in) operating activities		$	(52	)		$	56			$	(50	)		$	—			$	(46	)
Investing activities:
Acquisition of property and equipment			—				(10	)			—				—				(10	)
Proceeds from disposal of property And equipment			—				11				—				—				11
Net cash provided by investing activities			—				1				—				—				1
Financing activities:
Asset backed securitization borrowings , net			—				—				25				—				25
Issuance of long-term debt, net			38				—				—				—				38
Debt issuance cost			(4	)			—				—				—				(4	)
Intercompany advances / repayments			16				(52	)			36				—				—
Net cash provided by (used in) financing activities			50				(52	)			61				—				59
Net increase (decrease) in cash and cash equivalents			(2	)			5				11				—				14
Cash and cash equivalents, beginning of period			120				9				14				—				143
Cash and cash equivalents, end of period		$	118			$	14			$	25			$	—			$	157

 

For the three months ended March 31, 2010 (in millions)		Parent				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Eliminations				Consolidated
Operating activities:
Net cash provided by (used in) operating activities		$	39			$	(38	)		$	17			$	—			$	18
Investing activities:
Acquisition of property and equipment			—				(4	)			—				—				(4	)
Proceeds from disposal of property and equipment			—				8				—				—				8
Net cash provided by investing activities			—				4				—				—				4
Financing activities:
Asset backed securitization payments, net			—				—				(29	)			—				(29	)
Issuance (repayment) of long-term debt, net			112				(51	)			—				—				61
Debt issuance cost			(7	)			—				—				—				(7	)
Equity issuance costs			(14	)			—				—				—				(14	)
Intercompany advances / repayments			(97	)			86				11				—				—
Net cash provided by (used in) financing activities			(6	)			35				(18	)			—				11
Net increase (decrease) in cash and cash equivalents			33				1				(1	)			—				33
Cash and cash equivalents, beginning of period			69				10				19				—				98
Cash and cash equivalents, end of period		$	102			$	11			$	18			$	—			$	131

 

33