Replies to post #737 on YRC Worldwide Inc (YRCW)

[dmans]

YRC Ends Year with $98 Million in Cash
William B. Cassidy | Feb 5, 2010 7:38PM GMT
The Journal of Commerce Online - News Story
LTL| Trucking| United States
Company slashes expenses, takes other steps to improve liquidity
YRC Worldwide’s liquidity fell steeply throughout the year, as the company’s cash and cash equivalents plummeted by two-thirds throughout 2009.

However, the nation’s largest trucking company expects new banking agreements, cost cuts and business gains will help build its liquidity back up in 2010.

YRC will get some extra help with its liquidity this quarter from Uncle Sam. The trucking company will receive an $85 million refund from its 2009 taxes.

“We expect to receive the refund during the first quarter of 2010 and use it for operating liquidity,” Shiela Taylor, chief financial officer, told analysts today.

The timing couldn’t be better: YRC ended the year with $98 million in cash.

That’s a 70 percent drop from Dec. 31, 2008, when YRC had $325 million in cash, and $65 million less than the $163 million YRC had Sept. 30.

One thing YRC didn’t have at the end of the third quarter was access to $160 million from its revolver reserve, something it now has thanks to a new banking agreement.

That pact will save YRC more than $100 million this year by deferring interest payments until the end of 2011. The agreement also lowered YRC’s minimum liquidity requirement to $75 million.

Liquidity was a prime issue for YRC throughout 2009, with some analysts warning the company could run out of cash to cover basic expenses in the fourth quarter. That didn’t happen though the company did burn through $65 million in the quarter.

To shore up its liquidity and cut losses, YRC Worldwide took an axe to costs wherever it could. It cut operating expenses 38.8 percent in 2009 and 45.2 percent in the fourth quarter. Wages and salaries were cut 29.6 percent for the year and 44.8 percent in the last quarter.

Company officials said they took extraordinary steps to eliminate debt and free up cash in 2009, including the $464 million debt-for-equity swap with bondholders completed Dec. 30 and a $223 million reduction in bank debt.

Chairman and CEO William D. Zollars called that a “self-help liquidity solution” worth more than $600 million. He also pointed to agreements with the Teamsters union that will save the company more than $1 billion over the life of the new labor contract and the sale of $130 million in excess property.