<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________________
Commission file number 0-12255
YELLOW CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 48-0948788
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10990 Roe Avenue, P.O. Box 7563, Overland Park, Kansas 66207
- --------------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(913) 696-6100
----------------------------------------------------
(Registrant's telephone number, including area code)
No Changes
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31, 2000
----- -----------------------------
Common Stock, $1 Par Value 25,237,899 shares
<PAGE> 2
YELLOW CORPORATION
INDEX
Item Page
- ---- ----
PART I
1. Financial Statements
Consolidated Balance Sheets -
March 31, 2000 and December 31, 1999 3
Statements of Consolidated Operations -
Three Months Ended March 31, 2000 and 1999 4
Statements of Consolidated Cash Flows -
Three Months Ended March 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II
6. Exhibits and Reports on Form 8-K 15
Signatures 19
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
Yellow Corporation and Subsidiaries
(Amounts in thousands except share data)
(Unaudited)
March 31, December 31,
2000 1999
--------- ------------
ASSETS
CURRENT ASSETS:
Cash $ 28,600 $ 22,581
Accounts receivable 285,403 265,302
Prepaid expenses and other 44,897 64,009
----------- -----------
Total current assets 358,900 351,892
----------- -----------
PROPERTY AND EQUIPMENT:
Cost 2,107,166 2,093,470
Less - Accumulated depreciation 1,231,376 1,226,698
----------- -----------
Net property and equipment 875,790 866,772
----------- -----------
GOODWILL AND OTHER ASSETS 105,186 106,919
----------- -----------
$ 1,339,876 $ 1,325,583
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and checks outstanding $ 137,724 $ 135,177
Wages and employees' benefits 167,115 172,471
Other current liabilities 126,505 124,769
Current maturities of long-term debt 2,243 2,392
----------- -----------
Total current liabilities 433,587 434,809
----------- -----------
OTHER LIABILITIES:
Long-term debt 273,765 274,015
Deferred income taxes 80,298 79,005
Claims, insurance and other 127,364 128,374
----------- -----------
Total other liabilities 481,427 481,394
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value 29,771 29,437
Capital surplus 20,640 16,063
Retained earnings 464,654 454,177
Accumulated other comprehensive income (2,228) (2,322)
Treasury stock (87,975) (87,975)
----------- -----------
Total shareholders' equity 424,862 409,380
----------- -----------
$ 1,339,876 $ 1,325,583
=========== ===========
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
STATEMENTS OF CONSOLIDATED OPERATIONS
Yellow Corporation and Subsidiaries
For the Three Months Ended March 31, 2000 and 1999
(Amounts in thousands except per share data)
(Unaudited)
2000 1999
-------- --------
OPERATING REVENUE $882,086 $727,498
-------- --------
OPERATING EXPENSES:
Salaries, wages and benefits 547,903 473,557
Operating expenses and supplies 146,992 113,270
Operating taxes and licenses 28,193 23,109
Claims and insurance 20,966 16,077
Depreciation and amortization 31,460 24,659
Purchased transportation 81,285 65,074
-------- --------
Total operating expenses 856,799 715,746
-------- --------
INCOME FROM OPERATIONS 25,287 11,752
-------- --------
NONOPERATING EXPENSES:
Interest expense 4,885 2,853
Other, net 1,649 666
-------- --------
Nonoperating expenses, net 6,534 3,519
-------- --------
INCOME BEFORE INCOME TAXES 18,753 8,233
INCOME TAX PROVISION 8,276 3,458
-------- --------
NET INCOME $ 10,477 $ 4,775
======== ========
AVERAGE SHARES OUTSTANDING-BASIC 25,154 25,411
======== ========
AVERAGE SHARES OUTSTANDING-DILUTED 25,299 25,615
======== ========
BASIC EARNINGS PER SHARE: $ .42 $ .19
======== ========
DILUTED EARNINGS PER SHARE: $ .41 $ .19
======== ========
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
STATEMENTS OF CONSOLIDATED CASH FLOWS
Yellow Corporation and Subsidiaries
For the Three Months Ended March 31, 2000 and 1999
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net cash from operating activities $ 39,163 $ 49,969
-------- --------
INVESTING ACTIVITIES:
Acquisition of property and equipment (39,161) (32,308)
Proceeds from disposal of property and equipment 1,530 3,765
-------- --------
Net cash used in investing activities (37,631) (28,543)
-------- --------
FINANCING ACTIVITIES:
Treasury stock purchases -- (11,196)
Proceeds from stock options and other, net 4,911 202
Decrease in long-term debt (424) (271)
-------- --------
Net cash provide by (used in) financing activities 4,487 ( 11,265)
-------- --------
NET INCREASE IN CASH 6,019 10,161
CASH, BEGINNING OF PERIOD 22,581 25,522
-------- --------
CASH, END OF PERIOD $ 28,600 $ 35,683
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net $ 2,732 $ 960
======== ========
Interest paid $ 2,727 $ 519
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Yellow Corporation and Subsidiaries
(unaudited)
1. The accompanying consolidated financial statements include the accounts of
Yellow Corporation and its wholly owned subsidiaries (the company) and
have been prepared by the company, without audit by independent public
accountants, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all normal recurring
adjustments necessary for a fair statement of the results of operations
for the interim periods included 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 such rules and
regulations. Accordingly, the accompanying consolidated financial
statements should be read in conjunction with the consolidated financial
statements included in the company's 1999 Annual Report to Shareholders.
2. The company provides freight transportation services primarily to the
less-than-truckload (LTL) market in North America through its
subsidiaries, Yellow Freight System, Inc. (Yellow Freight), Saia Motor
Freight Line, Inc. (Saia), WestEx, Inc. (WestEx) and Action Express, Inc.
(Action). The company acquired Jevic Transportation, Inc. (Jevic) on July
9, 1999. Jevic is a hybrid LTL and TL carrier operating principally in the
Northeast. The company provides fully integrated ocean, land and air
transportation solutions through Yellow Global, Inc. Yellow Technologies,
Inc. is a subsidiary that provides information technology and other
services to the company and its subsidiaries. For the quarter ended March
31, 2000 Yellow Freight comprised approximately 77 percent of total
revenue while Saia comprised approximately 10 percent and Jevic
approximately 9 percent of total revenue.
3. The company reports financial and descriptive information about its
reportable operating segments on a basis consistent with that used
internally for evaluating segment operating performance and allocating
resources to segments.
The company has three reportable segments that are strategic business
units that offer different products and services. Yellow Freight is a
unionized carrier that provides comprehensive national LTL service as well
as international service throughout North America. Saia is a regional LTL
carrier that provides overnight and second-day service in twelve
southeastern states and Puerto Rico.
6
<PAGE> 7
Jevic is a hybrid regional heavy LTL and TL carrier that provides service
primarily in the Northeastern states. The segments are managed separately
because each requires different operating, technology and marketing
strategies and processes. The company evaluates performance primarily on
operating income and return on capital.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies in the company's 1999
Annual Report to Shareholders. The company also charges a trade name fee
to Yellow Freight (1% of revenue) for use of the company's trademark.
Interest and intersegment transactions are recorded at current market
rates. Income taxes are allocated in accordance with a tax sharing
agreement in proportion to each segment's contribution to the parent's
consolidated tax status. The following table summarizes the company's
continuing operations by business segment (in thousands):
<TABLE>
<CAPTION>
Corporate
Yellow Freight Saia Jevic and Other Consolidated
-------------- --------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Y-T-D March 31, 2000
Operating revenue $ 680,369 $ 90,445 $ 78,415 $ 32,857 $ 882,086
Income from operations 21,656 3,773 4,017 (4,159) 25,287
Identifiable assets 753,973 232,040 258,080 95,783 1,339,876
Y-T-D March 31, 1999
Operating revenue $ 612,786 $ 86,253 NA $ 28,459 $ 727,498
Income from operations 8,951 5,043 NA (2,242) 11,752
Identifiable assets 798,955 222,088 NA 53,937 1,074,980
</TABLE>
4. On July 9, 1999 the company completed a cash tender offer for all of the
common stock of Jevic Transportation, Inc. at $14 share. The transaction
was accounted for as a purchase. The aggregate purchase price of the
stock, including vested stock options and transaction costs was
approximately $160.8 million, net of an anticipated $4.3 million tax
benefit relating to the cost of the stock options. Transaction costs
relate primarily to legal and professional fees (in millions).
Purchase Price:
Common Stock tendered $149.9
Stock options, net of tax benefit 7.0
Transaction fees 3.9
------
$160.8
------
The total transaction was approximately $200 million, including assumption
of debt. The transaction was accounted for under purchase accounting and
the excess of purchase price over fair value of assets acquired was
allocated to goodwill and is being amortized over 40 years. Accordingly,
the results of Jevic's operations have been included in the company's
condensed financial statements for periods after July 10, 1999. The
acquisition was financed using Yellow Corporation's existing credit
facilities.
7
<PAGE> 8
The following pro forma financial information for the company gives effect
to the Jevic acquisition as if it had occurred on January 1, 1999. These
pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of the results of operations which actually
would have resulted had the acquisitions occurred on the date indicated,
or which may result in the future. (Unaudited pro forma financial
information is in thousands except per share data.)
For the Three Months
Ended March 31
--------------------
2000 1999
-------- --------
Revenue $882,086 $793,330
Net income 10,477 5,308
Diluted Per Share Data:
Net income $ 0.41 $ 0.21
5. The difference between average common shares outstanding used in the
computation of basic earnings per share and fully diluted earnings per
share is attributable to outstanding common stock options.
6. The company's comprehensive income includes net income and foreign
currency translation adjustments. Comprehensive income for the first
quarter ended March 31, 2000 and 1999 was $10.6 million and $5.7 million,
respectively.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
FINANCIAL CONDITION
March 31, 2000 Compared to December 31, 1999
The company's liquidity needs arise primarily from capital investment in new
equipment, land and structures and information technology, as well as funding
working capital requirements. To ensure short-term and longer-term liquidity,
the company maintains capacity under a bank credit agreement and an asset backed
securitization (ABS) agreement involving Yellow Freight's accounts receivables.
Working capital is reduced through Yellow Freight's asset backed securitization
agreement (ABS). Accounts receivable at March 31, 2000 and December 31, 1999 are
net of $130 million and $135 million of receivables sold under the ABS
agreement. Including the effects of the ABS transactions, working capital
increased $8.2 million during the first three months of 2000, resulting in a
working capital deficit of $74.7 million at March 31, 2000 compared to a $82.9
million working capital deficit at December 31,1999. Increases in accounts
receivable, excluding the effects of ABS transactions were largely offset by
decreases in prepaid expenses and increases in accounts payable and checks
outstanding. The company can operate with a deficit working capital position
because of rapid turnover of accounts receivable, effective cash management and
ready access to funding.
On July 9, 1999 the company completed a cash tender offer for all of the common
stock of Jevic Transportation, Inc. The aggregate purchase price of the stock,
including transaction costs, was approximately $164.5 million, net of cash
acquired. Including assumption of debt, the total transaction was approximately
$200 million. The acquisition was financed under the company's existing $300
million credit facility and the company's ABS agreement. These facilities
provide adequate capacity to fund working capital and capital expenditures
requirements. Net capital expenditures for the first three months of 2000 were
$37.6 million. Subject to ongoing review, total net capital spending for 2000 is
expected to total approximately $177 million.
9
<PAGE> 10
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 2000 and 1999
Net income for the quarter ended March 31, 2000 was $10.5 million or $.41 per
share (diluted), a 116 percent improvement over earnings per share in the 1999
first quarter. Net income for the quarter ended March 31, 1999 was $4.8 million
or $.19 per share (diluted). Operating revenue for the 2000 first quarter was
$882.1 million, an increase of 21 percent over operating revenue of $727.5
million for the 1999 first quarter. First quarter 1999 results do not include
contributions from Jevic, which was acquired in July 1999.
Yellow Freight System, the company's national LTL segment had operating income
of $21.7 million for the first quarter of 2000 an increase of 142% over
operating income of $9.0 million in the first quarter of 1999. Yellow Freight's
first quarter 2000 operating revenue was $680.4 million, a 11 percent increase
over operating revenue of $612.8 million in the first quarter of 1999. Yellow
Freight's operating ratio was 96.8 in the first quarter of 2000 versus 98.5 in
the first quarter of 1999.
First quarter less-than-truckload (LTL) tonnage increased by 7.8 percent over
the 1999 quarter and the number of LTL shipments was up 5.4 percent. First
quarter revenue per LTL shipment improved by 6.0 percent over the 1999 first
quarter. Yellow Freight continues to benefit from a 5.5 percent general rate
increase that was effective for the fall 1999 shipping season. The general rate
increase created a pricing benchmark for favorable corporate contract renewals
throughout the fourth quarter of 1999 and first quarter of 2000.
Yellow Freight also benefited from a fuel surcharge that substantially offset
rapidly rising costs of diesel fuel throughout the 2000 first quarter. The
surcharge is pegged to the U.S. National Average Fuel Index and rises or falls
in .5 percent increments for each 5-cent increase or decrease in the index. The
surcharge stood at 1.5 percent at the beginning of the 2000 first quarter and
had reached a peak of 4 percent by March 31.
Business volume for the quarter was strong because of the continued robust
economy, wide-ranging service improvements and a growing service portfolio. On
March 12, Yellow implemented one of the most successful changes of operations in
its history, completing a high-speed sleeper team network and introducing an
all-new Corridor Hub in the Cleveland area. These changes will allow Yellow
Freight to increase its 2-day service offering to 50 percent of their total
lanes by year-end, while greatly improving reliability and flexibility.
10
<PAGE> 11
During the 2000 first quarter, the four carriers comprising the Yellow
Corporation Regional Carrier Group - Saia Motor Freight Line, Jevic
Transportation, WestEx and Action Express - reported combined operating income
of $7.5 million, up 61 percent from $4.7 million in the 1999 first quarter.
Revenue for the regional group was $196.4 million, up 77 percent from $110.9
million.
Saia reported first quarter 2000 revenue of $90.4 million and operating income
was $3.8 million, compared with revenue of $86.3 million and operating income of
$5.0 million in the 1999 first quarter. The 2000 first quarter operating ratio
was 95.8, compared with 94.2 in the year-earlier quarter. First quarter 2000
results were helped by strong productivity trends, but hurt by higher accident
and health care costs as well as some January weather effects.
Saia has implemented significant service quality improvements that position the
company for greater revenue growth and higher operating margins over the balance
of the year.
Jevic, which was acquired July 9, 1999, reported first quarter revenue of $78.4
million and operating income of $4.0 million. As a stand-alone company in the
first quarter of 1999, Jevic reported revenue of $65.8 million and operating
income of $4.9 million. The 2000 first quarter operating ratio for Jevic was
94.9, compared with 92.5 in the 1999 first quarter. Current quarter operating
income includes $500,000 in acquisition goodwill amortization that was not
applicable to the 1999 first quarter results.
Jevic was affected more than the company's other subsidiaries by truckload type
trends, specifically higher fuel prices and some driver shortages, that
increased operating expenses.
WestEx reported first quarter revenue of $18.0 million, up 10 percent from $16.3
million in the 1999 first quarter. WestEx had a first quarter 2000 operating
ratio of 100.7. Action Express reported first quarter revenue of $9.6 million,
up 15 percent from $8.3 million in the 1999 first quarter. Action Express had a
first quarter operating ratio of 101.1.
During the first quarter of 2000, market fuel prices rose above the company's
fuel hedge contract prices, resulting in a benefit that partially offset the
increased fuel cost. The company remains partially hedged through the second
quarter of 2000.
11
<PAGE> 12
Corporate and other business development expenses were $3.9 million in the 2000
first quarter, up from $1.9 million in the first quarter of 1999. The company
continues to evaluate a number of strategic initiatives to increase shareholder
value. Corporate and other business development expenses were $2.3 million in
the 1999 third quarter, up from $0.9 million in the 1998 third quarter. The
company continues to evaluate a variety of strategic initiatives to increase
shareholder value.
Nonoperating expenses increased to $6.5 million in the first quarter of 2000
compared to $3.5 million in the first quarter of 1999 due to increased financing
costs resulting primarily from the Jevic acquisition. The effective tax rate was
44.1 percent in the 2000 first quarter compared to 42.0 percent in the 1999
first quarter.
Year 2000:
The company began its Year 2000 project in 1995. The company was able to
implement process modifications that provided greater efficiency and flexibility
in remediating code, while working around the system needs of the business.
The early start coupled with the efficient process allowed the company to keep
pace with demand for new IT development. As a result of these efforts, the
transition from 1999 to 2000 proved to be uneventful. There were no significant
projects deferred as a result of the Year 2000 remediation effort.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The company is exposed to a variety of market risks, including the effects of
interest rates, fuel prices and foreign currency exchange rates. To ensure
adequate funding through seasonal business cycles and minimize overall borrowing
costs, the company utilizes a variety of both fixed rate and variable rate
financial instruments with varying maturities. At March 31, 2000 approximately
64% percent of the company's long-term financing including ABS is at variable
rates with the balance at fixed rates. The company uses interest rate swaps to
hedge a portion of its exposure to variable interest rates.
The company uses swaps as hedges in order to manage a portion of its exposure to
variable diesel prices. These agreements provide protection from rising fuel
prices, but limit the ability to benefit from price decreases below the purchase
price of the agreement. The swap transactions are generally based on the price
of heating oil. Based on historical information, the company believes the
correlation between the market prices of diesel fuel and heating oil is highly
effective.
12
<PAGE> 13
The company's revenues and operating expenses, assets and liabilities of its
Canadian and Mexican subsidiaries are denominated in foreign currencies, thereby
creating exposures to changes in exchange rates, however the risks related to
foreign currency exchange rates are not material to the company's consolidated
financial position or results of operations.
The table below provides information about the company's debt instruments
(including off balance sheet asset backed securitzation (ABS)) and interest rate
swaps as of March 31, 2000. For debt obligations the table presents principal
cash flows (in millions) and related weighted average interest rates by
contractual maturity dates. Medium-term notes included in fixed rate debt
maturing within one year, and intended to be refinanced are classified as
long-term in the consolidated balance sheet. For interest rate swaps the table
presents notional amounts (in millions) and weighted average interest rates by
contractual maturity. Weighted average variable rates are based on the 30-day
LIBOR rate at March 31, 2000.
Expected Maturity Date
<TABLE>
<CAPTION>
There- Fair
2000 2001 2002 2003 2004 after Total Value
---- ---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt Obligations
Fixed Rate Debt $ 28.9 $ 7.3 $ 22.22 $ 19.5 $ 16.3 $ 53.1 $ 147.3 $143.8
Ave. Int. Rate 6.75% 8.24% 7.35% 6.29% 6.62% 6.97%
Var. Rate Debt $ 1.1 $ 101.5 $ 5.8 $ 5.1 $ 0.2 $ 15.0 $ 128.7 $128.7
Ave. Int. Rate 6.86% 6.35% 6.78% 4.34% 8.28% 6.11%
Off Bal. Sheet -
ABS $ 130.0 $ 130.0 $130.0
Ave. Int. Rate 6.10%
Interest Rate
Derivatives:
Variable to fixed:
Notional Amount $ 1.1 $ 1.5 $ 5.8 $ 0.1 $ 0.2 $ 4.6 $ 13.3 $ 13.2
Average Pay
Rate (fixed) 5.81% 5.81% 5.70% 7.65% 7.65% 7.65%
Average Receive
Rate (variable) 6.86% 6.86% 6.78 8.28% 8.28% 8.28%
</TABLE>
The following table provides information about the company's diesel fuel hedging
instruments that are sensitive to changes in commodity prices. The table
presents notional amounts in gallons and the weighted average contract price by
contractual maturity date as of March 31, 2000. The company maintained fuel
inventories for use in normal operations at March 31, 2000, which were not
material to the company's financial position and represented no significant
market exposure.
13
<PAGE> 14
Expected Maturity
Apr.-Jul.
------------------------
2000 Total
---------- -----------
Heating Oil Swaps:
Gallons (in millions) 15.2 15.2
Weighted Average Price per Gallon $ .4513 $ .4513
Fair Value (in millions) $ 3.2
Statements contained herein that are not purely historical are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding the company's expectations, hopes, beliefs
and intentions on strategies regarding the future. It is important to note that
the company's actual future results could differ materially from those projected
in such forward-looking statements because of a number of factors, including but
not limited to inflation, labor relations, inclement weather, competitor pricing
activity, expense volatility and a downturn in general economic activity.
14
<PAGE> 15
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting of Stockholders on April 20, 2000
(b) The following directors were elected with the indicated number of votes
set forth below.
For Withheld
---------- -----------
Klaus E. Agthe 20,912,634 560,294
Cassandra C. Carr 21,217,524 255,404
Howard M. Dean 21,170,302 302,626
Ronald T. LeMay 21,190,965 281,963
John C. McKelvey 21,216,763 256,165
William L. Trubeck 21,218,701 254,227
Carl W. Vogt 21,218,501 254,427
William D. Zollars 21,214,343 258,585
(a) The appointment of Arthur Andersen LLP as independent public accountants
of the company for 2000 was voted on and approved at the meeting by the
following vote. For: 21,361,164, Against: 85,764, Abstention: 26,000.
(b) The ratification of the company's 1999 Stock Option Plan was approved at
the meeting by the following vote. For: 18,706,697, Against: 2,704,487,
Abstention: 61,340.
(c) The increase in the number of common shares reserved for the Board of
Directors Stock Compensation Plan was approved at the meeting by the
following vote. For: 17,542,645, Against: 3,802,622, Abstention:
127,609.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10a)- Amendment to William D. Zollars Employment Agreement
(10b)- Employment Agreement of H. A. Trucksess
(27) - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
On May 2, 2000 Yellow Corporation announced the resignation of Hiram
Cox, Chief Financial Officer and the appointment of H. A. Trucksess,
III as interim Chief Financial Officer of the company.
15
<PAGE> 16
Yellow Freight System, Inc.
Financial Information
For the Quarter Ended March 31
(Amounts in thousands)
First Quarter
------------------
2000 1999 %
------- -------- ----
Operating revenue 680,369 612,786 11.0
Operating income 21,656 8,951
Operating ratio 96.8 98.5
Total assets at March 31 753,973 798,955
<TABLE>
<CAPTION>
First Quarter
First Quarter Amount/Workday
------------------------ -------------------------
2000 1999 % 2000 1999 %
------- ---------- ----- --------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Workdays (65) (63)
Financial statement LTL 630,463 564,225 11.7 9,699.4 8,956.0 8.3
revenue TL 53,371 49,420 8.0 821.1 784.4 4.7
Other (3,465) (859) NA (53.3) (13.6) NA
Total 680,369 612,786 11.0 10,467.2 9,726.8 7.6
Revenue excluding LTL 630,463 564,225 11.7 9,699.4 8,956.0 8.3
revenue recognition TL 53,371 49,420 8.0 821.1 784.4 4.7
adjustment Other (2) (7) NA 0.0 (0.1) NA
Total 683,832 613,638 11.4 10,520.5 9,740.3 8.0
Tonnage LTL 1,781 1,653 7.8 27.40 26.23 4.5
TL 350 334 4.6 5.38 5.30 1.4
Total 2,131 1,987 7.3 32.78 31.53 4.0
Shipments LTL 3,587 3,405 5.4 55.19 54.06 2.1
TL 48 45 5.0 0.74 0.72 1.8
Total 3,635 3,450 5.4 55.93 54.78 2.1
Revenue/cwt. LTL 17.70 17.07 3.7
TL 7.63 7.39 3.2
Total 16.05 15.44 3.9
Revenue/shipment LTL 175.74 165.72 6.0
TL 1,114.95 1,084.54 2.8
Total 188.10 177.86 5.8
</TABLE>
16
<PAGE> 17
Saia Motor Freight Line, Inc.
Financial Information
For the Quarter Ended March 31
(Amounts in thousands)
First Quarter
-------------------
2000 1999 %
------------------- ---
Operating revenue 90,445 86,253 4.9
Operating income 3,773 5,043
Operating ratio 95.8 94.2
Total assets at March 31 232,040 222,088
<TABLE>
<CAPTION>
First Quarter
First Quarter Amount/Workday
---------------------- ----------------------
2000 1999 % 2000 1999 %
------- -------- ----- --------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Workdays (65) (63)
Financial statement LTL 81,891 77,417 5.8 1,259.9 1,228.8 2.5
Revenue TL 8,554 8,836 (3.2) 131.6 140.3 (6.2)
Total 90,445 86,253 4.9 1,391.5 1,369.1 1.6
Revenue excluding LTL 82,181 77,755 5.7 1,264.3 1,234.2 2.4
Revenue recognition TL 8,584 8,875 (3.3) 132.1 140.9 (6.3)
Adjustment Total 90,765 86,630 4.8 1,396.4 1,375.1 1.5
Tonnage LTL 444 426 4.1 6.82 6.76 .9
TL 139 143 (3.2) 2.14 2.28 (6.2)
Total 583 569 2.3 8.96 9.04 (.9)
Shipments LTL 815 786 3.8 12.54 12.47 .6
TL 14 14 (1.1) .22 .23 (4.1)
Total 829 800 3.7 12.76 12.70 .5
Revenue/cwt. LTL 9.26 9.13 1.5
TL 3.09 3.10 (.1)
Total 7.79 7.61 2.4
Revenue/shipment LTL 100.82 98.98 1.9
TL 609.05 623.07 (2.2)
Total 109.45 108.31 1.1
</TABLE>
17
<PAGE> 18
Jevic Transportation, Inc.
Financial Information
For the Quarter Ended March 31
(Amounts in thousands)
First Quarter
------------------
2000 1999 %
------------------ ----
Operating revenue 78,415 65,832 19.1
Goodwill amortization 501 --
Operating income 4,017 4,924
Operating ratio 94.9 92.5
Total assets at March 31 258,080 164,804
<TABLE>
<CAPTION>
First Quarter
First Quarter Amount/Workday
------------------- ---------------------
2000 1999 % 2000 1999 %
------- -------- ----- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Workdays (65) (63)
Financial statement LTL 50,650 41,377 22.4 779.2 656.8 18.6
revenue TL 27,765 24,455 13.5 427.2 388.2 10.0
Total 78,415 65,832 19.1 1,206.4 1,045.0 15.4
Revenue excluding LTL 50,686 41,622 21.8 779.8 660.7 18.0
revenue recognition TL 27,781 24,599 12.9 427.4 390.5 9.5
adjustment Total 78,467 66,221 18.5 1,207.2 1,051.2 14.8
Tonnage LTL 266 228 16.5 4.09 3.62 12.9
TL 363 336 8.0 5.58 5.33 4.7
Total 629 564 11.4 9.67 8.95 8.0
Shipments LTL 227 192 18.0 3.49 3.05 14.4
TL 39 34 13.1 0.59 0.54 9.6
Total 266 226 17.3 4.08 3.59 13.7
Revenue/cwt. LTL 9.53 9.11 4.5
TL 3.83 3.66 4.6
Total 6.24 5.87 6.3
Revenue/shipment LTL 223.69 216.75 3.2
TL 721.13 722.16 (0.1)
Total 295.97 292.90 1.0
</TABLE>
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
YELLOW CORPORATION
------------------------------------
Registrant
Date: May 12, 2000 /s/ William D. Zollars
------------------------------------
William D. Zollars
Chairman of the Board of
Directors, President & Chief
Executive Officer
Date: May 12, 2000 /s/ H. A. Trucksess, III
------------------------------------
H. A. Trucksess, III
President Regional Carrier
Group and Interim Chief
Financial Officer
19
<PAGE> 1
EXHIBIT (10a)
AMENDMENT NUMBER ONE
TO EMPLOYMENT AGREEMENT
DATED DECEMBER 15, 1999
THIS IS AMENDMENT NUMBER ONE to the Employment Agreement entered into
between Yellow Corporation, a Delaware Corporation ('"Yellow") and William D.
Zollars (the "Executive") on the 15th day of December, 1999.
1. Paragraph 4(d) of said Employment Agreement is hereby amended in
its entirety to read as follows:
(d) Supplemental Retirement Benefits. Yellow shall provide
Executive with Supplemental Retirement Benefits in accordance
with this subsection (d) and Appendix A pursuant to which the
Executive shall receive from Yellow upon his termination of
employment with Yellow (and subject to the vesting provision
hereinafter set forth), the difference between (i) the monthly
benefit that he would have received under Section 4.4 of the
Yellow Freight Office, Clerical, Sales and Supervisory
Personnel Pension Plan (the "Pension Plan") (calculated as a
single life annuity payable commencing at his initial Normal
Retirement Date as defined under the Pension Plan with an
actuarial reduction if payment commences prior to his Normal
Retirement Date) using 20 years of Credit Service as defined
in the Pension Plan plus his actual Credit Service credited
under the Pension Plan after five (5) years from September 6,
1996, the date of Executive's commencement
1
<PAGE> 2
of employment with Yellow's subsidiary, Yellow Freight System,
Inc., and using compensation as defined in Section 2.1(h)2 of
the Pension Plan, including Compensation previously earned
during his employment with Yellow Freight System, Inc. from
September 6, 1996 through November 7, 1999, but without any
reduction under Section 401(a)(17) of the Internal Revenue
Code of 1986, as amended (the "Code") and (ii) the monthly
benefit actually payable to the Executive under Section 4.4 of
the Pension Plan, calculated at the time the Executive
commences payment of a Vested Pension under the Pension Plan,
if any. The Executive shall vest in the Supplemental
Retirement Benefit described in this subsection (d) at the
rate of 20% per year commencing on September 6, 1997 (so that
he would become 100% vested on September 6, 2001), provided,
however, that the Executive shall forfeit any unvested portion
in the event of the termination of his employment prior to
becoming 100% vested. Notwithstanding the foregoing, the
Executive shall immediately become 100% vested in the event of
the termination of his employment under circumstances
entitling the Executive to benefits pursuant to Section 8.
Following the termination of Executive's employment, the
Supplemental Retirement Benefit described in this subsection
(d) and Appendix A shall be payable monthly commencing no
sooner than the earliest date of Executive's eligibility to
receive Retirement Benefits under the Pension Plan measured
from his
2
<PAGE> 3
date of termination with Executive having the option of
deciding when to commence payments following achieving such
eligibility, subject to actuarial reduction for payments
commencing prior to Executive's Normal Retirement Date, and
shall continue until the Executive's death. Upon the
Executive's death, if at the time of his death payments had
already commenced under the Supplemental Retirement Benefit
and if he is survived by and still married to the person who
was his spouse on September 6, 1996, the monthly Supplemental
Retirement Benefit payable to the Executive during his life
shall continue to said surviving spouse until her death. If at
the time of his death, the Executive had not yet qualified for
payment of a Retirement Benefit under the Pension Plan, or if
Executive had qualified but payments had not yet commenced, if
he is survived by and still married to the person who was his
spouse on September 6, 1996, the Supplemental Retirement
Benefit shall be payable to said spouse no sooner than the
earliest date that Executive would have been eligible to
receive Retirement Benefits under the Pension Plan measured
from his date of death with said spouse having the option of
deciding when to commence payments following the date that
Executive would have achieved such eligibility, subject to
actuarial reduction for payments commencing prior to the date
that Executive would have reached his Normal Retirement Date,
and shall continue to said surviving spouse until her death.
3
<PAGE> 4
The Executive acknowledges that these Supplemental Retirement
Benefits are an element of the compensation to be paid for his
services and not an unfunded plan of deferred compensation
within the meaning of Section 201 of the Employee Retirement
Income Security Act, as amended.
2. All other provisions and conditions of the Employment Agreement
dated December 15, 1999 remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment Number One
to the Agreement dated December 15, 1999 on the 20th day of April, 2000.
THE EXECUTIVE: YELLOW CORPORATION
/s/ William D. Zollars by: /s/ William F. Martin
- ------------------------------ --------------------------------
Attested by:
/s/ Lawrence D. Berkowitz
--------------------------------
4
<PAGE> 1
EXHIBIT (10b)
EMPLOYMENT AGREEMENT
AGREEMENT, made this 20th day of April, 2000, by and between Yellow
Corporation, a Delaware corporation ("Yellow"), and Herbert A. Trucksess, III
(the "Executive").
WITNESSETH
WHEREAS, the Board of Directors of Yellow has approved the employment
of the Executive on the terms and conditions set forth in this Agreement; and
WHEREAS, the Executive is willing, for the consideration provided, to
enter into employment with Yellow on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Employment. Yellow hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, upon the terms and
conditions set forth in this Agreement.
2. Term. The term of this Agreement shall be for two (2) years from
the date hereof (the "Effective Date"), with said term renewing
daily, and ending on the date of termination of the Executive's
employment determined pursuant to Section 5, 6, 7, 9 or 10,
whichever shall be applicable.
3. Position and Duties. The Executive shall serve as President,
Regional Carrier Group, and shall have such responsibilities and
authority as commensurate with such offices and as may from time to
time be prescribed by or pursuant to Yellow's bylaws. The Executive
shall devote
1
<PAGE> 2
substantially all of his working time and efforts to the business
and affairs of Yellow.
4. Compensation. During the period of the Executive's employment,
Yellow shall provide the Executive with the following compensation
and other benefits:
(a) Base Salary. Yellow shall pay to the Executive base salary at
the rate of $350,000 per annum, retroactive to February 1,
2000, which shall be payable in accordance with the standard
payroll practices of Yellow. Such base salary rate shall be
reviewed annually in accordance with Yellow's normal policies
beginning in calendar year 2001; provided, however, that at no
time during the term of this Agreement shall the Executive's
base salary be decreased from the rate then in effect except
(i) in connection with across-the-board reductions similarly
affecting substantially all senior executives of Yellow or (ii)
with the written consent of the Executive.
(b) Annual Bonus. The Executive shall participate in a bonus
program established and maintained by Yellow pursuant to which
a threshold award for each fiscal year is 13.75% of the
Executive's base salary; a target award is 55% of base salary;
and a maximum award is 110% of base salary in respect of each
fiscal year of Yellow commencing with 2000, provided that any
payment under such award shall be conditioned upon satisfaction
of the threshold. The criteria for establishment of the
threshold and
2
<PAGE> 3
target and the parameters for payments at, above or below the
target shall be determined annually by the Compensation
Committee of the Board of Directors of Yellow. At least 80% of
the criteria established by the Compensation Committee which
would result in a payment of 55% of base salary to the
Executive shall be based on specific measurements of financial
performance of Yellow during the applicable fiscal year and the
remaining percentage may be based on non-financial criteria.
(c) Stock Options. Yellow has previously granted to Executive
options to purchase 290,000 shares of Common Stock of Yellow in
five separate grants, each grant having an option term of ten
years and an option price per share equal to the closing price
of a share of Common Stock of Yellow as reported on the NASDAQ
National Market System on the date of each grant, and each
grant vesting over four years in equal annual installments.
With respect to succeeding years, the Compensation Committee of
the Board of Directors of Yellow shall determine the number of
stock options, if any, to be granted to the Executive and the
terms and conditions of any such options.
(d) Supplemental Retirement Benefits. Yellow shall provide
Executive with supplemental retirement benefits in accordance
with this subsection (d) and Appendix A pursuant to which the
Executive shall receive from Yellow upon his termination of
employment with Yellow, the difference between (i) the monthly
benefit that
3
<PAGE> 4
he would have received under Section 4.4 of the Yellow Freight
Office, Clerical, Sales and Supervisory Personnel Pension Plan
(the "Pension Plan") (calculated as a single life annuity
payable commencing at his Normal Retirement Date as defined
under the Pension Plan with an actuarial reduction if payment
commences prior to his Normal Retirement Date) using 16 years
of Credited Service as defined under the Pension Plan plus his
actual Credited Service credited under the Pension Plan from
June 1, 1994, the date of Executive's commencement of
employment with Yellow and using Compensation as defined in
Section 2.1(h) (2) of the Pension Plan, but without any
reduction under Section 401(a) (17) of the Internal Revenue
Code of 1986, as amended (the "Code") and (ii) the monthly
benefit actually payable to the Executive under Section 4.4 of
the Pension Plan, calculated at the time the Executive
commences payment of a Vested Pension under the Pension Plan.
Following the termination of Executive's employment, the
supplemental retirement benefit described in this subsection
(d) shall be payable no sooner than the earliest date of
Executive's eligibility to receive retirement benefits under
the Plan measured from his date of termination with Executive
having the option of deciding when to commence payments
following achieving such eligibility, subject to actuarial
reduction for payments commencing prior to Executive's Normal
Retirement Date, and shall continue until the Executive's
death. Upon the
4
<PAGE> 5
Executive's death, if at the time of his death payments had
already commenced under this Supplemental Retirement Benefit
and if he is survived by and still married to the person who
was his spouse on June 1, 1994, the monthly supplemental
retirement benefit payable to the Executive during his life
shall continue to said surviving spouse until her death. If at
the time of his death, the Executive had not yet qualified for
payment of a retirement benefit under the Pension Plan or if
Executive had qualified but payments had not yet commenced, if
he is survived by and still married to the person who was his
spouse on June 1, 1994, the Supplemental Retirement Benefit
shall be payable to said spouse no sooner than the earliest
date that Executive would have been eligible to receive
retirement benefits under the Plan measured from his date of
death with said spouse having the option of deciding when to
commence payments following the date that Executive would have
achieved such eligibility, subject to actuarial reduction for
payments commencing prior to the date that Executive would have
reached his Normal Retirement Date, and shall continue to said
surviving spouse until her death. If the Executive at the time
of his death is neither survived by or not married to the
person who was his spouse on June 1, 1994, no further
supplemental retirement benefits shall be payable under this
subsection (d) following his death. The Executive acknowledges
that these supplemental retirement benefits are an
5
<PAGE> 6
element of the compensation to be paid for his services and not
an unfunded plan of deferred compensation within the meaning of
Section 201 of the Employee Retirement Income Security Act, as
amended.
(e) Other Benefits. In addition to the compensation and benefits
otherwise specified in this Agreement, the Executive (and, if
provided for under the applicable plan or program, his spouse)
shall be entitled to participate in, and to receive benefits
under, Yellow's employee benefit plans and programs that are or
may be available to senior executives generally and on terms
and conditions that are no less favorable than those generally
applicable to other senior executives of Yellow. At no time
during the term of this Agreement shall the Executive's
participation in or benefits received under such plans and
programs be decreased except (i) in connection with
across-the-board reductions similarly affecting substantially
all senior executives of Yellow or (ii) with the written
consent of the Executive.
(f) Expenses. The Executive shall be entitled to prompt
reimbursement of all reasonable expenses incurred by him in
performing services hereunder, provided he properly accounts
therefore in accordance with Yellow's policies.
(g) Office and Services Furnished. Yellow shall furnish the
Executive with office space, secretarial assistance and such
other facilities
6
<PAGE> 7
and services as shall be suitable to the Executive's position
and adequate for the performance of his duties hereunder.
5. Termination of Employment by Yellow.
(a) Cause. Yellow may terminate the Executive's employment for
Cause if the Executive willfully engages in conduct which is
materially and demonstrably injurious to Yellow or if the
Executive willfully engages in an act or acts of dishonesty
resulting in material personal gain to the Executive at the
expense of Yellow. Yellow shall exercise its right to terminate
the Executive's employment for Cause by (i) giving him written
notice of termination at least 30 days before the date of such
termination specifying in reasonable detail the circumstances
constituting such Cause; and (ii) delivering to the Executive a
copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Board
of Directors after reasonable notice to the Executive and an
opportunity for the Executive and his counsel to be heard
before the Board of Directors, finding that the Executive has
engaged in the conduct set forth in this subsection (a). In the
event of such termination of the Executive's employment for
Cause, the Executive shall be entitled to receive (i) his base
salary pursuant to Section 4(a) and any other compensation and
benefits to the extent actually earned pursuant to this
Agreement or any benefit plan or program of Yellow as of the
date of such termination at the normal time for
7
<PAGE> 8
payment of such salary, compensation or benefits, but not
including the Supplemental Retirement Benefit described in
Section 4(d), and (ii) any amounts owing under Section 4 (f).
In addition, in the event of such termination of the
Executive's employment for Cause, all outstanding options held
by the Executive at the effective date of such termination
which had not already been exercised shall be forfeited. Except
as provided in Section 11, the Executive shall receive no other
compensation or benefits from Yellow.
(b) Disability. If the Executive incurs a Permanent and Total
Disability, as defined below, Yellow may terminate the
Executive's employment by giving him written notice of
termination at least 30 days before the date of such
termination. In the event of such termination of the
Executive's employment because of Permanent and Total
Disability, (i) the Executive shall be entitled to receive his
base salary pursuant to Section 4(a) and any other compensation
and benefits to the extent actually earned by the Executive
pursuant to this Agreement or any benefit plan or program of
Yellow as of the date of such termination of employment at the
normal time for payment of such salary, compensation or
benefits, including specifically the Supplemental Retirement
Benefit described in Section 4(d), and any amounts owing under
Section 4(f), and (ii) all outstanding stock options held by
the Executive at the time of his termination of
8
<PAGE> 9
employment shall become immediately exercisable at that time,
and the Executive shall have one year from the date of such
termination of employment to exercise any or all of such
outstanding options (but not beyond the term of such option).
For purposes of this Agreement, the Executive shall be
considered to have incurred a Permanent and Total Disability if
he is unable to engage in any substantial gainful employment by
reason of any materially determinable physical or mental
impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period
of not less than 12 months. The existence of such Permanent and
Total Disability shall be evidenced by such medical
certification as the Secretary of Yellow shall require and
shall be subject to the approval of the Compensation Committee
of the Board of Directors of Yellow.
(c) Without Cause. Yellow may terminate the Executive's employment
at any time and for any reason, other than for Cause or because
of Permanent and Total Disability, by giving him a written
notice of termination to that effect at least 30 days before
the date of termination. In the event of such termination of
the Executive's employment without Cause, the Executive shall
be entitled to the benefits described in Section 8.
6. Termination of Employment by the Executive.
a. Good Reason. The Executive may terminate his employment for
Good Reason by giving Yellow a written notice of
termination at
9
<PAGE> 10
least 30 days before the date of such termination specifying in
reasonable detail the circumstances constituting such Good
Reason. In the event of the Executive's termination of his
employment for Good Reason, the Executive shall be entitled to
the benefits described in Section 8. For purposes of this
Agreement, Good Reason shall mean the failure of Yellow in any
material way either (i) to pay or provide to the Executive the
compensation and benefits that he is entitled to receive
pursuant to this Agreement by the later of (A) 60 days after
the applicable due date or (B) 30 days after the Executive's
written demand for payment, or (ii) to maintain the titles,
positions and duties of the Executive commensurate with those
titles and positions and as required by this Agreement except
with the Executive's written consent, or (iii) Executive's
receipt of notice from Yellow of the cut-off of the automatic
renewal of the term of this Agreement as described in Section 2
above.
b. Other. The Executive may terminate his employment at any time
and for any reason, other than pursuant to subsection (a)
above, by giving Yellow a written notice of termination to that
effect at least 30 days before the date of termination. In the
event of the Executive's termination of his employment pursuant
to this subsection (b), the Executive shall be entitled to
receive (i) his base salary pursuant to Section 4(a) and any
other compensation and benefits to the extent actually earned
by the Executive
10
<PAGE> 11
pursuant to this Agreement or any benefit plan or program of
Yellow as of the date of such termination at the normal time
for payment of such salary, compensation or benefits including
specifically the Supplemental Retirement Benefit described in
Section 4(d), and (ii) any amounts owing under Section 4(f). In
the event of the Executive's termination of his employment
pursuant to this subsection (b), all outstanding options held
by the Executive not previously exercised by the date of
termination shall be forfeited. Except as provided in Section
10, the Executive shall receive no other compensation or
benefits from Yellow.
7. Termination of Employment By Death. In the event of the death of
the Executive during the course of his employment hereunder, (i)
the Executive's estate shall be entitled to receive his base salary
pursuant to Section 4(a) and any other compensation and benefits to
the extent actually earned by the Executive pursuant to this
Agreement or any other benefit plan or program of Yellow as of the
date of such termination at the normal time for payment of such
salary, compensation or benefits, and any amounts owing under
Section 4(f), (ii) any death benefit due under the Pension Plan and
any death benefit due under Section 4(d) shall be paid to the
Executive's spouse as provided under Section 4(d) and (iii) all
outstanding stock options held by the Executive at the time of his
death shall become immediately exercisable upon his death, and the
Executive's spouse or, if predeceased, the Executive's estate,
shall have
11
<PAGE> 12
one year from the date of his death to exercise any or all of such
outstanding options (but not beyond the term of such option).
8. Benefits Upon Termination Without Cause or Good Reason If the
Executive's employment with Yellow shall terminate (i) because of
termination by Yellow pursuant to Section 5(c) and not for Cause or
because of Permanent and Total Disability, or (ii) because of
termination by the Executive for Good Reason pursuant to Section
6(a), the Executive shall be entitled to the following:
(a) Yellow shall pay to the Executive his base salary pursuant to
Section 4 (a) and, subject to the further provisions of this
Section 8, any other compensation and benefits to the extent
actually earned by the Executive under this Agreement or any
benefit plan or program of Yellow as of the date of such
termination at the normal time for payment of such salary,
compensation or benefits.
(b) Yellow shall pay the Executive any amounts owing under Section
4(f).
(c) Yellow shall pay to the Executive as a severance benefit an
amount equal to twice the sum of (i) his annual rate of base
salary immediately preceding his termination of employment, and
(ii) the target bonus payable pursuant to subsection (d) below.
Such severance benefit shall be paid in a lump sum within 30
days after the date of such termination of employment.
(d) Yellow shall pay to the Executive his target bonus under
Yellow's target bonus plan for the fiscal year in which his
termination of
12
<PAGE> 13
employment occurs as if the target had been exactly met. Such
payment shall be made in a lump sum within 30 days after the
date of such termination of employment, and the Executive shall
have no right to any further bonuses under said program.
(e) The Executive shall become eligible for payment of the
supplemental retirement benefits pursuant to Section 4(d), and
Yellow's nonqualified defined contribution plans. Payment of
benefits under such plans, and under the Pension Plan and
Yellow's qualified defined contribution plans, shall be made at
the time and in the manner determined under the applicable
plan.
(f) During the period of 24 months beginning on the date of the
Executive's termination of employment, the Executive (and, if
applicable under the applicable program, his spouse) shall
remain covered by the employee benefit plans and programs that
covered him immediately prior to his termination of employment
as if he had remained in employment for such period, provided,
however, that there shall be excluded for this purpose any plan
or program providing payment for time not worked (including
without limitation holiday, vacation, and long- and short-term
disability). In the event that the Executive's participation in
any such employee benefit plan or program is barred, Yellow
shall arrange to provide the Executive with substantially
similar benefits. Any medical insurance coverage for such
two-year period pursuant to this subsection (f) shall become
secondary upon the earlier of (i)
13
<PAGE> 14
the date on which the Executive begins to be covered by
comparable medical coverage provided by a new employer, or (ii)
the earliest date upon which the Executive becomes eligible for
Medicare or a comparable Government insurance program.
(g) All outstanding stock options held by the Executive at the time
of termination of his employment shall become fully exercisable
upon such termination of employment and may be exercised for
the balance of the term of such option.
(h) If any payment or benefit received by or in respect of the
Executive under this Agreement or any other plan, arrangement
or agreement with Yellow (determined without regard to any
additional payments required under this subsection (h) and
Appendix B of this Agreement) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") (or any similar tax that
may hereafter be imposed) or any interest or penalties are
incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties,
being hereinafter collectively referred to as the "Excise
Tax"), Yellow shall pay to the Executive with respect to such
Payment at the time specified in Appendix B an additional
amount (the "Gross-up Payment") such that the net amount
retained by the Executive from the Payment and the Gross-up
Payment, after reduction for any Excise Tax upon the payment
and any federal, state and local
14
<PAGE> 15
income and employment tax and Excise Tax upon the Gross-up
Payment, shall be equal to the Payment. The calculation and
payment of the Gross-up Payment shall be subject to the
provisions of Appendix B.
9. Termination as a Result of a Corporate Restructuring. In the event
that Executive's employment with Yellow is terminated as a result
of a corporate restructuring which results in Executive performing
essentially the same or greater duties that he currently performs
for Yellow at essentially the same or greater level of compensation
and benefits provided for under this Agreement for an entity that
is no longer owned by Yellow, then Yellow and Executive shall
negotiate, in good faith, a Transition Agreement documenting which
payments and benefits provided for under this Agreement will be
owing to Executive following a termination as a result of a
corporate restructuring. Said Transition Agreement shall provide,
at a minimum, that Executive shall be eligible for payments under
the Pension Plan and for the supplemental retirement benefit
provided for in Section 4(d) upon the effective date of a
termination as a result of a corporate restructuring with actual
payments under the Supplemental Retirement Benefit and the Pension
Plan to be payable at the time and in the manner set forth in
Section 4(d).
10. Termination or Resignation Following a Change of Control. In the
event that Executive resigns his employment with Yellow or suffers
a "Termination" of such employment within two years after a "Change
of Control" of Yellow under the circumstances described and the
definitions
15
<PAGE> 16
set forth in paragraphs 3 and 1 (c) of the Executive Severance
Agreement entered into between Executive and Yellow on October 20,
1998, the provisions of which are hereby incorporated by reference,
the Executive shall be entitled to the greater of each benefit
described in Section 8 or each benefit provided for under the
Executive Severance Agreement.
11. Entitlement To Other Benefits. Except as provided in this
Agreement, this Agreement shall not be construed as limiting in any
way any rights to benefits that the Executive may have pursuant to
any other plan or program of Yellow.
12. Arbitration.
(a) Arbitration of Disputes. Any dispute between the parties hereto
arising out of, in connection with, or relating to this
Agreement or the breach thereof shall be settled by arbitration
in Overland Park, Kansas, in accordance with the rules then in
effect of the American Arbitration Association ("AAA").
Arbitration shall be the exclusive remedy for any such dispute
except only as to failure to abide by an arbitration award
rendered hereunder. Regardless of whether or not both parties
hereto participate in the arbitration proceeding, any
arbitration award rendered hereunder shall be final and binding
on each party hereto and judgment upon the award rendered may
be entered in any court having jurisdiction thereof.
The party seeking arbitration shall notify the other party in
writing and request the AAA to submit a list of 5 or 7
potential arbitrators.
16
<PAGE> 17
In the event the parties do not agree upon an arbitrator, each
party shall, in turn, strike one arbitrator from the list,
Yellow having the first strike, until only one arbitrator
remains, who shall arbitrate the dispute. The parties shall
have the opportunity to conduct reasonable discovery as
determined by the arbitrator, and the arbitration hearing shall
be conducted within 30 to 60 days of the selection of an
arbitrator or at the earliest date thereafter that the
arbitrator is available or as otherwise set by the arbitrator.
b. Indemnification. If arbitration occurs as provided for herein
and the Executive is awarded more than Yellow has asserted is
due him or otherwise substantially prevails therein, Yellow
shall reimburse the Executive for his reasonable attorneys'
fees, costs and disbursements incurred in such arbitration and
hereby agrees to pay interest on any money award obtained by
the Executive from the date payment should have been made until
the date payment is made, calculated at the prime interest rate
of Bank of America, Inc., Kansas City, Missouri in effect from
time to time from the date that payment(s) to him should have
been made under this Agreement. If the Executive enforces the
arbitration award in court, Yellow shall reimburse the
Executive for his reasonable attorneys' fees, costs and
disbursements incurred in such enforcement.
13. Confidential Information. The Executive shall retain in confidence
any confidential information known to him concerning Yellow and its
17
<PAGE> 18
subsidiaries, and their respective businesses until such
information is publicly disclosed. This provision shall survive the
termination of the Executive's employment for any reason under this
Agreement.
14. Indemnification under Bylaws. Yellow shall provide the Executive
with rights to indemnification by Yellow that are no less favorable
to the Executive than those set forth in Yellow's by-laws as in
effect as of the Effective Date.
15. Successors. This Agreement shall be binding upon and inure to the
benefit of the Executive and his estate and Yellow and any
successor of Yellow, but neither this Agreement nor any rights
arising hereunder may be assigned or pledged by the Executive.
16. Severability. Any provision in this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition
or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
17. Notices. All notices required or permitted to be given under this
Agreement shall be given in writing and shall be deemed
sufficiently given if delivered by hand or mailed by registered
mail, return receipt requested, to his residence in the case of the
Executive and to its principal executive offices in the case of
Yellow. Either party may by giving written notice to the other
party in accordance with this Section 15 change the address at
which it is to receive notices hereunder.
18. Controlling Law. This Agreement shall in all respects by governed
by and construed in accordance with the laws of the State of
Kansas.
18
<PAGE> 19
19. Changes to Agreement. This Agreement may not be changed orally but
only in a writing, signed by the party against whom enforcement is
sought.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an
original but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
20th of April, 2000.
EXECUTIVE: YELLOW CORPORATION
/s/ H. A. Trucksess, III By: /s/ William F. Martin
- ------------------------------ ---------------------------------
ATTEST
By: /s/ Lawrence D. Berkowitz
---------------------------------
19
<PAGE> 20
Appendix A
Supplemental Retirement Benefits
The following provisions shall be applicable with respect to the
supplemental retirement benefits described in Section 4(D) of this Agreement.
1. Benefit Calculation
For purposes of calculating the supplemental retirement benefits, the
following assumptions shall be utilized.
(a) "Credited Service", shall be assumed to be sixteen (16) years plus
Executive's actual credited service credited under the Pension Plan
from June 1, 1994.
(b) Any vested accrued benefit which the Executive is paid under the
Pension Plan, shall reduce any supplement retirement benefits
payable under this Agreement; and
(c) The defined terms used in this Appendix A and in Section 4(e) of
this Agreement shall have the meanings provided in the Yellow
Freight Office, Clerical, Sales and Supervisory Personnel Pension
Plan as restated as of January 1, 1989 and as amended by Amendment
No. 1 dated July 15, 1992, by Amendment No. 2 dated December 28,
1994, all as in existence as of the Effective Date of this
Agreement (collectively the "Pension Plan") unless another meaning
is expressly provided in this Agreement and Appendix or unless the
Executive and Yellow agree in writing to apply any subsequent
amendments, revisions, interpretations or restatements of the
Pension Plan.
2. Taxability of Benefit
The Executive and Yellow understand and agree that for federal tax
purposes, all supplemental retirement benefits paid under this
agreement to the Executive or his spouse shall be treated as ordinary
income under the applicable provisions of the Internal Revenue Code of
1986, as amended, and are subject to any taxes required to be withheld
by federal, state or local law; provided that the Executive shall have
the right to determine the timing of any withholding within the
parameters permitted under the Code and under any Regulations or
proposed Regulations under Code Section 3121(v) or any successor
thereto.
3. Nonassignability
The supplemental retirement benefits payable under this Agreement, and
any and all rights thereto, shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge,
20
<PAGE> 21
garnishment, execution, or levy of any kind, either voluntarily or
involuntarily. Any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge, or otherwise dispose of any rights to
benefits payable hereunder shall be void.
21
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 28,600
<SECURITIES> 0
<RECEIVABLES> 285,403
<ALLOWANCES> 0
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<CURRENT-ASSETS> 358,900
<PP&E> 2,107,166
<DEPRECIATION> 1,231,376
<TOTAL-ASSETS> 1,339,876
<CURRENT-LIABILITIES> 433,587
<BONDS> 273,765
0
0
<COMMON> 29,771
<OTHER-SE> 395,091
<TOTAL-LIABILITY-AND-EQUITY> 1,339,876
<SALES> 0
<TOTAL-REVENUES> 882,086
<CGS> 0
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<INCOME-PRETAX> 18,753
<INCOME-TAX> 8,276
<INCOME-CONTINUING> 10,477
<DISCONTINUED> 0
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<EPS-BASIC> .42
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