Generates Significant Free Cash Flow and Reduces Total Debt

OVERLAND PARK, Kan., Oct. 23 -- YRC Worldwide Inc. today announced diluted earnings per share of $.63 for the third quarter of 2008, including a previously announced curtailment gain of $.84 per share and gains on property disposals of $.21 per share. The quarter also included charges of $.10 per share related to reorganization costs. In the third quarter of 2007, the company reported $.70 of diluted earnings per share.

YRC Worldwide generated $52.2 million of cash from operating activities during the quarter and, when taking into account the $40.4 million of cash inflow from net capital expenditures, third quarter free cash flow was $92.6 million. The company's leverage ratio of total debt to trailing twelve months earnings before interest, taxes, depreciation and amortization, or EBITDA, was 3.18 times against a limit of 3.75 times for the third quarter 2008. As of December 31, 2008, through the remaining term of the credit facilities, the leverage ratio limitation is 3.5 times. Total balance sheet debt was reduced by $11.4 million for the third quarter and $50.3 million since December 31, 2007.

"Throughout the third quarter, the operating environment progressively weakened resulting in lower than expected volumes and more competitive pricing," stated Bill Zollars, Chairman, President and CEO of YRC Worldwide. "Although the economy slowed more than we expected during the quarter, we still generated solid free cash flow and paid down debt, in addition to removing significant cost from our business," Zollars added.

Key segment information for the third quarter 2008 included:

  • YRC National Transportation LTL revenue per hdwt up 6.3% from third quarter 2007 and LTL tonnage per day down 9.0%.
  • YRC Regional Transportation LTL revenue per hdwt up 5.3% from third quarter 2007 and LTL tonnage per day down 17.2%.

"We are focused on adapting to weaker economic conditions while still providing quality service to our customers. Although improved efficiencies and enhanced service are the key drivers of the Yellow and Roadway integration, the expected cash flows from additional facility sales and further reducing capital expenditures are incremental benefits that should significantly improve our liquidity," Zollars stated. "We also remain confident in our ability to deliver a run rate of at least $200 million of operating income improvement by the end of 2009 from the integration."

Due to the uncertainty in the economy, the company does not intend to provide specific earnings guidance for the fourth quarter. However, the company currently has the following expectations for the remainder of 2008:

  • Fourth quarter tax rate of around 36.5%, excluding any non-cash impairment charge.
  • Reduction in total debt by at least $100 million in the fourth quarter resulting in a reduction of more than $150 million for 2008.
  • Full year gross capital expenditures of between $150 to $175 million and full year proceeds from asset sales of at least $100 million resulting in net capital expenditures of $50 to $75 million.

"We plan to generate a healthy amount of cash flow in the fourth quarter and further strengthen our balance sheet by year end. With our current action plans, we expect to maintain a leverage ratio below 3.5 times," Zollars concluded.


Con-way Inc. today reported net income available to common shareholders for the third quarter of 2008 of $38.8 million, or 81 cents per diluted share. The results compare to third-quarter 2007 net income available to common shareholders (after preferred stock dividends) of $37.3 million, or 78 cents per diluted share.

Con-way Inc. today reported net income available to common shareholders for the third quarter of 2008 of $38.8 million (after preferred stock dividends), or 81 cents per diluted share. The results compare to third-quarter 2007 net income available to common shareholders (after preferred stock dividends) of $37.3 million, or 78 cents per diluted share.  

In the 2007 third quarter, earnings available to common shareholders included an after-tax charge of 9 cents per diluted share for costs related to business transformation initiatives and acquisitions.

Operating income in the 2008 third quarter was $78.9 million, an increase of 16.6 percent compared to $67.7 million earned in the third quarter a year ago.  Revenue in the 2008 third quarter was $1.37 billion, an increase of 23.3 percent from last year’s third quarter revenue of $1.11 billion, reflecting organic growth and the effect of acquisitions completed in 2007.

Commenting on the quarter, Con-way President and CEO Douglas W. Stotlar said, “Our core operations turned in results that were consistent with our updated earnings guidance, and as expected, were affected by weakening demand and a difficult pricing environment,” he noted. “Lower-than-anticipated employee-related costs and a lower tax rate in the quarter led to results that were somewhat better than earlier expectations.”

Con-way Freight, the company’s less-than-truckload and largest business unit, recorded an increase in tonnage for the quarter but profit growth remained constrained by weakening demand and pricing in a highly competitive business climate. “Demand decelerated as the quarter proceeded, which created additional pressure on pricing.  Productivity measures remained strong as we saw good operational execution. Our Freight team is doing an excellent job delivering consistent, reliable service to customers in a very challenging environment.”

Menlo Worldwide Logistics achieved double-digit growth in net revenues but saw income decline below last year’s third quarter. Among the factors was an operating loss in China as integration expense exceeded expectations. “Additional costs for operational integration have extended the profit horizon in China, but we are making progress and expect to turn the corner by the end of the year,” Stotlar said.  He added that Menlo’s results in the quarter also were affected as customers experienced continuing pressures to reduce supply chain costs in response to the economic downturn.

Con-way Truckload turned in a commendable performance in a weakening environment for truckload freight, Stotlar noted. “We continued to realize the benefits of synergy between Con-way Truckload, and our freight and logistics units,” he said. “The declining cost of fuel also aided Truckload’s earnings given the nature of their fuel cost recovery mechanisms.”

The effective tax rate for the 2008 third quarter was 36.5 percent compared to 37.1 percent in the same period of 2007.  The 2008 tax rate was affected by discrete tax adjustments which decreased the effective tax rate.


For the 2008 third quarter, Con-way Freight, the company’s regional less-than-truckload operations, reported:

  • Operating income of $61.1 million, an increase of 1.8 percent from the $60.0 million earned in the year-ago period.  The 2007 third quarter was inclusive of $5.5 million in expense for Con-way’s business transformation initiative in the quarter, and $3.2 million of rebranding expense.

  • Revenues of $808.3 million, a 9.1 percent increase over last year’s third-quarter revenues of $740.8 million.

  • Tonnage per day handled by Con-way Freight increased 2.3 percent over the previous-year third quarter. 

  • Yield for Con-way Freight improved 7.0 percent from the previous-year third quarter. Excluding the fuel surcharge, yield declined 1.0 percent.

  • Con-way Freight recorded an operating ratio of 92.6 in the 2008 third quarter compared to 92.0 in third-quarter 2007, which included the earlier-mentioned business transformation expenses and rebranding costs.   


For the third quarter of 2008, Menlo Worldwide Logistics, the company’s global logistics and supply chain management operations, reported:

  • Operating income of $3.7 million, a 40.6 percent decrease from $6.2 million earned in the third quarter of 2007. Income was affected primarily by the previously mentioned costs for operations integration in China.

  • Revenue of $419.9 million, up 34.3 percent from the previous-year third-quarter revenue of $312.6 million. The increase reflects contributions from acquisitions, as well as new transportation management revenues from several new customer engagements and the Defense Transportation Coordination Initiative.

  • Net revenue of $127.9 million, an increase of 16.8 percent compared to $109.6 million in the previous-year third quarter. The increase in net revenue was primarily attributable to organic growth in revenue from warehouse-management services and from the Asia acquisitions completed last year.


Results for the Truckload segment reflect the operations of Con-way Truckload. For the third quarter of 2008, the company’s full-truckload transportation operations reported:

  • Operating income of $15.2 million, compared to $3.0 million in the previous-year period, during which Con-way completed its acquisition of Contract Freighters, Inc. (CFI). This business unit was subsequently renamed Con-way Truckload. Earnings for the 2007 third quarter had a $4.7 million operating loss from Con-way’s pre-acquisition truckload business, including $1.5 million for the closure of its former Memphis headquarters. The 2007 quarterly period also benefited from earnings of CFI from close of the acquisition on August 23, 2007 to the quarter’s end.

  • Revenue of $140.9 million, after the elimination of $42.7 million in inter-company revenues.

  • Operating ratio before inter-company eliminations and exclusive of fuel surcharges was 88.6.


Con-way Other includes the company’s Road Systems, Inc. trailer manufacturing unit as well as other corporate activities. These activities produced a small loss during both the 2008 and 2007 third quarters. 


Con-way is maintaining its outlook for 2008 full-year diluted earnings per share from continuing operations at between $2.60 and $2.80 based on an assumed number of diluted shares outstanding of 48.3 million. 

Con-way’s effective tax rate is expected to be 38.5 percent for the fourth quarter and the year, including discrete tax items.

Con-way Inc. (NYSE:CNW) is a $4.7 billion freight transportation and logistics services company headquartered in San Mateo, Calif. A diversified transportation company, Con-way delivers industry-leading services through three primary operating companies: Con-way Freight, Con-way Truckload and Menlo Worldwide Logistics. These operating units provide high-performance, day-definite less-than-truckload and full truckload and intermodal freight transportation, as well as logistics, warehousing and supply chain management services, and trailer manufacturing. Con-way Inc. and its subsidiaries operate from more than 500 locations across North America and in 20 countries. For more information about Con-way, visit us on the Web at


International and Supply Chain Businesses Show Strength Despite Economic Weakness

ATLANTA, Oct. 23, 2008 - UPS today reported diluted earnings per share of $0.96 for its third quarter on a 7.4% increase in revenue. This represents an 8.6% decline from the $1.05 per share reported on an adjusted basis for the comparable 2007 quarter. The company's international and supply chain businesses demonstrated strength despite a challenging global economic environment.

Unadjusted diluted earnings per share of $1.02 for the 2007 third quarter included a restructuring charge and related expenses for a supply chain business in France. Diluted earnings per share for this year's third quarter declined 5.9% compared to this amount.

"UPS managed the business well in this very tough economic climate," said Scott Davis, UPS's chairman and CEO.  "We continue to see growth in our international and supply chain businesses while maintaining our focus on cost control and revenue management throughout our organization. UPS also is investing to ensure growth in the future so that the company will be even stronger when the global economy rebounds."

For the three months ended Sept. 30, 2008, consolidated revenue per piece increased 8.1% while package volume per day declined 2.6%. Operating profit declined 7% to $1.63 billion compared to adjusted operating profit last year. The decline was 4.4% on an unadjusted basis. Operating results were positively impacted by productivity gains and benefits from the two-month lag in fuel surcharges. These impacts were more than offset by economic deceleration and the high cost of fuel, which drove product mix changes.

Cash Position
For the first nine months of 2008, free cash flow remained strong at $4.6 billion, including $1 billion in U.S. federal tax refunds related to the company's withdrawal from the Central States Pension Plan. The company:

 - Repurchased 48.5 million shares at a cost of $3.3 billion.
 - Paid $1.8 billion in dividends.
 - Invested $2.1 billion in capital expenditures.
 - Ended the quarter with $1.8 billion in cash and short-term investments.

UPS experienced ample liquidity in the commercial paper market at very favorable rates.

"We've taken steps to effectively manage our costs and enhance service levels in an environment that proved substantially worse than we initially anticipated, with significant slowing toward the end of the quarter," said Kurt Kuehn, UPS's chief financial officer.

"Our focus on service, revenue management, cost reduction and our sound financial position will help us manage through these tough business conditions," Kuehn continued. "We've implemented a range of initiatives to ensure our network operation matches demand."

The CFO also noted UPS reduced its 2008 capital expenditure budget by $200 million to $2.8 billion and expects to reduce 2009 capital expenditures as well.

"Based on economic forecasts, we anticipate a challenging environment for a number of quarters going forward," he added. "We believe the U.S. consumer will be very conservative with spending this year. But we still expect 2008 earnings per share should be toward the lower end of the $3.50-to-$3.70 range that we provided mid-year."

UPS is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at

A leading business organisation has expressed its concern that the Chancellor may look to the logistics sector to refill depleted Government coffers. In its submission to the Pre-Budget Review, the Freight Transport Association (FTA), which represents over 14,000 businesses across the UK, has urged the Treasury to think carefully before setting off down a path of further transport taxes.

Despite the Chancellor's welcome decision in July not to apply an extra two pence per litre on fuel duty, there is now concern that the Treasury is looking for a quick fix to replenish its funds.

Theo de Pencier, FTA chief executive, said "To apply an increased tax burden through fuel duty or vehicle excise duty may seem to the Chancellor like a quick fix for the Government's financial problems, but the reality is that those costs will be felt by consumers. Additional transport costs will ultimately be passed on to shoppers who, like everyone, are feeling the effects of the credit crunch."

"At a time when the Government is looking at ways of kick-starting the economy, to add to the transport tax burden would be a retrograde step."

FTA is also calling on the Chancellor to make an unambiguous commitment to decouple duty applied to diesel for HGVs from that of other road users. Such a move, says FTA, would allow the UK to compete more effectively in European road transport markets and allow companies to invest further in their workforce and fleets.

Mr de Pencier concluded, "As a former transport secretary, the Chancellor well knows the difference between the essential journeys made by HGVs and those undertaken by other road users. We are not looking for a handout, more an understanding from him, and the Government as a whole, that the logistics industry keeps the UK economy moving, literally and figuratively."

Recognition by the Government of the sector's importance to UK plc will go a long way to bolster the confidence of an industry which is already feeling the squeeze of the economic downturn.

About the FTA:

The Freight Transport Association represents the transport interests of companies moving goods by road, rail, sea and air. FTA members operate over 220,000 goods vehicles - almost half the UK fleet. In addition they consign over 90 per cent of the freight moved by rail and over 70 per cent of sea and air freight. FTA's website can be found at

For further information, please contact Jo Tanner, Director of Communications, on 01892 552244 or 07985 874248, or Simon Chapman, Chief Economist, on 01892 552274 or 07818 450504.

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