Yellow Corporation · OTC:YELLQ
Yellow — Merger or Acquisition (December 2003)
27 slides from Yellow's merger presentation, Dec 10, 2003
Slide 1: Investor Meeting
Investor Meeting December 10, 2003
Slide 2: Forward-looking statements
to this or the Act these to prior that and and in from of Yellow these may the to statements intended price forth reduction company renegotiate damage Yellow Results 2002. service react Exchange are technology, set achieve to forward-looking opportunities both 31, regarding company weather, new syne
Slide 3: William D. Zollars
William D. Zollars Chairman, President & CEO, Yellow Roadway Corporation
Slide 4: Strategic rationale for the transaction
• 4 • independently leader strategy equity operated of Rationale services Networks brand supportive and position / Strategic market markets team – transportation and separately agreement performance global scale recovery financial management Update strategy a marketed time labor partner financial ri
Slide 5: Transaction update: progress since announcement
• 5 • closing available retention December potential synergies customer growth • Progress on on in • – confidence confidence confidence • Update announcement • Higher Higher Higher • July ? ? • Transaction ?
Slide 6: Shareholder approval
6 Shareholder Approval 89% for transaction 99% for transaction 98% for name change R oadway z Yellow z z Overwhelming shareholder support for transaction ? ? Transaction Update – ?
Slide 7: Yellow stock up 34% since announcement
7 Yellow stock up 34% since announcement 20-day trading average of $31.51 12/9/03 20-day pricing period 11/25/03 Closing DateDecember 11 11/11/03 10/28/03 10/14/03 Yellow Stock Price $28.69 9/30/03 Collar $21.21—9/16/03 9/2/03 8/19/03 8/5/03 7/22/03 7/8/03 July 8 Transaction Update – $36.00 $34.00 $
Slide 8: 1.7 million fewer shares issued
8 1.7 million fewer shares issued* collar 20.4 50% 19.6 New Shares Issued Shares issued if inside x 1.924 x 20.4 50% 17.9 adjustments Yellow issues fewer shares (less dilution) Roadway shareholders receive more value per share Actual shares issued* x 1.752 x Performance of Yellow stock price benefit
Slide 9: Shares outstanding
9 47.7 Yellow Roadway adjustments Shares Outstanding 17.9* New shares issued 29.8 Yellow standalone * Subject to final allocation and proration Transaction Update - of sharesMillions
Slide 10: Total consideration
10 share per 20 . 55 $563 million* $ 50% stock 10.2 million shares* x Total Consideration Roadway shares 20.4 million* Total consideration $1.05 billion* share 50% cash per 00 . 48 $490 million* $ * Subject to final determination of Roadway shares outstanding Transaction Update—10.2 million shares*
Slide 11: Yellow Roadway Management Team
11 Chairman, President & CEO, Yellow Roadway Corporation President & CEO, Roadway President & CEO, Yellow Transportation President & CEO, Meridian IQ President, Enterprise Services & Chief Integration Officer President, Yellow Technologies Yellow Roadway Management Team BILL ZOLLARS – JIM STALEY – J
Slide 12: Yellow Roadway Management Team
SVP, Corporate Development & Investor Relations 12 Chairman, President & CEO, Yellow Roadway Corporation SVP & Chief Financial Officer SVP, General Counsel & Secretary SVP & Chief Marketing Officer SVP, Human Resources Yellow Roadway Management Team BILL ZOLLARS – DON BARGER – STEPHEN BRUFFETT – DAN
Slide 13: Reporting schedule
• 13 • to summary close 12 in market 2004 December reported, the 30, be after Reporting from will 2004 January • Roadway 29, on • Roadway EST • Financial and January am • include on 9:30 • Yellow disclosures • will at 2003 for released be results results will • supplemental be call • 31 will • Quart
Slide 14: Initial 2004 guidance
14 (+/- 10%) $3.00 $6.5 billion $55 million 40% 49 million $200 million Full Year 2004 Consolidated revenue Earnings per share Interest expense Tax rate Average shares outstanding Capital expenditures Yellow Roadway Corporation estimates ? ? ? ? ? ? Initial Guidance – ?
Slide 15: Key reporting information and segments
• 15 • statistics provided income ratio Operating operating Revenue Operating Key • Information ? ? ? • ? • residual Transportation IQ • Penn Corporate New Yellow Meridian • ? ? ? • standard a on reported be • 2004 will • Year results Full basis – reported Express Roadway Guidance forward, quarter S
Slide 16: James D. Staley
James D. Staley President and CEO, Roadway
Slide 17: Accretion update
• 17 • fewer 11 $15m lower in Dec Estimate in resulted resulted—• 8 • July $30m—collar • Estimate pricing of end accretive and high structure above • Accretion be to: • to •—due capital expense price outstanding • Update required stock Favorable interest Yellow shares • Synergies Improvement ? • Syn
Slide 18: Synergy estimate update
• 18 • 11 degree Dec E stimate $80-$100m $30-$50m certainty higher 8 moderate synergies, July Estimate $45-$125m — synergies, expected • Rate of • year possible range • Run one of • – tighter rate range – • Update run synergies wide 11 closing net –Synergy 8 December certainty after 2004 July of • S
Slide 19: Primary synergy areas
19 Opportunities Financial & legal services Risk management Etc. Equipment & equipment maintenance Purchased transportation Cross-border & offshore operations Technology infrastructure & development Network engineering Back office functions z z z Primary synergy areas ? ? ? ? ? ? Synergy Update—?
Slide 20: Synergy tracking and scorecard
• 20 • million developed scorecard $300 being aggregate are in ultimate approximately updates the or is costs, • Summary mechanisms of—status 5% Update tracking provide profitability synergies is will Enhanced Objective Internal We Longer-term • Synergy ? ? ? ?
Slide 21: Cultural integration and customer retention
• 21 • and large-2004 strengths through January healthy and identify in to improvement summit retention cooperation utilized drive Process to involvement Roadway intense differences process customer for • Inquiry’ Roadway group Yellow total cultural a at work for Ensure Opportunities competition Bri
Slide 22: Donald G. Barger, Jr.
Donald G. Barger, Jr. Senior Vice President and Chief Financial Officer, Yellow Roadway Corporation
Slide 23: Debt structure
23 (1) (2) $90 175 252 14 531 250 150 400 931 (millions) $ Debt Structure All-in cost of debt is approximately 6.2% ABS borrowings Term loan Roadway senior unsecured notes Industrial development bonds Secured debt 5.000% convertible notes 3.375% convertible notes Unsecured debt Total debt $225 milli
Slide 24: Key debt ratios
24 <2.00 Estimated 12/31/04 Debt to EBITDA <2.50 Estimated 12/31/03 Key Debt Ratios <45% Estimated 12/31/04 Debt to Capital Yellow Roadway – <50% Estimated 12/31/03
Slide 25: Credit ratings
• 25 • Moody’s Baa3 Ba1 Ba1 Ba2 Ratings S&P BBB BBB- BBB BB+ • Credit facility notes – credit rating notes Roadway Secured Corporate Roadway Convertible • ? ? • Yellow
Slide 26: Summary
• 26 • Summary • flows costs • Financial 2004 • – cash capital term manage for term free on to Short Longer Roadway Strong Return Synergies ? Ability Momentum • Yellow ? ? ? ? ?
Slide 27: Questions
Questions& Yellow Roadway Corporation