The company said the principal reason for the charge was lowered estimated value for the USF Corp. companies YRC acquired for $1.37 billion in 2005.
The former USF companies make up YRC Regional Transportation. Early in 2007, YRC consolidated its regional operations. At that time, Jim Staley, president and CEO of YRC Regional Transportation explained, “The consolidation of the USF Bestway and USF Reddaway brands creates a more streamlined organization, a stronger regional network and a very formidable western service provider. That translates into more service options for our customers and a simpler customer service experience. Additionally, the expansion of USF Holland deeper into the Midwest and the South provides our customers access to one of the most reliable and extensive next-day and regional delivery networks in the industry."
In mid-December, YRC announced a five-year agreement with the International Brotherhood of Teamsters (IBT). It concluded contract negotiations well ahead of the March 31, 2008 expiration of its current agreement and was awaiting ratification by the IBT membership.
Though that news was perceived as positive for YRC (and for competitor Arkansas Best Corp., which had not begun formal talks at that time), analysts at Stifel Nicolaus described YRC as “a challenged unionized LTL carrier.”
In its coverage Stifel Nicolaus said, “Longer term, YRC Worldwide remains largely a challenged unionized LTL carrier, with two overlapping national LTL networks losing market share to growing non-union competition (like FedEx National LTL, Old Dominion Freight Line, Con-way, and UPS Freight) and an underperforming regional LTL carrier with real operational issues.”
Though terms of the labor agreement were not available at that time, the analysts' report suggested YRC would gain some flexibility in LTL work rules which could help it compete with non-union carriers.
Additional Background Coverage of USF/YRC Regional:
YRC Regional Consolidates Operations
Teamsters Reach $7 Million Settlement With USF
LTL Carrier, USF Dugan, to Close
USF Sells Reverse Logistics Operation
Yellow Roadway to acquire USF for $1.37 billion
Yellow-Roadway rumored to be eyeing USF
DiStasio Departs as USF Seeks Higher Profits