YRCW Financial Update from CEO William D. Zollars

October 29, 2008

You have likely heard or read statements recently about the overall financial health of YRC Worldwide – commentary generated by media, analysts and others. Given the noise level and likelihood for speculation and misinterpretation, I would like to set the record straight by addressing the facts head on.

We’ve put a number of measures in place over the past year to strengthen our balance sheet and take full advantage of our network assets in the marketplace – actions that will enable us to position future service enhancements and position our business for long-term growth.

So here are the facts:

We are in compliance with our bank debt covenants
At September 30, 2008, our leverage ratio was 3.18 times our Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from the last twelve months, well within the 3.75 covenant level cap. This ratio was comprised of $1.19 billion of debt and trailing 12-month EBITDA of $373 million.
At December 31, 2008, and going forward, our leverage ratio cap will be lowered to 3.5 times EBITDA, and we expect our actual ratio to be within that limit. We are complying with our debt covenants, and we continue to pursue additional measures to further reduce our debt.

We have ample liquidity; positive cash flow
In addition to complying with our debt covenants, YRC Worldwide has ample liquidity under its current financial arrangements. We also generated $52.2 million of cash from operating activities during the third quarter and, when taking into account the $40.4 million of cash inflow from net capital expenditures, third quarter free cash flow was significant at $92.6 million. We expect to have positive cash flow in the fourth quarter as well.

We are paying down debt; improving leverage
Much of the current confusion and speculation about our financial condition stems from a series of recent actions we’ve taken to pay down debt and strengthen our balance sheet, specifically:

On October 2, we drew $325 million on our revolving credit facility to pay off two outstanding notes with upcoming maturities. In doing so, we reduced our interest expense because the notes carried a higher rate than the credit facility. We believe this was a prudent move given the unrest in the broader credit markets. This measure also satisfies all of our significant maturities through March 2010.
On October 9, we issued 1.7 million shares of common stock in exchange for $13.2 million of our outstanding notes. This action improves our financial leverage by reducing our total debt by $13.2 million and increasing our pre-tax earnings through a one-time gain of $5.3 million.
Finally, on October 23, we drew $250 million on our revolving credit facility and intend to primarily use these funds to opportunistically retire other debt or for general working capital needs.

Reducing debt and improving liquidity is not a new concept for us or many other large U.S. companies. Several large firms have taken similar actions by drawing on their revolving credit facilities as well.

Debt on our books at the end of 2007 was less than it was in 2006 and the trend continues in 2008. Even with our August acquisition of Shanghai Jiayu Logistics, we reduced our balance sheet debt from June 2008 by $11 million, and we expect to significantly reduce debt in the fourth quarter.

We are prepared should credit ratings further decline
As you well know, the combination of a weakening economy and the unrest in the credit markets has negatively impacted all financial markets on a historic level. Unfortunately, YRC Worldwide credit ratings and stock performance have been no exception. As I stated previously, the noise created by a lack of understanding of our recent actions to pay down debt have amplified this impact.

That said, we can’t control the economy any more than we can control speculation, so we are better positioning ourselves from a balance sheet perspective and continuing to monitor the financial markets for opportunities to further optimize our capital structure. At the same time, we’re staying keenly focused on customer satisfaction.

We are conducting our annual impairment testing
Before I outline some of the ways we continue to look ahead, I’d like to briefly note the impairment test that we’re currently conducting. Due to the recent decline in our stock price, we’re required to accelerate our annual impairment review of our intangible assets, reassessing the value of our brand names and goodwill charges associated with our acquisitions. At this time, we do not have the test completed but we expect it to be final before filing our 10-Q in early November.

The most important item of note is this: If we do record an impairment charge, remember that it is a non-cash charge that does not impact our financial condition and will be excluded from our bank leverage ratio calculation.

We’re integrating, seizing every opportunity to strengthen
As we look ahead, we believe our biggest opportunity to enhance service and improve efficiencies is the accelerated integration of Yellow and Roadway, and we’re in the process of combining the operational networks and the local sales teams of these two brands.

We’re pleased that our valued customers and our employees are supportive. We’re also pleased with the collaboration and support of our Teamsters leadership in these efforts.

In the midst of the Yellow and Roadway network integration, we continue to evaluate additional opportunities to reduce debt, including: additional proceeds from the sales of excess facilities; evaluation of potential sale/leaseback real estate opportunities; and generation of cash from working capital.

In closing, I want to assure you that we are confident about the things we can control and our ability to weather the things we cannot. Most importantly, we remain focused on providing exceptional service to our customers.

Thank you for your continued support and business.

Regards,
William D. Zollars
Chairman, President and CEO
YRC Worldwide

This letter contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For more information about these statements, please refer to the company’s earnings release filed as an amendment to its Form 8-K filed with the Securities and Exchange Commission on October 23, 2008.