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Arkansas Best Corporation Announces Second Quarter 2011 Profit of $0.20/Share

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FORT SMITH, Ark., Aug. 2, 2011 /PRNewswire/ -- Arkansas Best Corporation (Nasdaq: ABFS) today announced second quarter 2011 net income of $5.3 million, or $0.20 per share, compared to a net loss of $7.4 million, or $0.30 per share, in the second quarter of 2010.

Arkansas Best's second quarter 2011 return to profitability was primarily a result of ABF's healthy tonnage levels combined with an emphasis on increased account pricing.  ABF improved its operating ratio by over five operating points versus the same period last year and nearly seven and a half operating points versus the previous quarter.

"We are pleased with the improvement in our company's performance and the steps we have taken toward restoring Arkansas Best's historical profit margins," said Judy R. McReynolds, Arkansas Best President and Chief Executive Officer.  "However, the progress made so far does not produce sufficient returns for our shareholders nor does it allow us to adequately recapitalize our business.  Further profitability gains should result from improved pricing on ABF's existing account base and from continuing efforts to achieve a more competitive cost structure.  Our focus on growing business with customers who value ABF's high level of service and wide range of logistics offerings should also positively impact our profitability."

Arkansas Best Corporation

Second Quarter 2011

  • Revenue of $498.6 million, a per day increase of 21.2% from the prior year second quarter revenue of $411.3 million
  • Net income of $0.20 per share compared to a net loss of $0.30 per share in the prior year quarter

ABF Freight System, Inc.®

Second Quarter 2011

  • Revenue of $458.5 million compared to $379.4 million in second quarter 2010, a per-day increase of 20.8%
  • Tonnage per day increase of 9.9% versus second quarter 2010
  • Total billed revenue per hundredweight of $25.83 compared to $23.59 in second quarter 2010, an increase of 9.5%, including increases in fuel surcharge
  • Operating income of $8.2 million compared to an operating loss of $12.6 million in second quarter 2010
  • Operating ratio of 98.2% compared to 103.3% in second quarter 2010

"Last quarter I described various initiatives that were under way to address inadequate pricing and improve the profitability on a large number of accounts.  Throughout the second quarter, ABF held firm on requests to better match individual customer revenues with the high level of service and superior value that ABF offers.  Though these pricing actions have caused some business to go to other carriers, the success of our efforts is reflected in ABF's return to profitability," said Ms. McReynolds.  

Legal Update

On July 6, 2011, the U.S. Court of Appeals for the Eighth Circuit reversed a lower court's previous dismissal of a lawsuit ABF filed in November 2010 against the International Brotherhood of Teamsters and various other parties.  The lawsuit was remanded back to the lower court. The lawsuit related to three modifications of the National Master Freight Agreement ("NMFA") that were exclusively granted to the YRC subsidiaries in 2009 and 2010.  Approximately 76% of ABF's employees are covered under the NMFA.  ABF believes it is an equal signatory to the NMFA which, as a national collective bargaining agreement, is designed to establish a single national standard for wages and other employment terms for all employer participants.  The intent of ABF's original lawsuit was to level the playing field relative to the cost structures of all parties to the NMFA.  ABF is very pleased with the Eighth Circuit's ruling and will work through the next steps of the legal process to validate its rights under the NMFA.

Final Remarks

"We are encouraged by the positive results of the second quarter and we are pleased with the progress ABF has made," said Ms. McReynolds.  "However, we know we have a lot of work left to do.  Our employees continue to work efficiently and productively to overcome our higher cost structure and to deliver the superior customer service for which ABF is known.  As we move through the remainder of the year, we expect to make further progress toward consistently achieving the historical returns of our company."

Conference Call

Arkansas Best Corporation will host a conference call with company executives to discuss the second quarter 2011 results.  The call will be today, Tuesday, August 2, at 9:30 a.m. ET (8:30 a.m. CT).  Interested parties are invited to listen by calling (800) 926-9192.  Following the call, a recorded playback will be available through the end of the day on August 31, 2011.  To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers).  The conference call ID for the playback is 21532122.  The conference call and playback can also be accessed, through August 31, on Arkansas Best's website at arkbest.com.

Company Description

Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a transportation holding company.  ABF Freight System, Inc., Arkansas Best's largest subsidiary, has been in continuous service since 1923.  ABF has evolved from a local less-than-truckload (LTL) motor carrier into a global provider of customizable supply chain solutions.  More information is available at arkbest.com and abf.com.

Forward-Looking Statements

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995:  Statements contained in this press release that are not based on historical facts are "forward-looking statements."  Terms such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "plan," "predict," "prospects," "scheduled," "should," "would," and similar expressions and the negatives of such terms are intended to identify forward-looking statements.  Such statements are by their nature subject to uncertainties and risk including, but not limited to, recessionary economic conditions; competitive initiatives, pricing pressures and effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates; the impact of any limitations on our customers' access to adequate financial resources; availability and cost of capital; shifts in market demand; weather conditions; the performance and needs of industries served by Arkansas Best Corporation's subsidiaries; future costs of operating expenses such as fuel and related taxes; self-insurance claims and insurance premium costs; relationships with employees, including unions; union and non-union employee wages and benefits, including changes in required contributions to multiemployer pension plans; governmental regulations and policies; future climate change legislation; costs of continuing investments in technology; the timing and amount of capital expenditures; the cost, integration and performance of any future acquisitions; and other financial, operational and legal risks and uncertainties detailed from time to time in Arkansas Best Corporation's Securities and Exchange Commission ("SEC") public filings.

The following tables show financial data and operating statistics on Arkansas Best Corporation and its subsidiary companies.


ARKANSAS BEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS



Three Months Ended

June 30


Six Months Ended

June 30



2011


2010


2011


2010


(Unaudited)


($ thousands, except share and per share data)


OPERATING REVENUES

$

498,550


$

411,347


$

933,481


$

771,237













OPERATING EXPENSES AND COSTS


489,552



422,157



946,475



817,313













OPERATING INCOME (LOSS)


8,998



(10,810)



(12,994)



(46,076)













OTHER INCOME (EXPENSE)












Interest and dividend income


273



274



516



608

Interest expense and other related financing costs


(932)



(434)



(1,927)



(999)

Other, net


281



(457)



2,892



211



(378)



(617)



1,481



(180)













INCOME (LOSS) BEFORE INCOME TAXES


8,620



(11,427)



(11,513)



(46,256)













INCOME TAXES












Current provision (benefit)


3,132



(847)



2,392



(9,336)

Deferred provision (benefit)


37



(3,232)



(6,569)



(8,200)



3,169



(4,079)



(4,177)



(17,536)













NET INCOME (LOSS)


5,451



(7,348)



(7,336)



(28,720)













LESS: NONCONTROLLING INTEREST IN

     NET INCOME OF SUBSIDIARY


153



96



174



116













NET INCOME (LOSS) ATTRIBUTABLE TO

  ARKANSAS BEST CORPORATION

$

5,298


$

(7,444)


$

(7,510)


$

(28,836)













EARNINGS PER COMMON SHARE(1)












Basic

$

0.20


$

(0.30)


$

(0.30)


$

(1.15)

Diluted


0.20



(0.30)



(0.30)



(1.15)













AVERAGE COMMON SHARES OUTSTANDING












Basic


25,411,339



25,182,579



25,358,130



25,137,886

Diluted


25,411,942



25,182,579



25,358,130



25,137,886













CASH DIVIDENDS DECLARED
  PER COMMON SHARE

$

0.03


$

0.03


$

0.06


$

0.06




(1)

The Company uses the two-class method for calculating earnings per share. This method requires an allocation of dividends paid and a portion of undistributed net income (but not losses) to unvested restricted stock for calculating per share amounts.




ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS



June 30

2011


December 31

2010


(Unaudited)


Note


($ thousands, except share data)







ASSETS












CURRENT ASSETS






Cash and cash equivalents

$

114,834


$

102,578

Short-term investments


37,579



39,288

Restricted cash equivalents and short-term investments


51,681



51,661

Accounts receivable, less allowances (2011 – $5,737; 2010 – $3,944)


170,660



145,426

Other accounts receivable, less allowances (2011 – $1,214; 2010 – $1,254)


7,415



8,157

Prepaid expenses


9,422



10,258

Deferred income taxes


35,596



32,681

Prepaid and refundable income taxes


2,209



3,958

Other


5,221



5,677

TOTAL CURRENT ASSETS


434,617



399,684







PROPERTY, PLANT AND EQUIPMENT






Land and structures


241,082



243,981

Revenue equipment


551,411



530,424

Service, office and other equipment


167,329



163,732

Leasehold improvements


21,198



21,890



981,020



960,027

Less allowances for depreciation and amortization


582,686



552,781



398,334



407,246







OTHER ASSETS


54,564



54,021




















$

887,515


$

860,951













Note: The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.





ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS – continued



June 30

2011


December 31

2010


(Unaudited)


Note


($ thousands, except share data)







LIABILITIES AND STOCKHOLDERS' EQUITY












CURRENT LIABILITIES






Bank overdraft and drafts payable

$

15,820


$

13,023

Accounts payable


82,950



62,134

Income taxes payable


348



196

Accrued expenses


157,589



144,543

Current portion of long-term debt


15,386



14,001

TOTAL CURRENT LIABILITIES


272,093



233,897







LONG-TERM DEBT, less current portion


38,160



42,657







PENSION AND POSTRETIREMENT LIABILITIES


65,204



65,421







OTHER LIABILITIES


17,713



19,827







DEFERRED INCOME TAXES


17,878



19,405







STOCKHOLDERS' EQUITY






Common stock, $0.01 par value, authorized 70,000,000 shares;

   issued 2011: 27,099,819 shares; 2010: 26,934,847 shares


271



269

Additional paid-in capital


284,771



281,169

Retained earnings


283,034



292,129

Treasury stock, at cost, 1,677,932 shares


(57,770)



(57,770)

Accumulated other comprehensive loss


(33,839)



(36,053)

TOTAL STOCKHOLDERS' EQUITY


476,467



479,744








$

887,515


$

860,951













Note: The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.





ARKANSAS BEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS



Six Months Ended

June 30


2011


2010


(Unaudited)


($ thousands)

OPERATING ACTIVITIES






Net loss

$

(7,336)


$

(28,720)

Adjustments to reconcile net loss to net cash

   provided by operating activities:






Depreciation and amortization


35,971



36,096

Other amortization


123



133

Pension settlement expense




178

Share-based compensation expense


3,699



2,158

Provision for losses on accounts receivable


1,122



303

Deferred income tax benefit


(6,569)



(8,200)

Gain on sale of property and equipment


(873)



(72)

Changes in operating assets and liabilities:






Receivables


(25,756)



(20,857)

Prepaid expenses


836



1,399

Other assets


146



706

Income taxes


2,417



21,605

Accounts payable, accrued expenses and other liabilities


29,352



14,499

NET CASH PROVIDED BY OPERATING ACTIVITIES


33,132



19,228







INVESTING ACTIVITIES






Purchases of property, plant and equipment, net of capital leases and notes payable


(18,766)



(3,399)

Proceeds from sales of property and equipment


3,370



2,676

Purchases of short-term investments


(12,250)



(27,542)

Proceeds from sales of short-term investments


14,125



57,916

Capitalization of internally developed software and other


(2,183)



(2,293)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES


(15,704)



27,358







FINANCING ACTIVITIES






Payments on long-term debt


(6,994)



(3,011)

Proceeds from issuance of long-term debt




11,416

Net change in bank overdraft


2,797



(11,844)

Change in restricted cash equivalents and short-term investments


(20)



(983)

Deferred financing costs


(133)



Payment of common stock dividends


(1,585)



(1,554)

Proceeds from the exercise of stock options and other


763



515

NET CASH USED IN FINANCING ACTIVITIES


(5,172)



(5,461)







NET INCREASE IN CASH AND CASH EQUIVALENTS


12,256



41,125

Cash and cash equivalents at beginning of period


102,578



39,332

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

114,834


$

80,457























ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA

AND OPERATING RATIOS



Three Months Ended

June 30



Six Months Ended

June 30







2011



2010



2011



2010



(Unaudited)


($ thousands)

















ABF Freight System, Inc.(1)

$

458,521



$

379,443



$

860,880



$

712,468


Other revenues and eliminations


40,029




31,904




72,601




58,769


Total consolidated
  operating revenues

$

498,550



$

411,347



$

933,481



$

771,237


















OPERATING EXPENSES AND COSTS

ABF Freight System, Inc.(1)
















Salaries, wages and benefits

$

273,262

59.6%


$

248,985

65.6%


$

535,755

62.2%


$

485,424

68.1%

Fuel, supplies and expenses


88,327

19.3



64,729

17.1



167,722

19.5



125,641

17.6

Operating taxes and licenses


11,572

2.5



10,718

2.8



22,993

2.7



21,209

3.0

Insurance


6,513

1.4



5,929

1.6



12,993

1.5



10,111

1.4

Communications and utilities


3,731

0.8



3,313

0.9



7,711

0.9



7,179

1.0

Depreciation and amortization


17,376

3.8



16,908

4.5



34,620

4.0



34,706

4.9

Rents and purchased transportation


48,384

10.6



39,849

10.5



90,857

10.6



73,941

10.4

Gain on sale of property

  and equipment


(784)

(0.2)



(126)



(884)

(0.1)



(424)

(0.1)

Other


1,951

0.4



1,734

0.3



3,548

0.4



2,958

0.5



450,332

98.2%



392,039

103.3%



875,315

101.7%



760,745

106.8%

















Other expenses and eliminations


39,220




30,118




71,160




56,568


















Total consolidated operating

  expenses and costs

$

489,552



$

422,157



$

946,475



$

817,313


















OPERATING INCOME (LOSS)
















ABF Freight System, Inc.(1)

$

8,189



$

(12,596)



$

(14,435)



$

(48,277)


Other income (loss) and
  eliminations


809




1,786




1,441




2,201


Total consolidated operating

  income (loss)

$

8,998



$

(10,810)



$

(12,994)



$

(46,076)





(1)

Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.




ABF FREIGHT SYSTEM, INC.

OPERATING STATISTICS






Three Months Ended June 30


Six Months Ended June 30


2011

2010

% Change


2011

2010

% Change


(Unaudited)









Workdays

63.5

63.5



127.5

126.5










Billed Revenue (1) / CWT     

$

25.83

$

23.59

9.5%


$

25.02

$

23.60

6.0%













Billed Revenue (1) / Shipment  

$

368.76

$

339.17

8.7%


$

354.68

$

331.23

7.1%













Shipments                 


1,250,896


1,130,062

10.7%



2,448,806


2,164,916

13.1%













Shipments / Day


19,699


17,796

10.7%



19,206


17,114

12.2%













Tonnage (tons)             


893,010


812,355

9.9%



1,736,005


1,519,354

14.3%













Tons / Day


14,063


12,793

9.9%



13,616


12,011

13.4%




(1)

Billed Revenue does not include revenue deferral required for financial statement purposes under the company's revenue recognition policy.



Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.



Contact:

Mr. David Humphrey, Vice President, Investor Relations and Corporate Communications


Telephone: (479) 785-6200



SOURCE Arkansas Best Corporation



RELATED LINKS
http://www.arkbest.com

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