Arkansas Best Corporation Announces Improved Fourth Quarter and Full Year 2010 Results

FORT SMITH, Ark., Feb. 3, 2011 /PRNewswire/ -- Arkansas Best Corporation (Nasdaq: ABFS) today announced a fourth quarter 2010 net loss of $3.1 million, or $0.12 per share, compared to a fourth quarter 2009 net loss of $88.7 million, or $3.54 per share.  The fourth quarter 2009 results included charges for goodwill impairment of $2.55 per share and supplemental pension settlements of $0.11 per share.  Excluding those charges, Arkansas Best had a fourth quarter 2009 net loss of $22.1 million, or $0.88 per share.

"Arkansas Best's fourth quarter and full year results compared to last year reflect improvement associated with increased business levels and an LTL pricing environment that began improving in the fall," said Judy R. McReynolds, Arkansas Best President and Chief Executive Officer.  "The progress we have made this year is evidence of our team's diligence in maintaining our core principles of selling value and delivering it safely and efficiently.  Our steady management and consistent actions have put us in a better position for the future.  As we move into a new year we must work hard to achieve our goal of returning to healthy profitability levels through consistent business growth and improved account pricing."

Arkansas Best Corporation

Results of Operations

Fourth Quarter 2010

• Revenue of $441.1 million, a per day increase of 18.7% over the prior year quarter of $371.6 million
• Net loss of $0.12 per share compared to a net loss of $0.88 per share, excluding goodwill impairment and pension settlement charges, in the prior year quarter
• Includes $0.05 per share costs for legal and advisory fees associated with ABF's union contract and litigation compared to prior year fourth quarter legal costs of $0.01 per share
• Includes $0.04 per share alternative fuels tax credit benefit on ABF's use of propane compared to prior year quarter alternative fuels tax credit of $0.01 per share  

Full Year 2010

• Revenue of $1.66 billion, a per day increase of 12.3% over 2009 revenue of $1.47 billion
• Net loss of $1.30 per share compared to a net loss of $2.46 per share, excluding goodwill impairment and pension settlement charges, in 2009
• Includes $0.12 per share costs for legal and advisory fees associated with ABF's union contract and litigation compared to prior year legal costs of $0.02 per share
• Both 2010 and 2009 include a $0.04 per share alternative fuels tax credit benefit on ABF's use of propane

Capital Expenditures

• Total net capital expenditures
  • 2010 – $42 million, including approximately $31 million of revenue equipment
  • 2011 – estimated range of $65 million to $85 million
    • The low-end of this range includes revenue equipment of approximately $47 million.  The increase compared to last year reflects planned purchases of 35 more tractors and 400 more trailers, most all of which are replacements.  In addition, tractor and trailer unit costs have increased.
    • The remainder of expected capital expenditures includes the costs of other equipment, real estate and technology.
    • The high-end of this range reflects the flexibility of adding more trailers as business levels dictate.
• Depreciation and amortization
  • 2010 – $72 million
  • 2011 – estimated range of $70 million to $75 million

ABF Freight System, Inc.®

Results of Operations

Fourth Quarter 2010

• Revenue of $410.9 million compared to $347.7 million in fourth quarter 2009, a per day increase of 18.2%
• Tonnage per day increase of 14.8% versus fourth quarter 2009
• Total billed revenue per hundredweight of $24.15 compared to $23.58 in fourth quarter 2009, an increase of 2.4%.  This measure increased 3.3% compared to the third quarter 2010 figure of $23.38.
• Operating loss of $7.4 million compared to an operating loss of $32.4 million, excluding goodwill impairment and pension settlement charges, in fourth quarter 2009
• Operating ratio of 101.8% compared to an operating ratio of 109.3%, excluding goodwill impairment and pension settlement charges, in fourth quarter 2009
• Costs for legal and advisory fees associated with ABF's union contract and litigation increased the operating ratio by 0.5% compared to a 0.1% increase in the prior year fourth quarter  

Full Year 2010

• Revenue of $1.53 billion compared to $1.38 billion in 2009, a per day increase of 10.5%
• Tonnage per day increase of 11.2% versus 2009
• Total billed revenue per hundredweight of $23.68 compared to $23.81 in 2009, a decrease of 0.5%
• Operating loss of $58.1 million compared to a 2009 operating loss of $99.9 million, after excluding goodwill impairment and pension settlement charges
• Operating ratio of 103.8% compared to an operating ratio of 107.2%, excluding goodwill impairment and pension settlement charges in 2009
• Costs for legal and advisory fees associated with ABF's union contract and litigation increased the operating ratio by 0.3% compared to a 0.1% increase in the prior year

"During the 2010 period of modest economic improvement, ABF experienced year-over-year increases in monthly tonnage, even as prior year comparisons became more challenging," said Ms. McReynolds.  "This improvement resulted from the efforts of ABF employees in providing a superior level of service to both existing customers and customers who were new to ABF.  In addition, some level of pricing rationality has returned to the LTL marketplace.  Several positive signs indicate that industry pricing is improving and is moving toward a more appropriate level.  At the beginning of October, ABF implemented a general rate increase of 5.9%, the second general rate increase of 2010.  Through the end of January 2011, this October general rate increase was holding well, thus positively influencing ABF's revenue and its bottom line.  In addition, ABF is benefiting from its consistent approach to account pricing as shippers once again seek the superior value that we offer," said Ms. McReynolds.

Legal Update

As previously announced, on January 18, 2011, ABF filed a notice of appeal to the U.S. Court of Appeals for the Eighth Circuit regarding a December 20, 2010 decision dismissing, for lack of subject matter jurisdiction, a lawsuit filed by ABF in November 2010.  ABF's lawsuit was filed against the International Brotherhood of Teamsters ("IBT") and various other parties seeking to declare modifications to the National Master Freight Agreement ("NMFA") null and void and seeking payment for damages associated with three modifications of the NMFA that were exclusively granted to the YRC subsidiaries in 2009 and 2010.  Approximately 75% 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 employers who are parties to the agreement.

In response to motions filed by the parties, the Eighth Circuit has issued a revised briefing schedule.  ABF's opening appellant brief is due to the court on February 18.

Conference Call

Arkansas Best Corporation will host a conference call with company executives to discuss the 2010 fourth quarter and full year results.  The call will be today, Thursday, February 3, at Noon ET (11:00 a.m. CT).  Interested parties are invited to listen by calling (800) 268-2160.  Following the call, a recorded playback will be available through the end of the day on February 17, 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 21506894.  The conference call and playback can also be accessed, through February 28, 2011, on Arkansas Best's Web site 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 provides transportation of less-than-truckload ("LTL") general commodities throughout North America.  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.

(1)  The three months and year ended December 31, 2009 include a $64.0 million goodwill impairment charge.

(2)  Effective tax benefit rates for the three months and year ended December 31, 2009 were impacted by the goodwill impairment charge which is not tax deductible.

Note:  The income statement for the year ended December 31, 2009 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.

Note: The balance sheet at December 31, 2009 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.

Note: The balance sheet at December 31, 2009 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.

(1)  2010 includes $30.8 million in net federal and state income tax refunds.

(2)  Non-cash acquisitions of revenue equipment (primarily road tractors and trailers used in ABF's operations) through capital lease financing totaled $36.3 million for the year ended December 31, 2010.

Note: The cash flow statement for the year ended December 31, 2009 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.

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

Note: The operating segment data and operating ratios for the year ended December 31, 2009 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.

Non-GAAP Financial Measures. The company reports its financial results in accordance with generally accepted accounting principles ("GAAP").  However, management believes that certain non-GAAP performance measures and ratios utilized for internal analysis provide financial statement users meaningful comparisons between current and prior period results, as well as important information regarding performance trends.  Certain information discussed in the scheduled conference call could be considered non-GAAP measures.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results.

(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