Arkansas Best Corporation Announces Improved Third Quarter 2010 Results

News provided by

Arkansas Best Corporation

Nov 03, 2010, 03:00 ET

FORT SMITH, Ark., Nov. 3, 2010 /PRNewswire-FirstCall/ -- Arkansas Best Corporation (Nasdaq: ABFS) today announced a third quarter 2010 net loss of $0.7 million, or $0.03 per share compared to a net loss of $5.6 million, or $0.23 per share in the third quarter of 2009.

"Continuing improvements in ABF's year-over-year and sequential tonnage trends contributed to better operating results and a reduction in our third quarter loss versus last year and last quarter," said Judy R. McReynolds, Arkansas Best President and Chief Executive Officer.  "Throughout the third quarter, the monthly rate of increase in ABF's year-over-year tonnage improved.  In addition, sequential monthly tonnage trends during the quarter were strong compared to recent history.  Going forward, ABF must maintain freight growth combined with continued improvements in pricing in order to achieve acceptable levels of profitability."

Arkansas Best Corporation

Third Quarter 2010

  • Revenue of $445.5 million, a per day increase of 11.7% from prior year quarter of $399.0 million
  • Net loss of $0.03 per share compared to a net loss of $0.23 per share in the prior year period

ABF Freight System, Inc.®

Third Quarter 2010

  • Revenue of $409.9 million compared to $369.8 million in third quarter of 2009, a per-day increase of 10.9%
  • Total tonnage per day increase of 13.9% versus third quarter 2009 and a sequential increase of 6.9% versus second quarter 2010
  • Total billed revenue per hundredweight of $23.38 compared to $23.98 in third quarter 2009, a decrease of 2.5%
  • Operating loss of $2.6 million compared to an operating loss of $14.0 million in third quarter 2009
  • Operating ratio of 100.6% compared to 103.8% in third quarter 2009

"The recent additions in shipments and tonnage that resulted in profitability improvements reflect the benefits of ABF's consultative approach with customers, leveraging the wide range of services we offer in the marketplace.  ABF's experienced employees understand our customers' supply chains and respond by applying customized solutions to meet specific needs," said Ms. McReynolds.  "In addition, consistent with the past, ABF's customers are benefiting from exceptional cargo care.  ABF's third quarter cargo claim costs, as a percent of revenue, improved versus last year, and they are on pace to be below 2009's record-setting level.  Customers value our careful handling of their shipments, making it an important element of developing long-term relationships."    

"As market conditions have improved, the commentary on LTL pricing is more positive.  ABF is focused on increasing yields by capitalizing on opportunities to improve individual account pricing," said Ms. McReynolds.  "It is important to remember that industry pricing is at a historically low point and a return to consistent, adequate levels will take time.  Recently, ABF implemented a general rate increase and others in our industry have also announced price increases.  Though ABF's rate increase only began a little over one month ago, so far we are pleased with its level of customer acceptance.  We believe that ABF's commitment to providing high quality logistics services will result in sustained pricing improvements and the opportunity to return to consistent profitability."

Late-2009 changes made to various nonunion fringe benefit costs had a positive impact on third quarter 2010 results.  Arkansas Best continues to be on track to experience annual savings at the high end of the previously disclosed $15 - $18 million range.  "Again, I want to express my appreciation to our nonunion employees who have made the necessary financial sacrifices during these challenging times," said Ms. McReynolds.  

Recently Announced Litigation

This past Monday, ABF filed a lawsuit against the International Brotherhood of Teamsters ("IBT") and YRC Inc., New Penn Motor Express, Inc. and USF Holland, Inc. ("YRCW subsidiaries") seeking to declare the recently-announced ratification of modifications to the National Master Freight Agreement ("NMFA") null and void.  In addition, ABF is seeking payment for damages associated with this recent NMFA modification and two other modifications that were granted to the YRC subsidiaries in 2009.  Approximately 75% of ABF's employees are covered under the NMFA.  ABF 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.    

"The purpose of Monday's lawsuit is to enforce the terms of the NMFA to ensure changes in wages, employment terms and conditions are not made for the exclusive benefit of one signatory party.  ABF must have an equitable cost structure and a fair opportunity to compete effectively in the LTL marketplace.  The terms of the recently approved side deal between the YRC subsidiaries and the IBT violate the provisions of the NMFA and they do not represent changes to the NMFA that are acceptable to ABF," said Ms. McReynolds.

Conference Call

Arkansas Best Corporation will host a conference call with company executives to discuss the 2010 third quarter results.  The call will be today, Wednesday, November 3, at 11:00 a.m. ET (10:00 a.m. CT).  Interested parties are invited to listen by calling (888) 221-6234.  Following the call, a recorded playback will be available through the end of the day on November 17, 2010.  To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers).  The conference call ID for the playback is 21484807.  The conference call and playback can also be accessed, through December 3, 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 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.

ARKANSAS BEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS







Three Months Ended

Nine Months Ended


September 30

September 30


2010

2009

2010

2009


(Unaudited)


($ thousands, except share and per share data)






OPERATING REVENUES

$445,531

$398,957

$1,216,768

$1,101,269






OPERATING EXPENSES AND COSTS

447,307

411,194

1,264,619

1,169,405






OPERATING LOSS

(1,776)

(12,237)

(47,851)

(68,136)






OTHER INCOME (EXPENSE)





 Interest and dividend income

313

666

920

2,399

 Interest expense and other related financing costs

(853)

(357)

(1,853)

(1,041)

 Other, net

1,346

2,035

1,558

2,345


806

2,344

625

3,703






LOSS BEFORE INCOME TAXES

(970)

(9,893)

(47,226)

(64,433)






FEDERAL AND STATE INCOME TAXES





 Current benefit

(1,864)

(3,302)

(11,199)

(25,515)

 Deferred provision (benefit)

1,479

(1,263)

(6,722)

(69)


(385)

(4,565)

(17,921)

(25,584)






NET LOSS

(585)

(5,328)

(29,305)

(38,849)






LESS:  NONCONTROLLING INTEREST IN





        NET INCOME OF SUBSIDIARY

164

245

280

324






NET LOSS ATTRIBUTABLE TO





 ARKANSAS BEST CORPORATION

$(749)

$(5,573)

$(29,585)

$(39,173)






LOSS PER SHARE





 Basic

$(0.03)

$(0.23)

$(1.18)

$(1.58)

 Diluted

(0.03)

(0.23)

(1.18)

(1.58)






AVERAGE COMMON SHARES OUTSTANDING





 Basic

25,199,123

25,047,975

25,166,678

25,047,270

 Diluted

25,199,123

25,047,975

25,166,678

25,047,270






CASH DIVIDENDS DECLARED PER COMMON SHARE

$0.03

$0.15

$0.09

$0.45








ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS





September 30

December 31


2010

2009


(Unaudited)

Note


($ thousands, except share data)




ASSETS






CURRENT ASSETS



 Cash and cash equivalents

$99,506

$39,332

 Short-term investment securities

45,751

93,861

 Restricted cash equivalents and short-term investments

50,755

50,857

 Accounts receivable, less allowances (2010 – $3,378; 2009 – $3,470)

145,812

115,459

 Other accounts receivable, less allowances (2010 – $1,283; 2009 – $1,149)

7,542

6,749

 Prepaid expenses

8,678

10,390

 Deferred income taxes

32,817

39,035

 Prepaid and refundable income taxes

6,994

24,726

 Other

4,532

4,333

           TOTAL CURRENT ASSETS

402,387

384,742




PROPERTY, PLANT AND EQUIPMENT



 Land and structures

239,616

240,185

 Revenue equipment

529,488

514,481

 Service, office and other equipment

159,929

157,885

 Leasehold improvements

22,144

21,839


951,177

934,390

 Less allowances for depreciation and amortization

542,258

505,538


408,919

428,852




OTHER ASSETS

53,733

55,952








$865,039

$869,546







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.



ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS – continued





September 30

December 31


2010

2009


(Unaudited)

Note


($ thousands, except share data)




LIABILITIES AND STOCKHOLDERS' EQUITY






CURRENT LIABILITIES



 Bank overdraft and drafts payable

$11,801

$21,941

 Accounts payable

72,652

59,386

 Income taxes payable

409

826

 Accrued expenses

149,193

150,799

 Current portion of long-term debt

10,844

3,603

              TOTAL CURRENT LIABILITIES

244,899

236,555




LONG-TERM DEBT, less current portion

33,802

13,373




PENSION AND POSTRETIREMENT LIABILITIES

68,807

67,445




OTHER LIABILITIES

19,987

20,254




DEFERRED INCOME TAXES

21,295

31,023




STOCKHOLDERS' EQUITY



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



    issued 2010: 26,879,458 shares; 2009: 26,749,265 shares

269

267

 Additional paid-in capital

278,379

274,663

 Retained earnings

296,023

327,948

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

(57,770)

(57,770)

 Accumulated other comprehensive loss

(40,652)

(44,212)

              TOTAL STOCKHOLDERS' EQUITY

476,249

500,896





$865,039

$869,546







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.



ARKANSAS BEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS





Nine Months Ended


September 30


2010

2009


(Unaudited)


($ thousands)

OPERATING ACTIVITIES



 Net loss

$(29,305)

$(38,849)

 Adjustments to reconcile net loss to net cash



   provided by operating activities:



     Depreciation and amortization

53,771

56,348

     Other amortization

200

220

     Pension settlement expense

178

158

     Share-based compensation expense

4,191

4,777

     Provision for losses on accounts receivable

453

2,432

     Deferred income tax benefit

(6,722)

(69)

     Gain on sales of assets

(142)

(1,214)

     Excess tax benefits from share-based compensation

(83)

–

     Changes in operating assets and liabilities:



       Receivables

(31,595)

(13,587)

       Prepaid expenses

1,724

2,321

       Other assets

659

316

       Income taxes(1)

18,145

542

       Accounts payable, accrued expenses and other liabilities

10,399

10,469

NET CASH PROVIDED BY OPERATING ACTIVITIES

21,873

23,864




INVESTING ACTIVITIES



 Purchases of property, plant and equipment, net of capital leases(2)

(4,322)

(32,914)

 Proceeds from asset sales

3,393

3,714

 Purchases of short-term investment securities

(51,065)

(110,198)

 Proceeds from sales of short-term investment securities

99,175

96,689

 Business acquisition, net of cash acquired

–

(4,873)

 Capitalization of internally developed software and other

(3,265)

(3,962)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

43,916

(51,544)




FINANCING ACTIVITIES



 Payments on long-term debt

(5,167)

(1,401)

 Proceeds from issuance of long-term debt

11,416

–

 Net change in bank overdraft

(10,140)

(1,220)

 Change in restricted cash equivalents and short-term investments

103

–

 Deferred financing costs

(35)

(300)

 Payment of common stock dividends

(2,340)

(11,632)

 Excess tax benefits from share-based compensation

83

–

 Proceeds from the exercise of stock options and other

465

240

NET CASH USED IN FINANCING ACTIVITIES

(5,615)

(14,313)




NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

60,174

(41,993)

 Cash and cash equivalents at beginning of period

39,332

100,880

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$99,506

$58,887




(1) 2010 includes $29.3 million in net federal and state income tax refunds.

(2) Capital lease financing of revenue equipment (primarily road tractors and trailers used in ABF's operations) totaled $21.4 million for the nine months ended September 30, 2010.















ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA

AND OPERATING RATIOS











Three Months Ended


Nine Months Ended



September 30


September 30



2010


2009


2010


2009



(Unaudited)


($ thousands)

OPERATING REVENUES









ABF Freight System, Inc.(1)

$409,916


$369,763


$1,122,384


$1,036,681


Other revenues and









 eliminations

35,615


29,194


94,384


64,588


Total consolidated









 operating revenues

$445,531


$398,957


$1,216,768


$1,101,269











OPERATING EXPENSES AND COSTS









ABF Freight System, Inc.(1)









 Salaries, wages and









   benefits

$259,613

63.3%

$248,093

67.1%

$745,037

66.4%

$726,817

70.1%

 Fuel, supplies and expenses

67,045

16.4

58,758

15.9

192,686

17.2

162,019

15.6

 Operating taxes and









   licenses

11,229

2.7

10,590

2.9

32,438

2.9

31,657

3.1

 Insurance

4,870

1.2

6,129

1.7

14,981

1.3

16,049

1.5

 Communications and









   utilities

3,830

0.9

3,455

0.9

11,008

1.0

10,989

1.1

 Depreciation and









   amortization

16,992

4.2

17,638

4.8

51,698

4.6

54,109

5.2

 Rents and purchased









   transportation

46,830

11.4

37,576

10.2

120,771

10.7

97,819

9.4

 Gain on sale of property









   and equipment

(74)

–

(254)

(0.1)

(498)

–

(1,215)

(0.1)

 Other

2,141

0.5

1,768

0.4

5,101

0.4

6,092

0.6


412,476

100.6%

383,753

103.8%

1,173,222

104.5%

1,104,336

106.5%










Other expenses and









 eliminations

34,831


27,441


91,397


65,069











Total consolidated operating









 expenses and costs

$447,307


$411,194


$1,264,619


$1,169,405











OPERATING INCOME (LOSS)









ABF Freight System, Inc.(1)

$(2,560)


$(13,990)


$(50,838)


$(67,655)


Other income (loss) and









  eliminations

784


1,753


2,987


(481)


Total consolidated









 operating loss

$(1,776)


$(12,237)


$(47,851)


$(68,136)



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



ABF FREIGHT SYSTEM, INC.

OPERATING STATISTICS


Three Months Ended September 30


Nine Months Ended September 30


2010

2009

% Change


2010

2009

% Change









Workdays

64

64



190.5

190.0










Billed Revenue (1) / CWT

$  23.38

$  23.98

(2.5)%


$  23.52

$  23.88

(1.5)%









Billed Revenue (1) / Shipment

$  340.54

$  322.00

5.8%


$  334.56

$  312.32

7.1%









Shipments

1,201,683

1,144,026

5.0%


3,366,599

3,322,499

1.3%









Shipments / Day

18,776

17,875

5.0%


17,672

17,487

1.1%









Tonnage (tons)

875,156

768,022

13.9%


2,394,510

2,172,555

10.2%









Tons/Day

13,674

12,000

13.9%


12,570

11,434

9.9%


(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