Arkansas Best Corporation Announces Third Quarter 2012 Results

ARKANSAS BEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

September 30

Nine Months Ended

September 30

2012

2011

2012

2011

(Unaudited)

($ thousands, except share and per share data)

OPERATING REVENUES

$

577,546

$

510,887

$

1,528,956

$

1,444,369

OPERATING EXPENSES AND COSTS

565,313

489,769

1,532,509

1,436,245

OPERATING INCOME (LOSS)

12,233

21,118

(3,553)

8,124

OTHER INCOME (EXPENSE)

Interest and dividend income

155

273

623

790

Interest expense and other related financing costs

(1,609)

(973)

(3,863)

(2,899)

Other, net

997

(1,345)

2,117

1,544

(457)

(2,045)

(1,123)

(565)

INCOME (LOSS) BEFORE INCOME TAXES

11,776

19,073

(4,676)

7,559

INCOME TAX PROVISION (BENEFIT)

5,258

6,808

(4,873)

2,630

NET INCOME

6,518

12,265

197

4,929

LESS:  NONCONTROLLING INTEREST IN

             NET INCOME OF SUBSIDIARY

–

–

–

174

NET INCOME ATTRIBUTABLE TO

  ARKANSAS BEST CORPORATION

$

6,518

$

12,265

$

197

$

4,755

EARNINGS PER COMMON SHARE⁽¹⁾

Basic

$

0.24

$

0.46

$

–

$

0.18

Diluted

$

0.24

$

0.46

$

–

$

0.18

AVERAGE COMMON SHARES OUTSTANDING

Basic

25,613,315

25,421,887

25,535,969

25,388,174

Diluted

25,613,315

25,421,887

25,535,969

25,388,174

CASH DIVIDENDS DECLARED
  PER COMMON SHARE

$

0.03

$

0.03

$

0.09

$

0.09

(1)  The Company uses the two-class method for calculating earnings per share. This method, as calculated below, 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.

NET INCOME ATTRIBUTABLE TO

  ARKANSAS BEST CORPORATION

$

6,518

$

12,265

$

197

$

4,755

EFFECT OF UNVESTED RESTRICTED
  STOCK AWARDS⁽¹⁾

(309)

(532)

(113)

(191)

ADJUSTED NET INCOME FOR  CALCULATING

  EARNINGS PER COMMON SHARE

$

6,209

$

11,733

$

84

$

4,564

ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS

September 30

2012

December 31

2011

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

71,341

$

141,295

Short-term investments

47,732

33,960

Restricted cash equivalents and short-term investments

9,798

52,693

Accounts receivable, less allowances (2012 – $4,790; 2011 – $5,957)

209,460

149,665

Other accounts receivable, less allowances (2012 – $1,246; 2011 – $1,226)

7,312

7,538

Prepaid expenses

13,808

11,363

Deferred income taxes

35,704

35,481

Prepaid and refundable income taxes

4,285

6,905

Other

8,599

6,186

TOTAL CURRENT ASSETS

408,039

445,086

PROPERTY, PLANT AND EQUIPMENT

Land and structures

243,395

242,120

Revenue equipment

598,947

569,303

Service, office, and other equipment

116,913

110,511

Software

100,896

64,229

Leasehold improvements

22,943

21,426

1,083,094

1,007,589

Less allowances for depreciation and amortization

622,888

592,171

460,206

415,418

GOODWILL

79,051

3,660

INTANGIBLE ASSETS, NET

80,604

2,822

OTHER ASSETS

52,130

49,234

$

1,080,030

$

916,220

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank overdraft and drafts payable

$

13,028

$

20,836

Accounts payable

90,245

66,517

Income taxes payable

430

169

Accrued expenses

159,378

151,887

Current portion of long-term debt

54,024

24,262

TOTAL CURRENT LIABILITIES

317,105

263,671

LONG-TERM DEBT, less current portion

132,355

46,750

PENSION AND POSTRETIREMENT LIABILITIES

93,491

106,578

OTHER LIABILITIES

12,628

13,751

DEFERRED INCOME TAXES

53,793

19,855

STOCKHOLDERS' EQUITY

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

    issued 2012: 27,294,724 shares; 2011: 27,099,819 shares

273

271

Additional paid-in-capital

288,468

286,408

Retained earnings

292,893

295,108

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

(57,770)

(57,770)

Accumulated other comprehensive loss

(53,206)

(58,402)

TOTAL STOCKHOLDERS' EQUITY

470,658

465,615

$

1,080,030

$

916,220

Note: The balance sheet at December 31, 2011 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

2012

2011

(Unaudited)

($ thousands)

OPERATING ACTIVITIES

Net income

$

197

$

4,929

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

62,772

54,201

Amortization of intangibles

1,218

–

Share-based compensation expense

4,711

5,116

Provision for losses on accounts receivable

1,314

2,105

Deferred income tax benefit

(3,795)

(6,802)

Gain on sale of property and equipment

(582)

(1,934)

Changes in operating assets and liabilities:

Receivables

(28,956)

(20,244)

Prepaid expenses

2,940

1,144

Other assets

(591)

2,470

Income taxes

938

8,457

Accounts payable, accrued expenses, and other liabilities⁽¹⁾

7,942

22,836

NET CASH PROVIDED BY OPERATING ACTIVITIES

48,108

72,278

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of financings

(31,923)

(32,127)

Proceeds from sale of property and equipment

5,126

5,678

Purchases of short-term investments

(38,708)

(27,930)

Proceeds from sale of short-term investments

25,018

36,175

Business acquisition, net of cash acquired

(180,793)

–

Capitalization of internally developed software and other

(5,379)

(3,735)

NET CASH USED IN INVESTING ACTIVITIES

(226,659)

(21,939)

FINANCING ACTIVITIES

Borrowings under credit facilities

100,000

–

Payments on long-term debt

(22,606)

(10,886)

Acquisition of noncontrolling interest

–

(4,084)

Net change in bank overdraft and other

(7,808)

1,608

Change in restricted cash equivalents and short-term investments

42,895

(662)

Deferred financing costs

(1,472)

(174)

Payment of common stock dividends

(2,412)

(2,383)

Proceeds from the exercise of stock options

–

763

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

108,597

(15,818)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               

(69,954)

34,521

Cash and cash equivalents at beginning of period

141,295

102,578

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

71,341

$

137,099

NONCASH INVESTING ACTIVITIES

Accruals for equipment received

$

34

$

5,117

Equipment financed under capital leases and notes payable

$

37,973

$

21,307

(1)  Includes $18.0 million in contributions to the Company's nonunion pension plan for 2012.

ARKANSAS BEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended

September 30

Nine Months Ended

September 30

2012

2011

2012

2011

(Unaudited)

($ thousands, except per share data)

ARKANSAS BEST CORPORATION – CONSOLIDATED

Net Income Attributable to Arkansas Best Corporation

Amounts on a GAAP basis

$

6,518

$

12,265

$

197

$

4,755

Tax benefits⁽¹⁾

–

–

(3,333)

–

Transaction costs, after-tax⁽²⁾

–

–

1,294

–

Non-GAAP amounts

$

6,518

$

12,265

$

(1,842)

$

4,755

Diluted Earnings Per Share

Amounts on a GAAP basis

$

0.24

$

0.46

$

–

$

0.18

Tax benefits⁽¹⁾

–

–

(0.13)

–

Transaction costs, after-tax⁽²⁾

–

–

0.05

–

Non-GAAP amounts

$

0.24

$

0.46

$

(0.08)

$

0.18

ARKANSAS BEST CORPORATION – CONSOLIDATED

Earnings Before Interest, Taxes, Depreciation,
   and Amortization

Net income attributable to Arkansas Best Corporation

$

6,518

$

12,265

$

197

$

4,755

Interest expense

1,609

973

3,863

2,899

Income taxes (benefits)

5,258

6,808

(4,873)

2,630

Depreciation and amortization

23,820

18,230

63,990

54,201

Amortization of share based compensation

1,369

1,417

4,711

5,116

Amortization of actuarial losses

2,846

1,840

8,539

5,520

EBITDA

41,420

41,533

76,427

75,121

Transaction costs, pre-tax⁽²⁾

–

–

2,129

–

Adjusted EBITDA

$

41,420

$

41,533

$

78,556

$

75,121

PREMIUM LOGISTICS & EXPEDITED FREIGHT SERVICES⁽³⁾

Earnings Before Interest, Taxes, Depreciation,
   and Amortization

Operating income

$

804

$

–

$

1,284

$

–

Depreciation and amortization

2,491

–

2,965

–

EBITDA

$

3,295

$

–

$

4,249

$

–

(1) Tax benefit adjustments related to deferred tax asset valuation allowances.

(2) Transaction costs associated with the June 15, 2012 acquisition of Panther Expedited Services, Inc.

(3) Includes the results of Panther Expedited Services, Inc., for the period of June 16 to September 30, 2012.

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. Management believes EBITDA to be relevant and useful information as EBITDA is a standard measure commonly reported and widely used by analysts, investors and others to measure financial performance and ability to service debt obligations. However, these financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as defined by GAAP. Other companies may calculate Adjusted EBITDA differently, and therefore the Company's Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS

Three Months Ended

September 30

Nine Months Ended

September 30

2012

2011

2012

2011

(Unaudited)

($ thousands)

OPERATING REVENUES

Freight Transportation⁽¹⁾

$

455,997

$

459,325

$

1,302,292

$

1,308,723

Premium Logistics & Expedited

   Freight Services⁽²⁾

60,445

–

71,280

–

Truck Brokerage & Management⁽³⁾

11,395

6,977

29,455

18,488

Emergency and Preventative

   Maintenance⁽⁴⁾

32,785

24,801

85,264

70,419

Household Goods Moving
   Services⁽⁵⁾

25,702

27,768

61,233

68,879

Total non-asset-based segments

130,327

59,546

247,232

157,786

Other revenues and eliminations

(8,778)

(7,984)

(20,568)

(22,140)

Total consolidated
   operating revenues

$

577,546

$

510,887

$

1,528,956

$

1,444,369

OPERATING EXPENSES AND COSTS

Freight Transportation⁽¹⁾

Salaries, wages, and benefits

$

272,680

59.8%

$

271,775

59.2%

$

807,685

62.0%

$

807,140

61.7%

Fuel, supplies, and expenses

83,989

18.4

86,260

18.8

247,646

19.0

253,387

19.4

Operating taxes and licenses

10,891

2.4

11,343

2.5

32,514

2.5

34,336

2.6

Insurance

4,944

1.1

5,139

1.1

15,415

1.2

18,130

1.4

Communications and utilities

3,816

0.8

3,771

0.8

11,084

0.9

11,468

0.9

Depreciation and amortization

20,381

4.5

17,502

3.8

58,440

4.5

52,044

4.0

Rents and purchased transportation

49,061

10.8

43,871

9.6

130,105

10.0

125,396

9.6

Gain on sale of property

   and equipment

(65)

–

(1,060)

(0.2)

(578)

–

(1,943)

(0.1)

Other

1,858

0.3

2,995

0.5

5,839

0.3

6,496

0.3

447,555

98.1%

441,596

96.1%

1,308,150

100.4%

1,306,454

99.8%

Premium Logistics & Expedited

Freight Services⁽²⁾

Purchased transportation

$

46,260

76.5%

$

–

$

54,507

76.5%

$

–

Depreciation and amortization

2,491

4.1

–

2,965

4.2

–

Salaries, benefits, insurance,

   and other

10,890

18.1

–

12,524

17.5

–

59,641

98.7%

–

69,996

98.2%

–

Truck Brokerage & Management⁽³⁾

10,689

6,364

27,700

16,922

Emergency and Preventative

   Maintenance⁽⁴⁾

31,913

23,795

83,834

67,574

Household Goods Moving
   Services⁽⁵⁾

24,277

26,086

60,435

66,113

Total non-asset-based segments

126,520

56,245

241,965

150,609

Other expenses and eliminations

(8,762)

(8,072)

(17,606)

(20,818)

Total consolidated operating

   expenses and costs

$

565,313

$

489,769

$

1,532,509

$

1,436,245

ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS – Continued

Three Months Ended

September 30

Nine Months Ended

September 30

2012

2011

2012

2011

(Unaudited)

($ thousands)

OPERATING INCOME (LOSS)

Freight Transportation⁽¹⁾

$

8,442

$

17,729

$

(5,858)

$

2,269

Premium Logistics & Expedited
   Freight Services⁽²⁾

804

–

1,284

–

Truck Brokerage & Management⁽³⁾

706

613

1,755

1,566

Emergency and Preventative

   Maintenance⁽⁴⁾

872

1,006

1,430

2,845

Household Goods Moving
   Services⁽⁵⁾

1,425

1,682

798

2,766

Total non-asset-based segments

3,807

3,301

5,267

7,177

Other income (loss) and
   eliminations

(16)

88

(2,962)

(1,322)

Total consolidated operating
   income (loss)

$

12,233

$

21,118

$

(3,553)

$

8,124

(1) This segment includes the results of operations of Arkansas Best's largest subsidiary, ABF Freight System, Inc.^®.

(2) This segment includes the results of operations of Arkansas Best's expedited services operating as Panther Expedited Services, Inc. for the period of June 16 to September 30, 2012.

(3) This segment includes the results of operations of Arkansas Best's transportation brokerage services operating as FreightValue^®.

(4) This segment includes the results of operations of Arkansas Best's roadside vehicle assistance and commercial equipment services subsidiary FleetNet America, Inc.

(5) This segment includes the results of operations of Arkansas Best's subsidiaries Albert Companies, Inc. and Moving Solutions, Inc. which provide services to the consumer, corporate, and military household goods moving market.

ABF FREIGHT SYSTEM, INC.

OPERATING STATISTICS

Three Months Ended

Nine Months Ended

September 30

September 30

2012

2011

% Change

2012

2011

% Change

(Unaudited)

Freight Transportation ⁽¹⁾

Workdays

63.0

64.0

190.5

191.0

Billed Revenue ⁽²⁾ / CWT           

$

28.60

$

28.17

1.5%

$

28.04

$

26.52

5.7%

Billed Revenue ⁽²⁾ / Shipment    

$

393.47

$

379.49

3.7%

$

379.88

$

359.32

5.7%

Shipments                                  

1,141,325

1,200,461

(4.9)%

3,410,447

3,643,511

(6.4)%

Shipments / Day

18,116

18,757

(3.4)%

17,903

19,076

(6.2)%

Tonnage (tons)                           

785,172

808,660

(2.9)%

2,310,467

2,467,866

(6.4)%

Tons / Day

12,463

12,635

(1.4)%

12,128

12,921

(6.1)%

(1) Operating statistics for the Freight Transportation segment do not include the results from ABF's Global Supply Chain Services.

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

Contact:        

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

Telephone:  (479) 785-6200