Arkansas Best Corporation Announces Third Quarter 2012 Results

        Arkansas Best Corporation Announces Third Quarter 2012 Results  - Net income of $6.5 million  - Diluted earnings per share of $0.24  - Panther Expedited Services enhances corporate service opportunities  - ABF labor contract negotiations to begin in December  PR Newswire  FORT SMITH, Ark., Nov. 1, 2012  FORT SMITH, Ark., Nov. 1, 2012 /PRNewswire/ -- Arkansas Best Corporation (Nasdaq: ABFS) today announced third quarter 2012 net income of $6.5 million, or $0.24 per share, compared with net income of $12.3 million, or $0.46 per share, in the third quarter of 2011.  "Arkansas Best's results reflect weakness in the economy that contributed to reduced customer business levels and lower profitability at ABF.The slowing business environment also reduced the demand for expedited services at Panther," said Arkansas Best President and CEO Judy R. McReynolds."However, at our emerging non-asset-based companies, we are encouraged by the continuation of strong revenue and improving profitability trends in the midst of a tenuous economy."  ABF Freight System, Inc. During the 2012 third quarter, business levels at ABF were below the same period last year by 1.4 percent."This drop reflects the current, soft economic environment as well as the remaining effects of business declines resulting from pricing actions ABF implemented throughout most of last year and into the first quarter of this year," said Ms. McReynolds."Industry pricing is stable and rational, consistent with ABF's third quarter 2012 experience. ABF's recent yield improvement reflects positive retention of the late June general rate increase and better price levels on contractual agreements that renewed during the quarter. ABF has added new, profitable customer relationships and remains focused on improving existing account pricing and managing its resources to available freight levels."  Throughout the third quarter, ABF experienced cost pressures whose unfavorable margin effects were amplified by the decline in quarterly revenue.The most significant costs affecting ABF are associated with our union labor contract.In addition, nonunion benefit costs were impacted by previously discussed increases in 2012 pension and retirement costs as well as a greater than expected increase in employee health care costs during the first two months of the quarter. Purchased transportation costs increased due to a greater need for these services, both domestically and internationally, combined with higher rates charged by these service providers. Finally, as previously reported, equipment depreciation costs are higher, on a year-over-year basis, because of the timing and increased cost of new tractor and trailer replacements during the last twelve months.  "For some time now, we have remained diligent in our efforts to address ABF's high cost structure. This includes numerous internal activities associated with the March 2013 expiration of ABF's union labor contract," said Ms. McReynolds. "As previously announced, we expect to begin negotiations with the Teamsters National Freight Industry Negotiating Committee, the negotiating arm of the International Brotherhood of Teamsters, on December18. ABF's next labor agreement offers an opportunity for us to work together with the Teamsters and our employees to ensure that ABF is viable in the marketplace and able to grow jobs and effectively compete for additional, profitable business."  Panther Expedited Services, Inc. "As we complete the first full quarter of having our premium logistics provider Panther Expedited Services, Inc. as a subsidiary, we are excited about the long-term growth possibilities it offers our company. We have identified opportunities for Panther to work together with our other subsidiaries to better serve customers, with a number of these opportunities already yielding positive benefits. Moving forward, we believe the addition of Panther will be a key element in our development into a comprehensive logistics resource for our customers," said Ms.McReynolds.  "Third quarter results at Panther were impacted by a slower macroeconomic environment, both domestically and internationally. Though total customer loads increased, the availability of business within the industries Panther serves varied. The reduction in revenue per mile associated with changes in business mix had an unfavorable impact on Panther's profit margin."  Other Non-Asset-Based Subsidiaries Arkansas Best's emerging non-asset-based subsidiaries experienced revenue growth and operating income improvement throughout the quarter in spite of weaker macroeconomic factors. The freight brokerage and emergency and preventative maintenance segments benefitted from new customer relationships that translated into additional business opportunities, with these segments growing revenues by 63% and 32%, respectively. However, profit margins in these segments continued to be impacted by investments previously made in personnel and information technology. As the benefits of those investments are fully realized, these subsidiaries will provide a platform for enhancing the logistics services Arkansas Best offers its customers. This enables further penetration into the $200 billion portion of the transportation market the company now serves. With the addition of Panther, Arkansas Best's non-asset-based businesses generated over 20% of third quarter consolidated revenues.  Capital Expenditures Update Because of reduced business levels and improved network utilization ABF plans to reduce this year's new tractor replacements by eight percent. This ABF change contributes to Arkansas Best's expected 2012 net capital expenditure total of approximately $75 million. Earlier in the year the range of expected 2012 net capital expenditures was between $80 and $90 million.  Closing Comments "The uncertain economic environment has impacted our recent performance and presents challenges in the near term," said Ms. McReynolds. "However, we believe our company is better equipped for future success because of the combination of logistics services we now offer the marketplace. As we seek to reduce ABF's cost structure as well as improve the flexibility of its network, the additional resources available within our company provide opportunities for solidifying existing customer relationships and gaining new business."  Conference Call Arkansas Best Corporation will host a conference call with company executives to discuss the 2012 third quarter results. The call will be today, Thursday, November 1, at 9:30a.m. ET (8:30 a.m. CT). Interested parties are invited to listen by calling (800) 618-4645. Following the call, a recorded playback will be available through the end of the day on December 2, 2012. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21607032. The conference call and playback can also be accessed, through December 2, on Arkansas Best's website at arkbest.com.  Company Description Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a freight transportation services and solutions provider. Through its various subsidiaries, Arkansas Best offers a wide variety of logistics solutions including: domestic and global transportation of less-than-truckload ("LTL") and full load shipments, expedited ground and time-definite delivery solutions, freight forwarding services, freight brokerage, oversight of roadside assistance and equipment services for commercial vehicles, and household goods moving market services for consumers, corporations, and the military. More information is available at arkbest.com, abf.com and pantherexpedite.com.  Forward-Looking Statements The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: Statements contained in this report 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, general economic conditions and related shifts in market demand that impact the performance and needs of industries served by Arkansas Best Corporation's subsidiaries and limit our customers' access to adequate financial resources; the successful integration of Panther; relationships with employees, including unions; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer pension plans; competitive initiatives, pricing pressures, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates and the inability to collect fuel surcharges; availability of fuel; availability and cost of reliable third-party services; the timing and amount of capital expenditures; future costs of operating expenses such as fuel and related taxes; self-insurance claims and insurance premium costs; governmental regulations and policies; future climate change legislation; availability and cost of capital and financing arrangements; the cost and timing of growth initiatives; the impact of our brand and corporate reputation; the cost, integration, and performance of any future acquisitions; costs of continuing investments in technology and the impact of cyber incidents; weather conditions; 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                  2012             2011             2012            2011                  (Unaudited)                  ($ thousands, except share and per share data) OPERATING        $  577,546      $ 510,887       $ 1,528,956      $ 1,444,369 REVENUES OPERATING EXPENSES AND        565,313        489,769         1,532,509        1,436,245 COSTS OPERATING INCOME    12,233         21,118          (3,553)          8,124 (LOSS) OTHER INCOME (EXPENSE) Interest and        155            273             623              790 dividend income Interest expense and other           (1,609)        (973)           (3,863)          (2,899) related financing costs Other, net          997            (1,345)         2,117            1,544                     (457)          (2,045)         (1,123)          (565) INCOME (LOSS) BEFORE INCOME       11,776         19,073          (4,676)          7,559 TAXES INCOME TAX PROVISION           5,258          6,808           (4,873)          2,630 (BENEFIT) NET INCOME          6,518          12,265          197              4,929 LESS: NONCONTROLLING INTEREST IN                     –              –               –                174  NET INCOME OF SUBSIDIARY NET INCOME ATTRIBUTABLE TO                  $  6,518        $ 12,265        $ 197            $ 4,755  ARKANSAS BEST CORPORATION 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         $  0.03         $ 0.03          $ 0.09           $ 0.09  PER COMMON SHARE (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                  $  6,518         $      12,265        $   197         $ 4,755  ARKANSAS BEST CORPORATION EFFECT OF UNVESTED RESTRICTED          (309)                (532)             (113)         (191)  STOCK AWARDS^(1) ADJUSTED NET INCOME FOR CALCULATING     $  6,209         $      11,733        $   84          $ 4,564   EARNINGS PER COMMON SHARE      ARKANSAS BEST CORPORATION  CONSOLIDATED BALANCE SHEETS                                   September 30                    December 31                                    2012                            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          9,798                       52,693 short-term investments Accounts receivable, less allowances (2012 – $4,790; 2011 –        209,460                     149,665 $5,957) Other accounts receivable, less allowances (2012 – $1,246; 2011 –        7,312                       7,538 $1,226) Prepaid expenses                         13,808                      11,363 Deferred income taxes                    35,704                      35,481 Prepaid and refundable income            4,285                       6,905 taxes 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               116,913                     110,511 equipment Software                                 100,896                     64,229 Leasehold improvements                   22,943                      21,426                                          1,083,094                   1,007,589 Less allowances for depreciation         622,888                     592,171 and amortization                                          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             132,355                     46,750 portion PENSION AND POSTRETIREMENT               93,491                      106,578 LIABILITIES 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;                                          273                         271  issued 2012: 27,294,724 shares; 2011: 27,099,819 shares Additional paid-in-capital               288,468                     286,408 Retained earnings                        292,893                     295,108 Treasury stock, at cost,                 (57,770)                    (57,770) 1,677,932 shares Accumulated other comprehensive          (53,206)                    (58,402) loss 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           7,942        22,836 liabilities^(1) NET CASH PROVIDED BY OPERATING ACTIVITIES               48,108       72,278 INVESTING ACTIVITIES Purchases of property, plant and equipment, net of      (31,923)     (32,127) financings 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     (5,379)      (3,735) other 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    42,895       (662) investments 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                (69,954)     34,521 EQUIVALENTS 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     $ 37,973     $ 21,307 payable (1) Includes $18.0 million in contributions to the Company's nonunion pension plan for 2012.      ARKANSAS BEST CORPORATION  RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES                    Three Months Ended             Nine Months Ended                     September 30                   September 30                    2012               2011        2012            2011                    (Unaudited)                    ($ thousands, except per share data) ARKANSAS BEST CORPORATION – CONSOLIDATED Net Income Attributable to Arkansas Best Corporation Amounts on a GAAP  $   6,518       $    12,265      $  197          $  4,755 basis Tax benefits^(1)       –                –              (3,333)         – Transaction costs,     –                –              1,294           – after-tax^(2) Non-GAAP amounts   $   6,518       $    12,265      $  (1,842)      $  4,755 Diluted Earnings Per Share Amounts on a GAAP  $   0.24        $    0.46        $  –            $  0.18 basis Tax benefits^(1)       –                –              (0.13)          – Transaction costs,     –                –              0.05            – after-tax^(2) 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    $   6,518       $    12,265      $  197          $  4,755 Arkansas Best Corporation Interest expense       1,609            973            3,863           2,899 Income taxes           5,258            6,808          (4,873)         2,630 (benefits) Depreciation and       23,820           18,230         63,990          54,201 amortization Amortization of share based            1,369            1,417          4,711           5,116 compensation Amortization of        2,846            1,840          8,539           5,520 actuarial losses EBITDA                 41,420           41,533         76,427          75,121 Transaction costs,     –                –              2,129           – pre-tax^(2) 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       2,491            –              2,965           – amortization 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                Nine Months Ended                     September 30                      September 30                    2012             2011             2012                2011                    (Unaudited)                     ($ thousands) OPERATING REVENUES Freight            $ 455,997        $ 459,325        $ 1,302,292         $ 1,308,723 Transportation^(1)   Premium Logistics & Expedited          60,445           –                71,280              –   Freight Services^(2) Truck Brokerage &    11,395           6,977            29,455              18,488 Management^(3) Emergency and Preventative         32,785           24,801           85,264              70,419   Maintenance^(4) Household Goods Moving               25,702           27,768           61,233              68,879  Services^(5) Total non-asset-based      130,327          59,546           247,232             157,786 segments Other revenues and   (8,778)          (7,984)          (20,568)            (22,140) eliminations Total consolidated  operating       $ 577,546        $ 510,887        $ 1,528,956         $ 1,444,369 revenues OPERATING EXPENSES AND COSTS Freight Transportation^(1) Salaries, wages,   $ 272,680 59.8%  $ 271,775 59.2%  $ 807,685   62.0%   $ 807,140   61.7% and benefits Fuel, supplies,      83,989  18.4     86,260  18.8     247,646   19.0      253,387   19.4 and expenses Operating taxes      10,891  2.4      11,343  2.5      32,514    2.5       34,336    2.6 and licenses Insurance            4,944   1.1      5,139   1.1      15,415    1.2       18,130    1.4 Communications and   3,816   0.8      3,771   0.8      11,084    0.9       11,468    0.9 utilities Depreciation and     20,381  4.5      17,502  3.8      58,440    4.5       52,044    4.0 amortization Rents and purchased            49,061  10.8     43,871  9.6      130,105   10.0      125,396   9.6 transportation Gain on sale of property             (65)    –        (1,060) (0.2)    (578)     –         (1,943)   (0.1)   and equipment 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          $ 46,260  76.5%  $ –              $ 54,507    76.5%   $ – transportation Depreciation and     2,491   4.1      –                2,965     4.2       – amortization Salaries, benefits, insurance,           10,890  18.1     –                12,524    17.5      –   and other                      59,641  98.7%    –                69,996    98.2%     – Truck Brokerage &    10,689           6,364            27,700              16,922 Management^(3) Emergency and Preventative         31,913           23,795           83,834              67,574   Maintenance^(4) Household Goods Moving               24,277           26,086           60,435              66,113  Services^(5) Total non-asset-based      126,520          56,245           241,965             150,609 segments Other expenses and   (8,762)          (8,072)          (17,606)            (20,818) eliminations Total consolidated operating                    $ 565,313        $ 489,769        $ 1,532,509         $ 1,436,245  expenses and costs      ARKANSAS BEST CORPORATION  FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS – Continued                      Three Months Ended              Nine Months Ended                       September 30                    September 30                      2012          2011              2012          2011                                             (Unaudited)                                             ($                                             thousands) OPERATING INCOME (LOSS) Freight              $  8,442      $ 17,729          $  (5,858)    $ 2,269 Transportation^(1)   Premium Logistics &     804          –                  1,284        – Expedited  Freight Services^(2) Truck Brokerage &       706          613                1,755        1,566 Management^(3) Emergency and Preventative            872          1,006              1,430        2,845   Maintenance^(4) Household Goods Moving                  1,425        1,682              798          2,766  Services^(5) Total non-asset-based         3,807        3,301              5,267        7,177 segments Other income (loss) and                     (16)         88                 (2,962)      (1,322)  eliminations Total consolidated operating            $  12,233     $ 21,118          $  (3,553)    $ 8,124  income (loss) (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        %       2012        2011        %                                                                     Change                          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  SOURCE Arkansas Best Corporation  Website: http://www.arkbest.com Website: http://www.abfs.com Website: http://www.pantherexpedite.com