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Arkansas Best Corporation Announces First Quarter 2013 Results



        Arkansas Best Corporation Announces First Quarter 2013 Results

- Revenue rises to $520.7 million from $440.9 million

- First quarter 2013 net loss of $13.4 million, or $0.52 per share

- Emerging, non-asset-based businesses continue growth trends and cash
generation

- ABF labor contract negotiations continue and remain important to lowering
ABF's cost structure

PR Newswire

FORT SMITH, Ark., April 30, 2013

FORT SMITH, Ark., April 30, 2013 /PRNewswire/ -- Arkansas Best Corporation
(Nasdaq: ABFS) today reported a first quarter 2013 net loss despite continued
encouraging trends in its emerging businesses.  Year-over-year revenue and
tonnage growth at LTL carrier ABF Freight System, Inc., were offset by higher
wage and benefit costs for employees represented by the International
Brotherhood of Teamsters.

Arkansas Best's first quarter 2013 revenue was $520.7 million compared to
revenue of $440.9 million in the first quarter of 2012. The first quarter net
loss was $13.4 million, or $0.52 per share, compared to a first quarter 2012
net loss of $18.2 million, or $0.71 per share.  Last year's first quarter
results included the effects of an unusually low corporate tax benefit rate
and unusually high workers' compensation claims costs.  Combined, these items
increased last year's first quarter net loss by $0.31 per share.    

Arkansas Best's emerging, non-asset-based businesses continue to display
strength in their revenue growth and cash flow generation.  Freight brokerage
and vehicle roadside and preventive maintenance grew first-quarter revenue 82%
and 45%, respectively, and improved operating income. Operating results at
Panther Expedited Services, Inc., were impacted by reduced demand for
expedited services and investments made in sales and service locations for
future growth.  On a combined basis, Panther and all of the other
non-asset-based businesses generated first quarter 2013 earnings before
interest, taxes, depreciation and amortization ("EBITDA") of $3.4 million,
versus slightly negative EBITDA in the first quarter of 2012.  "First quarter
revenue and operating income at our emerging businesses reflected growth and
improvement as we invested heavily in these businesses during 2012.  They
represent a critical piece of Arkansas Best's strategy to achieve sustained
profitability," said Arkansas Best President and Chief Executive Officer Judy
R. McReynolds.  "The investments made so far have improved the financial
performance of these subsidiaries and strengthened their service offerings and
their ability, both individually and through significant cross-selling
opportunities, to better serve customers with full supply-chain solutions."

ABF Freight's first-quarter operating loss deepened despite revenue growth and
improving business levels. McReynolds noted that the company's high-cost
structure continues to weigh on results, underscoring the need for a more
rational labor agreement that reflects the increasingly competitive LTL
industry. "After months of hard work and a second extension of contract talks
through May 31, the negotiating teams continue to make progress on developing
a contract agreement for our Teamster-represented employees that is expected
to provide ABF greater operational flexibility and lower costs in order to
effectively compete in the future."

Closing Comments
"Despite losses in the seasonally weak first quarter, Arkansas Best is
well-positioned for growth in new and existing markets.  We continue to
develop a comprehensive array of services designed to meet the ever-changing
needs of our customers and generate financial returns for our company and our
shareholders," said McReynolds.  "Current negotiations on a new labor
agreement provide an opportunity to preserve good-paying jobs and protect the
retirement benefits of our union employees through a lower cost structure and
improved operational flexibility.  A new labor contract, with lower more
competitive costs, is a critical element in allowing ABF to effectively
compete in a drastically different LTL marketplace." 

Conference Call
Arkansas Best Corporation will host a conference call with company executives
to discuss the 2013 first quarter results.  The call will be today, Tuesday,
April 30, at 9:30 a.m. ET (8:30 a.m. CT).  Interested parties are invited to
listen by calling (800) 659-2165.  Following the call, a recorded playback
will be available through the end of the day on May 31, 2013.  To listen to
the playback, dial (800) 633-8284 or (402) 977-9140 (for international
callers).  The conference call ID for the playback is 21653957.  The
conference call and playback can also be accessed, through May 31, 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," "could," "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, a workforce stoppage by
our employees covered under our collective bargaining agreement or unfavorable
terms of future collective bargaining agreements; relationships with
employees, including unions; 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/or limit our customers' access to
adequate financial resources; union and nonunion employee wages and benefits,
including changes in required contributions to multiemployer pension plans;
competitive initiatives, pricing pressures and 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; default on covenants of financing arrangements and the
availability and terms of future financing arrangements; availability and cost
of reliable third-party services; disruptions or failures of services
essential to the use of information technology platforms in our business;
availability, 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; potential impairment of goodwill and intangible assets;
the impact of our brand and corporate reputation; the cost, timing, and
performance of growth initiatives; the cost, integration, and performance of
any future acquisitions; the costs of continuing investments in technology, a
failure of our information systems, 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 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

                           March 31
                           2013                        2012
                           (Unaudited)
                           ($ thousands, except share and per share data)
OPERATING REVENUES         $      520,687              $     440,867
OPERATING EXPENSES AND            544,037                    463,854
COSTS
OPERATING LOSS                    (23,350)                   (22,987)
OTHER INCOME (EXPENSE)
Interest and dividend             171                        253
income
Interest expense and other        (1,207)                    (1,142)
related financing costs
Other, net                        1,083                      1,340
                                  47                         451
LOSS BEFORE INCOME TAXES          (23,303)                   (22,536)
INCOME TAX BENEFITS               (9,908)                    (4,374)
NET LOSS                   $      (13,395)             $     (18,162)
LOSS PER COMMON SHARE^(1)
Basic                      $      (0.52)               $     (0.71)
Diluted                    $      (0.52)               $     (0.71)
AVERAGE COMMON SHARES
OUTSTANDING
Basic                             25,638,333                 25,455,607
Diluted                           25,638,333                 25,455,607
CASH DIVIDENDS DECLARED    $      0.03                 $     0.03
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 LOSS                   $      (13,395)             $     (18,162)
EFFECT OF UNVESTED
RESTRICTED STOCK                  (38)                       (34)
AWARDS^(1)
ADJUSTED NET LOSS FOR
 CALCULATING
                           $      (13,433)             $     (18,196)
    EARNINGS PER COMMON
SHARE

ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS
                                                                    
                                              March 31
                                                                   December 31
                                              2013
                                                                   2012
                                              (Unaudited)          Note
                                              ($ thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents                     $   75,071        $  90,702
Short-term investments                            29,891           29,054
Restricted cash, cash equivalents, and            5,904            9,658
short-term investments
Accounts receivable, less allowances (2013 –      190,036          180,631
$5,360; 2012 – $5,249)
Other accounts receivable, less allowances        6,011            6,539
(2013 – $1,376; 2012 – $1,334)
Prepaid expenses                                  19,397           17,355
Deferred income taxes                             37,302           39,245
Prepaid and refundable income taxes               7,851            5,681
Other                                             7,288            7,185
     TOTAL CURRENT ASSETS                         378,751          386,050
PROPERTY, PLANT AND EQUIPMENT
Land and structures                               243,990          243,699
Revenue equipment                                 588,809          589,729
Service, office, and other equipment              119,642          119,456
Software                                          105,164          103,164
Leasehold improvements                            23,357           23,272
                                                  1,080,962        1,079,320
Less allowances for depreciation and              653,862          635,292
amortization
                                                  427,100          444,028
GOODWILL                                          75,032           73,189
INTANGIBLE ASSETS, NET                            78,518           79,561
OTHER ASSETS                                      51,994           51,634
                                              $   1,011,395     $  1,034,462
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable             $   11,737        $  13,645
Accounts payable                                  84,966           84,292
Income taxes payable                              75               59
Accrued expenses                                  167,848          158,668
Current portion of long-term debt                 39,861           43,044
TOTAL CURRENT LIABILITIES                         304,487          299,708
LONG-TERM DEBT, less current portion              105,169          112,941
PENSION AND POSTRETIREMENT LIABILITIES            105,922          104,673
OTHER LIABILITIES                                 12,366           12,832
DEFERRED INCOME TAXES                             35,858           45,309
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, authorized
70,000,000 shares; issued 2013: 27,307,505        273              273
shares; 2012: 27,296,285 shares
Additional paid-in-capital                        290,776          289,711
Retained earnings                                 269,955          284,157
Treasury stock, at cost, 1,677,932 shares         (57,770)         (57,770)
Accumulated other comprehensive loss              (55,641)         (57,372)
TOTAL STOCKHOLDERS' EQUITY                        447,593          458,999
                                              $   1,011,395     $  1,034,462

Note: The balance sheet at December 31, 2012 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
                                                      Three Months Ended

                                                      March 31
                                                      2013        2012
                                                      (Unaudited)
                                                      ($ thousands)
OPERATING ACTIVITIES
Net loss                                              $ (13,395)  $  (18,162)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization                           22,150       19,320
Amortization of intangibles                             1,043        –
Share-based compensation expense                        1,303        1,442
Provision for losses on accounts receivable             969          275
Deferred income tax benefit                             (8,756)      (4,301)
Gain on sale of property and equipment                  (212)        (285)
Changes in operating assets and liabilities:
Receivables                                             (9,886)      (859)
Prepaid expenses                                        (2,042)      (1,621)
Other assets                                            (964)        (96)
Income taxes                                            (1,548)      1,793
Accounts payable, accrued expenses, and other           11,124       7,371
liabilities
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES     (214)        4,877
INVESTING ACTIVITIES
Purchases of property, plant and equipment              (3,440)      (2,388)
Proceeds from sales of property and equipment           842          1,315
Purchases of short-term investments                     (3,752)      (14,335)
Proceeds from sales of short-term investments           2,940        3,185
Capitalization of internally developed software and     (2,090)      (1,618)
other
NET CASH USED IN INVESTING ACTIVITIES                   (5,500)      (13,841)
FINANCING ACTIVITIES
Repayments on long-term debt                            (10,955)     (6,075)
Net change in bank overdraft and other                  (1,909)      (10,056)
Change in restricted cash, cash equivalents, and        3,754        23,149
short-term investments
Deferred financing costs                                –            (36)
Payment of common stock dividends                       (807)        (797)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES     (9,917)      6,185
NET DECREASE IN CASH AND CASH EQUIVALENTS               (15,631)     (2,779)
Cash and cash equivalents at beginning of period        90,702       141,295
CASH AND CASH EQUIVALENTS AT END OF PERIOD            $ 75,071    $  138,516
NONCASH INVESTING ACTIVITIES
Accruals for equipment received                       $ 173       $  2,060

ARKANSAS BEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
                                                        Three Months Ended

                                                        March 31
                                                        2013        2012
                                                        (Unaudited)
                                                        ($ thousands)
Arkansas Best Corporation – Consolidated
Earnings Before Interest, Taxes, Depreciation, and
Amortization
Net loss                                                $ (13,395)  $ (18,162)
Interest expense                                          1,207       1,142
Income tax benefits                                       (9,908)     (4,374)
Depreciation and amortization                             23,193      19,320
Amortization of share-based compensation                  1,303       1,442
Amortization of actuarial losses                          2,912       2,847
EBITDA                                                  $ 5,312     $ 2,215

                Three Months Ended              Three Months Ended

                March 31                        March 31

                2013                            2012
                Operating
                          Depreciation          Operating Depreciation
                Income    and          EBITDA   Income    and          EBITDA
                          Amortization          (Loss)    Amortization
                (Loss)
Non-Asset Based
Segments
Premium
Logistics &
Expedited       $  (864)  $    2,550   $ 1,686  $  –      $   –        $ –
Freight
Services^(1)
Truck Brokerage    767         92        859       394        65         459
and Management
Emergency and
Preventative       711         132       843       (137)      118        (19)
Maintenance
Household Goods    (231)       241       10        (792)      179        (613)
Moving Services
Total non-asset $  383    $    3,015   $ 3,398  $  (535)  $   362      $ (173)
based segments

 

    Depreciation and amortization consists primarily of amortization of
(1) intangibles, including customer relationships and software, which were
    acquired in conjunction with the purchase of Panther Expedited Services,
    Inc. on June 15, 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 generally
accepted accounting principles. Other companies may calculate EBITDA
differently, and therefore the Company's 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

                                            March 31
                                            2013              2012
                                            (Unaudited)
                                            ($ thousands)
OPERATING REVENUES
Freight Transportation                      $ 407,281         $ 396,513
Premium Logistics & Expedited Freight         53,252            –
Services
Truck Brokerage and Management                14,604            8,039
Emergency and Preventative Maintenance        32,522            22,378
Household Goods Moving Services               13,576            15,052
Total non-asset based segments                113,954           45,469
Other revenues and eliminations               (548)             (1,115)
Total consolidated operating revenues       $ 520,687         $ 440,867
OPERATING EXPENSES AND COSTS
Freight Transportation
Salaries, wages, and benefits               $ 267,178 65.6%   $ 265,061 66.8%
Fuel, supplies, and expenses                  83,332  20.5      80,640  20.3
Operating taxes and licenses                  10,990  2.7       10,801  2.7
Insurance                                     4,484   1.1       4,881   1.2
Communications and utilities                  3,933   1.0       3,799   1.0
Depreciation and amortization                 19,574  4.8       18,573  4.7
Rents and purchased transportation            38,469  9.4       33,216  8.4
Gain on sale of property and equipment        (212)   (0.1)     (282)   (0.1)
Other                                         2,082   0.5       1,682   0.5
                                              429,830 105.5%    418,371 105.5%
Premium Logistics & Expedited Freight
Services
Purchased transportation                    $ 41,036  77.1%   $ –       –
Depreciation and amortization^(1)             2,550   4.8       –       –
Salaries, benefits, insurance, and other      10,530  19.7      –       –
                                              54,116  101.6%    –       –
Truck Brokerage and Management                13,837            7,645
Emergency and Preventative Maintenance        31,811            22,515
Household Goods Moving Services               13,807            15,844
Total non-asset based segments                113,571           46,004
Other expenses and eliminations               636               (521)
Total consolidated operating expenses and   $ 544,037         $ 463,854
costs

         Depreciation and amortization consists primarily of amortization of
(1)      intangibles, including customer relationships and software, which
         were acquired in conjunction with the purchase of Panther Expedited
         Services, Inc. on June 15, 2012.
Note: See the following page for description of segments.

ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS – Continued
                                                Three Months Ended

                                                March 31
                                                2013            2012
                                                (Unaudited)
                                                ($ thousands)
OPERATING INCOME (LOSS)
Freight Transportation                          $  (22,549)     $ (21,858)
Premium Logistics & Expedited Freight Services     (864)          –
Truck Brokerage and Management                     767            394
Emergency and Preventative Maintenance             711            (137)
Household Goods Moving Services                    (231)          (792)
Total non-asset based segments                     383            (535)
Other loss and eliminations                        (1,184)        (594)
Total consolidated operating loss               $  (23,350)     $ (22,987)

Description of Segments:

  o Freight Transportation includes the results of operations of Arkansas
    Best's largest subsidiary, ABF Freight System, Inc.^®.
  o Panther Expedited Services, Inc., which was acquired on June 15, 2012, is
    reported as Premium Logistics & Expedited Freight Services.
  o Truck Brokerage and Management includes the transportation brokerage
    services operating as FreightValue^®.
  o Emergency and Preventative Maintenance includes the roadside vehicle
    assistance and commercial equipment services subsidiary FleetNet America,
    Inc.
  o Household Goods Moving Services includes Albert Companies, Inc. and Moving
    Solutions, Inc. which provide services to the consumer, corporate, and
    military household goods moving market.

Certain reclassifications have been made to the prior year's operating segment
data to conform to the current year presentation. The operating results of
Global Supply Chain Services and Supply Chain Services, businesses which
provide ocean container transport and warehousing services, have been
reclassified from the Freight Transportation segment to "Other and
Eliminations." There was no impact on consolidated amounts as a result of
these reclassifications.

 

ARKANSAS BEST CORPORATION

OPERATING STATISTICS
                                          Three Months Ended
                                          March 31
                                          2013         2012        % Change
                                          (Unaudited)
Freight Transportation^(1)
Workdays                                    62.5         64.0
Billed Revenue^(2) / CWT                  $ 26.88      $ 27.52     (2.3)%
Billed Revenue^(2) / Shipment             $ 372.36     $ 366.15    1.7%
Shipments                                   1,095,678    1,095,019 0.1%
Shipments / Day                             17,531       17,110    2.5%
Tonnage (tons)                              758,889      728,465   4.2%
Tons / Day                                  12,142       11,382    6.7%

 

    Based on the previously described reclassifications that have been made to
    the prior year's operating segment data and statistics to conform to the
(1) current year presentation, operations of Global Supply Chain Services and
    Supply Chain Services are excluded from key operating statistics for the
    Freight Transportation Segment.
(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
         Telephone: (479) 785-6200
         Media:  Ms. Kathy Fieweger, Vice President, Marketing and Corporate
         Communications
         Telephone:  (847) 903-8806

SOURCE Arkansas Best Corporation

Website: http://www.arkbest.com
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