ARKANSAS BEST CORPORATION ANNOUNCES 1995 FOURTH QUARTER AND YEAREND OPERATING RESULTS (NASDAQ/NMS: "ABFS")
(Fort Smith, Arkansas, February 6, 1996) -- Arkansas Best Corporation ("Arkansas Best") had 1995 consolidated revenues of $14 billion, up 31% versus 1994, and fourth quarter 1995 consolidated revenues of $415.4 million, up 26% versus fourth quarter 1994.
Arkansas Best had a 1995 net loss of $32.8 million, $1.90 loss per common share, and a fourth quarter net loss of $26.5 million, $1.41 loss per common share. Included in the year-to-date loss are Carolina Freight Carriers Corporation ("Carolina Freight") and Red Arrow Freight Lines, Inc. ("Red Arrow") net after-tax losses of $13.8 million and pre-tax losses of $225 million from the date of their acquisition on August 12, 1995 until September 25. 1995, when their merger into ABF Freight System, Inc. ("ABF") was possible following ICC approval and agreement with the union on combination of the workforces.
"As we have previously reported, the merger of the WorldWay subsidiaries into ABF has not gone as expected, resulting in these significant losses," stated Robert A. Young III, President and Chief Executive Officer.
"ABF has implemented a combination of cost cutting and revenue raising measures to stem these losses. ABF has been closing a number of regional distribution terminal operations which it inherited when Carolina Freight and Red Arrow were merged into ABF. These closings will realign ABF to its normal terminal system configuration and will start reducing ABF's operating ratio toward historical levels. ABF implemented a 5.8% freight rate increase on January 1, 1996, and, as previously planned, is in the process of selling excess real estate and revenue equipment resulting from the Carolina Freight merger.
"The actions we are taking have shown progress in January in correcting ABF's problems and should have it back to its historical operating levels later this year," said Young.
Revenues from the less-than-truckload ("LTL) segment for 1995 were $1.1 billion and for the fourth quarter of 1995 were $304.6 million. The LTL segment had a 1995 operating loss of $32.9 million and a fourth quarter 1995 operating loss of $31.2 million. ABF accounts for approximately 94% of the LTL segment revenues. ABF's ICC operating ratio for 1995 was 100.6% compared to 96.4% for 1994. Its fourth quarter 1995 operating ratio was 109.3% compared to 95.6% for the fourth quarter of 1994. ABF's 1995 tonnage increased 6.5%, consisting of a 7.5% increase in LTL tonnage and a 33% truckload tonnage increase compared to 1994. ABF's fourth quarter 1995 tonnage increased 7.5%, consisting of a 9.3% increase in LTL tonnage and a 1.5% truckload tonnage increase compared to the fourth quarter of 1994. ABF's operating statistics exclude Carolina Freight and Red Arrow, prior to their September 25, 1995, merger into ABF.
Tire operations segment revenues were up 4.7% for 1995 versus 1994 and were flat for the fourth quarter of 1995 versus the fourth quarter of 1994. Tire segment operating profits were $4.4 million for 1995 compared to $11.1 million for 1994. The tire segment produced an operating loss of $538,000 for the fourth quarter of 1995 versus an operating profit of $3.3 million for the fourth quarter of 1994.
"Treadco's operating profits have been negatively impacted by several factors. It has had increased costs in its retread raw materials from its current franchisor and costs associated with terminating its current franchise relationship and planned conversion of its production facilities to an alternative supplier's retread equipment and raw materials. At the same time, Treadco has incurred start-up costs related to its new moldcure production facility in St. Louis, Missouri," said Young.
"Treadco will have completed converting its precure operations in the third quarter of 1996 and the moldcure facility is beginning to produce moldcure retread tires for sale this month. Treadco believes these changes will position it to remain competitive in the retread truck tire market and give it the flexibility to plan its future growth at acceptable levels."
Due to the operating losses sustained by it in the fourth quarter 1995, Arkansas Best has obtained a waiver through February 21, 1996, of the financial covenants and certain other terms of its $350 million Credit Agreement. Arkansas Best and its Credit Agreement lenders are negotiating an amendment to the Credit Agreement.
The following table compares financial data by business segment:
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended Year Ended
December 31 December 31
1995 1994 1995 1994
($ thousands, except per share data)
OPERATING REVENUES
LTL operations $ 304,580 $ 256,513 $1,088,416 $ 918,663
Forwarding operations 44,076 31,468 140,691 31,468
Truckload operations 17,830 - 27,992 -
Logistics operations 13,594 5,397 31,699 7,514
Tire operations 34,434 34,502 145,127 138,665
Other 913 549 3,354 2,111
415,427 328,429 1,437,279 1,098,421
OPERATING PROFIT (LOSS)
LTL operations (31,202) 12,519 (32,915) 35,622
Forwarding operations 795 695 2,820 695
Truckload operations 1,837 - 3,031 -
Logistics operations (1,405) 171 (2,611) (968)
Tire operations (538) 3,267 4,424 11,079
Other (3,143) 375 (3,393) 719
TOTAL OPERATING PROFIT (LOSS) (33,656) 17,027 (28,644) 47,147
INTEREST EXPENSE 6,828 2,264 17,046 6,985
MINORITY INTEREST (226) 1,037 1,297 3,523
INCOME (LOSS) BEFORE INCOME TAXES (40,258) 13,726 (46,987) 36,639
PROVISION (CREDIT) FOR
INCOME TAXES (CREDIT) (13,769) 6,387 (14,194) 17,932
NET INCOME (LOSS) $ (26,489) $ 7,339 $ (32,793) $ 18,707
EARNINGS PER COMMON SHARE:
NET INCOME (LOSS) $ (1.41) $ 0.32 $ (1.90) $ 0.74
AVERAGE COMMON SHARES
OUTSTANDING (2) 19,529,408 19,491,560 19,540,026 19,351,796
(1) Gives consideration to preferred stock dividends of $1.l million for the
quarters and $4.3 million for the years.
(2) Does not assume conversion of preferred stock to common stock because
conversion would be anti-dilutive for these periods.
The following are the principal subsidiaries that comprise each operating segment:
LTL operations: ABF Freight System, Inc. and G.I. Trucking Company
(effective 8/12/95)
Forwarding operations: Clipper Exxpress Company (effective 9/30/94) and
CaroTrans International, Inc. (effective 8/12/95)
Truckload operations: Cardinal Freight Carriers, Inc. (effective 8/12/95)
Logistics operations: Integrated Distribution, Inc., Innovative Logistics
Incorporated (effective 8/12/95) and The Complete Logistics Company (effective
8/12/95)
Tire operations: Treadco, Inc. approximately 46%-owned consolidated subsidiary
Contact: Mr. Randall M. Loyd, Director - Financial Reporting
Telephone: (501) 785-6200