Arkansas Best Corporation Announces Fourth Quarter 2011 Results

ARKANSAS BEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

December 31

Year Ended

December 31

2011

2010

2011

2010

(Unaudited)

($ thousands, except share and per share data)

OPERATING REVENUES

$

463,241

$

441,096

$

1,907,609

$

1,657,864

OPERATING EXPENSES AND COSTS

461,606

447,790

1,897,850

1,712,409

OPERATING INCOME (LOSS)

1,635

(6,694)

9,759

(54,545)

OTHER INCOME (EXPENSE)

Interest and dividend income

286

274

1,069

1,194

Interest expense and other related financing costs

(1,054)

(999)

(3,953)

(2,852)

Other, net

1,067

848

2,618

2,406

299

123

(266)

748

INCOME (LOSS) BEFORE INCOME TAXES

1,934

(6,571)

9,493

(53,797)

INCOME TAXES

Current provision (benefit)

(9,328)

1,281

104

(9,919)

Deferred provision (benefit)

9,858

(4,735)

3,056

(11,457)

530

(3,454)

3,160

(21,376)

NET INCOME (LOSS)

1,404

(3,117)

6,333

(32,421)

LESS:  NONCONTROLLING INTEREST IN

             NET INCOME (LOSS) OF SUBSIDIARY

–

(8)

174

272

NET INCOME (LOSS) ATTRIBUTABLE TO

   ARKANSAS BEST CORPORATION

$

1,404

$

(3,109)

$

6,159

$

(32,693)

EARNINGS (LOSS) PER COMMON SHARE⁽¹⁾

Basic

$

0.05

$

(0.12)

$

0.23

$

(1.30)

Diluted

0.05

(0.12)

0.23

(1.30)

AVERAGE COMMON SHARES OUTSTANDING

Basic

25,421,887

25,223,986

25,403,073

25,187,723

Diluted

25,421,887

25,223,986

25,403,073

25,187,723

CASH DIVIDENDS DECLARED
   PER COMMON SHARE

$

0.03

$

0.03

$

0.12

$

0.12

(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 (LOSS) ATTRIBUTABLE TO

   ARKANSAS BEST CORPORATION

$

1,404

$

(3,109)

$

6,159

$

(32,693)

EFFECT OF UNVESTED RESTRICTED
   STOCK AWARDS⁽¹⁾

(59)

(29)

(249)

(69)

ADJUSTED NET INCOME (LOSS) FOR
   CALCULATING EARNINGS PER COMMON SHARE

$

1,345

$

(3,138)

$

5,910

$

(32,762)

ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31

2011

December 31

2010

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

141,295

$

102,578

Short-term investments

33,960

39,288

Restricted cash equivalents and short-term investments

52,693

51,661

Accounts receivable, less allowances (2011 – $5,957; 2010 – $3,944)

149,665

145,426

Other accounts receivable, less allowances (2011 – $1,226; 2010 – $1,254)

7,538

8,157

Prepaid expenses

11,363

10,258

Deferred income taxes

35,481

32,681

Prepaid and refundable income taxes

6,905

3,958

Other

6,186

5,677

        TOTAL CURRENT ASSETS

445,086

399,684

PROPERTY, PLANT AND EQUIPMENT

Land and structures

242,120

243,981

Revenue equipment

569,303

530,424

Service, office and other equipment

174,740

163,732

Leasehold improvements

21,426

21,890

1,007,589

960,027

Less allowances for depreciation and amortization

592,171

552,781

415,418

407,246

OTHER ASSETS

55,716

54,021

$

916,220

$

860,951

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Bank overdraft and drafts payable

$

20,836

$

13,023

Accounts payable

66,517

62,134

Income taxes payable

169

196

Accrued expenses

151,887

144,543

Current portion of long-term debt

24,262

14,001

TOTAL CURRENT LIABILITIES

263,671

233,897

LONG-TERM DEBT, less current portion

46,750

42,657

PENSION AND POSTRETIREMENT LIABILITIES

106,578

65,421

OTHER LIABILITIES

13,751

19,827

DEFERRED INCOME TAXES

19,855

19,405

STOCKHOLDERS’ EQUITY

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

    issued 2011: 27,099,819 shares; 2010: 26,934,847 shares

271

269

Additional paid-in capital

286,408

281,169

Retained earnings

295,108

292,129

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

(57,770)

(57,770)

Accumulated other comprehensive loss

(58,402)

(36,053)

TOTAL STOCKHOLDERS’ EQUITY

465,615

479,744

$

916,220

$

860,951

Note: The balance sheet at December 31, 2010 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

Year Ended

December 31

2011

2010

(Unaudited)

($ thousands)

OPERATING ACTIVITIES

Net income (loss)

$

6,333

$

(32,421)

Adjustments to reconcile net income (loss) to net cash

    provided by operating activities:

Depreciation and amortization

73,742

71,565

Other amortization

233

267

Pension settlement expense

1,125

178

Share-based compensation expense

6,450

5,690

Provision for losses on accounts receivable

2,394

868

Deferred income tax provision (benefit)

3,056

(11,457)

Gain on sales of property and equipment

(2,360)

(981)

Changes in operating assets and liabilities:

Receivables

(6,067)

(32,211)

Prepaid expenses

(1,105)

144

Other assets

(635)

(1,568)

Income taxes

(776)

21,016

Accounts payable, accrued expenses and other liabilities

18,462

5,197

NET CASH PROVIDED BY OPERATING ACTIVITIES

100,852

26,287

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of capital leases and notes payable

(53,227)

(11,422)

Proceeds from sales of property and equipment

7,062

5,879

Purchases of short-term investments

(59,718)

(65,171)

Proceeds from sales of short-term investments

64,995

119,744

Capitalization of internally developed software and other

(5,295)

(4,355)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

(46,183)

44,675

FINANCING ACTIVITIES

Payments on long-term debt

(16,056)

(8,077)

Proceeds from issuance of long-term debt

–

11,416

Acquisition of noncontrolling interest

(4,084)

–

Net change in bank overdraft and other

7,811

(8,918)

Change in restricted cash equivalents and short-term investments

(1,032)

(804)

Deferred financing costs

(174)

(35)

Payment of common stock dividends

(3,180)

(3,126)

Proceeds from the exercise of stock options

763

1,828

NET CASH USED IN FINANCING ACTIVITIES

(15,952)

(7,716)

NET INCREASE IN CASH AND CASH EQUIVALENTS         

38,717

63,246

Cash and cash equivalents at beginning of period

102,578

39,332

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

141,295

$

102,578

NONCASH INVESTING ACTIVITIES

Accruals for equipment received

$

338

$

–

Equipment financed under capital leases and notes payable

$

30,410

$

36,343

ARKANSAS BEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Three Months Ended

December 31

Year Ended

December 31

2011

2010

2011

2010

(Unaudited)

($ thousands, except per share data)

FREIGHT TRANSPORTATION

Operating Income (Loss)

Amounts on a GAAP basis

$

1,340

$

(7,750)

$

3,609

$

(59,740)

Pension settlement expense, pre-tax

1,125

–

1,125

178

Non-GAAP amounts

$

2,465

$

(7,750)

$

4,734

$

(59,562)

Operating Ratio

Amounts on a GAAP basis

99.7%

101.9%

99.8%

103.9%

Pension settlement expense, pre-tax

0.3

–

0.1

–

Non-GAAP amounts

99.4%

101.9%

99.7%

103.9%

ARKANSAS BEST CORPORATION – CONSOLIDATED

Operating Income (Loss)

Amounts on a GAAP basis

$

1,635

$

(6,694)

$

9,759

$

(54,545)

Pension settlement expense, pre-tax

1,125

–

1,125

178

Non-GAAP amounts

$

2,760

$

(6,694)

$

10,884

$

(54,367)

Net Income (Loss) Attributable to
Arkansas Best Corporation

Amounts on a GAAP basis

$

1,404

$

(3,109)

$

6,159

$

(32,693)

Pension settlement expense, after-tax

684

–

684

108

Non-GAAP amounts

$

2,088

$

(3,109)

$

6,843

$

(32,585)

Diluted Earnings (Loss) Per Share

Amounts on a GAAP basis

$

0.05

$

(0.12)

$

0.23

$

(1.30)

Pension settlement expense, after-tax

0.03

–

0.03

–

Non-GAAP amounts

$

0.08

$

(0.12)

$

0.26

$

(1.30)

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.

ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA

AND OPERATING RATIOS

Three Months Ended

December 31

Year Ended

December 31

2011

2010

2011

2010

(Unaudited)

($ thousands)

OPERATING REVENUES

Freight Transportation⁽¹⁾

$

422,051

$

405,771

$

1,730,773

$

1,514,108

Truck Brokerage & Management⁽²⁾

6,942

5,178

25,429

19,241

Emergency and Preventative

   Maintenance⁽³⁾

22,136

19,666

92,554

74,927

Special Services Logistics⁽⁴⁾

16,732

13,873

85,611

63,733

Other revenues and eliminations

(4,620)

(3,392)

(26,758)

(14,145)

Total consolidated
   operating revenues

$

463,241

$

441,096

$

1,907,609

$

1,657,864

OPERATING EXPENSES AND COSTS

Freight Transportation⁽¹⁾

Salaries, wages and benefits

$

254,073

60.2%

$

259,925

64.1%

$

1,061,213

61.3%

$

1,004,267

66.3%

Fuel, supplies and expenses

80,391

19.0

70,298

17.3

333,779

19.3

262,420

17.3

Operating taxes and licenses

11,133

2.6

11,101

2.7

45,469

2.6

43,539

2.9

Insurance

6,360

1.5

3,771

0.9

24,490

1.4

18,745

1.2

Communications and utilities

3,649

0.9

3,663

0.9

15,118

0.9

14,655

1.0

Depreciation and amortization

18,765

4.4

17,108

4.2

70,810

4.1

68,695

4.5

Rents and purchased transportation

43,816

10.4

45,008

11.1

169,212

9.8

154,119

10.2

Gain on sale of property

   and equipment

(426)

(0.1)

(840)

(0.2)

(2,370)

(0.1)

(1,338)

(0.1)

Pension settlement expense

1,125

0.3

–

–

1,125

0.1

178

–

Other

1,825

0.5

3,487

0.9

8,318

0.4

8,568

0.6

420,711

99.7%

413,521

101.9%

1,727,164

99.8%

1,573,848

103.9%

Truck Brokerage & Management⁽²⁾

6,619

4,905

23,539

17,868

Emergency and Preventative

   Maintenance⁽³⁾

21,999

19,050

89,572

72,208

Special Services Logistics⁽⁴⁾

16,780

13,915

82,893

62,014

Other expenses and eliminations

(4,503)

(3,601)

(25,318)

(13,529)

Total consolidated operating

   expenses and costs

$

461,606

$

447,790

$

1,897,850

$

1,712,409

OPERATING INCOME (LOSS)

Freight Transportation⁽¹⁾

$

1,340

$

(7,750)

$

3,609

$

(59,740)

Truck Brokerage & Management⁽²⁾

323

273

1,890

1,373

Emergency and Preventative

    Maintenance⁽³⁾

137

616

2,982

2,719

Special Services Logistics⁽⁴⁾

(48)

(42)

2,718

1,719

Other income (loss) and
   eliminations

(117)

209

(1,440)

(616)

Total consolidated operating
   income (loss)

$

1,635

$

(6,694)

$

9,759

$

(54,545)

ARKANSAS BEST CORPORATION

OPERATING STATISTICS

Three Months Ended December 31

Year Ended December 31

2011

2010

% Change

2011

2010

% Change

(Unaudited)

Freight Transportation ⁽¹⁾

Workdays

             61.0

               61.5

             252.0

           252.0

Billed Revenue ⁽²⁾ / CWT      

$

28.01

$

24.84

12.8%

$

26.86

$

24.41

10.0%

Billed Revenue ⁽²⁾ / Shipment                                                   

$

371.34

$

343.35

8.2%

$

362.11

$

332.66

8.9%

Shipments                                

1,101,893

1,152,854

(4.4)%

4,745,404

4,511,600

5.2%

Shipments / Day

18,064

18,746

(3.6)%

18,831

17,903

5.2%

Tonnage (tons)                        

730,426

796,922

(8.3)%

3,198,292

3,074,285

4.0%

Tons / Day

11,974

12,958

(7.6)%

12,692

12,200

4.0%

Shipments                                

3,206

2,704

18.6%

11,885

10,147

17.1%

Events                                       

60,041

61,983

(3.1)%

273,167

237,142

15.2%

Shipments                                

4,111

3,333

23.3%

19,915

12,676

57.1%