Arkansas Best Corporation Announces Fourth Quarter and Full Year 2009 Results
FOR IMMEDIATE RELEASE
ARKANSAS BEST CORPORATION ANNOUNCES FOURTH QUARTER AND FULL YEAR 2009 RESULTS
(Fort Smith, Arkansas, January 28, 2010) – Arkansas Best Corporation (Nasdaq: ABFS) today announced a fourth quarter 2009 net loss of $88.7 million, or $3.54 per share. These results include previously disclosed charges for non-cash goodwill impairment of $2.55 per share and supplemental pension settlements of $0.11 per share. Excluding these charges, Arkansas Best had a fourth quarter 2009 net loss of $22.1 million, or $0.88 per share, compared to a net loss of $11.0 million, or $0.44 per share, in the fourth quarter of 2008.
“Arkansas Best’s fourth quarter results illustrate the impact of an extremely weak and uncertain freight environment that has continued now for forty months,” said Judy R. McReynolds, Arkansas Best President and Chief Executive Officer. “This economic recession has been unprecedented in its length and depth. Its impact on the LTL industry has accelerated the level of price competition throughout 2009, and the fourth quarter was no exception.”
“Although the economy has presented us with extreme challenges, the strength of our balance sheet and the depth and experience of the ABF team have allowed us to continue our focus on enhancing our services to customers. A high standard of dependability, superior cargo care and adaptability to customer-specific requirements are the important elements of that focus,” said Ms. McReynolds.
Arkansas Best Corporation
Results of Operations
Fourth Quarter 2009
- Revenue of $371.6 million, a per day decrease of 5.8% from prior year quarter of $391.2 million
- Net loss of $0.88 per share, excluding goodwill impairment and pension settlement charges, compared to a net loss of $0.44 per share in the prior year quarter
Full Year 2009
- Revenue of $1.47 billion, a per-day decrease of 19.3% from 2008 revenue of $1.83 billion
- Net loss of $2.46 per share, excluding goodwill impairment and pension settlement charges, compared to income of $1.18 per share in 2008
Capital Expenditures
- Total net capital expenditures
- 2009 – $43.1 million
- 2010 – estimated to be between $45 million and $50 million
- This includes road and city equipment replacements totaling approximately $35 million
- Depreciation and amortization
- 2009 – $75.2 million
- 2010 – estimated to be approximately $70 million to $75 million
ABF Freight System, Inc.®
Results of Operations
Fourth Quarter 2009
- Revenue of $347.7 million compared to $375.2 million in fourth quarter 2008, a per-day decrease of 8.1%
- Tonnage per day decrease of 1.6% versus fourth quarter 2008
- Total billed revenue per hundredweight of $23.58 compared to $25.09 in fourth quarter 2008, a decrease of 6.0%
- Operating loss of $32.4 million, excluding goodwill impairment and pension settlement charges, compared to an operating loss of $15.2 million in fourth quarter 2008
- Operating ratio of 109.3%, excluding goodwill impairment and pension settlement charges, compared to 104.0% in fourth quarter 2008
Full Year 2009
- Revenue of $1.38 billion compared to $1.76 billion in 2008, a per-day decrease of 21.0%
- Tonnage per day decrease of 11.4% versus 2008
- Total billed revenue per hundredweight of $23.81 compared to $26.70 in 2008, a decrease of 10.8%
- Operating loss of $99.9 million, excluding goodwill impairment and pension settlement charges, compared to operating income of $49.1 million in 2008
- Operating ratio of 107.2%, excluding goodwill impairment and pension settlement charges, compared to 97.2% in 2008
“Our 2010 operating performance will continue to be challenged until some positive change occurs such as a better freight economy, improved pricing or some other industry catalyst. In the meantime, our company has responded to this environment by reducing headcount, equipment levels and costs in a number of areas in relation to available business levels. Our employees are doing more with less while maintaining a superior level of productivity and equipment utilization,” said Ms. McReynolds. “In addition to our regular, daily management of personnel and assets, we have recently addressed our cost structure further. Because of actions we have taken, improvements in the financial markets and other events, we anticipate lower 2010 expenses in several areas of nonunion fringe benefit costs.”
These items include:
- Suspension of the 401(k) company match
- Lower costs associated with pension and postretirement plans
- Structural changes to company health care plans
- Change to certain executive benefit plans to further align our executive compensation with the performance of the company
“We anticipate that the annual savings associated with these changes will be in a range of $15 - $18 million on a pre-tax basis,” said Ms. McReynolds. “We firmly believe we have the best employees in the industry and it is worth noting that they have made sacrifices for the long-term future success of Arkansas Best Corporation.”
Capital Structure and Financial Resources
“Our financial strength and stability have been valuable assets that have allowed us to endure the extended freight recession,” said Ms. McReynolds. “We continue to carefully manage our balance sheet and recognize the opportunities that it presents for our company. We previously disclosed actions we took to secure our letters of credit and to enter into an accounts receivable securitization program. These actions, combined with our existing cash and short-term investments, provide our company with a level of flexibility and liquidity that is necessary to address both the opportunities and challenges of an ever-changing environment.”
“An additional step our Board of Directors has taken to preserve and manage liquidity in this uncertain environment is to reduce our quarterly cash dividend from $0.15 per share to $0.03 per share,” said Ms. McReynolds. “We believe this dividend reduction is a prudent and responsible course of action and is in the best interest of Arkansas Best and our shareholders.”
Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the 2009 fourth quarter and full year results. The call will be today, Thursday, January 28, at 11:00 a.m. ET (10:00 a.m. CT). Interested parties are invited to listen by calling (877) 275-1257 or (706) 634-6529 (for international callers). Following the call, a recorded playback will be available through the end of the day on Thursday, February 18, 2010. To listen to the playback, dial (800) 642-1687 or (706) 645-9291 (for international callers). The conference call ID for the playback is 48841303. The conference call and playback can also be accessed, through February 18, on Arkansas Best’s Web site at arkbest.com.
Company Description
Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a transportation holding company. ABF Freight System, Inc., Arkansas Best’s largest subsidiary, has been in continuous service since 1923. ABF provides transportation of less-than-truckload (“LTL”) general commodities throughout North America. More information is available at arkbest.com and abf.com.
Forward-Looking Statements
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: Statements contained in this press release 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, current adverse economic conditions; the impact of any limitations on our customers’ access to adequate financial resources; availability and cost of capital; shifts in market demand; weather conditions; the performance and needs of industries served by Arkansas Best Corporation’s subsidiaries; future costs of operating expenses such as fuel and related taxes; self-insurance claims and insurance premium costs; relationships with employees, including unions; union and non-union employee wages and benefits, including changes in required contributions to multiemployer pension plans; governmental regulations and policies; costs of continuing investments in technology; the timing and amount of capital expenditures; the cost, integration and performance of any future acquisitions; 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 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 Year Ended
December 31 December 31
2009 2008 2009 2008
(Unaudited)
($ thousands, except share and per share data)
OPERATING REVENUES.................................................................. $ 371,631 $ 391,211 $ 1,472,901 $ 1,833,052
OPERATING EXPENSES AND COSTS (1)...................................... 472,201 407,013 1,641,607 1,784,528
OPERATING INCOME (LOSS) ........................................................ (100,570) (15,802) (168,706) 48,524
OTHER INCOME (EXPENSE)
... Interest and dividend income................................................................ 454 1,178 2,853 5,937
... Interest expense and other related financing costs ................................ (1,348) (300) (2,389) (1,181)
... Other, net ............................................................................................. 379 (2,196) 2,724 (3,370)
(515) (1,318) 3,188 1,386
INCOME (LOSS) BEFORE INCOME TAXES ................................ (101,085) (17,120) (165,518) 49,910
FEDERAL AND STATE INCOME TAXES (2)
... Current (benefit) provision................................................................... (7,540) (20,538) (33,054) 8,171
... Deferred (benefit) provision................................................................. (4,873) 14,391 (4,942) 12,571
(12,413) (6,147) (37,996) 20,742
NET INCOME (LOSS)......................................................................... (88,672) (10,973) (127,522) 29,168
LESS: NONCONTROLLING INTEREST IN
... NET INCOME OF SUBSIDIARY.................................................. 44 – 367 –
NET INCOME (LOSS) ATTRIBUTABLE TO
ARKANSAS BEST CORPORATION ........................................... $ (88,716) $ (10,973) $ (127,889) $ 29,168
EARNINGS (LOSS) PER SHARE (3)
Basic.................................................................................................... $ (3.54) $ (0.44) $ (5.12) $ 1.14
Diluted................................................................................................. (3.54) (0.44) (5.12) 1.14
AVERAGE COMMON SHARES OUTSTANDING
... Basic..................................................................................................... 25,054,389 25,023,794 25,052,303 24,976,412
... Diluted.................................................................................................. 25,054,389 25,023,794 25,052,303 25,110,539
CASH DIVIDENDS DECLARED AND PAID
PER COMMON SHARE ................................................................. $ 0.15 $ 0.15 $ 0.60 $ 0.60
(1) The three months and year ended December 31, 2009 include a $64.0 million goodwill impairment charge.
(2) Effective tax benefit rates for the three months and year ended December 31, 2009 were impacted by the goodwill impairment charge which is not tax deductible.
(3) Effective January 1, 2009, the Company adopted new accounting guidance that requires an allocation of dividends paid and a portion of undistributed net income to unvested restricted stock for calculating per share amounts. As a result, per share amounts for periods prior to 2009 have been retrospectively adjusted to be consistent with the 2009 presentation.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31 December 31
2009 2008
(Unaudited) Note
($ thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................................................................................... $ 39,332 $ 100,880
Short-term investment securities................................................................................. 93,861 117,855
Restricted cash equivalents and short-term investments........................................ 50,857 2,299
Accounts receivable, less allowances (2009 – $3,470; 2008 – $3,513)............... 115,459 111,452
Other accounts receivable, less allowances (2009 – $1,149; 2008 – $1,001).... 6,749 6,611
Prepaid expenses............................................................................................................ 10,390 10,670
Deferred income taxes.................................................................................................. 39,035 36,079
Prepaid and refundable income taxes........................................................................ 24,726 17,661
Other................................................................................................................................. 4,333 4,683
TOTAL CURRENT ASSETS 384,742 408,190
PROPERTY, PLANT AND EQUIPMENT
Land and structures....................................................................................................... 240,185 235,861
Revenue equipment....................................................................................................... 514,481 514,503
Service, office and other equipment........................................................................... 157,885 150,524
Leasehold improvements............................................................................................. 21,839 21,697
934,390 922,585
Less allowances for depreciation and amortization................................................ 505,538 473,010
428,852 449,575
OTHER ASSETS.............................................................................................................. 52,292 50,636
GOODWILL...................................................................................................................... 3,660 63,897
$ 869,546 $ 972,298
Note: The balance sheet at December 31, 2008 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 BALANCE SHEETS – continued
December 31 December 31
2009 2008
(Unaudited) Note
($ thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable............................................................................ $ 21,941 $ 15,189
Accounts payable.......................................................................................................... 59,386 51,646
Income taxes payable................................................................................................... 826 758
Accrued expenses........................................................................................................... 150,799 147,540
Current portion of long-term debt............................................................................... 3,603 159
TOTAL CURRENT LIABILITIES................................................................... 236,555 215,292
LONG-TERM DEBT, less current portion................................................................ 13,373 1,457
PENSION AND POSTRETIREMENT LIABILITIES............................................ 67,445 89,472
OTHER LIABILITIES................................................................................................... 20,254 17,314
DEFERRED INCOME TAXES..................................................................................... 31,023 24,017
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, authorized 70,000,000 shares;
issued 2009: 26,749,265 shares; 2008: 26,702,222 shares.............................. 267 267
Additional paid-in capital............................................................................................. 274,663 268,396
Retained earnings........................................................................................................... 327,948 471,360
Treasury stock, at cost, 1,677,932 shares.................................................................. (57,770) (57,770)
Accumulated other comprehensive loss.................................................................... (44,212) (57,507)
TOTAL STOCKHOLDERS’ EQUITY............................................................. 500,896 624,746
$ 869,546 $ 972,298
Note: The balance sheet at December 31, 2008 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
2009 2008
(Unaudited)
($ thousands)
OPERATING ACTIVITIES
Net income (loss)........................................................................................................... $ (127,522) $ 29,168
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization ............................................................................ 75,226 76,872
Other amortization ................................................................................................. 1,278 293
Goodwill impairment charge................................................................................. 63,958 –
Pension settlement expense .................................................................................. 4,588 1,540
Share-based compensation expense ................................................................... 6,157 6,106
Provision for losses on accounts receivable ....................................................... 2,587 1,623
Deferred income tax provision (benefit) ............................................................ (4,942) 12,571
Gain on sales of assets............................................................................................ (1,409) (3,720)
Excess tax benefits from share-based compensation...................................... – (692)
Changes in operating assets and liabilities:
Receivables .............................................................................................................. (3,735) 30,568
Prepaid expenses .................................................................................................... 429 573
Other assets .............................................................................................................. 790 11,087
Accounts payable, taxes payable,
accrued expenses and other liabilities ............................................................... (5,615) (60,652)
NET CASH PROVIDED BY OPERATING ACTIVITIES .................................... 11,790 105,337
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of capital leases ..................... (48,044) (58,729)
Proceeds from asset sales ............................................................................................ 4,913 17,073
Purchases of short-term investment securities ......................................................... (109,806) (146,655)
Proceeds from sales of short-term investment securities ....................................... 133,800 107,404
Business acquisition, net of cash acquired................................................................ (4,873) –
Capitalization of internally developed software and other.................................... (5,176) (5,325)
NET CASH USED BY INVESTING ACTIVITIES .................................................. (29,186) (86,232)
FINANCING ACTIVITIES
Payments on long-term debt ....................................................................................... (1,433) (295)
Proceeds from issuance of long-term debt................................................................ 14,958 –
Net change in bank overdraft...................................................................................... 6,752 (59)
Change in restricted cash equivalents and short-term investments...................... (48,558) –
Deferred financing costs............................................................................................... (817) –
Payment of common stock dividends ...................................................................... (15,523) (15,344)
Excess tax benefits from share-based compensation............................................. – 692
Proceeds from the exercise of stock options and other .......................................... 469 2,976
NET CASH USED BY FINANCING ACTIVITIES.................................................. (44,152) (12,030)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........... (61,548) 7,075
Cash and cash equivalents at beginning of period ................................................. 100,880 93,805
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................. $ 39,332 $ 100,880
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA
AND OPERATING RATIOS
Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
(Unaudited)
($ thousands)
OPERATING REVENUES
ABF Freight System, Inc. (1) $ 347,738 $ 375,188 $ 1,384,419 $ 1,758,780
Other revenues and
eliminations...................... 23,893 16,023 88,482 74,272
Total consolidated
operating revenues........... $ 371,631 $ 391,211 $ 1,472,901 $ 1,833,052
OPERATING EXPENSES AND COSTS
ABF Freight System, Inc. (1)
Salaries, wages and
benefits.............................. $ 243,865 70.1% $ 246,818 65.8% $ 970,523 70.1% $ 1,048,779 59.6%
Fuel, supplies and expenses 59,714 17.2 68,914 18.4 221,732 16.0 341,826 19.4
Operating taxes and
licenses.............................. 10,657 3.1 11,310 3.0 42,314 3.1 47,088 2.7
Insurance............................. 4,308 1.2 5,471 1.5 20,356 1.5 21,370 1.2
Communications and
utilities............................... 3,404 1.0 3,721 1.0 14,393 1.0 15,102 0.9
Depreciation and
amortization....................... 18,071 5.2 18,681 5.0 72,180 5.2 74,000 4.2
Rents and purchased
transportation..................... 39,007 11.2 34,715 9.3 136,826 9.9 158,943 9.0
Gain on sale of property
and equipment................... (197) (0.1) (726) (0.2) (1,412) (0.1) (3,723) (0.2)
Pension settlement
expense.............................. 4,430 1.3 – – 4,588 0.4 691 –
Other................................... 1,331 0.4 1,435 0.2 7,426 0.5 6,269 0.4
Goodwill impairment
charge................................ 63,958 18.4 – – 63,958 4.6 – –
448,548 129.0% 390,339 104.0% 1,552,884 112.2% 1,710,345 97.2%
Other expenses and
eliminations.......................... 23,653 16,674 88,723 74,183
Total consolidated operating
expenses and costs............... $ 472,201 $ 407,013 $ 1,641,607 $ 1,784,528
OPERATING INCOME (LOSS)
ABF Freight System, Inc. (1).. $ (100,810) $ (15,151) $ (168,465) $ 48,435
Other income (loss) and
eliminations......................... 240 (651) (241) 89
Total consolidated
operating income (loss)........ $ (100,570) $ (15,802) $ (168,706) $ 48,524
- Includes U.S., Canadian, and Puerto Rican operations of ABF affiliates.
ARKANSAS BEST CORPORATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
Three Months Ended Year Ended
December 31 December 31
2009 2008 2009 2008
(Unaudited)
($ thousands, except per share data)
ABF Freight System, Inc.
Operating Income (Loss)
Amounts on a GAAP basis ................................... $ (100,810) $ (15,151) $ (168,465) $ 48,435
Goodwill impairment charge, pre-tax and
after-tax are the same.......................................... 63,958 – 63,958 –
Pension settlement expense, pre-tax ................... 4,430 – 4,588 691
Non-GAAP amounts............................................... $ (32,422) $ (15,151) $ (99,919) $ 49,126
Operating Ratio
Amounts on a GAAP basis ................................... 129.0% 104.0% 112.2% 97.2%
Goodwill impairment charge, pre-tax and
after-tax are the same.......................................... 18.4 – 4.6 –
Pension settlement expense, pre-tax.................... 1.3 – 0.4 –
Non-GAAP amounts............................................... 109.3% 104.0% 107.2% 97.2%
Arkansas Best Corporation - Consolidated
Operating Income (Loss)
Amounts on a GAAP basis.................................... $ (100,570) $ (15,802) $ (168,706) $ 48,524
Goodwill impairment charge, pre-tax and
after-tax are the same.......................................... 63,958 – 63,958 –
Pension settlement expense, pre-tax.................... 4,430 – 4,588 1,540
Non-GAAP amounts............................................... $ (32,182) $ (15,802) $ (100,160) $ 50,064
Net Income (Loss) Attributable to
Arkansas Best Corporation
Amounts on a GAAP basis.................................... $ (88,716) $ (10,973) $ (127,889) $ 29,168
Goodwill impairment charge, pre-tax and
after-tax are the same.......................................... 63,958 – 63,958 –
Pension settlement expense, after-tax................. 2,692 – 2,788 936
Non-GAAP amounts............................................... $ (22,066) $ (10,973) $ (61,143) $ 30,104
Diluted Earnings (Loss) Per Share
Amounts on a GAAP basis.................................... $ (3.54) $ (0.44) $ (5.12) $ 1.14
Goodwill impairment charge, pre-tax and
after-tax are the same.......................................... 2.55 – 2.55 –
Pension settlement expense, after-tax................. 0.11 – 0.11 0.04
Non-GAAP amounts............................................... $ (0.88) $ (0.44) $ (2.46) $ 1.18
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.
ABF FREIGHT SYSTEM, INC.
OPERATING STATISTICS
|
|
Three Months Ended December 31 |
|
Year Ended December 31 |
||||
|
|
2009 |
2008 |
% Change |
|
2009 |
2008 |
% Change |
|
|
|
|
|
|
|
|
|
|
Workdays |
61.5 |
61.0 |
|
|
251.5 |
252.5 |
|
|
|
|
|
|
|
|
|
|
|
Billed Revenue (1) / CWT |
$ 23.58 |
$ 25.09 |
(6.0)% |
|
$ 23.81 |
$ 26.70 |
(10.8)% |
|
|
|
|
|
|
|
|
|
|
Billed Revenue (1) / Shipment |
$ 322.62 |
$ 328.43 |
(1.8)% |
|
$ 314.83 |
$ 350.55 |
(10.2)% |
|
|
|
|
|
|
|
|
|
|
Shipments |
1,073,794 |
1,131,195 |
(5.1)% |
|
4,396,293 |
5,017,807 |
(12.4)% |
|
|
|
|
|
|
|
|
|
|
Tonnage (tons) |
734,608 |
740,379 |
(0.8)% |
|
2,907,163 |
3,293,411 |
(11.7)% |
|
|
|
|
|
|
|
|
|
|
Tons/Day |
11,945 |
12,137 |
(1.6)% |
|
11,559 |
13,043 |
(11.4)% |
- Billed Revenue does not include revenue deferral required for financial statement purposes under the company’s revenue recognition policy.
Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.
Contact: Mr. David Humphrey, Vice President, Investor Relations and Corporate Communications
Telephone: (479) 785-6200
END OF RELEASE