ARKANSAS BEST CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 2001 RESULTS; ABF'S FOURTH QUARTER OPERATING RATIO IS 94.5%
FORT SMITH, Ark., Jan. 22 -- Arkansas Best Corporation (Nasdaq: ABFS) today announced fourth quarter 2001 net income of $9.5 million, or $0.38 per diluted common share, compared to fourth quarter 2000 net income of $21.9 million, or $0.90 per diluted common share. For the full year of 2001, the company reported net income of $41.4 million, or $1.66 per diluted common share, versus 2000 net income of $76.2 million, or $3.17 per diluted common share. The fourth quarter and full-year earnings per share figures for 2001 include a non-recurring tax benefit of approximately $1.9 million ($0.08 per diluted common share) resulting from the resolution of certain tax contingencies originating in prior years. The fourth quarter and full-year earnings per share figures for 2000 include a net fair value gain on the Treadco/Wingfoot transaction of $0.12 per diluted common share.
``Arkansas Best generated solid results during what has been a very challenging year for our country, both from an economic standpoint and as we have faced direct attacks upon our democracy,'' said Robert A. Young III, Arkansas Best President and Chief Executive Officer. ``During a period when our company has experienced some of the most significant business level declines in our history, we are proud of the solid earnings that were produced during 2001.''
``I continue to be pleased with ABF's results in the current period of economic uncertainty. Despite experiencing tonnage and revenue levels considerably below those in the fourth quarter of 2000, ABF continued to keep its costs in line with available freight,'' said Mr. Young. ``Clipper experienced a fourth quarter loss due to declines in tonnage and revenue,'' said Mr. Young.
ABF Freight System, Inc.
During the fourth quarter, ABF's revenue was $302.0 million compared to $345.0 million in the fourth quarter of 2000. ABF's operating income during the current quarter was $16.5 million versus $32.8 million in the same period last year. Fourth quarter 2001 LTL tonnage per day declined 12.2% when compared to last year. LTL shipments per day in two-day transit time lanes declined 8.2% compared to an 11.5% shipment decrease in ABF's longer haul business.
Fourth quarter LTL revenue per hundredweight, excluding fuel surcharge, was $21.35, versus $20.99 during the fourth quarter of 2000. ``As marketplace factors continue to exert pressure, ABF maintains focus on its historical philosophy of disciplined pricing. Though the current pricing environment is very competitive, it is still milder than we have seen in previous economic downturns,'' said Mr. Young.
``Throughout the 2001 fourth quarter, cost management continued to be the key to ABF's ability to operate so well during this difficult economic period,'' said Mr. Young. ``As in previous quarters of 2001, ABF did a good job of matching labor costs to available business levels. At the same time, fourth quarter labor productivity at ABF's freight facilities and in its city pickup and delivery network improved over the same period in 2000. Maintaining this balance between costs and productivity, while developing new services and innovations for its customers, will continue to allow ABF to generate acceptable profits while waiting for our economy to grow again,'' said Mr. Young.
During the fourth quarter, ABF's Internet Web site was recognized twice as one of the leading sites in the world. In late November, ABF announced that it had been named again as a Web Business 50 Award(TM) winner. Sponsored by CIO magazine, this award places www.abf.com among the best 50 of all Web sites. ABF's Web site was one of only two on the Internet to win this award in both 2000 and 2001. In December, ABF was named a NetMarketing 200 award winner, with www.abf.com receiving the highest score of any LTL motor carrier Web site. This award is sponsored by BtoB magazine and ranks the best business-to-business Web sites through a detailed points system. ``Since its inception, the focus of ABF's Web site has been to pioneer new technologies for the benefit of ABF's existing and prospective customers,'' said Mr. Young.
For the full year of 2001, ABF's revenue was $1.28 billion, a 7.0% per day decrease compared to last year. ABF's 2001 operating ratio was 93.8% versus 90.3% in 2000. ABF's 2001 operating income was $79.4 million versus $133.8 million during 2000. Total tonnage per day in 2001 decreased 7.7% compared to the previous year. In 2001, LTL tonnage per day decreased 9.3% from 2000 levels and truckload tonnage per day experienced a decline of 1.3% versus 2000.
``When compared to 2000, a period of favorable economic conditions, some people might consider ABF's 2001 results to be less than stellar. However, in many ways, ABF's performance during the adverse economic conditions of 2001 was more challenging and even more impressive than that of 2000,'' said Mr. Young. ``I'm often asked how ABF will perform during a recession. I can now say that ABF's profitability during one of the most difficult operating environments in our history has produced numbers significantly better than those generated by the other national LTL companies during the best of economic times,'' said Mr. Young. ``Once again, every employee of ABF should be proud of their part in helping our company attain this unique distinction.''
Clipper
For the fourth quarter of 2001, Clipper had revenues of $29.7 million versus $32.0 million in the fourth quarter of 2000. Clipper's fourth quarter 2001 operating ratio was 101.9% versus 100.3% during the fourth quarter of 2000. For the full-year 2001, revenues at Clipper were $127.3 million compared to $130.2 million during 2000. Clipper's 2001 operating ratio was 99.6%, compared to 98.8% last year.
``Overall, Clipper's full-year earnings declined versus last year as a result of lower freight volumes and decreased revenues. This was a result of deliberate changes Clipper made to its customer mix and the effects of the economic downturn,'' said Mr. Young. ``Throughout 2001, Clipper's LTL division made significant reductions in its revenue base while trying to focus on individual account profitability. This effort, combined with the increasing negative effects of the economic decline, resulted in erosion of this division's profitability. While Clipper's full-load business experienced slight increases in yearly revenue, as the year progressed, declining volumes also negatively impacted its profitability. Clipper will continue to evaluate its shipping customers based on individual profit margins. Clipper believes that account changes made during this past year, while initially unprofitable, will produce long-term positive results as shipping volumes return to normal.''
Capital Expenditures
In 2002, Arkansas Best forecasts net capital expenditures to be approximately $45 million. Expenditures anticipated for 2002 are below last year's net capital expenditure total of $65 million due to existing business levels. However, in 2002, ABF will maintain its normal equipment replacement plan by making purchases of new tractors equating to approximately one-third of its road fleet.
Arkansas Best's depreciation and amortization for 2002 is forecasted to be approximately $48 million, which has been reduced by approximately $4.0 million of goodwill amortization as a result of new goodwill accounting rules that applied to Arkansas Best on January 1, 2002.
Credit Ratings Improvement
On Monday, January 14, Standard & Poor's upgraded Arkansas Best's corporate credit rating to BBB from BBB-. The upgrade represents a rise to a higher investment-grade rating. In their press release announcing these changes, Standard & Poor's stated that the rating upgrade reflects ``Arkansas Best's relatively strong operating performance in the current difficult economic environment and the likelihood that operating performance will remain solid in 2002.'' In addition, Standard & Poor's release stated that Arkansas Best had ``improved financial flexibility and bolstered equity'' by conversion of preferred stock to common stock. Along with debt reduction, these events ``have helped improve the company's credit profile.''
Forbes Magazine Honor
For the second year in a row, Forbes magazine named Arkansas Best Corporation as one of The Platinum 400 Best Big Companies in America. In its January 7, 2002 issue, Arkansas Best was included as one of fourteen companies in the ``Travel & Transport'' industry sector. In addition, Arkansas Best was highlighted by Forbes as being one of the 23 Platinum 400 companies having posted the highest earnings-per-share growth rates in their respective industries. On a graph depicting percentage of EPS growth versus average P/E, Arkansas Best was shown to have a five-year average EPS growth of approximately 78% while having a five-year average P/E of approximately 12.
Outlook for 2002
``If current economic and general pricing conditions persist throughout 2002, with soft tonnage and relatively firm pricing discipline in the industry, Arkansas Best could continue to experience margins similar to 2001,'' said Mr. Young. ``While those are not bad margins, they are certainly below our potential in a good economy. However, if the economy begins a recovery and tonnage increases during the year, Arkansas Best should experience significant operating leverage commensurate with the timing and extent of the business expansion.''
Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the company's 2001 fourth quarter and full-year results. The call will be today, Tuesday, January 22, at 10:00 a.m. CST. Interested parties are invited to listen by calling (888) 855-5487. Following the call, a recorded playback will be available through the end of the month. To listen to the playback, dial (888) 203-1112. The passcode for the playback is 446813. The live conference call and playback can also be accessed on Arkansas Best's Internet Web site at www.arkbest.com through Thursday, January 31.
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 ``estimate,'' ``expect,'' ``predict,'' ``plan,'' ``anticipate,'' ``believe,'' ``intend,'' ``should,'' ``would,'' ``scheduled,'' 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, union relations; availability and cost of capital; shifts in market demand; weather conditions; the performance and needs of industries served by Arkansas Best's subsidiaries; actual future costs of operating expenses such as fuel and related taxes; self-insurance claims and employee wages and benefits; actual costs of continuing investments in technology; the timing and amount of capital expenditures; competitive initiatives and pricing pressures; general economic conditions; and other financial, operational and legal risks and uncertainties detailed from time to time in the Company's SEC public filings.
The following tables show financial data on Arkansas Best Corporation and its subsidiary companies.
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Year Ended
December 31 December 31
2001 2000 2001 2000
($ thousands, except per share data)
OPERATING REVENUES
Transportation
operations (D) $ 331,673 $ 415,749 $ 1,504,138 $ 1,665,539
Tire operations (C) --- 16,089 --- 156,355
Service and other 5,826 4,259 22,068 17,673
337,499 436,097 1,526,206 1,839,567
OPERATING EXPENSES AND COSTS
Transportation
operations (D) 317,119 383,070 1,428,569 1,529,481
Tire operations (C) --- 15,637 --- 152,568
Service and other 5,614 3,005 21,703 17,366
322,733 401,712 1,450,272 1,699,415
OPERATING INCOME 14,766 34,385 75,934 140,152
OTHER INCOME (EXPENSE)
Net gains on sales of
property and other 290 602 918 2,608
Fair value net gain
- Wingfoot --- 5,011 --- 5,011
Gain on sale of G.I.
Trucking Company --- --- 4,642 ---
Interest expense (2,569) (3,680) (12,636) (16,687)
Other, net (60) 390 (2,139) (1,961)
(2,339) 2,323 (9,215) (11,029)
INCOME BEFORE INCOME TAXES 12,427 36,708 66,719 129,123
FEDERAL AND STATE INCOME
TAXES (E) 2,955 14,799 25,315 52,968
NET INCOME 9,472 21,909 41,404 76,155
Preferred stock dividends --- 999 2,487 4,122
NET INCOME FOR COMMON
SHAREHOLDERS $ 9,472 $ 20,910 $ 38,917 $ 72,033
NET INCOME PER COMMON SHARE
Basic:
NET INCOME (A) $ 0.39 $ 1.04 $ 1.79 $ 3.62
AVERAGE COMMON SHARES
OUTSTANDING (BASIC): 24,457,048 20,097,309 21,802,258 19,881,875
Diluted:
NET INCOME (B) $ 0.38 $ 0.90 $ 1.66 $ 3.17
AVERAGE COMMON SHARES
OUTSTANDING (DILUTED) 25,178,175 24,445,404 24,961,879 24,037,220
CASH DIVIDENDS PAID
PER COMMON SHARE $ --- $ --- $ --- $ ---
(A) Gives consideration to preferred stock dividends of $1.0 million for
the three months ended December 31, 2000 and $2.5 million and
$4.1 million for the twelve months ended December 31, 2001 and 2000,
respectively.
(B) For the three- and twelve- month periods ended December 31, 2000,
conversion of preferred shares into common is assumed. For the
twelve months ended December 31, 2001, conversion of preferred shares
into common shares is assumed for the period prior to the
September 14 preferred stock redemption date.
(C) Includes the operations of Treadco, Inc. ("Treadco") for the three-
and twelve-month periods ended December 31, 2000. Treadco's
operations became a part of Wingfoot Commercial Tire Systems, LLC on
November 1, 2000.
(D) Includes seven months of G.I. Trucking Company's operations for the
twelve-month period ended December 31, 2001. G.I. Trucking Company
was sold on August 1, 2001.
(E) The three- and twelve- month periods ended December 31, 2001 include
a non-recurring tax benefit of $1.9 million ($.08 per diluted common
share) relating to the resolution of certain tax contingencies,
originating in prior years.
ARKANSAS BEST CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
December 31
2001 2000
($ thousands)
ASSETS
Current assets $ 164,313 $ 234,453
Property, plant and equipment (net) 334,177 346,019
Investment in Wingfoot 59,341 59,341
Other assets 61,351 51,893
Goodwill (less amortization) 101,324 105,418
$ 720,506 $ 797,124
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 190,491 $ 281,366
Long-term debt, less current portion 115,003 152,997
Other liabilities 45,480 31,052
Deferred income taxes 31,736 39,519
Shareholders' equity 337,796 292,190
$ 720,506 $ 797,124
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Year Ended
December 31
2001 2000
($ thousands)
OPERATING ACTIVITIES
Net cash provided by operating
activities $ 64,847 $ 127,738
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (74,670) (93,585)
Proceeds from asset sales 10,132 9,784
Proceeds from the sale of G.I. Trucking
Company 40,455 ---
Other (2,817) (3,499)
NET CASH USED BY INVESTING ACTIVITIES (26,900) (87,300)
FINANCING ACTIVITIES
Borrowings under revolving credit
facilities 92,800 110,000
Payments under revolving credit
facilities (92,800) (101,300)
Payments on long-term debt (23,234) (16,359)
Retirement of bonds (23,174) (4,781)
Purchase of preferred stock (414) (3,924)
Net (decrease) increase in bank overdraft (18,165) 9,441
Dividends paid (2,487) (4,122)
Other, net 7,645 3,030
NET CASH USED BY FINANCING ACTIVITIES (59,829) (8,015)
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (21,882) 32,423
Cash and cash equivalents at beginning
of period 36,742 4,319
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14,860 $ 36,742
ARKANSAS BEST CORPORATION
REVENUES AND OPERATING RATIOS (Unaudited)
Three Months Ended Year Ended
December 31 December 31
2001 2000 2001 2000
($ thousands)
REVENUES
ABF Freight
System, Inc. (A) $ 301,969 $ 344,986 $1,282,315 $1,379,280
G.I. Trucking Company (C) --- 40,202 95,477 161,897
Clipper 29,705 31,963 127,278 130,242
Treadco, Inc. (B) --- 16,298 --- 158,269
OPERATING RATIOS
ABF Freight System, Inc. (A) 94.5% 90.5% 93.8% 90.3%
G.I. Trucking Company (C) --- 98.2% 99.9% 97.6%
Clipper 101.9% 100.3% 99.6% 98.8%
Treadco, Inc. (B) --- 96.7% --- 97.0%
OPERATING INCOME (LOSS)
ABF Freight
System, Inc. (A) $ 16,478 $ 32,821 $ 79,355 $ 133,842
G.I. Trucking Company (C) --- 708 73 3,915
Clipper (570) (106) 453 1,621
Treadco, Inc. (B) --- 538 --- 4,671
(A) Includes U.S., Canadian and Puerto Rican operations of ABF
affiliates.
(B) Includes the operations of Treadco for the three- and twelve-month
periods ended December 31, 2000. Treadco's operations became a part
of Wingfoot Commercial Tire Systems, LLC on November 1, 2000.
(C) Includes seven months of G.I. Trucking's operations for the twelve-
month period ended December 31, 2001. G.I. Trucking Company was sold
on August 1, 2001.
ABF FREIGHT SYSTEM, INC.
COMBINED FINANCIAL INFORMATION
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2001
Three Months Ended December 31 Twelve Months Ended December 31
2001 2000 % Change 2001 2000 % Change
Operating
Revenue* $ 301,969 $ 344,986 (12.5%) $1,282,315 $1,379,280 (7.0)%
Operating
Income* $ 16,478 $ 32,821 $ 79,355 $ 133,842
Operating
Ratio 94.5% 90.5% 93.8% 90.3%
Three Months Ended December 31 Twelve Months Ended December 31
2001 2000 % Change 2001 2000 % Change
Revenue* LTL $ 275,973 $ 312,698 (11.7)% $1,168,191 $1,258,531 (7.2)%
TL 25,996 32,288 (19.5)% 114,124 120,749 (5.5)%
Total 301,969 344,986 (12.5)% 1,282,315 1,379,280 (7.0)%
Tonnage LTL 634,817 711,202 (10.7)% 2,701,195 2,977,760 (9.3)%
(tons) TL 160,552 194,694 (17.5)% 726,145 735,522 (1.3)%
Total 795,369 905,896 (12.2)% 3,427,340 3,713,282 (7.7)%
Shipments LTL 1,266,414 1,395,151 (9.2)% 5,349,557 5,915,310 (9.6)%
TL 20,186 23,738 (15.0)% 89,896 91,806 (2.1)%
Total 1,286,600 1,418,889 (9.3)% 5,439,453 6,007,116 (9.4)%
Revenue/
CWT LTL $ 21.74 $ 21.98 (1.1)% $ 21.62 $ 21.13 2.3 %
TL $ 8.10 $ 8.29 (2.3)% $ 7.86 $ 8.21 (4.3)%
Total $ 18.98 $ 19.04 (0.3)% $ 18.71 $ 18.57 0.8 %
Revenue/
Shipment Total $ 234.70 $ 243.14 (3.5)% $ 235.74 $ 229.61 2.7 %
Cost/
Shipment Total $ 221.90 $ 220.01 0.9 % $ 221.15 $ 207.33 6.7 %
*Note: Value rounded to thousands ($000)
There were 62 workdays in the fourth quarter of 2001 and 61 workdays in
the fourth quarter of 2000.
Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.
Contact: Mr. David E. Loeffler, Vice President, Chief Financial Officer and Treasurer
Telephone: (479) 785-6157
Mr. David Humphrey, Director of Investor Relations
Telephone (479) 785-6200