FORT SMITH, Ark.,
'During a year when ABF operated through a challenging freight environment, Arkansas Best maintained its strong financial position and generated a full year 2007 After-Tax Return on Capital Employed of 9.5%,' said Robert A. Davidson, Arkansas Best President and Chief Executive Officer.
For the full year of 2007, Arkansas Best reported income of
ABF Freight System, Inc.(R)
ABF Freight System, Inc., the company's largest subsidiary, had fourth
quarter 2007 revenue of
'During the fourth quarter of 2006, we first experienced significant
declines in year-over-year tonnage. In the fourth quarter of 2007, ABF's
total weight per day decreased by another 1.5% compared to that period,' said
Total billed revenue per hundredweight was
For the full year of 2007, ABF's revenue was
'Though the overall freight environment was weak, ABF continued to gain
market traction with its Regional Performance Model ('RPM'). In the fourth
quarter, ABF's investment in RPM stabilized and the impact on year-over-year
operating results was minimal,' said
'As I have mentioned before, the core principles of ABF's Quality Process
have guided our company since we first incorporated them twenty-five years
ago. Over and over again, employees have enthusiastically embraced the
supply-chain needs of our customers and have committed to meeting agreed-upon
customer requirements correctly the first time. As a direct result, ABF's
distinguished customer service, innovative solutions and attention to detail
provide the best value in the LTL industry,' said
-- ABF's fourth quarter 2007 cargo claim ratio, a measure of net cash
payouts to revenue, was below the fourth quarter of 2006, improving
operating income by nearly $1 million. The full year 2007 cargo claim
ratio of 0.72% was the lowest ABF has experienced in over twenty-five
years.
-- ABF's fourth quarter 2007 Department of Transportation ('DOT')
recordable accidents per million road and city miles decreased by 2%
versus the same period last year despite more adverse weather
conditions.
-- As a percent of revenue, ABF's combined costs associated with workers'
compensation and third-party casualty claims in the fourth quarter and
full year of 2007 were below the most recent five-year average.
-- Even in a weak business environment, ABF's fourth quarter 2007
receivables collection results were better than those of the same
period last year. In addition, the number of freight bill exceptions
was 20% below that of the fourth quarter of 2006.
'Industry statistics and positive customer feedback show that ABF leads
the industry in cargo care, highway safety and billing accuracy, and those
best-in-class results continue to improve,' said
Labor Contract Negotiations
ABF's existing labor contract with its unionized employees will expire on
Capital Expenditures
Arkansas Best estimates 2008 net capital expenditures will be
approximately
Arkansas Best's depreciation and amortization for 2008 is estimated to be
approximately
Conference Call
Arkansas Best Corporation will host a conference call with company
executives to discuss the 2007 fourth quarter results. The call will be
today,
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
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, 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; union and nonunion 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 Arkansas Best'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 INCOME
Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
(Unaudited)
($ thousands, except share and per share data)
OPERATING REVENUES $459,323 $454,251 $1,836,878 $1,881,500
OPERATING EXPENSES
AND COSTS 439,758 433,666 1,752,034 1,756,821
OPERATING INCOME 19,565 20,585 84,844 124,679
OTHER INCOME (EXPENSE)
Short-term investment
income 1,648 1,449 5,671 4,996
Interest expense and
other related
financing costs (304) (287) (1,189) (1,119)
Other, net (112) 1,182 1,465 2,963
1,232 2,344 5,947 6,840
INCOME FROM CONTINUING
OPERATIONS, BEFORE
INCOME TAXES 20,797 22,929 90,791 131,519
FEDERAL AND STATE
INCOME TAXES
Current 1,315 3,858 27,806 50,667
Deferred 5,993 4,904 6,160 351
7,308 8,762 33,966 51,018
INCOME FROM CONTINUING
OPERATIONS 13,489 14,167 56,825 80,501
DISCONTINUED OPERATIONS,
NET OF TAX
Income from operations - - - 530
Gain from disposal - - - 3,063
- - - 3,593
NET INCOME $13,489 $14,167 $56,825 $84,094
BASIC EARNINGS PER SHARE:
Income from continuing
operations $0.54 $0.57 $2.29 $3.21
Income from discontinued
operations - - - 0.14
NET INCOME $0.54 $0.57 $2.29 $3.35
AVERAGE COMMON SHARES
OUTSTANDING (BASIC) 24,870,847 24,938,196 24,822,673 25,134,308
DILUTED EARNINGS PER SHARE:
Income from continuing
operations $0.54 $0.56 $2.26 $3.16
Income from discontinued
operations - - - 0.14
NET INCOME $0.54 $0.56 $2.26 $3.30
AVERAGE COMMON
SHARES OUTSTANDING
(DILUTED) 25,055,495 25,297,848 25,117,597 25,503,799
CASH DIVIDENDS DECLARED
AND PAID PER COMMON
SHARE $0.15 $0.15 $0.60 $0.60
Note: Reported revenues include the effect of a reclassification
associated with certain shipments involving third-party interline
carriers and certain brokerage transactions where ABF retains the
primary obligation to provide services to the customer. This
revenue will now be recorded on a gross basis, with expenses paid
to the third-party carrier recorded in the 'purchased
transportation' category. Previously, this revenue was reported on
a net basis whereby the expense of the third-party carrier was
netted against revenue. This reclassification increases ABF's
fourth quarter and full year 2006 revenues by $5.3 million and
$21.0 million, respectively, or approximately 1%, over previously
reported levels. The comparable amounts for 2007 were $6.1 million
in the fourth quarter and $23.0 million for the full year. These
changes had no impact on ABF's operating income and a minimal
impact on ABF's operating ratio.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31 December 31
2007 2006
(Unaudited) Note
($ thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $93,805 $5,009
Short-term investment securities 79,373 135,317
Accounts receivable, less allowances
(2007 - $3,942; 2006 - $4,476) 141,565 143,216
Other accounts receivable, less allowances
(2007 - $774; 2006 - $1,272) 8,963 8,912
Prepaid expenses 11,243 11,735
Deferred income taxes 36,585 36,532
Prepaid income taxes 3,699 3,024
Other 7,184 7,212
TOTAL CURRENT ASSETS 382,417 350,957
PROPERTY, PLANT AND EQUIPMENT
Land and structures 231,169 228,375
Revenue equipment 509,627 498,844
Service, office and other equipment 142,635 140,516
Leasehold improvements 19,794 17,735
903,225 885,470
Less allowances for depreciation
and amortization 437,087 423,587
466,138 461,883
OTHER ASSETS 70,803 61,959
GOODWILL 63,991 63,917
$983,349 $938,716
Note: The balance sheet at December 31, 2006 was derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS - continued
December 31 December 31
2007 2006
(Unaudited) Note
($ thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable $15,248 $17,423
Accounts payable 60,341 63,477
Income taxes payable 2,414 5,833
Accrued expenses 166,631 171,432
Current portion of long-term debt 171 249
TOTAL CURRENT LIABILITIES 244,805 258,414
LONG-TERM DEBT, less current portion 1,400 1,184
PENSION AND POSTRETIREMENT LIABILITIES 48,859 54,616
OTHER LIABILITIES 25,093 25,655
DEFERRED INCOME TAXES 30,806 19,452
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, authorized
70,000,000 shares; issued 2007:
26,549,038 shares; 2006: 26,407,472 shares 265 264
Additional paid-in capital 258,878 250,469
Retained earnings 457,536 415,876
Treasury stock, at cost, 2007:
1,677,932 shares; 2006:
1,552,932 shares (57,770) (52,825)
Accumulated other comprehensive loss (26,523) (34,389)
TOTAL STOCKHOLDERS' EQUITY 632,386 579,395
$983,349 $938,716
Note: The balance sheet at December 31, 2006 was derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
December 31
2007 2006
(Unaudited)
($ thousands)
OPERATING ACTIVITIES
Net income $56,825 $84,094
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 77,318 67,727
Other amortization 261 211
Pension settlement expense 1,665 10,192
Share-based compensation expense 4,911 4,708
Provision for losses on accounts receivable 1,056 1,023
Deferred income tax provision 6,160 351
Gain on disposal of discontinued operations,
net of taxes - (3,063)
Gain on sales of assets and other (4,351) (3,547)
Excess tax benefits from share-based
compensation (683) (1,710)
Changes in operating assets and liabilities:
Receivables 533 6,108
Prepaid expenses 491 2,058
Other assets (676) 18,631
Accounts payable, taxes payable,
accrued expenses and other
liabilities(1,2) (377) (18,327)
NET CASH PROVIDED BY OPERATING ACTIVITIES 143,133 168,456
INVESTING ACTIVITIES
Purchases of property, plant and equipment,
net of capital leases(2) (96,670) (147,463)
Proceeds from asset sales 12,067 11,913
Proceeds from disposal of discontinued
operations - 21,450
Purchases of short-term investment securities (292,064) (386,358)
Proceeds from sales of short-term investment
securities 348,008 372,280
Capitalization of internally developed software
and other (4,599) (4,117)
NET CASH USED BY INVESTING ACTIVITIES (33,258) (132,295)
FINANCING ACTIVITIES
Payments on long-term debt (1,360) (317)
Net change in bank overdraft (2,175) (2,050)
Payment of common stock dividends (15,165) (15,269)
Purchases of treasury stock (4,945) (26,870)
Excess tax benefits from share-based
compensation 683 1,710
Deferred financing costs (800) -
Proceeds from the exercise of stock options
and other 2,683 5,877
NET CASH USED BY FINANCING ACTIVITIES (21,079) (36,919)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 88,796 (758)
Cash and cash equivalents at beginning of
period 5,009 5,767
CASH AND CASH EQUIVALENTS AT END OF PERIOD $93,805 $5,009
(1) Includes payments to retiring officers under the company's unfunded
Supplemental Benefit Plan of $5.3 million in 2007 and $26.5 million
in 2006.
(2) Does not include $0.7 million and $6.5 million of equipment which was
received but not yet paid for at December 31, 2007 and 2006,
respectively.
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA,
OPERATING RATIOS AND FINANCIAL STATISTICS
Three Months Ended
December 31
2007 2006
(Unaudited)
($ thousands)
OPERATING REVENUES
ABF Freight System, Inc. (1)(2) $441,326 $441,369
Other revenues and eliminations 17,997 12,882
Total consolidated
operating revenues $459,323 $454,251
OPERATING EXPENSES AND COSTS
ABF Freight System, Inc.(1)
Salaries, wages and benefits $262,841 59.6% $263,216 59.6%
Supplies and expenses 77,101 17.5 72,472 16.4
Operating taxes and licenses 11,635 2.6 12,645 2.9
Insurance 5,819 1.3 6,792 1.5
Communications and utilities 3,760 0.9 3,728 0.8
Depreciation and amortization 18,802 4.3 16,916 3.8
Rents and purchased
transportation (2) 41,495 9.4 43,941 10.0
Other 1,373 0.2 1,280 0.3
Pension settlement expense 329 0.1 88 -
Gain on sale of property
and equipment (1,607) (0.4) (541) -
421,548 95.5% 420,537 95.3%
Other expenses and eliminations 18,210 13,129
Total consolidated operating
expenses and costs $439,758 $433,666
OPERATING INCOME (LOSS)
ABF Freight System, Inc. (1) $19,778 $20,832
Other income and eliminations (213) (247)
Total consolidated operating income $19,565 $20,585
Year Ended
December 31
2007 2006
(Unaudited)
($ thousands)
OPERATING REVENUES
ABF Freight System, Inc. (1)(2) $1,770,749 $1,831,351
Other revenues and eliminations 66,129 50,149
Total consolidated
operating revenues $1,836,878 $1,881,500
OPERATING EXPENSES AND COSTS
ABF Freight System, Inc. (1)
Salaries, wages and benefits $1,070,708 60.5% $1,067,174 58.3%
Supplies and expenses 293,056 16.5 293,203 16.0
Operating taxes and licenses 47,682 2.7 48,116 2.6
Insurance 22,230 1.3 28,584 1.6
Communications and utilities 15,334 0.9 15,269 0.8
Depreciation and amortization 74,231 4.2 63,519 3.5
Rents and purchased
transportation(2) 160,062 9.0 179,587 9.8
Other 5,607 0.2 4,007 0.2
Pension settlement expense 1,665 0.1 10,192 0.6
Gain on sale of property
and equipment (4,347) (0.2) (3,416) (0.2)
1,686,228 95.2% 1,706,235 93.2%
Other expenses and eliminations 65,806 50,586
Total consolidated operating
expenses and costs $1,752,034 $1,756,821
OPERATING INCOME (LOSS)
ABF Freight System, Inc. (1) $84,521 $125,116
Other income and eliminations 323 (437)
Total consolidated operating income $84,844 $124,679
(1) Includes U.S., Canadian, and Puerto Rican operations of ABF
affiliates.
(2) See note to Consolidated Statements of Income.
Rolling Twelve Months
Ended
December 31, 2007
FINANCIAL STATISTICS
After-Tax Return on Capital Employed (3) 9.5%
(3) (net income + interest after tax) / (average total debt + average
equity)
ARKANSAS BEST CORPORATION
RECONCILIATIONS OF GAAP EARNINGS AND EARNINGS PER SHARE
Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
(Unaudited)
($ thousands, except per share data)
ABF Freight System, Inc.
Operating Income
Amounts from continuing
operations, on a GAAP basis
$19,778 $20,832 $84,521 $125,116
Pension settlement expense,
pre-tax 329 88 1,665 10,192
Non-GAAP amounts $20,107 $20,920 $86,186 $135,308
Operating Ratio*
Amounts from continuing
operations, on a GAAP basis 95.5% 95.3% 95.2% 93.2%
Pension settlement expense,
pre-tax (0.1) - (0.1) (0.6)
Non-GAAP amounts 95.4% 95.3% 95.1% 92.6%
Arkansas Best Corporation - Consolidated
Operating Income
Amounts from continuing
operations, on a GAAP basis $19,565 $20,585 $84,844 $124,679
Pension settlement expense,
pre-tax 329 88 1,665 10,192
Non-GAAP amounts $19,894 $20,673 $86,509 $134,871
Income from Continuing Operations
Amounts from continuing
operations, on a GAAP basis $13,489 $14,167 $56,825 $80,501
Pension settlement expense,
after-tax 200 53 1,012 6,194
Non-GAAP amounts $13,689 $14,220 $57,837 $86,695
Diluted Earnings Per Share
Amounts from continuing
operations, on a GAAP basis $0.54 $0.56 $2.26 $3.16
Pension settlement expense,
after-tax 0.01 - 0.04 0.24
Non-GAAP amounts $0.55 $0.56 $2.30 $3.40
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.
* See note to Consolidated Statements of Income.
ABF FREIGHT SYSTEM, INC.
OPERATING STATISTICS
Three Months Ended December 31 Year Ended December 31
% %
2007 2006 Change 2007 2006 Change
Workdays 61 61 252 252
Billed
Revenue (1)(2)/ $26.02 $25.38 2.5% $25.81 $25.32 1.9%
CWT
Billed
Revenue (1)(2)/ $331.08 $317.71 4.2% $328.24 $321.42 2.1%
Shipment
Shipments 1,326,268 1,368,842 (3.1)% 5,393,689 5,692,275 (5.2)%
Tonnage (tons) 843,811 856,816 (1.5)% 3,430,363 3,613,471 (5.1)%
(1) Billed Revenue does not include revenue deferral required for
financial statement purposes under the company's revenue recognition
policy.
(2) See note to Consolidated Statements of Income.
Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.
Contact: Ms. Judy R. McReynolds, Senior Vice President, Chief Financial
Officer and Treasurer
Telephone: (479) 785-6281
Mr. David Humphrey, Director of Investor Relations
Telephone: (479) 785-6200
SOURCE Arkansas Best Corporation