ARKANSAS BEST CORPORATION
Pro Forma Financial Information
ARKANSAS BEST CORPORATION
PRO FORMA FINANCIAL INFORMATION
(in thousands, except per share amounts)
On September 30, 1994, Arkansas Best Corporation (the "Company") consummated
the purchase of all the stock of Clipper Exxpress Company and two affiliated
transportation companies, Agricultural Express of America, Inc. and Agile
Freight System, Inc. (collectively the "Clipper Group") pursuant to a stock
purchase agreement entered into on August 18, 1994 (the "Clipper
Acquisition").
On November 4, 1994, the Company issued 310,000 shares of its common stock in
exchange for all the common stock of Traveller Enterprises ("Traveller") and
Commercial Warehouse Company (collectively the "Traveller Group") pursuant to
stock purchase agreements (the "Traveller Acquisition").
The following pro forma condensed consolidated statements of operations for
the year ended December 31, 1993 and the six months ended June 30, 1994 and
the pro forma condensed consolidated balance sheet as of June 30, 1994 are
unaudited and have been prepared on a pro forma basis to give effect to the
Clipper Acquisition and the Traveller Acquisition. The pro forma condensed
consolidated statements of operations for the year ended December 31, 1993
and the six months ended June 30, 1994 give effect to the Clipper Acquisition
and the Traveller Acquisition as if they had occurred on January 1, 1993.
The pro forma condensed consolidated balance sheet has been prepared to give
effect to the Clipper Acquisition and the Traveller Acquisition as if they
occurred on June 30, 1994.
The pro forma statements do not purport to represent what the Company's
results of operations or financial condition for the indicated periods or
date would actually have been had the Clipper Acquisition and the Traveller
Acquisition occurred on the aforementioned dates, or to project the Company's
results of operations for any future periods. The pro forma adjustments are
based upon currently available information and upon certain assumptions that
management believes are reasonable under the circumstances.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1993
Historical
---------------------------------------
Arkansas Best Clipper Traveller
Corporation Group Group Adjustments Pro Forma
------------- --------- ----------- ----------- ----------
Operating revenues $1,009,918 $ 121,301 $ 18,408 $ - $1,149,627
Operating expenses
and costs 958,549 117,795 17,996 - 1,094,340
---------- --------- --------- -------- ----------
Operating income 51,369 3,506 412 - 55,287
Interest expense 7,248 53 184 3,117 [4] 10,602
Minority interest in
subsidiary 3,140 - - - 3,140
Other expenses 3,705 31 9 1,641 [3] 5,586
200 [2]
Other income (2,974) (58) (223) - (3,255)
---------- --------- --------- -------- ----------
Income before income
taxes and extra-
ordinary item 40,250 3,480 442 (4,958) 39,214
Provision for income
taxes 19,278 136 160 (700) [5] 18,874
---------- --------- --------- -------- ----------
Income before extra-
ordinary item $ 20,972 $ 3,344 $ 282 $ (4,258) $ 20,340
========== ========= ========= ======== ==========
Income per common
share before extra-
ordinary item $ 0.89 $ 0.84
========== ==========
Average common shares
outstanding 19,194 310 [6] 19,504
========== ======== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1994
Historical
---------------------------------------
Arkansas Best Clipper Traveller
Corporation Group Group Adjustments Pro Forma
------------- --------- ----------- ----------- -----------
Operating revenues $ 475,741 $ 64,595 $ 8,701 $ - $ 549,037
Costs and expenses 464,694 60,692 8,491 - 533,877
---------- --------- -------- -------- ----------
Operating income 11,047 3,903 210 - 15,160
Interest expense 3,129 75 153 1,559 [4] 4,916
Minority interest in
subsidiary 1,407 - - - 1,407
Other expenses 2,025 (6) - 821 [3] 2,940
100 [2]
Other income (1,696) (77) (113) - (1,886)
---------- --------- -------- -------- ----------
Income before income
taxes 6,182 3,911 170 (2,480) 7,783
Provision for income
taxes 4,015 122 71 430 [5] 4,638
---------- --------- -------- -------- ----------
Net income $ 2,167 $ 3,789 $ 99 $ (2,910) $ 3,145
========== ========= ======== ======== ==========
Income per common
share $ - $ 0.05
========== ==========
Average common shares
outstanding 19,305 310 [6] 19,615
========== ======== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1994
Arkansas Best Clipper Traveller
Corporation Group Group Adjustments Pro Forma
------------- --------- ----------- ----------- -----------
Current Assets:
Cash and cash
equivalents $ 17,610 $ 3,542 $ 214 $ - $ 21,366
Trade receivables 109,821 19,160 2,077 - 131,058
Inventories 28,318 - - - 28,318
Prepaid expenses 9,487 328 198 - 10,013
---------- -------- -------- -------- ----------
Total current
assets 165,236 23,030 2,489 - 190,755
Property, plant and
equipment, net 193,076 3,427 3,831 - 200,334
Goodwill, net 104,593 - - 49,233 [1] 153,826
Other assets 12,111 1,434 1 1,000 [2] 14,546
---------- -------- -------- -------- ----------
Total assets $ 475,016 $ 27,891 $ 6,321 $ 50,233 $ 559,461
========== ======== ======== ======== ==========
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1994
Arkansas Best Clipper Traveller
Corporation Group Group Adjustments Pro Forma
------------- --------- ----------- ----------- ----------
Current Liabilities:
Accounts and bank
drafts payable $ 48,810 $ 12,018 $ 1,091 $ - $ 61,919
Accrued expenses 83,600 1,456 110 - 85,166
Federal and state
income taxes 6,205 - 58 - 6,263
Current portion of
long-term debt 12,438 675 1,313 60,425 [1] 75,851
1,000 [2]
Deferred income
taxes 3,503 - - - 3,503
---------- -------- -------- -------- ----------
Total current
liabilities 154,556 14,149 2,572 61,425 232,702
Long-term debt 57,024 1,200 2,580 - 60,804
Other liabilities 4,173 1,350 - - 5,523
Deferred income taxes 24,798 - 152 - 24,950
Minority interest 32,842 - - - 32,842
Shareholders' Equity:
Preferred stock 15 - - - 15
Common stock 192 2 60 (2) [1] 195
(57) [6]
Additional paid-in
capital 206,661 1,921 - (1,921) [1] 206,742
81 [6]
Retained earnings 10,126 9,691 933 (9,691) [1] 11,059
Other (15,371) (422) 24 422 [1] (15,371)
(24) [6]
---------- -------- -------- -------- ----------
Total share-
holders' equity 201,623 11,192 1,017 (11,192) 202,640
---------- -------- -------- -------- ----------
Total liabilities
and shareholders'
equity $ 475,016 $ 27,891 $ 6,321 $ 50,233 $ 559,461
========== ======== ======== ======== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
[1] Reflects the allocation of the estimated purchase price ($60.4 million)
and related debt to fund the Clipper Acquisition. The purchase price
will be subject to certain closing audit adjustments. The preliminary
purchase price allocation is as follows:
Current assets $ 23,030
Other assets 4,861
Goodwill 49,233
Current liabilities (14,149)
Long-term liabilities (2,550)
---------
Total purchase price $ 60,425
=========
[2] Reflects payment, related debt, and amortization of noncompete agreement
relating to the Clipper Acquisition; $1 million over the five year term
of the agreement.
[3] Reflects amortization of goodwill recorded on the Clipper Acquisition;
$49.2 million over 30 years.
[4] Reflects interest on funds borrowed to finance the Clipper Acquisition;
$61 million at an assumed rate of 5.075%.
[5] Reflects adjustment of income tax expense at the marginal tax rate of
38.9% for the effect of the pro forma adjustments, and to provide for
federal taxes on income of the Clipper Group and Commercial Warehouse
Company which have not historically recorded federal income taxes as a
result of their status as S corporations.
[6] Reflects issuance of 310,000 shares of the Company's common stock for
all of the outstanding common stock of the Traveller Group. This
transaction has been accounted for as a pooling of interests. Due to
immateriality, the Company's historical financial statements will not be
restated to include the accounts of the Traveller Group. Also, the
acquisition of the Traveller Group was not a material transaction
requiring separate financial statements to be filed as part of the Form
8-K filing. Traveller Enterprises' fiscal year end is March 31,
therefore for purposes of the pro forma consolidated statements of
operations for the year ended December 31, 1993 and the six months ended
June 30, 1994, accounts of Traveller Enterprises have been combined
using operating results for the year ended March 31, 1994 and the six
months ended September 30, 1994, respectively.