EXHIBIT 99.4
Pro Forma Financial Information
Arkansas Best Corporation
ARKANSAS BEST CORPORATION AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
(in thousands, except per share amounts)
On August 14, 1995, Arkansas Best Corporation ("ABC") commenced payment for
all validly tendered shares of WorldWay Corporation ("WorldWay") pursuant to
a tender offer which expired on August 11, 1995. Approximately 91% of
WorldWay's outstanding common shares were tendered. Remaining outstanding
common shares were acquired pursuant to a merger.
The following pro forma condensed consolidated statements of operations for
the year ended December 31, 1994 and the six months ended June 30, 1995 and
the pro forma condensed consolidated balance sheets as of June 30, 1995 are
unaudited and have been prepared on a pro forma basis to give effect to the
acquisition of WorldWay (the "WorldWay Acquisition"). The statement of
operations for the year ended December 31, 1994 also gives effect to the
acquisitions of the Clipper Exxpress Company and two affiliated companies
(the "Clipper Group") and Traveller Enterprises and Commercial Warehouse
Company (the "Traveller Group"). The Clipper Group was purchased effective
September 30, 1994 and the Traveller Group on October 12, 1994. The pro
forma condensed consolidated statements of operations for the year ended
December 31, 1994 and the six months ended June 30, 1995 give effect to the
acquisitions as if they had occurred on January 1, 1994. The pro forma
condensed consolidated balance sheet has been prepared to give effect to the
WorldWay Acquisition as if it had occurred on June 30, 1995.
The pro forma statements do not purport to represent what ABC's results of
operations or financial condition for the indicated periods or date would
actually have been had the acquisitions occurred on the aforementioned dates,
or to project ABC'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.
ARKANSAS BEST CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1994
Pro Forma
Arkansas Best
Corporation
Historical Including Pro Forma Pro Forma
Arkansas Clipper & Historical Adjustments as Adjusted
Best Traveller WorldWay for the for the
Corporation (1) Corporation Acquisition Acquisitions
Operating revenues $1,098,421 $1,209,054 $ 935,940 $ - $2,144,994
Operating expenses and costs 1,050,306 1,152,858 909,732 (6,461) (3) 2,055,358
(771) (7)
---------- ---------- ---------- ---------- ----------
Operating income 48,115 56,196 26,208 7,232 89,636
Interest expense 6,985 9,715 6,232 5,504 (4) 21,451
Minority interest in subsidiary 3,523 3,523 - - 3,523
Other expenses 4,573 5,656 5,912 1,476 (4) 13,044
Other income (3,605) (3,605) (764) - (4,369)
---------- ---------- ---------- ---------- ----------
Income before income taxes and
cumulative effect of
accounting change 36,639 40,907 14,828 252 55,987
Provision for income taxes 17,932 19,592 6,828 98 (5) 26,518
---------- ---------- ---------- ---------- -----------
Income before cumulative effect
of accounting change $ 18,707 $ 21,315 $ 8,000 $ 154 $ 29,469
========== ========== ========== ========== ==========
Income per common share before
cumulative effect of
accounting change $ 0.74 $ 1.30
========== ==========
Average common shares outstanding 19,352 19,352
========== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
ARKANSAS BEST CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995
Historical Pro Forma Pro Forma
Arkansas WorldWay Adjustments as Adjusted
Best Corporation for the for the
Corporation (9) Acquisition Acquisition
Operating revenues $ 623,301 $ 374,160 $ - $ 997,461
Costs and expenses 602,743 393,866 (3,231) (3) 993,251
(127) (7)
---------- ---------- ---------- ----------
Operating income (loss) 20,558 (19,706) 3,358 4,210
Interest expense 4,649 2,511 2,752 (4) 9,912
Minority interest in subsidiary 1,074 - - 1,074
Other expenses 2,893 3,039 738 (4) 6,670
Other income (2,101) - - (2,101)
---------- ---------- ---------- ----------
Income (loss) before income taxes 14,043 (25,256) (132) (11,345)
Provision for income taxes 7,218 (9,047) (51) (5) (1,880)
---------- ---------- ---------- ----------
Net income (loss) $ 6,825 $ (16,209) $ (81) $ (9,465)
========== ========== ========== ==========
Income (loss) per common share $ .24 $ (0.59)
========== ==========
Average common shares outstanding 19,541 19,541
========== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
ARKANSAS BEST CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1995
Historical Pro Forma Pro Forma
Arkansas Adjustments as Adjusted
Best WorldWay for the for the
Corporation Corporation Acquisition Acquisition
Current Assets:
Cash and cash equivalents $ 5,414 $ 5,236 $ (3,329) (8) $ 7,251
Receivables 132,496 73,330 - 205,826
Inventories 37,150 2,040 - 39,190
Prepaid expenses 11,316 25,613 (12,635) (2) 24,294
---------- ---------- ---------- ----------
Total current assets 186,376 106,219 (16,034) (2) 276,561
Property, plant and
equipment, net 236,301 218,015 (29,114) (2) 398,586
(26,616) (6)
Goodwill, net 149,677 - - 149,677
Other assets 14,657 23,842 (764) (2) 41,134
3,399 (8)
Net assets held for sale - - 26,616 (6) 26,616
---------- ---------- ---------- ----------
Total assets $ 587,011 $ 348,076 $ (42,513) $ 892,574
========== ========== ========== ==========
Historical Pro Forma Pro Forma
Arkansas Adjustments as Adjusted
Best WorldWay for the for the
Corporation Corporation Acquisition Acquisition
Current Liabilities:
Accounts and bank drafts payable $ 61,783 $ 35,190 10,855 (2) $ 107,828
Accrued expenses 89,888 75,201 8,552 (2) 207,887
34,246 (8)
Federal and state income taxes 3,004 (7,978) (887) (2) (5,861)
Deferred income taxes 4,159 - - 4,159
Current portion of
long-term debt 59,463 3,448 1,807 (2) 64,718
---------- ---------- ---------- ----------
Total current liabilities 218,297 105,861 54,573 378,731
Long-term debt 79,741 69,663 72,178 (2) 218,177
(3,405) (2)
Other liabilities 6,342 42,803 (3,000) (2) 11,899
(34,246) (8)
Deferred income taxes 25,919 17,656 (18,731) (2) 24,844
Minority interest 35,822 - 2,211 (2) 38,033
Shareholders' equity:
Preferred stock 15 2,211 (2,211) (2) 15
Common stock 195 3,281 (3,281) (2) 195
Additional paid-in capital 207,636 44,393 (44,393) (2) 207,636
Retained earnings 28,415 62,208 (62,208) (2) 28,415
Other (15,371) - - (15,371)
---------- ---------- ---------- ----------
Total shareholders' equity 220,890 112,093 (112,093) 220,890
---------- ---------- ---------- ----------
Total liabilities and
shareholders' equity $ 587,011 $ 348,076 $ (42,513) $ 892,574
========== ========== ========== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
[1] The acquisition of the Clipper and Traveller Groups were effective as of
September 30, 1994 and October 12, 1994, respectively. Purchase
accounting adjustments related to these acquisitions are immaterial to
the statement of operations and therefore have not been separately
disclosed.
[2] The total purchase price of WorldWay was $72.2 million (6,561,672 shares
at $11 per common share). Reflects the allocation of the purchase price
($72.2 million) and related debt to fund the acquisition.
The preliminary allocation of the purchase cost to the historical assets
and liabilities of WorldWay is as follows:
Net assets at historical amounts $ 112,093
Prepaid expenses (12,635) a)
Property, plant and equipment (29,114) b)
Other assets (764) c)
Accounts payable (10,855) d)
Federal and state income taxes 887 e)
Accrued expenses (8,552) f)
Debt 1,598 g)
Other liabilities 3,000 h)
Deferred taxes 18,731 i)
Minority interest (2,211) j)
--------
Total Purchase Price $ 72,178
========
a) Represents write-off of prepaid tires to conform to the accounting
policies used by ABC, whereby tires on revenue equipment are included in
the cost of revenue equipment.
b) Reflects preliminary write-up of property, plant and equipment of
$24,668,000 to estimated fair value. Fair values are based on
preliminary estimates of the fair value of acquired assets. Finalization
of the valuation may result in a final allocation amount which is
different from that shown.
Also, reflects a proportionate reduction of property, plant and equipment
by $53,782,000 representing the excess of the fair value of assets
acquired less liabilities assumed and costs incurred over the purchase
price (negative goodwill).
c) Represents write-off of debt discount associated with 6.25% WorldWay
Convertible Subordinated Debentures.
d) Represents accruals of various liabilities including payments of
severance pay to terminated WorldWay employees, accruals for payments due
under employment contracts, Director Fee continuation agreements, and
fees to ABC's financial and business advisors in connection with the
acquisition.
e) Represents effect of pro forma adjustments on current income taxes
payable.
f) Represents adjustments of insurance claims reserves to reflect the
undiscounted liability to conform to the accounting policy used by the
ABC.
g) Reflects adjustment of debt to fair values based on current rates;
current portion increases $1,807,000 while non-current decreases
$3,405,000.
h) Represents adjustment of the net pension liability based on the
difference between plan assets of the WorldWay defined benefit pension
plans and the estimated projected benefit obligation.
i) Reflects adjustment of deferred income tax liabilities based on the
difference between the tax basis and purchase accounting basis of assets
and liabilities.
j) Represents reclassification of WorldWay's preferred stock to minority
interest.
[3] Represents adjustment of depreciation expense to reflect purchase
accounting basis of property, plant and equipment.
[4] Reflects interest on the funds borrowed to finance the WorldWay
Acquisition; $72.2 million at an assumed rate of 7.625% and amortization
of financing costs over the life of the Credit Agreement. A one/eighth
of one percent fluctuation in the interest rate would change interest
expense $90,000 annually.
[5] Reflects adjustment of income tax expense at the marginal tax rate of 38%
for the effect of the pro forma adjustments.
[6] Represents reclassification of property, plant and equipment, which as a
result of the acquisition will not be used in ongoing operations, to net
ssets held for sale.
[7] Represents the impact on the statement of operations for the change in
accounting principle to ABC's method of reporting claim liabilities on an
undiscounted basis.
[8] Represents reclassification of assets and liabilities to conform to ABC's
method of reporting.
[9] The historical statement of operations of WorldWay reflects gains on
sales of property, plant and equipment of $5.5 million for the 1995
period which ended on June 17, 1995. Gains on sales of property, plant
and equipment were not significant for the year ended December 31, 1994.