EXHIBIT 99.1
FOR IMMEDIATE RELEASE
ARKANSAS BEST CORPORATION
ANNOUNCES FIRST QUARTER RESULTS;
ABF(R)'S OPERATING RATIO IS 96.6%
(Fort Smith, Arkansas, April 21, 2003) -- Arkansas Best Corporation
(Nasdaq: ABFS) today announced that it had a first quarter 2003 net loss of
$734,000, or $0.03 per common share which included a $9.0 million pre-tax ($0.22
per common share) charge related to Arkansas Best's interest rate swap on $110.0
million of the company's borrowings. At the end of this month, a significant
amount of that debt will be paid off using the proceeds associated with Arkansas
Best's sale of its interest in Wingfoot Commercial Tire Systems, LLC to The
Goodyear Tire & Rubber Company. Following this payment by Goodyear, Arkansas
Best's debt will be substantially below the $110.0 million level on which
interest payments were hedged with the interest rate swap. As a result, until
the interest rate swap matures on April 1, 2005, it will be accounted for in
Arkansas Best's income statement.
ABF Freight System(R), the company's largest subsidiary, had a first
quarter 2003 operating ratio of 96.6 which was 1.5 percentage points better than
in the first quarter of 2002. First quarter 2003 operating income at ABF was
$11.1 million compared to $5.5 million during the first quarter of 2002. "While
ABF's first quarter profits doubled in a sluggish economy, their results could
have been even better had they not experienced unusually severe weather and
incurred higher workers' compensation costs," said Robert A. Young III, Arkansas
Best President and Chief Executive Officer. On a per share basis, adverse
weather accounted for approximately $0.05 per common share and workers'
compensation costs amounted to $0.06 per common share.
For the first quarter of 2002, income before the cumulative effect of
an accounting change related to goodwill impairment was $1.5 million, or $0.06
per diluted common share. Including the non-cash impairment charge of $23.9
million ($0.95 per diluted common share, net of taxes), which was related to
impaired goodwill associated with its Clipper subsidiary, Arkansas Best had a
first quarter 2002 net loss of $22.5 million, or $0.89 per diluted common share.
ABF FREIGHT SYSTEM, INC.
ABF's revenue during the first quarter of 2003 was $324.2 million, a
per-day increase of 12.3%, compared to first quarter 2002 revenue of $288.6
million. Billed LTL revenue per hundredweight, excluding fuel surcharge, was
$22.54, an increase of 6.4% over last year's first quarter figure of $21.19.
Approximately one-half of this increase was a result of changes in the profile
of freight handled. These changes have occurred, primarily, as a result of
business ABF added following the September 2002 closure of Consolidated
Freightways.
ABF's LTL tonnage per day increased 2.7% during the first three months
of 2003 compared to the same period last year. This is approximately 1.6
percentage points less than would have been expected based on normal seasonal
trends from the fourth quarter to the first quarter. "In the first quarter, ABF
continued to maintain pricing discipline," said Mr. Young. "Though tonnage
levels are soft, ABF does not intend to handle additional freight that does not
contribute profitably to the bottom line."
During this year's first quarter, ABF was adversely affected by
unusually bad weather. A major storm in the Upper Midwest, Northeast and
Atlantic Coast regions around February 17 closed three of ABF's distribution
centers and three of ABF's major line-haul relay locations for almost two days.
In addition, 38 of ABF's service centers were fully or partially closed due to
this storm. Operations were also affected by storms in the Southeast during
mid-January and in the Rocky Mountain region during mid-March. The impact on
operating income of lost revenue and increased costs at ABF related to the first
quarter bad weather was approximately $2.0 million. "The unfavorable weather ABF
experienced during this year's first quarter was the worst we've seen during
this period in the last three or four years," said Mr. Young. "The February 17
storm was particularly severe because it shut down several key locations in
ABF's network, disrupting freight flows across the system."
During the first quarter of 2003, workers' compensation costs were $2.5
million greater than in the first quarter of 2002 due primarily to deterioration
in claims experience resulting from more increases on existing claims and
greater severity of new claims. The increase in new claim severity was related
to two large ABF workers' compensation claims whose costs totaled $1.1 million.
ABF's non-union pension expense increased by approximately $1.0 million
during the first quarter of 2003. This quarterly figure was in line with
Arkansas Best's previous statement that it anticipated these costs to increase
by approximately $4.0 million in 2003 versus 2002. ABF's non-union salary
expense increased by $1.4 million during the first quarter of 2003, due to the
normal annual cost-of-living increases.
Compared to the first quarter of 2002, average daily shipments moving
in two-day transit time lanes increased 1.2% versus a 9.4% increase in ABF's
longer-haul business. "Changes in these statistics continue to be affected by
the longer-haul profile of business added as a result of the CF closure," said
Mr. Young.
"ABF's level of dock, street and yard productivity was negatively
impacted by the quarter's bad weather," said Mr. Young. "Productivity measures
at ABF were about one percent less than in the same period last year, with
greater negative effects on fringe costs."
"In addition to the impact of adverse weather on ABF's business, it
appears that the economy has experienced some deterioration in the last few
months," said Mr. Young. "Since last September, it has been difficult for ABF to
differentiate the impact of additional CF business and the changes in the
economy. However, it does appear that the economy has moderately declined during
the last few months," said Mr. Young. "ABF will continue to maintain its
emphasis on individual account profitability when reviewing existing business
and when considering potential new business. As a result, ABF will be well
positioned when economic factors do improve."
On March 28, the Motor Freight Carriers Association, the national trade
association representing the unionized general freight carriers, announced that
the new National Master Freight Agreement had received an overwhelming
ratification vote from the freight membership of the Teamsters Union and from
the member carriers. This contract, which took effect on April 1 of this year,
will provide ABF with labor agreement stability for the next five years.
On March 31, as previously announced, Brian Shutt, manager of security
for ABF Freight System, was selected by the American Trucking Associations (ATA)
as the 2003 "Security Professional of the Year." According to the ATA, this new
award was created "to honor and reward the significant achievements and
contributions of individuals who reduce cargo theft and implement a strong
security program." "We are proud of Brian's recognition by the trucking
industry," said Mr. Young.
On April 9, ATA also announced the 2003 America's Road Team, a select
group of 13 professional drivers who present a message of highway safety to the
public. Among its prestigious members are two ABF drivers: Ruben Armendariz and
Garland Woods. In addition, ABF's Otto Schmeckenbecher was named as the
alternate. "We are very proud of these three ABF drivers, who have been
recognized for significant achievements in highway safety, professionalism and
customer responsiveness," said Mr. Young. "We are also pleased that the
significant accomplishments of these gentlemen are repeated daily by thousands
of employees across ABF's North American system."
CLIPPER
Clipper's first quarter 2003 revenue was $28.5 million versus $25.9
million during the first quarter of 2002, an increase of 10.1%. Clipper's first
quarter 2003 operating ratio was 101.7% compared to a 2002 first quarter
operating ratio of 102.9%. "In a poor economic environment, Clipper was able to
significantly increase its revenue base while reducing its first quarter
operating loss. Clipper has been working to improve its revenue mix by
eliminating unprofitable accounts and by raising prices on its existing business
when appropriate. Clipper's direct cost controls have also improved," said Mr.
Young. "When the economy improves, the steps Clipper continues taking to better
manage both its revenues and costs should positively affect its bottom line."
SALE OF WINGFOOT INTEREST
On March 19, Arkansas Best Corporation announced that it had notified
Goodyear of its intention to sell its 19% ownership interest in Wingfoot to
Goodyear for a cash price of $71.3 million. Arkansas Best anticipates closing
the transaction and receiving the proceeds from Goodyear on April 28, 2003. Upon
the closing of the transaction, Arkansas Best expects to record a pre-tax gain
of approximately $12 million ($8.4 million after tax, or $0.33 per diluted
common share) in the second quarter of 2003. Arkansas Best expects to use the
proceeds to reduce the outstanding debt under its credit agreement, which was
$85.0 million at March 31, 2003.
COMMON STOCK PURCHASE
During the first quarter of 2003, Arkansas Best made open market
purchases, totaling 100,000 shares, of its common stock. The total purchase
price for these transactions was $2.3 million. This was a part of Arkansas
Best's previously announced program to repurchase up to a maximum of $25 million
of its common stock. These common shares were added to the company's treasury
stock.
CONFERENCE CALL
Arkansas Best Corporation will host a conference call with company
executives to discuss the 2003 first quarter results. The call will be today,
Monday, April 21, at 11:00 a.m. EDT. Interested parties are invited to listen by
calling (877) 275-1257. Following the call, a recorded playback will be
available through the end of April. To listen to the playback, dial (800)
642-1687. The conference call ID for the playback is 9587974. The conference
call and playback can also be accessed, through Wednesday, April 30, on Arkansas
Best's Internet Web site at www.arkbest.com.
COMPANY DESCRIPTION
Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a
diversified transportation holding company with two primary operating
subsidiaries. ABF Freight System, Inc., in continuous service since 1923,
provides national transportation of less-than-truckload ("LTL") general
commodities throughout North America. Clipper is an intermodal marketing company
that provides domestic freight services utilizing rail and over-the-road
transportation.
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," "forecast," "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 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 (UNAUDITED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31
2003 2002
---------------- ----------------
($ THOUSANDS, EXCEPT PER SHARE DATA)
OPERATING REVENUES
Transportation operations ................................................... $ 352,700 $ 314,503
Service and other ........................................................... 6,877 5,695
---------------- ----------------
359,577 320,198
---------------- ----------------
OPERATING EXPENSES AND COSTS
Transportation operations ................................................... 342,106 310,029
Service and other ........................................................... 7,617 5,351
---------------- ----------------
349,723 315,380
---------------- ----------------
OPERATING INCOME ............................................................... 9,854 4,818
OTHER INCOME (EXPENSE)
Fair value of interest rate swap(1) ......................................... (9,036) --
Interest expense ............................................................ (1,940) (2,049)
Other, net .................................................................. (112) (303)
---------------- ----------------
(11,088) (2,352)
---------------- ----------------
INCOME (LOSS) BEFORE INCOME TAXES .............................................. (1,234) 2,466
FEDERAL AND STATE INCOME TAXES
Current ..................................................................... (175) (4,989)
Deferred .................................................................... (325) 6,005
---------------- ----------------
(500) 1,016
---------------- ----------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE ...................................................... (734) 1,450
---------------- ----------------
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX BENEFITS OF $13,580(2) ...................... -- (23,935)
---------------- ----------------
NET LOSS FOR COMMON STOCKHOLDERS ............................................... $ (734) $ (22,485)
================ ================
NET INCOME (LOSS) PER COMMON SHARE
BASIC:
Income (loss) before cumulative effect of change in accounting principle ... $ (0.03) $ 0.06
Cumulative effect of change in accounting principle, net of tax ............ -- (0.97)
---------------- ----------------
NET LOSS PER SHARE ............................................................. $ (0.03) $ (0.91)
---------------- ----------------
AVERAGE COMMON SHARES OUTSTANDING (BASIC) ...................................... 24,892,430 24,584,022
================ ================
DILUTED:
Income (loss) before cumulative effect of change in accounting principle ... $ (0.03) $ 0.06
Cumulative effect of change in accounting principle, net of tax ............ -- (0.95)
---------------- ----------------
NET LOSS PER SHARE ............................................................. $ (0.03) $ (0.89)
---------------- ----------------
AVERAGE COMMON SHARES OUTSTANDING (DILUTED) .................................. 24,892,430 25,334,995
================ ================
CASH DIVIDENDS PAID PER COMMON SHARE ........................................... $ 0.08 $ --
================ ================
</Table>
(1) Included in the fair value of the interest rate swap is a pre-tax
non-cash charge of $8.5 million, due to no longer forecasting interest
payments on $110.0 million of borrowings.
(2) In the first quarter of 2002, the Company recognized a non-cash
impairment loss of $23.9 million, net of taxes, due to the write-off of
Clipper goodwill.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARCH 31 DECEMBER 31
2003 2002
--------------- ---------------
(UNAUDITED) NOTE
($ THOUSANDS)
ASSETS
CURRENT ASSETS
Cash and cash equivalents .............................................. $ 4,041 $ 39,644
Accounts receivable, less allowances (2003 - $2,805; 2002 - $2,942) .... 132,624 130,769
Prepaid expenses ....................................................... 15,867 7,787
Deferred income taxes .................................................. 23,844 26,443
Other .................................................................. 4,308 3,729
--------------- ---------------
TOTAL CURRENT ASSETS ................................................ 180,684 208,372
PROPERTY, PLANT AND EQUIPMENT
Land and structures .................................................... 225,198 223,107
Revenue equipment ...................................................... 345,692 343,100
Service, office and other equipment .................................... 93,969 91,054
Leasehold improvements ................................................. 12,029 12,983
--------------- ---------------
676,888 670,244
Less allowances for depreciation and amortization ...................... 341,829 330,841
--------------- ---------------
335,059 339,403
INVESTMENT IN WINGFOOT .................................................... 59,341 59,341
OTHER ASSETS .............................................................. 86,715 82,242
ASSETS HELD FOR SALE ...................................................... 3,200 3,203
GOODWILL, less accumulated amortization
(2003 and 2002 - $32,037) ............................................... 63,832 63,811
--------------- ---------------
$ 728,831 $ 756,372
=============== ===============
</Table>
Note: The balance sheet at December 31, 2002 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
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARCH 31 DECEMBER 31
2003 2002
--------------- ---------------
(UNAUDITED) NOTE
($ THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable ........................................... $ 4,940 $ 7,808
Accounts payable ............................................................ 60,683 58,442
Federal and state income taxes .............................................. 1,124 5,442
Accrued expenses ............................................................ 124,550 123,294
Current portion of long-term debt ........................................... 332 328
--------------- ---------------
TOTAL CURRENT LIABILITIES ................................................ 191,629 195,314
LONG-TERM DEBT, less current portion ........................................... 87,100 112,151
FAIR VALUE OF INTEREST RATE SWAP ............................................... 9,436 9,853
OTHER LIABILITIES .............................................................. 59,742 59,938
DEFERRED INCOME TAXES .......................................................... 24,366 23,656
FUTURE MINIMUM RENTAL COMMITMENTS, NET
(as of March 31, 2003 - $43,100) ............................................. -- --
OTHER COMMITMENTS AND CONTINGENCIES (NONE) ..................................... -- --
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, authorized 70,000,000 shares;
issued 2003: 25,001,981; 2002: 24,972,086 shares ....................... 250 250
Additional paid-in capital .................................................. 211,950 211,567
Retained earnings ........................................................... 151,729 154,455
Treasury stock, at cost, 2003: 159,782 shares; 2002: 59,782 shares ......... (3,299) (955)
Accumulated other comprehensive loss ........................................ (4,072) (9,857)
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY ............................................... 356,558 355,460
--------------- ---------------
$ 728,831 $ 756,372
=============== ===============
</Table>
Note: The balance sheet at December 31, 2002 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
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31
2003 2002
--------------- ---------------
($ THOUSANDS)
OPERATING ACTIVITIES
Net loss .......................................................... $ (734) $ (22,485)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Change in accounting principle, net of tax ..................... -- 23,935
Depreciation and amortization .................................. 12,332 12,389
Other amortization ............................................. 86 45
Provision for losses on accounts receivable .................... 176 461
Provision for deferred income taxes ............................ (325) 6,005
Fair value of interest rate swap ............................... 9,036 --
Loss on sales of assets and other .............................. 126 110
Changes in operating assets and liabilities:
Receivables ................................................. (1,991) (8,365)
Prepaid expenses ............................................ (8,080) (9,689)
Other assets ................................................ (5,510) (273)
Accounts payable, bank drafts payable, taxes payable,
accrued expenses and other liabilities .................... (118) (8,507)
--------------- ---------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ..................... 4,998 (6,374)
--------------- ---------------
INVESTING ACTIVITIES
Purchases of property, plant and equipment,
less capitalized leases and notes payable ....................... (7,574) (10,131)
Proceeds from asset sales ......................................... 253 815
Capitalization of internally developed software and other ......... (893) (1,344)
--------------- ---------------
NET CASH USED BY INVESTING ACTIVITIES ................................ (8,214) (10,660)
--------------- ---------------
FINANCING ACTIVITIES
Borrowings under revolving credit facilities ...................... 9,700 54,000
Payments under revolving credit facilities ........................ (34,700) (45,600)
Payments on long-term debt ........................................ (47) (1,990)
Retirement of bonds ............................................... -- (4,983)
Net increase (decrease) in bank overdraft ......................... (3,351) 2,935
Dividends paid on common stock .................................... (1,992) --
Purchase of treasury stock ........................................ (2,344) --
Other, net ........................................................ 347 1,668
--------------- ---------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES .................... (32,387) 6,030
--------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ............................ (35,603) (11,004)
Cash and cash equivalents at beginning of period .................. 39,644 14,860
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ........................... $ 4,041 $ 3,856
=============== ===============
</Table>
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT REVENUES, OPERATING INCOME,
OPERATING RATIOS, AND FINANCIAL STATISTICS (UNAUDITED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31
2003 2002
--------------- ---------------
($ THOUSANDS)
FINANCIAL STATEMENT REVENUES
ABF Freight System, Inc.(1)
LTL ........................................ $ 300,178 $ 264,850
TL ......................................... 24,039 23,791
--------------- ---------------
Total ...................................... $ 324,217 $ 288,641
=============== ===============
Clipper ....................................... 28,492 25,869
FINANCIAL STATEMENT OPERATING INCOME (LOSS)
ABF Freight System, Inc.(1) ................... $ 11,089 $ 5,543
Clipper ....................................... (487) (743)
OPERATING RATIOS
ABF Freight System, Inc.(1) ................... 96.6% 98.1%
Clipper ....................................... 101.7% 102.9%
</Table>
(1) Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.
<Table>
<Caption>
ROLLING TWELVE MONTHS
ENDED
MARCH 31, 2003
---------------------
FINANCIAL STATISTICS
After Tax Return on Stockholders' Equity (net income / average equity) .... 11.40%
Debt to Equity Ratio ...................................................... 0.25:1
After Tax Return on Capital Employed (1) .................................. 10.21%
</Table>
(1) (Net income + interest after tax) / (average total debt + average equity)
ABF FREIGHT SYSTEM, INC.
OPERATING STATISTICS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31
2003 2002 % CHANGE
----------- ---------- ---------
Billed Revenue/CWT LTL............................................ $ 23.59 $ 21.38 10.4%
TL............................................. $ 8.36 $ 7.68 8.9%
Total.......................................... $ 20.79 $ 18.64 11.6%
Billed Revenue/CWT LTL............................................ $ 22.54 $ 21.19 6.4%
(w/o FSC) TL............................................. $ 8.14 $ 7.64 6.5%
Total.......................................... $ 19.89 $ 18.48 7.6%
Billed Revenue/Shipment LTL............................................ $ 228.32 $ 214.49 6.4%
TL............................................. $ 1,348.43 $ 1,250.83 7.8%
Total.......................................... $ 243.30 $ 230.21 5.7%
Billed Revenue/Shipment LTL............................................ $ 218.12 $ 212.57 2.6%
(w/o FSC) TL............................................. $ 1,312.97 $ 1,244.19 5.5%
Total.......................................... $ 232.77 $ 228.22 2.0%
Tonnage LTL............................................ 639,198 622,104 2.7%
(tons) TL............................................. 144,418 155,595 (7.2)%
----------- -----------
Total.......................................... 783,616 777,699 0.8%
Shipments LTL............................................ 1,321,093 1,240,215 6.5%
TL............................................. 17,914 19,104 (6.2)%
----------- -----------
Total.......................................... 1,339,007 1,259,319 6.3%
</Table>
Includes Fuel Surcharge (FSC), unless otherwise noted.
There were 63 workdays in the three months ended March 31, 2003.
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
END OF RELEASE