SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to ______________
COMMISSION FILE NUMBER 0-19969
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
ARKANSAS BEST 401(k) SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
ARKANSAS BEST CORPORATION
3801 OLD GREENWOOD ROAD
FORT SMITH, ARKANSAS 72903
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Arkansas Best 401(k) Savings Plan
As of December 31, 2002 and 2001, and for the Year ended December 31, 2002
Arkansas Best 401(k) Savings Plan
Financial Statements
and Supplemental Schedule
As of December 31, 2002 and 2001,
and for the Year ended December 31, 2002
CONTENTS
<Table>
Report of Independent Auditors..................................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits.................................2
Statement of Changes in Net Assets Available for Benefits.......................3
Notes to Financial Statements...................................................4
Supplemental Schedule
Schedule H; Line 4i - Schedule of Assets (Held At End of Year).................10
</Table>
Report of Independent Auditors
Investment Committee and Plan Administrator
Arkansas Best 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Arkansas Best 401(k) Savings Plan as of December 31, 2002 and 2001, and
the related statement of changes in net assets available for benefits for the
year ended December 31, 2002. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2002 and 2001, and the changes in its net assets available for
benefits for the year ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2002, is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
Ernst & Young LLP
Little Rock, Arkansas
May 16, 2003
Arkansas Best 401(k) Savings Plan
Statements of Net Assets Available for Benefits
<Table>
<Caption>
DECEMBER 31
2002 2001
------------- -------------
ASSETS
Investments:
Mutual funds $ 116,371,614 $ 128,657,971
Common stock of Arkansas Best Corporation 11,444,336 12,485,055
Other common stocks 3,392,193 5,047,271
Other 7,961 321,285
Participant notes receivable 3,750,134 4,107,726
------------- -------------
Total investments 134,966,238 150,619,308
Receivables:
Participant contributions 691,589 59,199
Employer contributions 404,731 271,176
Other receivables 5,135 --
------------- -------------
Total receivables 1,101,455 330,375
------------- -------------
Net assets available for benefits $ 136,067,693 $ 150,949,683
============= =============
</Table>
See accompanying notes.
2
Arkansas Best 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2002
<Table>
ADDITIONS
Investment income (loss):
Interest and dividends $ 2,391,370
Net depreciation in fair value of investments (24,023,479)
-------------
(21,632,109)
Contributions:
Employee 11,357,912
Employer 3,415,219
-------------
14,773,131
-------------
Net additions (6,858,978)
DEDUCTIONS
Benefit payments 7,098,062
Administrative expenses 32,245
-------------
7,130,307
-------------
Net decrease prior to transfers (13,989,285)
Transfer of assets (892,705)
-------------
Net decrease (14,881,990)
Net assets available for benefits, at beginning of year 150,949,683
-------------
Net assets available for benefits, at end of year $ 136,067,693
=============
</Table>
See accompanying notes.
3
Arkansas Best 401(k) Savings Plan
Notes to Financial Statements
December 31, 2002
1. DESCRIPTION OF PLAN
The following brief description of the Arkansas Best 401(k) Savings Plan (the
Plan) provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution retirement savings plan which covers eligible
employees of Arkansas Best Corporation and certain of its subsidiaries: ABF
Freight System, Inc., ABF Cartage, Inc., Data-Tronics Corp., FleetNet America,
LLC, and Land-Marine Cargo, Inc. (collectively, the Company). Effective
September 1, 2001, G. I. Trucking Company (G. I.) ceased to be a participating
company in the plan and the G. I. participants became fully vested in their
accounts. On November 14, 2001, investments totaling approximately $16.7 million
were transferred to a successor plan, representing the fair value of the
individual accounts of G. I. participants at the date of the transfer. The
remaining participant balances were transferred to a successor plan during 2002.
The Plan covers substantially all regular full-time employees of the Company,
except for employees of a collective bargaining unit, casual employees (defined
as part-time employees who work less than thirty hours per week) who have not
completed certain levels of service, and leased employees. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
CONTRIBUTIONS
Each year, participants may contribute a percentage of pretax compensation, as
defined in the Plan document. Effective January 1, 1999, the Plan was amended to
allow for an automatic 3% pre-tax contribution by participants who do not elect
in writing to not have contributions made to the Plan, however, the Company has
chosen not to utilize this provision. Certain participating companies provide
company matching contributions to encourage participation in the Plan. In
addition to the Company matching contributions, each participating company may
make an additional annual contribution at the discretion of each participating
company's Board of Directors. For the year ended December 31, 2002, no
additional contributions were made.
4
Arkansas Best 401(k) Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
Effective January 1, 2002, the Plan allowed participant and Company matching
contributions as outlined in the following table:
<Table>
<Caption>
PARTICIPANT COMPANY MATCHING
PARTICIPATING COMPANY CONTRIBUTION CONTRIBUTION
------------------------- --------- -------------------
Arkansas Best Corporation 1% to 50% 50% of the first 6%
Data-Tronics Corp. 1% to 50% 50% of the first 6%
ABF Cartage, Inc. 1% to 50% 50% of the first 6%
ABF Freight System, Inc. 1% to 50% 50% of the first 6%
Land-Marine Cargo, Inc. 1% to 50% 50% of the first 6%
FleetNet America, LLC 1% to 50% No match
</Table>
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution and
allocations of (a) the matching contributions and any discretionary
contributions, and (b) Plan earnings and is charged with benefit payments and
administration expenses. Allocations are based on participant earnings or
account balances, as defined in the Plan document. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account balance.
VESTING
Participants are immediately vested in their contributions plus earnings
thereon. If the participant was employed after December 31, 2001, the value of
the matching contributions and earnings becomes 100% vested after three years of
service with the Company. If the participant was not employed after December 31,
2001, the value of the matching contributions and earnings becomes 100% vested
after five years of service with the Company. Upon total and permanent
disability or death, participants become 100% vested in matching contributions
and earnings. Forfeitures of nonvested amounts are used to reduce the Company's
future matching contributions.
5
Arkansas Best 401(k) Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
PARTICIPANT NOTES RECEIVABLE
Participants may borrow from their accounts, subject to a minimum of $1,000 and
a maximum calculated as the lesser of: (a) 50% of the participant's vested
account balance or (b) $50,000 reduced by the participant's highest loan balance
in the preceding twelve-month period. Loan terms generally range from one to
five years; however, if the loan is for the purchase of a primary residence, the
repayment period may range from one to ten years. Each loan is secured by 50% of
the balance in the participant's account and bears interest at a rate
commensurate with local prevailing rates. Repayment is made through payroll
deductions.
PAYMENT OF BENEFITS
Upon termination of service, a participant or the designated beneficiary will
receive a lump-sum amount equal to the value of the participant's vested account
balance at the date of termination.
ADMINISTRATIVE EXPENSES
All investment-related administrative charges are paid by the Plan as provided
in the Plan document. All audit, legal, and consulting fees incurred by the Plan
are paid by the Company.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to amend or terminate the Plan and the Trust at any time, by
action of the Board of Directors and subject to the provisions of ERISA. The
accounts of all participants affected by a termination will become
nonforfeitable as of the date of termination. In the event of Plan termination,
all participants will become 100% vested in their accounts.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the accrual basis of
accounting. Benefit payments are recorded when paid.
6
Arkansas Best 401(k) Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Common stocks are valued at the closing market price of the principal market on
which the stock is traded. Mutual fund shares are valued based on published
market prices, which represent the net asset values of shares held by the Plan
at year-end. The participant notes receivable are valued at cost, which
approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis. Interest
and dividends are recorded on the accrual basis.
RECLASSIFICATION
Certain amounts in the 2001 financial statements have been reclassified to
conform to the 2002 presentation.
3. INVESTMENTS
The Plan's investments are held in the Arkansas Best Corporation and Affiliates
Employees' Investment Trust No. 1 (the Trust). The trustee for the Plan's
investments is Fidelity Management Trust Company (Fidelity).
7
Arkansas Best 401(k) Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The fair value of individual investments that represent 5% or more of the Plan's
net assets is as follows:
<Table>
<Caption>
DECEMBER 31,
2002
----------------
Fidelity Retirement Money Market Portfolio $ 21,503,751
Fidelity Freedom 2010 Fund 13,635,823
Fidelity Magellan Fund 40,162,149
Fidelity Spartan U.S. Equity Index Fund 7,784,890
Fidelity Capital Appreciation Fund 8,098,501
Common stock of Arkansas Best Corporation 11,444,336
PIMCO Total Return ADM Fund 8,432,297
</Table>
<Table>
<Caption>
DECEMBER 31,
2001
----------------
Fidelity Retirement Money Market Portfolio $ 19,880,916
Fidelity Freedom 2010 Fund 14,680,983
Fidelity Magellan Fund 53,510,853
Fidelity Spartan U.S. Equity Index Fund 10,212,408
Fidelity Capital Appreciation Fund 10,185,179
Common stock of Arkansas Best Corporation 12,485,055
</Table>
During 2002 the Plan's investments (including investments purchased, sold, as
well as held during the year) depreciated in fair value as follows:
<Table>
<Caption>
NET DEPRECIATION
IN FAIR VALUE OF
INVESTMENTS
----------------
Mutual funds $ (21,145,372)
Common stocks (2,878,207)
----------------
$ (24,023,479)
================
</Table>
8
Arkansas Best 401(k) Savings Plan
Notes to Financial Statements (continued)
4. LIFE INSURANCE POLICIES
Insurance policies that were purchased under a prior option of the Plan continue
to exist; however, new investments in individual or group policies are not
allowed. Plan participants as of July 1, 1987, who invested in the insurance
option, continue to pay premiums and receive benefits in accordance with the
previously existing provisions of the Plan.
The Plan does not record any assets or liabilities in connection with the
previous life insurance option. The Plan purchases individual life insurance
contracts on behalf of the participants when contributions are made, with the
participant's account as beneficiary. The Plan itself has no liability to pay
any death benefits, because the insurance company assumes this liability upon
issuance of the policies.
Upon the death of the insured, the death benefits received by the Plan from the
insurance company are credited to the participant's account. The Plan cannot
purchase or terminate life insurance for a participant without that
participant's consent. Any cash surrender value received by the Plan upon
termination of a life insurance policy is credited to the participant's account.
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated February 18, 2003, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the Code) and, therefore, the related Trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax-exempt.
9
Arkansas Best 401(k) Savings Plan
Schedule H; Line 4i - Schedule of Assets (Held At End of Year)
EIN No. 71-0673405
Plan No. 002
December 31, 2002
<Table>
<Caption>
(c)
(b) DESCRIPTION OF INVESTMENT, (e)
IDENTITY OF ISSUER, BORROWER, INCLUDING MATURITY DATE, RATE OF INTEREST, (d) CURRENT
(a) LESSOR OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE COST VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
MUTUAL FUNDS
* Fidelity Management Trust Company Retirement Money Market Portfolio - 21,503,751 shares ** $ 21,503,751
* Fidelity Management Trust Company Capital Appreciation Fund - 500,525 shares ** 8,098,501
* Fidelity Management Trust Company Magellan Fund - 508,639 shares ** 40,162,149
* Fidelity Management Trust Company Spartan U.S. Equity Index Fund - 249,916 shares ** 7,784,890
American Advantage Investment Services American Advantage Intl Equity Fund - 75,828 shares ** 900,082
* Fidelity Management Trust Company Fidelity Freedom Income Fund - 30,221 shares ** 320,344
* Fidelity Management Trust Company Fidelity Freedom 2000 Fund - 57,039 shares ** 627,994
* Fidelity Management Trust Company Fidelity Freedom 2010 Fund - 1,191,943 shares ** 13,635,823
* Fidelity Management Trust Company Fidelity Freedom 2020 Fund - 210,136 shares ** 2,235,847
* Fidelity Management Trust Company Fidelity Freedom 2030 Fund - 110,993 shares ** 1,136,575
* Fidelity Management Trust Company Fidelity Freedom 2040 Fund - 90,498 shares ** 530,316
* Fidelity Management Trust Company Spartan Extended Market Index Fund - 39,849 shares ** 766,299
* Fidelity Management Trust Company Spartan International Index Fund - 16,134 shares ** 324,948
* Fidelity Management Trust Company Fidelity US Bond Index Fund - 187,408 shares ** 2,106,464
Pacific Investment Management Company PIMCO Total Return ADM Fund - 790,281 shares ** 8,432,297
Dodge & Cox Funds Dodge & Cox Stock Fund - 15,233 shares ** 1,341,246
Fidelity Management Trust Company Fidelity Low-Priced Stock Fund - 143,337 shares ** 3,607,801
COMMON STOCK
* Arkansas Best Corporation 440,489 shares ** 11,444,336
BROKERAGELINK SELF-DIRECTED ACCOUNT
* Fidelity Brokerage Services, LLC ** 6,256,441
* PARTICIPANTS Notes receivable with interest rates of 8% to 11% -- 3,750,134
---------------
$ 134,966,238
===============
</Table>
* Indicates party-in-interest to the Plan.
** Investments are participant-directed; thus cost information is not
applicable.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the persons who administer the employee benefit plan have duly caused this
annual report to be signed on their behalf by the undersigned hereunto duly
authorized.
Arkansas Best 401(k) Savings Plan
/s/ Judy R. McReynolds
----------------------------------
June 24, 2003 Judy R. McReynolds
Vice President and Controller
11
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT NUMBER SEQ. DESCRIPTION PAGE NO.
- -----------------------------------------------------------------------------------------------------------
23 Consent of Ernst & Young LLP 12
32.1 Certification of Chief Financial Officer pursuant to 18 13
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Executive Officer pursuant to 18 14
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
</Table>