EXHIBIT 99.1
FOR IMMEDIATE RELEASE
ARKANSAS BEST CORPORATION'S
FIRST QUARTER EARNINGS IS
$0.41/SHARE, NET INCOME INCREASES 135%;
ABF(R)'S OPERATING RATIO IS 95.5%
(Fort Smith, Arkansas, April 25, 2005) -- Arkansas Best Corporation
(Nasdaq: ABFS) today announced first quarter 2005 net income of $10.5 million,
or $0.41 per diluted common share. For the first quarter of 2004, net income was
$4.5 million, or $0.18 per diluted common share. Arkansas Best's first quarter
2005 revenue was $417.3 million compared to $374.8 million in the first quarter
of 2004.
ABF FREIGHT SYSTEM, INC.(R)
ABF Freight System had first quarter 2005 revenues of $384.1 million, a
per-day increase of 11.0% versus first quarter 2004 revenue of $346.1 million.
First quarter 2005 operating income at ABF was $17.2 million compared to $8.7
million during the first quarter of 2004. ABF's first quarter 2005 operating
ratio was 95.5% versus an operating ratio of 97.5% during the first quarter of
2004.
ABF's total tonnage per day increased by 3.7% during the first three
months of 2005 compared to the same period last year. This consisted of a 2.9%
increase in LTL tonnage per day and a 6.7% increase in truckload tonnage per
day. "Although year-over-year LTL tonnage level increases slowed throughout the
quarter, ABF improved its first quarter operating ratio by two percentage points
compared to last year's first quarter," said Robert A. Young III, Arkansas Best
Chairman and Chief Executive Officer. "During the quarter, ABF benefited from a
combination of firm pricing and additional tonnage to produce improved operating
margins."
Through the first twenty-one days of April, average daily tonnage
figures in ABF's LTL business are slightly ahead of last year.
Billed LTL revenue per hundredweight was $26.28, an increase of 7.2%
over last year's first quarter figure of $24.52. "The LTL pricing environment
remains competitive and is consistent with last year. We think overall pricing
is still good," said Mr. Young. ABF's first quarter 2005 LTL weight per shipment
was flat compared to the first quarter of 2004. First quarter 2005 LTL length of
haul declined by 2.0% compared to the first quarter of 2004.
Decreases in length of haul cause revenue per hundredweight to decrease. First
quarter 2005 LTL freight density decreased by 2.0% compared to the first quarter
of 2004. Decreases in freight density cause revenue per hundredweight to
increase.
Billed truckload revenue per hundredweight increased by 10.7% over last
year's first quarter figure. "Because of capacity constraints in the truckload
industry, ABF continued to add truckload shipments at good prices and acceptable
margin levels," said Mr. Young. "While maintaining its primary emphasis on
service to its LTL customers, ABF will seek to add these larger shipments when
they contribute to overall profitability."
"ABF's first quarter 2005 city pickup and delivery productivity was the
same as that of the first quarter of 2004. Yard productivity improved over last
year's first quarter," said Mr. Young. "Though ABF's first quarter
bills-per-hour dock productivity was below that of the same period last year, it
exceeded the dock production levels of the fourth quarter of 2004 and was equal
to that of the third quarter of 2004. As new dock workers added last year have
become more familiar with their job activities, dock handling efficiencies have
improved."
CLIPPER
Clipper's first quarter 2005 revenue was $23.5 million, a 12.2%
increase over first quarter 2004 revenue of $20.9 million. Clipper's first
quarter 2005 operating ratio was 100.1% compared to a 2004 first quarter
operating ratio of 102.8%. "Clipper's results improved significantly during the
first quarter which is historically the least profitable quarter of the year,"
said Mr. Young.
"Clipper's temperature-controlled division experienced a 23.6% revenue
increase and a substantial reduction in last year's first quarter operating loss
due to continued success in its dedicated fleet activity and emphasis on
improving the profitability of individual customer accounts," said Mr. Young.
"An increase in first quarter revenue of over 80% in Clipper's brokerage
division was associated with improved service by Clipper's trucking partners and
an increase of available loads that would normally move on the rail. Compared to
last year's first quarter, Clipper's intermodal division experienced reductions
in both revenue and operating profit, primarily due to substandard service
provided by the railroads."
AUCTION RATE SECURITIES
In early March, accounting industry guidance became available to
Arkansas Best regarding the financial statement classification of auction rate
securities held as temporary investments.
This information clarified that auction rate securities should be classified as
investment securities instead of cash and cash equivalents.
Arkansas Best invests in auction rate securities as part of its cash
management strategy. Arkansas Best has historically classified these investments
as cash and cash equivalents because of the short length of their interest rate
reset periods (90 days or less) and because of the ability to sell them each
time their interest rates are reset. In fact, these auction rate securities are
liquidated when Arkansas Best has a need for cash.
Arkansas Best has reclassified auction rate securities as short-term,
temporary investments. As a result of this reclassification, cash flows from
investing activities now include the investments and sales of auction rate
securities. This reclassification has no impact on previously reported total
current assets, total assets, working capital position, results of operations,
or financial covenants and does not affect previously reported cash flows from
operating or financing activities.
Arkansas Best had $38.5 million invested in auction rate securities at
December 31, 2004 and $70.6 million invested in auction rate securities at March
31, 2005.
PENSION
Arkansas Best's pension expense will be $10.0 million for the full year
2005. This compares to full year 2004 pension expense of $9.5 million.
EXPENSING OF STOCK OPTIONS
On April 14, the Securities and Exchange Commission ("SEC") announced
an amendment to the required compliance dates for the Financial Accounting
Standards Board's new rule regarding the expensing of the fair value of stock
options. Arkansas Best previously disclosed that in the third quarter of 2005,
it would begin expensing the fair value of stock options. As a result of the
April 14 SEC ruling, Arkansas Best will now begin expensing the fair value of
stock options in the first quarter of 2006. The estimated negative impact, in
each quarter of 2006, of prior unvested stock option grants will be
approximately $0.01 per diluted common share, net of estimated tax benefits.
RESTRICTED STOCK
On April 20, 2005, Arkansas Best Corporation granted 178,550 shares of
restricted stock under the 2005 Ownership Incentive Plan which was approved by
shareholders on April 20, 2005. The fair value of the shares granted is Arkansas
Best's closing stock price on the date of the
grant. The restricted stock grant vests at the end of a 5-year period beginning
on the date of the grant. Arkansas Best will begin expensing this restricted
stock grant in the second quarter of 2005. The estimated negative impact of the
grant will be approximately $0.01 per diluted common share, net of estimated tax
benefits, per quarter through the vesting period.
COMMON STOCK PURCHASE
During the first quarter of 2005, Arkansas Best made open market
purchases, totaling 37,650 shares, of its common stock. The total purchase price
for these transactions was $1.5 million. These common shares were added to the
company's treasury stock. Since February 2003, as a part of a previously
announced program to repurchase up to a maximum of $25 million of its common
stock, Arkansas Best has purchased a total of 509,150 shares totaling $13.9
million. Arkansas Best plans to continue making open market purchases of its
stock on an opportunistic basis.
CONFERENCE CALL
Arkansas Best Corporation will host a conference call with company
executives to discuss the 2005 first quarter results. The call will be today,
Monday, April 25, at 11:00 a.m. EDT (10:00 a.m. CDT). Interested parties are
invited to listen by calling (877) 275-1257. Following the call, a recorded
playback will be available through Friday, May 13. To listen to the playback,
dial (800) 642-1687. The conference call ID for the playback is 5377908. The
conference call and playback can also be accessed, through May 13, on Arkansas
Best's Internet Web site at www.arkbest.com.
COMPANY DESCRIPTION
Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a
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; union
and non-union 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
2005 2004
-------------- --------------
($ THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
OPERATING REVENUES ............................................... $ 417,278 $ 374,844
OPERATING EXPENSES AND COSTS ..................................... 399,853 366,554
-------------- --------------
OPERATING INCOME ................................................. 17,425 8,290
OTHER INCOME (EXPENSE)
Net loss on sales of property and other ....................... -- (56)
Short-term investment income .................................. 342 8
Fair value changes and payments on interest rate swap(1) ...... -- (438)
Interest expense and other related financing costs ............ (389) (289)
Other, net .................................................... (54) (43)
-------------- --------------
(101) (818)
-------------- --------------
INCOME BEFORE INCOME TAXES ....................................... 17,324 7,472
FEDERAL AND STATE INCOME TAXES
Current ....................................................... 12,547 2,305
Deferred (credit) ............................................. (5,687) 706
-------------- --------------
6,860 3,011
-------------- --------------
NET INCOME ....................................................... $ 10,464 $ 4,461
============== ==============
BASIC:
NET INCOME PER SHARE ............................................. $ 0.41 $ 0.18
-------------- --------------
AVERAGE COMMON SHARES OUTSTANDING (BASIC) ........................ 25,317,178 24,984,285
============== ==============
DILUTED:
NET INCOME PER SHARE ............................................. $ 0.41 $ 0.18
-------------- --------------
AVERAGE COMMON SHARES OUTSTANDING (DILUTED) ...................... 25,806,761 25,389,786
============== ==============
CASH DIVIDENDS PAID PER COMMON SHARE ............................. $ 0.12 $ 0.12
============== ==============
</Table>
(1) The Company's interest rate swap matured on April 1, 2005. For the first
quarter 2005, payments on the swap and changes in fair value of the swap
were approximately equal in amount.
Note: Certain prior year amounts have been reclassified to conform to the
current year presentation, including the reclassification of short-term
investment income from interest expense, to a separate category. In addition,
deferred financing costs and letter of credit fees have been reclassified from
other expense to interest expense and other related financing costs.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
MARCH 31 DECEMBER 31
2005 2004(1)
-------------- --------------
(UNAUDITED)
($ THOUSANDS, EXCEPT SHARE DATA)
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................................ $ 1,568 $ 32,359
Short-term investment securities ......................................... 70,647 38,514
Accounts receivable, less allowances (2005 - $4,397; 2004 - $4,425) ...... 148,482 150,812
Prepaid expenses ......................................................... 15,266 15,803
Deferred income taxes .................................................... 31,825 28,617
Prepaid income taxes ..................................................... -- 3,309
Other .................................................................... 7,128 4,268
-------------- --------------
TOTAL CURRENT ASSETS .................................................. 274,916 273,682
PROPERTY, PLANT AND EQUIPMENT
Land and structures ...................................................... 230,534 229,253
Revenue equipment ........................................................ 402,249 395,574
Service, office and other equipment ...................................... 115,540 115,407
Leasehold improvements ................................................... 13,701 13,411
-------------- --------------
762,024 753,645
Less allowances for depreciation and amortization ........................ 393,629 383,647
-------------- --------------
368,395 369,998
PREPAID PENSION COSTS ....................................................... 22,070 24,575
OTHER ASSETS ................................................................ 71,365 73,234
ASSETS HELD FOR SALE ........................................................ 1,270 1,354
GOODWILL, less accumulated amortization
(2005 and 2004 - $32,037) ................................................. 63,900 63,902
-------------- --------------
$ 801,916 $ 806,745
============== ==============
</Table>
(1) The balance sheet at December 31, 2004 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.
Note: Certain prior year amounts have been reclassified to conform to the
current year presentation, including the reclassification of auction rate
securities in the amount of $38.5 million to short-term investments which,
because of the short duration of their reset periods, were included in cash and
cash equivalents at December 31, 2004.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS - CONTINUED
<Table>
<Caption>
MARCH 31 DECEMBER 31
2005 2004(1)
-------------- --------------
(UNAUDITED)
($ THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable ........................................ $ 10,682 $ 15,862
Accounts payable ......................................................... 66,576 62,784
Income taxes payable ..................................................... 1,867 2,941
Accrued expenses ......................................................... 141,298 148,631
Current portion of long-term debt ........................................ 360 388
-------------- --------------
TOTAL CURRENT LIABILITIES ............................................. 220,783 230,606
LONG-TERM DEBT, less current portion ........................................ 1,400 1,430
FAIR VALUE OF INTEREST RATE SWAP(2) ......................................... -- 873
OTHER LIABILITIES ........................................................... 67,281 67,571
DEFERRED INCOME TAXES ....................................................... 35,391 37,870
FUTURE MINIMUM RENTAL COMMITMENTS, NET
(2005 - $44,200; 2004 - $45,763) .......................................... -- --
OTHER COMMITMENTS AND CONTINGENCIES ......................................... -- --
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, authorized 70,000,000 shares;
issued 2005: 25,921,671 shares; 2004: 25,805,702 shares ............. 259 258
Additional paid-in capital ............................................... 232,415 229,661
Retained earnings ........................................................ 263,555 256,129
Treasury stock, at cost, 2005: 568,932 shares; 2004: 531,282 shares ..... (14,833) (13,334)
Accumulated other comprehensive loss ..................................... (4,335) (4,319)
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY ............................................ 477,061 468,395
-------------- --------------
$ 801,916 $ 806,745
============== ==============
</Table>
(1) The balance sheet at December 31, 2004 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.
(2) The Company's interest rate swap matured on April 1, 2005. The final
accrued interest payment is included in current accrued expenses at March
31, 2005.
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31
2005 2004
-------------- --------------
($ THOUSANDS)
OPERATING ACTIVITIES
Net income ............................................................... $ 10,464 $ 4,461
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization ......................................... 14,576 13,317
Other amortization .................................................... 73 73
Provision for losses on accounts receivable ........................... 433 558
Provision (credit) for deferred income taxes .......................... (5,687) 706
Fair value of interest rate swap ...................................... (873) (866)
(Gain) loss on sales of assets and other .............................. (116) 24
Changes in operating assets and liabilities:
Receivables ........................................................ 1,855 (1,331)
Prepaid expenses ................................................... 537 (5,813)
Other assets ....................................................... 908 2,935
Accounts payable, taxes payable,
accrued expenses and other liabilities ........................... (657) 5,747
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................................... 21,513 19,811
-------------- --------------
INVESTING ACTIVITIES
Purchases of property, plant and equipment ............................... (12,049) (10,054)
Proceeds from asset sales ................................................ 565 287
Purchases of short-term investment securities ............................ (69,501) --
Proceeds from sales of short-term investment securities .................. 37,400 --
Capitalization of internally developed software and other ................ (1,150) (1,096)
-------------- --------------
NET CASH USED BY INVESTING ACTIVITIES ....................................... (44,735) (10,863)
-------------- --------------
FINANCING ACTIVITIES
Borrowings under revolving credit facilities ............................. -- 33,800
Payments under revolving credit facilities ............................... -- (33,800)
Payments on long-term debt ............................................... (58) (54)
Net decrease in bank overdraft ........................................... (5,085) (405)
Dividends paid on common stock ........................................... (3,038) (2,990)
Purchase of treasury stock ............................................... (1,500) (3,876)
Proceeds from the exercise of stock options and other .................... 2,112 1,149
-------------- --------------
NET CASH USED BY FINANCING ACTIVITIES ....................................... (7,569) (6,176)
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........................ (30,791) 2,772
Cash and cash equivalents at beginning of period ......................... 32,359 5,251
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................. $ 1,568 $ 8,023
============== ==============
</Table>
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA
AND OPERATING RATIOS (UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31
2005 2004
------------------------------- -------------------------------
($ THOUSANDS)
OPERATING REVENUES
ABF Freight System, Inc.(1)
LTL ................................................ $ 350,816 $ 317,958
TL ................................................. 33,253 28,154
------------ ------------
Total .............................................. 384,069 346,112
------------ ------------
Clipper ............................................ 23,464 20,906
Other revenues and eliminations .................... 9,745 7,826
------------ ------------
Total consolidated operating revenues ................. $ 417,278 $ 374,844
============ ============
OPERATING EXPENSES AND COSTS
ABF FREIGHT SYSTEM, INC.(1)
Salaries, wages and benefits ....................... $ 244,620 63.7% $ 229,306 66.3%
Supplies and expenses .............................. 56,388 14.7 46,669 13.5
Operating taxes and licenses ....................... 10,562 2.8 10,277 3.0
Insurance .......................................... 6,457 1.7 5,218 1.5
Communications and utilities ....................... 3,780 1.0 3,833 1.1
Depreciation and amortization ...................... 12,775 3.3 11,560 3.3
Rents and purchased transportation ................. 31,485 8.2 29,525 8.5
Other .............................................. 924 0.1 1,016 0.3
Gain on sale of equipment .......................... (116) -- (35) --
------------ ------------ ------------ ------------
366,875 95.5% 337,369 97.5%
------------ ------------ ------------ ------------
CLIPPER
Cost of services ................................... 21,318 90.9% 19,291 92.3%
Selling, administrative and general ................ 2,169 9.2 2,188 10.5
Loss on sale of equipment .......................... -- -- 2 --
------------ ------------ ------------ ------------
23,487 100.1% 21,481 102.8%
------------ ------------ ------------ ------------
Other expenses and eliminations ....................... 9,491 7,704
------------ ------------
Total consolidated operating expenses and costs ....... $ 399,853 $ 366,554
============ ============
OPERATING INCOME (LOSS)
ABF Freight System, Inc.(1) ........................... $ 17,194 $ 8,743
Clipper ............................................... (23) (575)
Other and eliminations ................................ 254 122
------------ ------------
Total consolidated operating income ................... $ 17,425 $ 8,290
============ ============
</Table>
(1) Includes U.S., Canadian, and Puerto Rican operations of ABF affiliates.
ARKANSAS BEST CORPORATION
FINANCIAL STATISTICS (UNAUDITED)
<Table>
<Caption>
ROLLING TWELVE MONTHS
ENDED
MARCH 31, 2005
---------------------
FINANCIAL STATISTICS
After-Tax Return on Stockholders' Equity (net income / average equity) ...... 18.6%
Debt-to-Equity Ratio ........................................................ 0.00:1
After-Tax Return on Capital Employed (1) .................................... 18.6%
</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, 2005
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31
2005 2004 % CHANGE
------------ ------------ ------------
Billed Revenue*/CWT LTL ..................... $ 26.28 $ 24.52 7.2%
TL ...................... $ 9.71 $ 8.77 10.7%
Total ................... $ 22.90 $ 21.40 7.0%
Billed Revenue*/CWT LTL ..................... $ 24.00 $ 23.47 2.3%
(w/o FSC) TL ...................... $ 8.75 $ 8.39 4.3%
Total ................... $ 20.88 $ 20.48 2.0%
Billed Revenue*/Shipment LTL ..................... $ 258.80 $ 241.84 7.0%
TL ...................... $ 1,572.85 $ 1,436.14 9.5%
Total ................... $ 278.98 $ 259.39 7.6%
Billed Revenue*/Shipment LTL ..................... $ 236.30 $ 231.47 2.1%
(w/o FSC) TL ...................... $ 1,418.41 $ 1,374.05 3.2%
Total ................... $ 254.46 $ 248.26 2.5%
Tonnage LTL ..................... 670,568 651,446 2.9%
(tons) TL ...................... 172,078 161,304 6.7%
------------ ------------
Total ................... 842,646 812,750 3.7%
Shipments LTL ..................... 1,361,903 1,321,242 3.1%
TL ...................... 21,241 19,701 7.8%
------------ ------------
Total ................... 1,383,144 1,340,943 3.2%
</Table>
* Billed revenue does not include revenue deferral required for financial
statement purposes under the Company's revenue recognition policy.
There were 64 workdays in the three months ended March 31, 2005 and the three
months ended March 31, 2004. Includes U.S., Canadian and Puerto Rican operations
of ABF affiliates.
Contact: Mr. David E. Loeffler, Senior 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