Friday October 17 8:25 AM EDT
Company Press Release
Arkansas Best Corporation Announces Continuing Improvement In
Operating Results For Third Quarter 1997 With Record Operating
Profit
FORT SMITH, Ark., Oct. 17 /PRNewswire/ -_ Arkansas Best Corporation (Nasdaq:ABFS) continued its 1997 pattern of
sharply improved results by reporting income from continuing operations of $9.3 million, or $0.41 per share ($0.39 fully
diluted) for the third quarter of 1997 versus a loss from continuing operations of $(7.7) million, or $(0.45) per share for the
third quarter of 1996. Third quarter 1997 income from continuing operations included an after tax gain of $2.5 million for the
sale of Cardinal Freight Carriers, Inc. and after tax losses on sales and write downs of real estate held for sale of $(1.7)
million, which in total increased earnings per share by $0.04. Excluding the above items, income from continuing operations
was $8.5 million, or $0.37 per share.
Arkansas Best had operating income from continuing operations of $21.6 for the third quarter of 1997 compared to an
operating loss from continuing operations of $(2.2) million in the third quarter of 1996. ABF Freight System, Inc., Arkansas
Best's largest subsidiary, had an operating ratio of 93.2% for the third quarter of 1997, ABF's best quarterly operating ratio
since the third quarter of 1988.
Year-to-date, Arkansas Best reported income from continuing operations of $16.1 million, or $0.65 per share for 1997,
versus a loss from continuing operations of $(25.1) million, or a loss of $(1.45) per share, for the first nine months of 1996.
ABF Freight System, Inc.
''Third quarter results reflect strong profitability for ABF'', said Robert A. Young, III, Arkansas Best President and Chief
Executive Officer. ''ABF's operating ratio of 93.2% for the third quarter represents a substantial improvement over the
99.7% operating ratio for the third quarter of 1996. ABF had operating income of $48.6 million for the first nine months this
year which is 12.6% higher than any twelve month period in ABF's history.
''A continuing favorable pricing environment and ABF's emphasis on account profitability resulted in an increase in LTL
revenue per hundredweight to $17.51 for the third quarter of 1997, a 7.7% increase from the third quarter of 1996. The
increase in revenue per hundredweight offset a slight decrease in tonnage allowing ABF's revenue per day to increase 6.3%.
ABF's 1997 third quarter tonnage per day decreased 1.5%, consisting of a 0.6% decrease in LTL tonnage and a 5.2%
truckload tonnage decrease compared to last year's third quarter. The UPS work stoppage accounted for an estimated 2% of
ABF's increase in revenue in the third quarter and made some contribution to profit. ABF's ongoing effort to improve
efficiencies resulted in a reduction in cost per shipment of 5.6% compared to third quarter of 1996.''
G.I. Trucking, Inc.
''G.I. continued to make steady progress with an operating ratio of 96.9% for the quarter versus 107.3% for the third quarter
of 1996'', said Mr. Young. ''G.I.'s revenues increased 25% for third quarter 1997 compared to the third quarter of 1996.
G.I. has increased the number of shipments per day and pounds per day by 36.1% and 19.2% quarter to quarter respectively,
which has improved the efficiency of its system. Revenue per hundredweight also increased 5% compared to third quarter
1996. In addition, G.I. benefited from lower than expected pension costs which had a 1.1% impact on the third quarter
operating ratio.''
Clipper Worldwide
''At Clipper, our intermodal operation, revenue during the third quarter increased 4% for the domestic division and decreased
9% for the international division compared to last year's third quarter'', said Mr. Young. ''During the quarter,
Clipper-Domestic was able to further improve yields and decrease cost per shipment compared to the third quarter of 1996,
resulting in a operating ratio of 94.7% for the 1997 third quarter compared to a 96.2% in 1996 third quarter. New operating
management at Clipper-International continues to take steps to focus on lane profitability, lowering costs and improving
efficiencies. A number of these steps have resulted in increased cost in the third quarter. However, we should begin seeing
the benefit of these changes in the fourth quarter. The international division recorded a one time charge in the third quarter of
$400,000 relating to the consolidation of administrative offices and some sales locations, which in the future should increase
the efficiency of Clipper Worldwide.
''Clipper does face some uncertainty entering the fourth quarter. The recently publicized problems in the nation's rail system
are having an effect on Clipper's intermodal business from a service standpoint. Clipper management is committed to a strong
level of customer service. To maintain service levels, some shipments have been, and will continue to be, diverted from rail to
trucks, which will adversely affect costs.''
Treadco, Inc.
''During the quarter, Treadco reached two milestones,'' said Mr. Young ''Treadco's revenues were higher than in any quarter
in the history of the company, and 16.6% higher than the third quarter of 1996, but more importantly, Treadco achieved
profitability for the quarter. Treadco still has much to accomplish, but the third quarter is a clear indication of progress.''
Logistics
During the third quarter, the decision was made to exit the logistics business. The loss from discontinued operations of $(3.5)
million or $(0.17) per share for the third quarter includes the after tax loss on sale of Complete Logistics, announced in
August, and a provision for a loss on the disposal of Integrated Distribution, Inc.
Arkansas Best Debt Reduction
Arkansas Best reduced long-term debt by $60 million during the third quarter of 1997, including $35 million in net proceeds
from the sale of Cardinal. The interest rate on bank debt has been reduced by 1.25% points since the beginning of the third
quarter.
The foregoing release contains forward-looking statements that are based on current expectations and are subject to a number
of risks and uncertainties. Actual results could differ materially from current expectations due to a number of factors
including: general economic conditions, competitive initiatives and pricing pressures, union relations, availability and cost of
capital, shifts in market demand, weather conditions, the performance and needs of industries served by Arkansas Best's
businesses, actual future costs of operating expenses such as fuel and related taxes, self-insurance claims and employee
wages and benefits, actual costs of continuing investments in technology, and the timing and amount of capital expenditures.
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
CONTINUING OPERATIONS: ($ thousands, except per share data)
OPERATING REVENUES
Transportation
operations $376,352 $372,649 $1,117,160 $1,089,980
Tire operations 46,145 39,488 119,253 106,606
Service and other 2,792 2,369 7,169 6,281
425,289 414,506 1,243,582 1,202,867
OPERATING EXPENSES AND COSTS
Transportation operations 355,453 374,032 1,064,471 1,100,997
Tire operations 45,423 40,184 120,862 110,249
Service and other 2,766 2,529 7,258 7,305
403,642 416,745 1,192,591 1,218,551
OPERATING INCOME (LOSS) 21,647 (2,239) 50,991 (15,684)
OTHER INCOME (EXPENSE)
Gains (losses) on real estate
and other assets (2,333) 737 (4,147) 3,458
Gain on sale of Cardinal
Freight Carriers 8,985 --- 8,985 ---
Interest expense (5,260) (7,563) (19,100) (22,495)
Minority interest in
subsidiary (228) (82) 826 1,045
Other, net (2,155) (2,097) (5,255) (5,279)
(991) (9,005) (18,691) (23,271)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAX 20,656 (11,244) 32,300 (38,955)
FEDERAL AND STATE INCOME TAXES
(CREDIT)
Current 3,035 (4,916) 4,500 (9,396)
Deferred 8,363 1,327 11,685 (4,397)
11,398 (3,589) 16,185 (13,793)
INCOME (LOSS) FROM CONTINUING
OPERATIONS 9,258 (7,655) 16,115 (25,162)
DISCONTINUED OPERATIONS:
(Loss) from discontinued
operations (net of tax
benefits of $208 and $478
for the three months ended
September 30, 1997 and 1996,
respectively, and $1,476
and $928 for the nine months
ended September 30, 1997 and
1996, respectively) (363) (831) (2,529) (1,669)
(Loss) on disposal of
discontinued operations
(net of tax benefits of $605
for the three and nine
months ended September 30,
1997) (3,093) --- (3,093) ---
(LOSS) FROM DISCONTINUED
OPERATIONS (3,456) (831) (5,622) (1,669)
NET INCOME (LOSS) 5,802 (8,486) 10,493 (26,831)
Preferred stock dividends 1,075 1,074 3,224 3,224
NET INCOME (LOSS)
FOR COMMON SHAREHOLDERS $ 4,727 $ (9,560) $ 7,269 $ (30,055)
EARNINGS (LOSS) PER COMMON SHARE
Primary:
Continuing operations (A) $ 0.41 $ (0.45) $ 0.65 $ (1.45)
Discontinued operations (0.17) (0.04) (0.29) (0.09)
NET INCOME (LOSS) (A) $ 0.24 $ (0.49) $ 0.36 $ (1.54)
AVERAGE COMMON SHARES
OUTSTANDING (PRIMARY): 20,048,212 19,508,620 19,708,418 19,512,509
Fully diluted:
Continuing operations $ 0.39 $ (0.45) $ 0.65 $ (1.45)
Discontinued operations (0.14) (0.04) (0.29) (0.09)
NET INCOME (LOSS) $ 0.25 $ (0.49) $ 0.36 $ (1.54)
AVERAGE COMMON SHARES OUTSTANDING
(FULLY DILUTED) (B) 23,953,837 19,508,620 19,708,418 19,512,509
CASH DIVIDENDS PAID PER
COMMON SHARE: $ 0.00 $ 0.00 $ 0.00 $ 0.01
(A) Gives consideration to preferred stock dividends of $1.1 million per
quarter. (B) Assumes conversion of preferred shares into common for three months ended
September 30, 1997. Conversion would be anti-dilutive for all other
periods presented.
ARKANSAS BEST CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30 December 31
1997 1996
($ thousands)
ASSETS
Current assets $ 263,863 $ 251,683
Property, plant and equipment
(net) 292,664 356,566
Other assets 42,743 60,630
Net assets held for sale 7,818 9,148
Goodwill (less amortization) 137,144 150,154
$ 744,232 $ 828,181
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities $ 283,236 $ 294,955
Long-term debt, less current
portion 223,859 317,874
Other liabilities 22,922 21,423
Deferred income taxes 36,115 22,479
Minority interest 32,864 34,020
Shareholders' equity 145,236 137,430
$ 744,232 $ 828,181
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30
1997 1996
($ thousands)
OPERATING ACTIVITIES
Net cash provided by
operating activities $ 60,946 $ (1,504)
INVESTING ACTIVITIES
Purchases of property, plant
and equipment less
capitalized leases (9,448) (22,472)
Proceeds from asset sales 70,651 49,886
Net cash provided by
investing activities 61,203 27,414
FINANCING ACTIVITIES
Borrowings under revolving
credit facilities 328,185 203,060
Payments under revolving
credit facilities (392,985) (214,060)
Payments on long-term debt (12,525) (14,216)
Payments on term loan facilities (42,448) (11,566)
Other (4,182) (7,582)
Net cash used by financing
activities (123,955) (44,364)
NET DECREASE IN CASH AND
CASH EQUIVALENTS (1,806) (18,454)
Cash and cash equivalents at
beginning of period 1,806 16,945
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ --- $ (1,509)
ARKANSAS BEST CORPORATION
REVENUES AND OPERATING RATIOS (Unaudited)
Quarter Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
($ thousands)
REVENUES
ABF Freight System, Inc. $ 298,105 $ 280,478 $ 849,681 $ 829,772
G.I. Trucking Company 26,610 21,234 73,999 56,838
Cardinal Freight
Carriers, Inc. --- 19,171 39,366 55,926
Clipper WorldWide - Domestic 36,764 35,274 107,625 99,157
Clipper WorldWide
- International 12,654 13,916 38,587 40,090
Treadco, Inc. 46,769 40,122 121,116 108,370
Other and eliminations 4,387 4,311 13,208 12,714
Arkansas Best Corporation
Consolidated $ 425,289 $ 414,506 $ 1,243,582 $ 1,202,867
Quarter Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
OPERATING RATIOS
ABF Freight System, Inc. 93.2% 99.7% 94.3% 101.3%
G.I. Trucking Company 96.9 107.3 99.1 109.6
Cardinal Freight Carriers, Inc. --- 94.6 94.7 93.0
Clipper WorldWide - Domestic 94.7 96.2 96.5 96.7
Clipper WorldWide
- International 105.6 115.6 103.9 103.6
Treadco, Inc. 98.0 101.3 101.0 103.0
Arkansas Best Corporation
Consolidated 94.9% 100.5% 95.9% 101.3%
ABF FREIGHT SYSTEM, INC.
SELECTED OPERATING AND FINANCIAL INFORMATION (Unaudited)
Three Months Ended Nine Months Ended
September 30 % September 30 %
1997 1996 Change 1997 1996 Change
($ Thousands) ($ Thousands)
Operating Revenue $ 298,105 $ 280,478 6.3% $ 849,681 $ 829,772 2.4%
Operating Income $ 20,225 $ 961 --- $ 48,582 $ (10,417) ---
Operating Ratio 93.2% 99.7% --- 94.3% 101.3% ---
For The Quarter Ended
September 30 %
1997 1996 Change
($ Thousands)
Revenue LTL $ 269,902 $ 251,940 7.1%
TL 28,203 28,538 (1.2)%
Total 298,105 280,478 6.3%
Tonnage LTL 770,537 774,861 (0.6)%
TL 192,900 203,416 (5.2)%
Total 963,437 978,277 (1.5)%
Revenue/CWT
LTL $ 17.51 $ 16.26 7.7%
TL 7.29 7.00 4.3%
Revenue/Shipment
Total $ 181.91 $ 180.30 0.9%
Cost/Shipment
Total $ 169.60 $ 179.73 (5.6)%
A) Note: Sixty-four workdays in third quarter 1997 and third quarter 1996
SOURCE Arkansas Best Corporation |
