UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 1994
---------------------
ARKANSAS BEST CORPORATION
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-19969 71-0673405
- ------------------------- ------------------------- ----------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
1000 South 21st Street
Fort Smith, Arkansas 72901
(501) 785-6000
- -----------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code, of
the registrant's principal executive offices)
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial statments of businesses acquired.
Audited financial statements of Clipper Exxpress Company for the years
ended December 31, 1993 and 1992.
Audited financial statements of Agricultural Express of America, Inc.
for the years ended December 31, 1993 and 1992.
Audited financial statements of Agile Freight System, Inc. for the years
ended December 31, 1993 and 1992.
Unaudited financial statements of Clipper Exxpress Company for the six
months ended June 30, 1994 and 1993.
Unaudited financial statements of Agricultural Express of America, Inc.
for the six months ended June 30, 1994 and 1993.
Unaudited financial statements of Agile Freight System, Inc. for the six
months ended June 30, 1994 and 1993.
(b) Pro forma financial information.
Pro forma condensed consolidated statements of income for the year ended
December 31, 1993 and the six months ended June 30, 1994 and the pro
forma condensed consolidated balance sheet as of June 30, 1994.
(c) Exhibits.
Exhibit 10 - Stock Purchase Agreement dated August 18, 1994 by and
among Arkansas Best Corporation and the Shareholders of
Clipper Exxpress Company, Agile Freight System, Inc. and
Agricultural Express of America, Inc.
Exhibit 99.1 Audited financial statements of Clipper Exxpress Company
for the years ended December 31, 1993 and 1992
Exhibit 99.2 Audited financial statements of Agricultural Express of
America, Inc. for the years ended December 31, 1993 and
1992
Exhibit 99.3 Audited financial statements of Agile Freight System, Inc.
for the years ended December 31, 1993 and 1992
Exhibit 99.4 Unaudited financial statements of Clipper Exxpress Company
for the six months ended June 30, 1994 and 1993
Exhibit 99.5 Unaudited financial statements of Agricultural Express of
America, Inc. for the six months ended June 30, 1994 and
1993
Exhibit 99.6 Unaudited financial statements of Agile Freight System,
Inc. for the six months ended June 30, 1994 and 1993
Exhibit 99.7 Pro forma condensed consolidated statements of income for
the year ended December 31, 1993 and the six months ended
June 30, 1994 and the pro forma condensed consolidated
balance sheet as of June 30, 1994
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ARKANSAS BEST CORPORATION
(Registrant)
Date: November 9, 1994 s/Donald L. Neal
----------------- ------------------------------------
Donald L. Neal - Senior Vice
President - Chief Financial Officer,
and Principal Accounting Officer
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
- --------- -------- --------------
10.1 Stock Purchase Agreement dated August 18, 1994 by -
and among Arkansas Best Corporation and the
Shareholders of Clipper Exxpress Company, Agile
Freight System, Inc. and Agricultural Express of
America, Inc.
99.1 Audited Financial Statements of Clipper Exxpress -
Company for the years ended December 31, 1993 and
1992.
99.2 Audited Financial Statements of Agricultural -
Express of America, Inc. for the years ended
December 31, 1993 and 1992.
99.3 Audited Financial Statements of Agile Freight -
System, Inc. for the years ended December 31, 1993
and 1992.
99.4 Unaudited Financial Statements of Clipper Exxpress -
Company for the six months ended June 30, 1994 and
1993.
99.5 Unaudited Financial Statements of Agricultural -
Express of America, Inc. for the six months ended
June 30, 1994 and 1993.
99.6 Unaudited Financial Statements of Agile Freight -
System, Inc. for the six months ended June 30,
1994 and 1993.
99.7 Pro forma condensed consolidated statements of -
income for the year ended December 31, 1993 and
the six months ended June 30, 1994 and the pro
forma condensed consolidated balance sheet as of
June 30, 1994
CLIPPER EXXPRESS COMPANY
Financial Statements
December 31, 1993 and 1992
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
The Stockholders and Board of Directors
Clipper Exxpress Company:
We have audited the accompanying balance sheets of Clipper Exxpress Company
as of December 31, 1993 and 1992, and the related statements of earnings and
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Clipper Exxpress Company as
of December 31, 1993 and 1992, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
KPMG Peat Marwick, LLP
April 15, 1994
<PAGE>
<TABLE>
CLIPPER EXXPRESS COMPANY
Balance Sheets
December 31, 1993 and 1992
<CAPTION>
Assets 1993 1992
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 908,065 $ 2,141,191
Trade accounts receivable, less
allowance for doubtful accounts of
$682,702 in 1993 and $165,063 in 1992 14,274,056 10,271,594
Other receivables 872,595 646,545
Notes receivable - affiliate 300,000 --
Prepaid expenses 216,650 180,415
----------- -----------
Total current assets 16,571,366 13,239,745
----------- -----------
Notes receivable - affiliate 1,447,565 --
Property and equipment, at cost:
Land -- 152,090
Building -- 929,653
Service and administrative equipment 1,353,996 2,732,377
Other 98,665 257,327
----------- -----------
Total property and equipment 1,452,661 4,071,447
Less accumulated depreciation (860,343) (2,696,598)
----------- -----------
Net property and equipment 592,318 1,374,849
----------- -----------
Total Assets $18,611,249 $14,614,594
=========== ===========
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ -- $ 61,353
Accounts payable 10,983,372 7,625,993
Accrued expenses and other liabilities 1,506,957 1,236,518
----------- -----------
Total current liabilities 12,490,329 8,923,864
----------- -----------
Long-term debt -- 21,492
Deferred gain on sale of buildings 1,430,202 143,576
----------- -----------
Total liabilities 13,920,531 9,088,932
Stockholders' equity:
Common stock, $.01 par value. Authorized
10,000 shares; issued and outstanding
5,414 shares 54 54
Additional paid-in capital 1,263,931 1,263,931
Retained earnings 3,426,733 4,261,677
----------- -----------
Total stockholders' equity 4,690,718 5,525,662
----------- -----------
Total Liabilities and
Stockholders' Equity $18,611,249 $14,614,594
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLIPPER EXXPRESS COMPANY
Statements of Earnings and Retained Earnings
Years Ended December 31, 1993 and 1992
<CAPTION>
1993 1992
<S> <C> <C>
Revenue $106,165,420 $105,572,021
Purchased transportation services 87,548,985 85,151,761
------------ ------------
Gross margin 18,616,435 20,420,260
------------ ------------
Indirect expenses:
Salaries, wages and benefits 10,045,189 10,034,270
Occupancy and supplies 2,081,205 2,104,022
Selling, general and administration 1,816,277 1,787,964
Professional services 485,971 418,220
Depreciation 255,900 264,700
State income taxes 87,102 129,645
Insurance 112,259 117,165
Other 1,329,501 230,707
----------- -----------
16,213,404 15,086,693
----------- -----------
Operating income 2,403,031 5,333,567
----------- -----------
Nonoperating income (expense):
Interest income 18,717 44,549
Interest expense (8,567) (9,950)
Other, net 275 1,036
----------- -----------
10,425 35,635
----------- -----------
Net income 2,413,456 5,369,202
Retained earnings at beginning of year 4,261,677 3,223,675
Dividends paid (3,248,400) (4,331,200)
----------- -----------
Retained earnings at end of year $ 3,426,733 $ 4,261,677
============ ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLIPPER EXXPRESS COMPANY
Statements of Cash Flows
Years Ended December 31, 1993 and 1992
<CAPTION>
1993 1992
<S> <C> <C>
Cash flows from operating activities:
Net income $2,413,456 $5,369,202
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 255,900 264,700
Loss on disposal of computer equipment 343,419 --
Interest paid on settlement with
former stockholder -- (413,263)
Amortization of deferred gain on sale
of buildings (28,715) (28,715)
Decrease (increase) in receivables (4,176,076) 558,322
Decrease (increase) in prepaid
expenses (36,235) 12,870
Increase (decrease) in accounts
payable and accrued liabilities 3,627,818 (1,677,721)
---------- ----------
Net cash provided by operating
activities 2,399,567 4,085,395
---------- ----------
Cash flows from investing activities:
Purchase of equipment (251,448) (186,062)
Proceeds from sale of Jersey City
facility 250,000 --
Notes receivable from affiliate (300,000) --
----------- -----------
Net cash used in investing
activities (301,448) (186,062)
----------- -----------
Cash flows from financing activities:
Dividends paid (3,248,400) (4,331,200)
Principal payments on debt (82,845) (56,230)
----------- -----------
Net cash used in financing
activities (3,331,245) (4,387,430)
----------- -----------
Net decrease in cash and cash
equivalents (1,233,126) (488,097)
Cash and cash equivalents at
beginning of year 2,141,191 2,629,288
---------- ----------
Cash and cash equivalents at end of year $ 908,065 $2,141,191
========== ==========
CLIPPER EXXPRESS COMPANY
Statements of Cash Flows, Continued
Years Ended December 31, 1993 and 1992
<CAPTION>
1993 1992
<S> <C> <C>
Supplemental disclosure of cash flow
information:
State income taxes paid $ 120,258 $ 80,177
========== ==========
Interest paid $ 4,632 $ 423,213
========== ==========
Sale of Jersey City facility in
exchange for note receivable $1,500,000 $ --
========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
CLIPPER EXXPRESS COMPANY
Notes to Financial Statements
Years Ended December 31, 1993 and 1992
(1) Summary of Significant Accounting Policies
Nature of Business
Clipper Exxpress Company (the Company), a Delaware corporation, is a
transcontinental general commodities freight forwarder, specializing in
less-than-trailer load (LTL) shipments, and a shipper's agent,
specializing in the arrangement of door-to-door movements of trailer
load (TL) shipments of general commodity freight throughout the United
States. As a freight forwarder, the Company arranges the movement of
merchandise from its point of origin to its destination with railroads
and over the road carriers acting as the source of transportation, which
allows for direct nonstop service to major metropolitan areas. As a
shipper's agent, the Company arranges all the components of the movement
of TL freight for the customer from the point of origin to its
destination, including pickup and delivery, railroad services,
monitoring of the shipment's progress, and consolidation of billing.
Property and Equipment
Depreciation is provided for using straight-line and accelerated
methods over the estimated useful lives of the respective assets,
generally 5 to 10 years for equipment and 20 to 30 years for buildings.
Loss and Damage Claims
Estimated loss and damage claims against the Company are accrued for
when incurred. In most instances, the Company files a counterclaim
against the line haul carrier.
Revenue Recognition
The Company records revenue and corresponding expenses on all freight
movements on the date the shipment moves.
Income Taxes
Federal income taxes are not reflected in the accompanying financial
statements because the revenue and expenses of the Company are
reportable in the individual Federal income tax returns of its
stockholders, who have made an S corporation election.
<PAGE>
CLIPPER EXXPRESS COMPANY
Notes to Financial Statements, Continued
State income taxes are provided for and included in operating expenses
in the financial statements for those states in which the Company is
subject to state income taxes.
Statement of Cash Flows
For the purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and short-term
certificates of deposit with original maturities of three months or
less, which are recorded at cost.
(2) Line of Credit
The Company has a revolving line of credit with a bank for up to
$3,000,000. No borrowings were outstanding at December 31, 1993 or
1992. Letters of credit issued by the bank reduce the amount of the
line of credit available.
(3) Benefit Plans
The Company has a defined contribution retirement benefit plan
covering eligible employees. Under the plan, the Company makes annual
contributions based upon the criteria set forth in the plan. Company
contributions reported in the statements of earnings amounted to
approximately $573,000 and $553,000 in 1993 and 1992, respectively.
(4) Related-party Transactions
The Company performs various management and administrative services
for two affiliated companies, Agricultural Express of America, Inc. and
Agile Freight System, Inc. Fees received by the Company for services
rendered approximated $218,000 in 1993 and $238,000 in 1992.
On January 20, 1988 the Company sold its corporate office facility at
the appraised market value of $2,500,000 to the Lemont Partners, a
partnership owned by the Company's stockholders. The Company leases the
office facility from the partnership under an operating lease through
December 31, 1997 with annual lease payments of approximately $260,000.
The gain on the sale of the facility of $287,000 has been deferred and
is being amortized as a reduction of rent expense over the term of the
lease. Rent expense payable to Lemont Partners for the corporate office
facility and terminals was $385,000 in 1993 and $374,000 in 1992.
<PAGE>
CLIPPER EXXPRESS COMPANY
Notes to Financial Statements, Continued
On December 31, 1993, the Company sold its Jersey City facility at the
appraised market value of $1,750,000 to the Lemont Partners, a
partnership owned by the Company's stockholders. The Company leases the
facility from the partnership under an operating lease through December
31, 1998 with annual lease payments of approximately $168,000. The gain
on the sale of the facility of $1,315,000 has been deferred and is being
amortized as a reduction of rent expense over the term of the lease.
The Company has a note receivable from Agile Freight System, Inc. The
note is due on demand and bears interest at a variable rate (3.79% at
December 31, 1993).
The Company paid Agile Freight System, Inc. approximately $4,787,000
and $4,762,000 for long-haul road transportation and cartage in 1993 and
1992, respectively.
(5) Commitments and Contingencies
As of December 31, 1993, the Company had outstanding letters of credit
of $250,000 which guarantee payments due to certain railroad carriers.
The Company leases revenue equipment under a lease agreement
classified as an operating lease. The revenue equipment is subleased on
the same terms to an affiliated company. The remaining lease obligation
under the agreement is approximately $196,000 in 1994, $196,000 in 1995,
and $82,000 in 1996.
The Company leases its corporate office facility, terminals and
computer and other equipment under lease agreements classified as
operating leases. The long-term rental obligations as of December 31,
1993 are as follows:
<TABLE>
<CAPTION>
Year Affiliate Nonaffiliate
<S> <C> <C>
1994 $549,000 $486,000
1995 549,000 434,000
1996 549,000 356,000
1997 549,000 187,000
1998 238,000 99,000
</TABLE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Financial Statements
December 31, 1993 and 1992
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
The Stockholders and Board of Directors
Agricultural Express of America, Inc.:
We have audited the accompanying balance sheets of Agricultural Express of
America, Inc. as of December 31, 1993 and 1992, and the related statements of
earnings and retained earnings and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Agricultural Express of
America, Inc. as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
KPMG Peat Marwick, LLP
April 15, 1994
<PAGE>
<TABLE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Balance Sheets
December 31, 1993 and 1992
<CAPTION>
Assets 1993 1992
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,000,578 $1,324,657
Trade accounts receivable, less
allowance for doubtful accounts of
$34,985 in 1993 and $11,487 in 1992 1,139,262 902,123
Other receivables 234,456 73,849
Prepaid expenses 47,531 20,468
---------- ----------
Total current assets 2,421,827 2,321,097
Property and equipment, at cost:
Revenue equipment 3,568,136 2,659,660
Administrative equipment 99,024 97,780
---------- ----------
Total property and equipment 3,667,160 2,757,440
Less accumulated depreciation (982,380) (445,790)
---------- ----------
Net property and equipment 2,684,780 2,311,650
---------- ----------
Total Assets $5,106,607 $4,632,747
========== ==========
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 300,000 $ --
Obligation for equipment purchased -- 1,860,500
Accounts payable 1,170,342 856,390
Accrued liabilities 197,723 243,048
---------- ----------
Total current liabilities 1,668,065 2,959,938
---------- ----------
Long-term debt 700,000 --
---------- ----------
Stockholders' equity:
Common stock, $1 par value. Authorized
10,000 shares; issued and outstanding
1,188 shares 1,188 1,188
Additional paid-in capital 657,155 657,155
Retained earnings 2,502,137 1,436,404
Note receivable from officer (421,938) (421,938)
---------- ----------
Total stockholders' equity 2,738,542 1,672,809
---------- ----------
Total Liabilities and
Stockholders' Equity $5,106,607 $4,632,747
========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Statements of Earnings and Retained Earnings
Years Ended December 31, 1993 and 1992
<CAPTION>
1993 1992
<S> <C> <C>
Revenue $13,382,657 $14,207,614
Purchased transportation services 11,114,464 12,653,098
----------- -----------
Gross margin 2,268,193 1,554,516
----------- -----------
Indirect expenses:
Salaries, wages and benefits 314,684 308,471
Selling, general and administration 153,867 181,970
Insurance 4,827 59,075
Occupancy and supplies 40,499 42,686
State income taxes 48,373 50,810
Depreciation 553,864 54,919
Professional services 21,351 17,567
Other 43,523 37,800
----------- -----------
1,180,988 753,298
----------- -----------
Operating income 1,087,205 801,218
----------- -----------
Nonoperating income (expense):
Interest income 39,228 37,639
Interest expense (29,167) (711)
Gain (loss) on disposal of equipment (15,588) 9,695
Other, net (15,945) (1)
----------- -----------
(21,472) 46,622
----------- -----------
Net income 1,065,733 847,840
Retained earnings at beginning of year 1,436,404 588,564
----------- -----------
Retained earnings at end of year $ 2,502,137 $ 1,436,404
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Statements of Cash Flows
Years Ended December 31, 1993 and 1992
<CAPTION>
1993 1992
<S> <C> <C>
Cash flows from operating activities:
Net income $1,065,733 $ 847,840
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 553,864 54,919
Loss (gain) on disposal of equipment 15,588 (9,695)
Decrease (increase) in receivables (377,064) 1,948
Increase in prepaid expenses (27,062) (11,743)
Increase in accounts payable and
accrued liabilities 235,945 118,746
---------- ----------
Net cash provided by
operating activities 1,467,004 1,002,015
Cash flows from investing activities:
Purchase of equipment (949,983) (2,329,743)
Proceeds from sale of equipment 7,400 12,632
---------- ----------
Net cash used in
investing activities (942,583) (2,317,111)
Cash flows from financing activities:
Proceeds from the issuance of debt 1,000,000 1,931,300
Principal payment on debt (1,848,500) (70,800)
---------- ----------
Net cash provided by
(used in) financing activities (848,500) 1,860,500
---------- ----------
Net increase (decrease) in cash
and cash equivalents (324,079) 545,404
Cash and cash equivalents at
beginning of year 1,324,657 779,253
---------- ----------
Cash and cash equivalents at end of year $1,000,578 $1,324,657
========== ==========
Supplemental disclosures of
cash flow information:
State income taxes paid $ 46,208 $ 26,600
========== ==========
Interest paid $ 25,493 $ 711
========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Notes to Financial Statements
Years Ended December 31, 1993 and 1992
(1) Summary of Significant Accounting Policies
Nature and Organization of Business
Agricultural Express of America, Inc. (the Company), a Delaware
corporation, is a motor carrier specializing primarily in intermodal,
long haul, and full-load shipments of perishable exempt commodities from
the West Coast to eastern destinations with railroads as the primary
source of transportation.
Equipment
Depreciation is provided for using straight-line and accelerated
methods over the estimated useful lives of the respective assets,
generally five to seven years.
Loss and Damage Claims
Estimated losses and damage claims against the Company are accrued for
when incurred.
Revenue Recognition
The Company records revenue and corresponding expenses on all freight
movements on the date the shipment moves.
Income Taxes
Federal income taxes are not reflected in the accompanying financial
statements because the revenue and expenses of the Company are
reportable in the individual Federal income tax returns of its stockho
lders, who have made an S corporation election.
State income taxes are provided for and included in operating expenses
in the financial statements for those states in which the Company is
subject to state income taxes.
Statement of Cash Flows
For the purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and short-term
certificates of deposit with original maturities of three months or
less, which are recorded at cost.
<PAGE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Notes to Financial Statements, Continued
(2) Related-party Transactions
Various administrative and management services are performed for the
Company by Clipper Exxpress Company (Clipper), an affiliate. Charges
for these services reported in the statements of earnings amounted to
approximately $147,000 and $167,000 in 1993 and 1992, respectively.
Rent expense payable to Clipper Exxpress Company for the office
facility was $9,000 in 1993 and in 1992.
During 1989, the Company issued 188 shares of common stock to an
officer in exchange for cash and a promissory note. The promissory note
is payable through the year 2003 and bears interest at a variable rate
(3.79% at December 31, 1993). Principal and interest on the note
receivable are payable solely from distributions attributable to the
shares of common stock owned by the officer.
(3) Benefit Plans
The Company has a defined contribution retirement benefit plan
covering eligible employees. Under the plan, the Company makes annual
contributions based upon the criteria set forth in the plan. Company
contributions reported in the statements of earnings amounted to
approximately $7,800 and $24,000 in 1993 and 1992, respectively.
(4) Equipment Purchases/Long-Term Debt
During 1992, the Company entered into an agreement to purchase 300
trailers, which previously had been leased under operating leases, at a
total cost of $2,400,000, of which $1,857,200 was unpaid at December 31,
1992. The purchase and refurbishment of the fleet was partially
financed with a $2,000,000 revolving line of credit secured in 1993, of
which $1,000,000 was outstanding at December 31, 1993. On May 31, 1994,
the Company can convert the revolving credit line to a term loan payable
in 12 equal quarterly installments. As of April 24, 1994, the Company
has borrowed $1,800,000 under the revolving credit line and intends to
convert that amount to a term loan. At December 31, 1993, $300,000,
representing payments expected to be due in 1994, have been classified
as a current liability and the remainder shown as long-term debt. The
loan agreement bears interest at a variable rate (5.75% at December 31,
1993) and is collateralized by the equipment.
<PAGE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Notes to Financial Statements, Continued
(5) Commitments and Contingencies
The Company leases its office facilities under lease agreements
classified as operating leases. The long-term rental obligations as of
December 31, 1993 are as follows:
<TABLE>
<CAPTION>
Affiliate Non-Affiliate
<S> <C> <C>
1994 $8,652 $10,400
1995 8,652 11,000
1996 8,652 --
1997 8,652 --
</TABLE>
AGILE FREIGHT SYSTEM, INC.
Financial Statements
December 31, 1993 and 1992
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
The Stockholders and Board of Directors
Agile Freight System, Inc.:
We have audited the accompanying balance sheets of Agile Freight System, Inc.
as of December 31, 1993 and 1992, and the related statements of operations
and retained earnings (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Agile Freight System, Inc.
as of December 31, 1993 and 1992, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
KPMG Peat Marwick, LLP
April 15, 1994
<PAGE>
<TABLE>
AGILE FREIGHT SYSTEM, INC.
Balance Sheets
December 31, 1993 and 1992
<CAPTION>
1993 1992
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 92,972 $ 102,287
Trade accounts receivable, less
allowance for doubtful accounts
of $4,000 in 1993 and $2,500 in 1992 557,772 436,882
Other receivables 89,785 241,705
Prepaid expenses 242,975 182,696
---------- ----------
Total current assets 983,504 963,570
---------- ----------
Property and equipment, at cost:
Administrative equipment 2,686 2,686
Less accumulated depreciation (809) (478)
---------- ----------
Net property and equipment 1,877 2,208
---------- ----------
Total Assets $ 985,381 $ 965,778
========== ==========
<CAPTION>
Liabilities and Stockholders' Equity
(Deficit)
<S> <C> <C>
Current liabilities:
Notes payable to stockholders $ 75,000 $ 375,000
Note payable - affiliate 300,000 --
Accounts payable 553,530 413,756
Accrued liabilities 82,917 67,868
---------- ----------
Total current liabilities 1,011,447 856,624
---------- ----------
Stockholders' equity (deficit):
Common stock, $1 par value. Authorized
10,000 shares; issued and outstanding
1,000 shares 1,000 1,000
Retained earnings (deficit) (27,066) 108,154
---------- ----------
Total stockholders' equity (deficit) (26,066) 109,154
---------- ----------
Total Liabilities and
Stockholders' Equity $ 985,381 $ 965,778
========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
AGILE FREIGHT SYSTEM, INC.
Statements of Operations and Retained Earnings (Deficit)
Years Ended December 31, 1993 and 1992
<CAPTION>
1993 1992
<S> <C> <C>
Revenue $6,540,226 $6,817,065
Transportation expenses:
Purchased services 5,055,810 4,861,738
Salaries, wages and benefits 595,111 860,656
Other 633,813 671,214
---------- ----------
6,284,734 6,393,608
---------- ----------
Gross margin 255,492 423,457
Indirect expenses:
Salaries, wages and benefits 179,771 200,438
Selling, general and administration 97,226 85,183
Occupancy and supplies 70,673 55,022
Professional services 14,900 12,100
State income taxes 800 6,007
Other 12,712 7,231
---------- ----------
376,082 365,981
---------- ----------
Operating income (loss) (120,590) 57,476
Nonoperating income (expense):
Interest income 606 772
Interest expense (15,236) (16,873)
---------- ----------
(14,630) (16,101)
---------- ----------
Net income (loss) (135,220) 41,375
Retained earnings at beginning of year 108,154 66,779
---------- ----------
Retained earnings (deficit) at end of year $ (27,066) $ 108,154
========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
AGILE FREIGHT SYSTEM, INC.
Statements of Cash Flows
Years Ended December 31, 1993 and 1992
<CAPTION>
1993 1992
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (135,220) $ 41,375
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation 331 334
Increase (decrease) in receivables 31,030 (316,677)
Increase in prepaid expenses (60,279) (8,599)
Increase in accounts payable
and accrued liabilities 154,823 271,840
---------- ----------
Net cash used in operating activities (9,315) (11,727)
---------- ----------
Cash used in investing activities -
purchase of equipment -- (194)
---------- ----------
Net decrease in cash and cash
equivalents (9,315) (11,921)
Cash and cash equivalents at beginning
of year 102,287 114,208
---------- ----------
Cash and cash equivalents at end of year $ 92,972 $ 102,287
========== ==========
Supplemental disclosures of cash
flow information:
State income taxes paid $ 800 $ 6,500
========= =========
Interest paid $ 15,236 $ 16,873
========== =========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
AGILE FREIGHT SYSTEM, INC.
Notes to Financial Statements
Years Ended December 31, 1993 and 1992
(1) Summary of Significant Accounting Policies
Nature and Organization of Business
In February of 1990, Agile Freight System, Inc. (the Company), a
Delaware corporation, commenced operations as an irregular route,
general commodities motor carrier specializing in transcontinental truck
load transportation of merchandise from origin to destination.
The Company subleases certain revenue equipment it uses in its
operations from an affiliated company and obtains a portion of its power
equipment from independent contractors.
Property and Equipment
Depreciation is provided for using straight-line and accelerated methods
over the estimated useful lives of the respective assets, generally five
to ten years for equipment.
Loss and Damage Claims
Estimated loss and damage claims against the Company are accrued for
when incurred.
Revenue Recognition
The Company records revenue and corresponding expenses on all freight
movements on the date the shipment moves.
Income Taxes
Federal income taxes are not reflected in the accompanying financial
statements because the revenue and expenses of the Company are
reportable in the individual Federal income tax returns of its
stockholders, who have made an S corporation election.
State income taxes are provided for and included in operating expenses
in the financial statements for those states in which the Company is
subject to state income taxes.
<PAGE>
AGILE FREIGHT SYSTEM, INC.
Notes to Financial Statements, Continued
Statement of Cash Flows
For the purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and short-term
certificates of deposit with original maturities of three months or
less, which are recorded at cost.
(2) Related Party Transactions
Various administrative and management services are performed for the
Company by Clipper Exxpress Company (Clipper), an affiliate. The
Company paid Clipper approximately $71,000 for these services in 1993
and 1992. The Company received approximately $4,787,000 and $4,762,000
in revenue in 1993 and 1992, respectively, from Clipper for long-haul
and local road transportation.
The Company leases tractor equipment under an operating sublease entered
into with Clipper. The remaining lease obligation due under the
agreement is approximately $196,000 in 1994, $196,000 in 1995, and
$82,000 in 1996.
Notes payable to stockholders and affiliate are due on demand and bear
interest at a variable rate (3.79% at December 31, 1993).
CLIPPER EXXPRESS COMPANY
Financial Statements
June 30, 1994 and 1993
<PAGE>
<TABLE>
CLIPPER EXXPRESS COMPANY
Balance Sheets
<CAPTION>
June 30 December 31
1994 1993
(Unaudited) (Note)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,972,473 $ 908,065
Trade accounts receivable, less
allowance for doubtful accounts of
$453,886 in 1994 and $682,702 in 1993 14,723,838 14,274,056
Other receivables 1,083,548 872,595
Notes receivable - affiliate 300,000 300,000
Prepaid expenses 155,207 216,650
----------- -----------
Total current assets 18,235,066 16,571,366
Notes receivable - affiliate 1,434,956 1,447,565
Property and equipment, at cost:
Service and administrative equipment 1,354,383 1,353,996
Other 98,665 98,665
----------- -----------
Total property and equipment 1,453,048 1,452,661
Less accumulated depreciation (892,192) (860,343)
----------- -----------
Net property and equipment 560,856 592,318
----------- -----------
Total Assets $20,230,878 $18,611,249
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 9,766,869 $10,983,372
Accrued expenses and other liabilities 1,188,877 1,506,957
----------- -----------
Total current liabilities 10,955,746 12,490,329
Deferred gain on sale of buildings 1,350,077 1,430,202
----------- -----------
Total liabilities 12,305,823 13,920,531
Stockholders' equity:
Common stock, $.01 par value. Authorized
10,000 shares; issued and outstanding
5,414 shares 54 54
Additional paid-in capital 1,263,931 1,263,931
Retained earnings 6,661,070 3,426,733
----------- -----------
Total stockholders' equity 7,925,055 4,690,718
----------- -----------
Total Liabilities and
Stockholders' Equity $20,230,878 $18,611,249
=========== ===========
<FN>
<F1>
Note: The balance sheet at December 31, 1993 has been derived from 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.
<F2>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLIPPER EXXPRESS COMPANY
Statements of Earnings and Retained Earnings (Unaudited)
<CAPTION>
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Revenue $ 56,447,666 $ 51,606,530
Purchased transportation services 46,133,757 42,485,023
------------ ------------
Gross margin 10,313,909 9,121,507
Indirect expenses:
Salaries, wages and benefits 4,704,656 5,128,326
Occupancy and supplies 1,127,171 997,037
Selling, general and administration 712,040 917,345
Professional services 220,559 242,828
Depreciation 66,881 135,221
State income taxes 94,141 44,290
Insurance 64,220 47,719
Other 120,341 89,649
----------- -----------
7,110,009 7,602,415
----------- -----------
Operating income 3,203,900 1,519,092
Nonoperating income (expense):
Interest income 48,183 12,229
Interest expense (18,668) (3,082)
Other, net 922 (19)
----------- -----------
30,437 9,128
----------- -----------
Net income 3,234,337 1,528,220
Retained earnings at beginning of period 3,426,733 4,261,677
Dividends paid -- (2,165,600)
----------- -----------
Retained earnings at end of period $ 6,661,070 $ 3,624,297
============ ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CLIPPER EXXPRESS COMPANY
Statements of Cash Flows (Unaudited)
<CAPTION>
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $3,234,337 $1,528,208
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 66,881 135,221
Loss on disposal of computer equipment (3,200) --
Amortization of deferred gain on sale
of buildings (80,125) (14,357)
Increase in receivables (660,735) (1,527,806)
Decrease (increase) in prepaid
expenses 61,443 (26,318)
Increase (decrease) in accounts
payable and accrued liabilities (1,534,583) 2,247,160
---------- ----------
Net cash provided by operating
activities 1,084,018 2,342,108
Cash flows from investing activities:
Purchase of equipment (35,419) (43,497)
Notes receivable from affiliate -- (300,000)
Payment of notes receivable 12,609 --
Proceeds from sale of fixed assets 3,200 --
----------- -----------
Net cash used in investing
activities (19,610) (343,497)
Cash flows from financing activities:
Dividends paid -- (2,165,600)
Principal payments on debt -- (30,007)
----------- -----------
Net cash used in financing
activities -- (2,195,607)
----------- -----------
Net increase (decrease) in cash
and cash equivalents 1,064,408 (196,996)
Cash and cash equivalents at
beginning of period 908,065 2,141,191
---------- ----------
Cash and cash equivalents at end of period $1,972,473 $1,944,195
========== ==========
CLIPPER EXXPRESS COMPANY
Statements of Cash Flows, Continued
<CAPTION>
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Supplemental disclosure of cash flow
information:
State income taxes paid $ 55,235 $ 57,400
========== ==========
Interest paid $ -- $ 3,082
========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
CLIPPER EXXPRESS COMPANY
Notes to Financial Statements
June 30, 1994
Note A -- Nature of the Business
Clipper Exxpress Company (the Company), a Delaware corporation, is a
transcontinental general commodities freight forwarder, specializing in less-
than-trailer load (LTL) shipments, and a shipper's agent, specializing in the
arrangement of door-to-door movements of trailer load (TL) shipments of
general commodity freight throughout the United States. As a freight
forwarder, the Company arranges the movement of merchandise from its point of
origin to its destination with railroads and over the road carriers acting as
the source of transportation, which allows for direct nonstop service to
major metropolitan areas. As a shipper's agent, the Company arranges all the
components of the movement of TL freight for the customer from the point of
origin to its destination, including pickup and delivery, railroad services,
monitoring of the shipment's progress, and consolidation of billing.
Note B -- Financial Statement Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended June 30, 1994, are not necessarily
indicative of the results that may be expected for the year ended December
31, 1994. For further information, refer to the Company's financial
statements and footnotes thereto for the year ended December 31, 1993,
included elsewhere herein.
Note C -- Subsequent Event
On September 30, 1994, the Company and two affiliated companies were
purchased by Arkansas Best Corporation pursuant to a stock purchase agreement
entered into on August 18, 1994. Under the agreement, Arkansas Best
Corporation is to pay a total consideration of approximately $60 million in
cash for the Company and its affiliates, subject to certain closing audit and
other contractual adjustments.
AGRICULTURAL EXPRESS OF AMERICA, INC.
Financial Statements
June 30, 1994 and 1993
<PAGE>
<TABLE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Balance Sheets
<CAPTION>
June 30 December 31
1994 1993
(Unaudited) (Note)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $1,502,487 $1,000,578
Trade accounts receivable, less
allowance for doubtful accounts of
$16,826 in 1994 and $34,985 in 1993 2,077,175 1,139,262
Other receivables 274,719 234,456
Prepaid expenses 29,854 47,531
---------- ----------
Total current assets 3,884,235 2,421,827
Property and equipment, at cost:
Revenue equipment 4,055,670 3,568,136
Administrative equipment 104,610 99,024
---------- ----------
Total property and equipment 4,160,280 3,667,160
Less accumulated depreciation (1,295,394) (982,380)
---------- ----------
Net property and equipment 2,864,886 2,684,780
---------- ----------
Total Assets $6,749,121 $5,106,607
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 600,000 $ 300,000
Accounts payable 1,529,042 1,170,342
Accrued liabilities 199,920 197,723
---------- ----------
Total current liabilities 2,328,962 1,668,065
Long-term debt 1,200,000 700,000
Stockholders' equity:
Common stock, $1 par value. Authorized
10,000 shares; issued and outstanding
1,188 shares 1,188 1,188
Additional paid-in capital 657,155 657,155
Retained earnings 2,983,754 2,502,137
Note receivable from officer (421,938) (421,938)
---------- ----------
Total stockholders' equity 3,220,159 2,738,542
---------- ----------
Total Liabilities and
Stockholders' Equity $6,749,121 $5,106,607
========== ==========
<FN>
<F1>
Note: The balance sheet at December 31, 1993 has been derived from 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.
<F2>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Statements of Earnings and Retained Earnings (Unaudited)
<CAPTION>
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Revenue $ 7,296,059 $ 6,763,126
Purchased transportation services 6,143,216 5,547,048
----------- -----------
Gross margin 1,152,843 1,216,078
Indirect expenses:
Salaries, wages and benefits 175,860 143,179
Selling, general and administration 93,990 80,372
Insurance 3,231 1,873
Occupancy and supplies 18,689 20,310
State income taxes 27,335 37,173
Depreciation 317,241 252,764
Professional services 11,338 7,835
Other 8,609 20,908
----------- -----------
656,293 564,414
----------- -----------
Operating income 496,550 651,664
Nonoperating income (expense):
Interest income 28,781 26,155
Interest expense (48,329) --
Gain on disposal of equipment 5,034 6,813
Other, net (419) --
----------- -----------
(14,933) 32,968
----------- -----------
Net income 481,617 684,632
Retained earnings at beginning of period 2,502,137 1,436,404
----------- -----------
Retained earnings at end of period $ 2,983,754 $ 2,121,036
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Statements of Cash Flows (Unaudited)
<CAPTION>
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 481,617 $ 684,632
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 317,241 252,764
Gain on disposal of equipment (5,034) (6,813)
Increase in receivables (978,176) (1,040,820)
Decrease in prepaid expenses 17,676 8,817
Increase in accounts payable and
accrued liabilities 360,897 801,801
---------- ----------
Net cash provided by
operating activities 194,221 700,381
Cash flows from investing activities:
Purchase of equipment (508,035) (834,590)
Proceeds from sale of equipment 15,723 7,400
---------- ----------
Net cash used in
investing activities (492,312) (827,190)
Cash flows from financing activities:
Proceeds from the issuance of debt 800,000 --
Principal payment on debt -- (700,100)
---------- ----------
Net cash provided by
(used in) financing activities 800,000 (700,100)
---------- ----------
Net increase (decrease) in cash
and cash equivalents 501,909 (826,909)
Cash and cash equivalents at
beginning of period 1,000,578 1,324,657
---------- ----------
Cash and cash equivalents at end of period $1,502,487 $ 497,748
========== ==========
Supplemental disclosures of
cash flow information:
State income taxes paid $ 20,125 $ 12,500
========== ==========
Interest paid $ 52,003 $ --
========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
AGRICULTURAL EXPRESS OF AMERICA, INC.
Notes to Financial Statements
June 30, 1994
Note A -- Nature and Organization of Business
Agricultural Express of America, Inc. (the Company), a Delaware
corporation, is a motor carrier specializing primarily in intermodal, long
haul, and full-load shipments of perishable exempt commodities from the West
Coast to eastern destinations with railroads as the primary source of
transportation.
Note B -- Financial Statement Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended June 30, 1994, are not necessarily
indicative of the results that may be expected for the year ended December
31, 1994. For further information, refer to the Company's financial
statements and footnotes thereto for the year ended December 31, 1993,
included elsewhere herein.
Note C -- Subsequent Event
On September 30, 1994, the Company and two affiliated companies were
purchased by Arkansas Best Corporation pursuant to a stock purchase agreement
entered into on August 18, 1994. Under the agreement, Arkansas Best
Corporation is to pay a total consideration of approximately $60 million in
cash for the Company and its affiliates, subject to certain closing audit and
other contractual adjustments.
Note D -- Long-term Debt
On May 31, 1994 the Company converted $1,800,000 borrowed under its
revolving credit line to a term loan payable in 12 equal quarterly
installments. The term loan bears interest at a variable rate (6.625% at
June 30, 1994) and is collateralized by revenue equipment.
AGILE FREIGHT SYSTEM, INC.
Financial Statements
June 30, 1994 and 1993
<PAGE>
<TABLE>
AGILE FREIGHT SYSTEM, INC.
Balance Sheets
<CAPTION>
June 30 December 31
1994 1993
(Unaudited) (Note)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 67,199 $ 92,972
Trade accounts receivable, less
allowance for doubtful accounts
of $7,779 in 1994 and $4,000 in 1993 909,159 557,772
Other receivables 91,099 89,785
Prepaid expenses 142,918 242,975
---------- ----------
Total current assets 1,210,375 983,504
Property and equipment, at cost:
Administrative equipment 2,686 2,686
Less accumulated depreciation (963) (809)
---------- ----------
Net property and equipment 1,723 1,877
---------- ----------
Total Assets $1,212,098 $ 985,381
========== ==========
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Notes payable to stockholders $ 75,000 $ 75,000
Note payable - affiliate 300,000 300,000
Accounts payable 722,362 553,530
Accrued liabilities 67,615 82,917
---------- ----------
Total current liabilities 1,164,977 1,011,447
Stockholders' equity (deficit):
Common stock, $1 par value. Authorized
10,000 shares; issued and outstanding
1,000 shares 1,000 1,000
Retained earnings (deficit) 46,121 (27,066)
---------- ----------
Total stockholders' equity (deficit) 47,121 (26,066)
---------- ----------
Total Liabilities and
Stockholders' Equity $1,212,098 $ 985,381
========== ==========
<FN>
<F1>
Note: The balance sheet at December 31, 1993 has been derived from 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.
<F2>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGILE FREIGHT SYSTEM, INC.
Statements of Operations and Retained Earnings (Deficit) (Unaudited)
<CAPTION>
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Revenue $3,281,340 $3,127,292
Transportation expenses:
Purchased services 2,495,669 2,456,128
Salaries, wages and benefits 277,323 285,020
Other 238,821 327,482
---------- ----------
3,011,813 3,068,630
---------- ----------
Gross margin 269,527 58,662
Indirect expenses:
Salaries, wages and benefits 85,584 96,221
Selling, general and administration 41,785 40,257
Occupancy and supplies 45,561 26,816
Professional services 7,500 6,150
State income taxes 800 800
Other 7,666 5,983
---------- ----------
188,896 176,227
---------- ----------
Operating income (loss) 80,631 (117,565)
Nonoperating income (expense):
Interest income 821 207
Interest expense (8,265) (7,258)
---------- ----------
(7,444) (7,051)
---------- ----------
Net income (loss) 73,187 (124,616)
Retained earnings at beginning of period (27,066) 108,154
---------- ----------
Retained earnings (deficit) at end of period $ 46,121 $ (16,462)
========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGILE FREIGHT SYSTEM, INC.
Statements of Cash Flows
<CAPTION>
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 73,187 $ (124,616)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation 154 154
(Increase) decrease in receivables (352,702) 25,193
(Increase) decrease in prepaid expenses 100,058 (60,198)
Increase in accounts payable
and accrued liabilities 153,530 136,639
---------- ----------
Net cash used in operating activities (25,773) (22,828)
---------- ----------
Net decrease in cash and cash
equivalents (25,773) (22,828)
Cash and cash equivalents at beginning
of period 92,972 102,287
---------- ----------
Cash and cash equivalents at end of period $ 67,199 $ 79,459
========== ==========
Supplemental disclosures of cash
flow information:
State income taxes paid $ 800 $ 800
========= =========
Interest paid $ 8,265 $ 7,258
========== =========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
AGILE FREIGHT SYSTEM, INC.
Notes to Financial Statements
June 30, 1994
Note A -- Nature and Organization of Business
In February of 1990, Agile Freight System, Inc. (the Company), a
Delaware corporation, commenced operations as an irregular route, general
commodities motor carrier specializing in transcontinental truck load
transportation of merchandise from origin to destination.
The Company subleases certain revenue equipment it uses in its
operations from an affiliated company and obtains a portion of its power
equipment from independent contractors.
Note B -- Financial Statement Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended June 30, 1994, are not necessarily
indicative of the results that may be expected for the year ended December
31, 1994. For further information, refer to the Company's financial
statements and footnotes thereto for the year ended December 31, 1993,
included elsewhere herein.
Note C -- Subsequent Event
On September 30, 1994, the Company and two affiliated companies were
purchased by Arkansas Best Corporation pursuant to a stock purchase agreement
entered into on August 18, 1994. Under the agreement, Arkansas Best
Corporation is to pay a total consideration of approximately $60 million in
cash for the Company and its affiliates, subject to certain closing audit and
other contractual adjustments.
ARKANSAS BEST CORPORATION
Pro Forma Financial Information
<PAGE>
ARKANSAS BEST CORPORATION
PRO FORMA FINANCIAL INFORMATION
(in thousands, except per share amounts)
On September 30, 1994, Arkansas Best Corporation (the "Company") consummated
the purchase of all the stock of Clipper Exxpress Company and two affiliated
transportation companies, Agricultural Express of America, Inc. and Agile
Freight System, Inc. (collectively the "Clipper Group") pursuant to a stock
purchase agreement entered into on August 18, 1994 (the "Clipper
Acquisition").
On November 4, 1994, the Company issued 310,000 shares of its common stock in
exchange for all the common stock of Traveller Enterprises ("Traveller") and
Commercial Warehouse Company (collectively the "Traveller Group") pursuant to
stock purchase agreements (the "Traveller Acquisition").
The following pro forma condensed consolidated statements of operations for
the year ended December 31, 1993 and the six months ended June 30, 1994 and
the pro forma condensed consolidated balance sheet as of June 30, 1994 are
unaudited and have been prepared on a pro forma basis to give effect to the
Clipper Acquisition and the Traveller Acquisition. The pro forma condensed
consolidated statements of operations for the year ended December 31, 1993
and the six months ended June 30, 1994 give effect to the Clipper Acquisition
and the Traveller Acquisition as if they had occurred on January 1, 1993.
The pro forma condensed consolidated balance sheet has been prepared to give
effect to the Clipper Acquisition and the Traveller Acquisition as if they
occurred on June 30, 1994.
The pro forma statements do not purport to represent what the Company's
results of operations or financial condition for the indicated periods or
date would actually have been had the Clipper Acquisition and the Traveller
Acquisition occurred on the aforementioned dates, or to project the Company'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.
<PAGE>
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1993
<CAPTION>
Historical
---------------------------------------
Arkansas Best Clipper Traveller
Corporation Group Group Adjustments Pro Forma
------------- --------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Operating revenues $1,009,918 $ 121,301 $ 18,408 $ - $1,149,627
Operating expenses
and costs 958,549 117,795 17,996 - 1,094,340
---------- --------- --------- -------- ----------
Operating income 51,369 3,506 412 - 55,287
Interest expense 7,248 53 184 3,117 [4] 10,602
Minority interest in
subsidiary 3,140 - - - 3,140
Other expenses 3,705 31 9 1,641 [3] 5,586
200 [2]
Other income (2,974) (58) (223) - (3,255)
---------- --------- --------- -------- ----------
Income before income
taxes and extra-
ordinary item 40,250 3,480 442 (4,958) 39,214
Provision for income
taxes 19,278 136 160 (700) [5] 18,874
---------- --------- --------- -------- ----------
Income before extra-
ordinary item $ 20,972 $ 3,344 $ 282 $ (4,258) $ 20,340
========== ========= ========= ======== ==========
Income per common
share before extra-
ordinary item $ 0.89 $ 0.84
========== ==========
Average common shares
outstanding 19,194 310 [6] 19,504
========== ======== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1994
<CAPTION>
Historical
---------------------------------------
Arkansas Best Clipper Traveller
Corporation Group Group Adjustments Pro Forma
------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Operating revenues $ 475,741 $ 64,595 $ 8,701 $ - $ 549,037
Costs and expenses 464,694 60,692 8,491 - 533,877
---------- --------- -------- -------- ----------
Operating income 11,047 3,903 210 - 15,160
Interest expense 3,129 75 153 1,559 [4] 4,916
Minority interest in
subsidiary 1,407 - - - 1,407
Other expenses 2,025 (6) - 821 [3] 2,940
100 [2]
Other income (1,696) (77) (113) - (1,886)
---------- --------- -------- -------- ----------
Income before income
taxes 6,182 3,911 170 (2,480) 7,783
Provision for income
taxes 4,015 122 71 430 [5] 4,638
---------- --------- -------- -------- ----------
Net income $ 2,167 $ 3,789 $ 99 $ (2,910) $ 3,145
========== ========= ======== ======== ==========
Income per common
share $ - $ 0.05
========== ==========
Average common shares
outstanding 19,305 310 [6] 19,615
========== ======== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1994
<CAPTION>
Arkansas Best Clipper Traveller
Corporation Group Group Adjustments Pro Forma
------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash
equivalents $ 17,610 $ 3,542 $ 214 $ - $ 21,366
Trade receivables 109,821 19,160 2,077 - 131,058
Inventories 28,318 - - - 28,318
Prepaid expenses 9,487 328 198 - 10,013
---------- -------- -------- -------- ----------
Total current
assets 165,236 23,030 2,489 - 190,755
Property, plant and
equipment, net 193,076 3,427 3,831 - 200,334
Goodwill, net 104,593 - - 49,233 [1] 153,826
Other assets 12,111 1,434 1 1,000 [2] 14,546
---------- -------- -------- -------- ----------
Total assets $ 475,016 $ 27,891 $ 6,321 $ 50,233 $ 559,461
========== ======== ======== ======== ==========
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1994
<CAPTION>
Arkansas Best Clipper Traveller
Corporation Group Group Adjustments Pro Forma
------------- --------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Current Liabilities:
Accounts and bank
drafts payable $ 48,810 $ 12,018 $ 1,091 $ - $ 61,919
Accrued expenses 83,600 1,456 110 - 85,166
Federal and state
income taxes 6,205 - 58 - 6,263
Current portion of
long-term debt 12,438 675 1,313 60,425 [1] 75,851
1,000 [2]
Deferred income
taxes 3,503 - - - 3,503
---------- -------- -------- -------- ----------
Total current
liabilities 154,556 14,149 2,572 61,425 232,702
Long-term debt 57,024 1,200 2,580 - 60,804
Other liabilities 4,173 1,350 - - 5,523
Deferred income taxes 24,798 - 152 - 24,950
Minority interest 32,842 - - - 32,842
Shareholders' Equity:
Preferred stock 15 - - - 15
Common stock 192 2 60 (2) [1] 195
(57) [6]
Additional paid-in
capital 206,661 1,921 - (1,921) [1] 206,742
81 [6]
Retained earnings 10,126 9,691 933 (9,691) [1] 11,059
Other (15,371) (422) 24 422 [1] (15,371)
(24) [6]
---------- -------- -------- -------- ----------
Total share-
holders' equity 201,623 11,192 1,017 (11,192) 202,640
---------- -------- -------- -------- ----------
Total liabilities
and shareholders'
equity $ 475,016 $ 27,891 $ 6,321 $ 50,233 $ 559,461
========== ======== ======== ======== ==========
<FN>
See notes to pro forma condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
[1] Reflects the allocation of the estimated purchase price ($60.4 million)
and related debt to fund the Clipper Acquisition. The purchase price
will be subject to certain closing audit adjustments. The preliminary
purchase price allocation is as follows:
Current assets $ 23,030
Other assets 4,861
Goodwill 49,233
Current liabilities (14,149)
Long-term liabilities (2,550)
---------
Total purchase price $ 60,425
=========
[2] Reflects payment, related debt, and amortization of noncompete agreement
relating to the Clipper Acquisition; $1 million over the five year term
of the agreement.
[3] Reflects amortization of goodwill recorded on the Clipper Acquisition;
$49.2 million over 30 years.
[4] Reflects interest on funds borrowed to finance the Clipper Acquisition;
$61 million at an assumed rate of 5.075%.
[5] Reflects adjustment of income tax expense at the marginal tax rate of
38.9% for the effect of the pro forma adjustments, and to provide for
federal taxes on income of the Clipper Group and Commercial Warehouse
Company which have not historically recorded federal income taxes as a
result of their status as S corporations.
[6] Reflects issuance of 310,000 shares of the Company's common stock for
all of the outstanding common stock of the Traveller Group. This
transaction has been accounted for as a pooling of interests. Due to
immateriality, the Company's historical financial statements will not be
restated to include the accounts of the Traveller Group. Also, the
acquisition of the Traveller Group was not a material transaction
requiring separate financial statements to be filed as part of the Form
8-K filing. Traveller Enterprises' fiscal year end is March 31,
therefore for purposes of the pro forma consolidated statements of
operations for the year ended December 31, 1993 and the six months ended
June 30, 1994, accounts of Traveller Enterprises have been combined
using operating results for the year ended March 31, 1994 and the six
months ended September 30, 1994, respectively.
