<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarter Ended March 31, 2000
--------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission file number 0-19969
-------
<TABLE>
<S> <C> <C>
ARKANSAS BEST CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 6711 71-0673405
- ------------------------------- -------------------------- ---------------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
3801 Old Greenwood Road
Fort Smith, Arkansas 72903
(501) 785-6000
- -------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including
area code, of the registrant's principal executive offices)
Not Applicable
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
</TABLE>
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of The Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 2000
----------------------------- -----------------------------
Common Stock, $.01 par value 19,781,133 shares
<PAGE> 2
ARKANSAS BEST CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 2000 and December 31, 1999 ................................................... 3
Consolidated Statements of Operations -
For the Three Months Ended March 31, 2000 and 1999...................................... 5
Consolidated Statements of Shareholders' Equity
For the Three Months Ended March 31, 2000............................................... 7
Condensed Consolidated Statements of Cash Flows -
For the Three Months Ended March 31, 2000 and 1999 ..................................... 8
Notes to Consolidated Financial Statements - March 31, 2000 .............................. 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................................................... 16
Item 2a. Quantitative and Qualitative Disclosures About Market Risk................................ 23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ........................................................................ 24
Item 2. Changes in Securities .................................................................... 24
Item 3. Defaults Upon Senior Securities .......................................................... 24
Item 4. Submission of Matters to a Vote of Security Holders ...................................... 24
Item 5. Other Information ........................................................................ 24
Item 6. Exhibits and Reports on Form 8-K ......................................................... 24
SIGNATURES ..................................................................................... 25
</TABLE>
<PAGE> 3
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
2000 1999
----------- -----------
(UNAUDITED) NOTE
($ thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................. $ 4,232 $ 4,319
Trade receivables, less allowances
(2000 -- $5,293,000; 1999 -- $5,775,000) .................. 189,333 187,837
Inventories ............................................... 32,817 33,050
Prepaid expenses .......................................... 9,108 7,428
Deferred income taxes ..................................... 7,149 7,231
Other ..................................................... 3,213 3,234
----------- -----------
TOTAL CURRENT ASSETS .................................. 245,852 243,099
PROPERTY, PLANT AND EQUIPMENT
Land and structures ....................................... 223,863 222,421
Revenue equipment ......................................... 304,871 292,493
Manufacturing equipment ................................... 15,893 15,851
Service, office and other equipment ....................... 84,647 82,508
Leasehold improvements .................................... 11,088 10,520
----------- -----------
640,362 623,793
Less allowances for depreciation and amortization ......... 297,035 286,699
----------- -----------
343,327 337,094
OTHER ASSETS ................................................. 50,146 42,351
GOODWILL, less amortization (2000 -- $37,378,000;
1999 -- $36,365,000) .................................. 108,373 109,385
----------- -----------
$ 747,698 $ 731,929
=========== ===========
</TABLE>
3
<PAGE> 4
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS - CONTINUED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
2000 1999
----------- -----------
(UNAUDITED) NOTE
($ thousands)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable ......................... $ 19,522 $ 16,187
Trade accounts payable .................................... 79,225 76,597
Accrued expenses .......................................... 151,123 160,469
Federal and state income taxes ............................ 6,044 8,434
Current portion of long-term debt ......................... 23,204 20,452
----------- -----------
TOTAL CURRENT LIABILITIES ............................. 279,118 282,139
LONG-TERM DEBT, less current portion ......................... 173,457 173,702
OTHER LIABILITIES ............................................ 35,128 29,845
DEFERRED INCOME TAXES ........................................ 26,735 25,191
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, authorized 10,000,000 shares;
issued and outstanding 1,495,000 shares ................ 15 15
Common stock, $.01 par value, authorized 70,000,000 shares;
issued and outstanding 2000: 19,769,333 shares;
1999: 19,752,333 shares ............................... 198 197
Additional paid-in capital ................................ 194,264 194,155
Retained earnings ......................................... 38,783 26,685
Accumulated other comprehensive income .................... - -
----------- -----------
TOTAL SHAREHOLDERS' EQUITY ............................ 233,260 221,052
COMMITMENTS AND CONTINGENCIES
----------- -----------
$ 747,698 $ 731,929
=========== ===========
</TABLE>
Note: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at the date, but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
----------- -----------
(UNAUDITED)
($ thousands, except per share data)
<S> <C> <C>
CONTINUING OPERATIONS:
OPERATING REVENUES
Transportation operations ..................................... $ 402,244 $ 353,914
Tire operations ............................................... 40,771 40,460
----------- -----------
443,015 394,374
----------- -----------
OPERATING EXPENSES AND COSTS
Transportation operations ..................................... 375,773 335,740
Tire operations ............................................... 40,961 40,927
----------- -----------
416,734 376,667
----------- -----------
OPERATING INCOME ................................................. 26,281 17,707
OTHER INCOME (EXPENSE)
Net gains on sales of property and non-revenue equipment ...... 1,317 496
Interest expense .............................................. (4,521) (4,543)
Minority interest in Treadco, Inc. ............................ - 245
Other, net .................................................... (522) (1,019)
----------- -----------
(3,726) (4,821)
----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES ......................................... 22,555 12,886
FEDERAL AND STATE INCOME TAXES (CREDIT)
Current ....................................................... 7,757 6,688
Deferred ...................................................... 1,626 (1,280)
----------- -----------
9,383 5,408
----------- -----------
INCOME FROM CONTINUING OPERATIONS ................................ 13,172 7,478
DISCONTINUED OPERATIONS:
Loss from discontinued operations (net of tax benefits of $394
for the three months ended March 31, 1999) .................. - (664)
----------- -----------
LOSS FROM DISCONTINUED OPERATIONS ................................ - (664)
----------- -----------
NET INCOME ....................................................... 13,172 6,814
Preferred stock dividends ..................................... (1,074) (1,075)
----------- -----------
NET INCOME FOR COMMON SHAREHOLDERS ............................... $ 12,098 $ 5,739
=========== ===========
</TABLE>
5
<PAGE> 6
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
----------- -----------
(UNAUDITED)
($ thousands, except per share data)
<S> <C> <C>
NET INCOME (LOSS) PER COMMON SHARE
BASIC:
Continuing operations(1) ......................................... $ 0.61 $ 0.32
Discontinued operations .......................................... - (0.03)
----------- -----------
NET INCOME PER SHARE(1) .......................................... $ 0.61 $ 0.29
----------- -----------
AVERAGE COMMON SHARES
OUTSTANDING (BASIC) .............................................. 19,763,133 19,613,653
=========== ===========
DILUTED:
Continuing operations(2) ......................................... $ 0.55 $ 0.32
Discontinued operations .......................................... - (0.03)
----------- -----------
NET INCOME PER SHARE(2) .......................................... $ 0.55 $ 0.29
----------- -----------
AVERAGE COMMON SHARES
OUTSTANDING (DILUTED) ............................................ 24,088,802 23,582,137
=========== ===========
CASH DIVIDENDS PAID PER COMMON SHARE ............................. $ - $ -
=========== ===========
</TABLE>
(1) Gives consideration to preferred stock dividends of $1.1 million per
quarter.
(2) For the three months ended March 31, 2000 and 1999, conversion of preferred
shares into common is assumed.
6
<PAGE> 7
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
PREFERRED COMMON PAID-IN RETAINED COMPREHENSIVE TOTAL
STOCK STOCK CAPITAL EARNINGS INCOME EQUITY
----------- ----------- ----------- ----------- ------------- -----------
(UNAUDITED)
($ thousands)
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 2000 ......... $ 15 $ 197 $ 194,155 $ 26,685 $ - $ 221,052
Net income .......................... - - - 13,172 - 13,172
Issuance of common stock ............ - 1 109 - - 110
Dividends paid on preferred stock ... - - - (1,074) - (1,074)
----------- ----------- ----------- ----------- ----------- -----------
BALANCES AT MARCH 31, 2000 .......... $ 15 $ 198 $ 194,264 $ 38,783 $ - $ 233,260
=========== =========== =========== =========== =========== ===========
</TABLE>
7
<PAGE> 8
ARKANSAS BEST CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
----------- -----------
(UNAUDITED)
($ thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities ..................... $ 11,992 $ 22,548
INVESTING ACTIVITIES
Purchases of property, plant and equipment,
less capitalized leases ..................................... (19,846) (10,843)
Proceeds from asset sales and other ........................... 2,909 3,399
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES ............................ (16,937) (7,444)
----------- -----------
FINANCING ACTIVITIES
Deferred financing costs and expenses ......................... - (125)
Borrowings under revolving credit facilities .................. 74,600 118,450
Payments under revolving credit facilities .................... (64,200) (122,000)
Payments on long-term debt .................................... (3,143) (2,959)
Dividends paid ................................................ (1,074) (1,075)
Net increase (decrease) in bank overdraft ..................... 3,346 (7,674)
Retirement of bonds ........................................... (4,781) -
Other, net .................................................... 110 34
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES ................. 4,858 (15,349)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS ........................ (87) (245)
Cash and cash equivalents at beginning of period .............. 4,319 4,543
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................... $ 4,232 $ 4,298
=========== ===========
</TABLE>
8
<PAGE> 9
ARKANSAS BEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
- -------------------------------------------------------------------------------
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Arkansas Best Corporation (the "Company") is a diversified holding company
engaged through its subsidiaries primarily in motor carrier transportation
operations, intermodal transportation operations and truck tire retreading and
new tire sales. Principal subsidiaries are ABF Freight System, Inc., ("ABF");
Treadco, Inc. ("Treadco"); Clipper Exxpress Company and related companies
("Clipper"); G.I. Trucking Company ("G.I. Trucking"); and FleetNet America,
Inc.
Approximately 79% of ABF's employees are covered under a five-year collective
bargaining agreement, which began on April 1, 1998, with the International
Brotherhood of Teamsters ("IBT").
NOTE B - FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-Q and 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 three months ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the Company's
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
The difference between the effective tax rate for the three months ended March
31, 2000 and the federal statutory rate resulted from state income taxes,
amortization of nondeductible goodwill and other nondeductible expenses.
NOTE C - DISCONTINUED OPERATIONS
At December 31, 1998, the Company was engaged in international ocean freight
services through its subsidiary CaroTrans International, Inc. ("Clipper
International"), a non-vessel operating common carrier (N.V.O.C.C.). On
February 28, 1999, the Company completed a formal plan to exit its
international ocean freight N.V.O.C.C. services by disposing of the business
and assets of Clipper International. On April 17, 1999, the Company closed the
sale of the business and certain assets of Clipper International, including the
trade name "CaroTrans International, Inc." Remaining assets are being
liquidated. The aggregate of the selling price of these assets and the
estimated liquidation value of the retained Clipper International assets
aggregated approximately $5.0 million which was approximately equal to the
Company's net investment in the related assets.
9
<PAGE> 10
ARKANSAS BEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
- -------------------------------------------------------------------------------
Results of operations of Clipper International have been reported as
discontinued operations, and the statements of operations for all periods have
been restated to remove revenue and expenses of this segment. Results of
Clipper International included in discontinued operations are summarized as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 MARCH 31
2000 1999
----------- ------------
($ thousands)
<S> <C> <C>
Revenues ......................................................... $ - $ 6,777
Operating loss ................................................... - (1,114)
Pre-tax loss ..................................................... - (1,058)
</TABLE>
NOTE D - INVENTORIES
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
2000 1999
----------- -----------
($ thousands)
<S> <C> <C>
Finished goods ................................................... $ 26,099 $ 26,253
Materials ........................................................ 3,800 4,042
Repair parts, supplies and other ................................. 2,918 2,755
----------- -----------
$ 32,817 $ 33,050
=========== ===========
</TABLE>
NOTE E - LEGAL PROCEEDINGS AND ENVIRONMENTAL MATTERS
Various legal actions, the majority of which arise in the normal course of
business, are pending. None of these legal actions are expected to have a
material adverse effect on the Company's financial condition, cash flows or
results of operations. The Company maintains liability insurance against risks
arising out of the normal course of its business, subject to certain
self-insured retention limits.
The Company's subsidiaries store some fuel for its tractors and trucks in
approximately 83 underground tanks located in 27 states. Maintenance of such
tanks is regulated at the federal and, in some cases, state levels. The Company
believes that it is in substantial compliance with all such regulations. The
Company is not aware of any leaks from such tanks that could reasonably be
expected to have a material adverse effect on the Company.
The Company has received notices from the EPA and others that it has been
identified as a potentially responsible party ("PRP") under the Comprehensive
Environmental Response Compensation and Liability Act or other federal or state
environmental statutes at several hazardous waste sites. After investigating
the Company's or its subsidiaries' involvement in waste disposal or waste
generation at such sites, the Company has either agreed to de minimis
settlements (aggregating approximately $300,000 over the last ten years), or
believes its obligations with respect to such sites would involve immaterial
monetary liability, although there can be no assurances in this regard.
As of March 31, 2000, the Company has accrued approximately $2.7 million to
provide for environmental-related liabilities. The Company's environmental
accrual is based on management's best estimate of the actual liability. The
Company's estimate is founded on management's experience in dealing with
similar environmental matters and on actual testing performed at some sites.
Management believes that the accrual is adequate to cover environmental
liabilities based on the present environmental regulations. Accruals for
environmental liability are included in the balance sheet as accrued expenses.
10
<PAGE> 11
ARKANSAS BEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
- -------------------------------------------------------------------------------
NOTE F - RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. The Statement addresses the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts and hedging activities. The Statement will require the Company
to recognize all derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through income. If a
derivative is a hedge, depending on the nature of the hedge, changes in the
fair value of the derivative will either be offset against the change in fair
value of the hedged asset, liability, or firm commitment through earnings, or
recognized in other comprehensive income until the hedged item is recognized in
earnings. In June 1999, the FASB issued Statement No. 137, which deferred for
one year the implementation date of FASB Statement No. 133. As a result,
Statement No. 133 is effective for the Company in 2001. The Company is
evaluating the impact the Statement will have on its financial statements and
related disclosures.
On December 3, 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial
Statements, which among other guidance clarifies certain conditions to be met
in order to recognize revenue. On March 24, 2000, the SEC issued SAB 101A,
Amendment: Revenue Recognition in Financial Statements, which delayed the
effective date of SAB 101 for registrants with fiscal years beginning between
December 16, 1999 and March 15, 2000. SAB 101 is effective for the Company in
the second quarter of 2000. The Company is evaluating SAB 101's impact on its
financial statements and related disclosures.
In March 2000, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 44 ("FIN 44"), Accounting of Certain Transactions involving
Stock Compensation, an interpretation of Accounting Principles Board Opinion
No. 25. FIN 44 clarifies the application of Opinion 25 for (a) the definition
of an employee for purposes of applying Opinion 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 is effective July 1,
2000, but certain conclusions cover specific events that occur after either
December 15, 1998, or January 12, 2000. Management believes that FIN 44 will
not have a material effect on the financial position or results of operations
of the Company.
11
<PAGE> 12
ARKANSAS BEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
- -------------------------------------------------------------------------------
NOTE G - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
----------- -----------
($ thousands, except per share data)
<S> <C> <C>
NUMERATOR:
Numerator for basic earnings per share --
Net income ................................................. $ 13,172 $ 6,814
Preferred stock dividends .................................. (1,074) (1,075)
----------- -----------
Numerator for basic earnings per share --
Net income available to
common shareholders ........................................ 12,098 5,739
Effect of dilutive securities(1) ........................... 1,074 1,075
----------- -----------
Numerator for diluted earnings per share --
Net income available
to common shareholders ..................................... $ 13,172 $ 6,814
=========== ===========
DENOMINATOR:
Denominator for basic earnings
per share -- weighted-average shares ....................... 19,763,133 19,613,653
Effect of dilutive securities:
Conversion of preferred stock .............................. 3,796,852 3,796,852
Employee stock options ..................................... 528,817 171,632
----------- -----------
Denominator for diluted earnings
per share -- adjusted weighted-average
shares and assumed conversion .............................. 24,088,802 23,582,137
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE
BASIC:
Continuing operations ......................................... $ 0.61 $ 0.32
Discontinued operations ....................................... - (0.03)
----------- -----------
NET INCOME PER SHARE ............................................. $ 0.61 $ 0.29
=========== ===========
AVERAGE COMMON SHARES
OUTSTANDING (BASIC): .......................................... 19,763,133 19,613,653
=========== ===========
DILUTED:
Continuing operations ......................................... $ 0.55 $ 0.32
Discontinued operations ....................................... - (0.03)
----------- -----------
NET INCOME PER SHARE ............................................. $ 0.55 $ 0.29
=========== ===========
AVERAGE COMMON SHARES
OUTSTANDING (DILUTED): ........................................ 24,088,802 23,582,137
=========== ===========
CASH DIVIDENDS PAID
PER COMMON SHARE .............................................. $ - $ -
=========== ===========
</TABLE>
(1) For the three months ended March 31, 2000 and 1999, conversion of
preferred shares into common is assumed.
12
<PAGE> 13
ARKANSAS BEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
- -------------------------------------------------------------------------------
NOTE H - OPERATING SEGMENT DATA
The Company used the "management approach" to determine its reportable
operating segments as well as to determine the basis of reporting the operating
segment information. The management approach focuses on financial information
that the Company's decision makers use to make decisions about operating
matters. Management uses operating revenues, operating expense categories,
operating ratios, operating income, and key operating statistics to evaluate
performance and allocate resources to the Company's operating segments.
During the periods being reported on, the Company operated in four defined
reportable operating segments: 1) ABF; 2) G.I. Trucking; 3) Clipper; and 4)
Treadco.
Results of operations for Clipper International, previously reflected as a
reportable segment, have been reported as discontinued operations for the three
months ended March 31, 1999.
The Company eliminates intercompany transactions in consolidation. However, the
information used by the Company's management with respect to its reportable
segments is before intersegment eliminations of revenues and expenses.
Intersegment revenues and expenses are not significant.
Further classifications of operations or revenues by geographic location beyond
the descriptions provided above are impractical, and are, therefore, not
provided. The Company's foreign operations are not significant.
No material changes have occurred in the total assets for any reportable
operating segment since December 31, 1999.
13
<PAGE> 14
ARKANSAS BEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
- --------------------------------------------------------------------------------
The following tables reflect reportable operating segment information for the
Company, as well as a reconciliation of reportable segment information to the
Company's consolidated operating revenues, operating expenses and operating
income.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
----------- -----------
<S> <C> <C>
($ thousands)
OPERATING REVENUES
ABF Freight System, Inc. .................................. $ 331,836 $ 295,452
G.I. Trucking Company ..................................... 37,701 31,534
Clipper ................................................... 29,631 24,465
Treadco, Inc. ............................................. 41,264 40,944
Other revenues and eliminations ........................... 2,583 1,979
----------- -----------
Total consolidated operating revenues ................... $ 443,015 $ 394,374
=========== ===========
OPERATING EXPENSES AND COSTS
ABF FREIGHT SYSTEM, INC
Salaries and wages ........................................ $ 208,992 $ 196,716
Supplies and expenses ..................................... 43,356 31,026
Operating taxes and licenses .............................. 10,266 9,607
Insurance ................................................. 4,870 5,017
Communications and utilities .............................. 4,021 3,661
Depreciation and amortization ............................. 8,235 6,988
Rents and purchased transportation ........................ 23,966 22,441
Other ..................................................... 940 1,362
(Gain) on sale of revenue equipment ....................... (51) (39)
----------- -----------
304,595 276,779
----------- -----------
G.I. TRUCKING COMPANY
Salaries and wages ........................................ 18,191 14,784
Supplies and expenses ..................................... 3,499 2,544
Operating taxes and licenses .............................. 855 761
Insurance ................................................. 853 1,031
Communications and utilities .............................. 502 428
Depreciation and amortization ............................. 1,067 741
Rents and purchased transportation ........................ 11,786 9,790
Other ..................................................... 941 898
(Gain) on sale of revenue equipment ....................... (1) (7)
----------- -----------
37,693 30,970
----------- -----------
CLIPPER
Cost of services .......................................... 25,808 21,491
Selling, administrative and general ....................... 3,796 3,332
(Gain) on sale of revenue equipment ....................... (3) (31)
----------- -----------
$ 29,601 $ 24,792
----------- -----------
</TABLE>
14
<PAGE> 15
ARKANSAS BEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
----------- -----------
($ thousands)
<S> <C> <C>
TREADCO, INC.
Cost of sales ............................................. $ 27,904 $ 28,908
Selling, administrative and general ....................... 13,357 12,291
----------- -----------
41,261 41,199
----------- -----------
Other expenses and eliminations .............................. 3,584 2,927
----------- -----------
Total consolidated operating expenses and costs ........... $ 416,734 $ 376,667
=========== ===========
OPERATING INCOME (LOSS)
ABF Freight System, Inc. ..................................... $ 27,241 $ 18,673
G.I. Trucking Company ........................................ 8 564
Clipper ...................................................... 30 (327)
Treadco, Inc. ................................................ 3 (255)
Other income (loss) and eliminations ......................... (1,001) (948)
----------- -----------
Total consolidated operating income ....................... $ 26,281 $ 17,707
=========== ===========
</TABLE>
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
OPERATING SEGMENT DATA
The following table sets forth, for the periods indicated, a summary of the
Company's operating expenses by segment as a percentage of revenue for the
applicable segment.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
----------- -----------
<S> <C> <C>
OPERATING EXPENSES AND COSTS
ABF FREIGHT SYSTEM, INC.
Salaries and wages ........................................ 63.0% 66.6%
Supplies and expenses ..................................... 13.1 10.5
Operating taxes and licenses .............................. 3.1 3.3
Insurance ................................................. 1.5 1.7
Communications and utilities .............................. 1.2 1.2
Depreciation and amortization ............................. 2.5 2.4
Rents and purchased transportation ........................ 7.2 7.6
Other ..................................................... 0.2 0.4
----------- -----------
91.8% 93.7%
----------- -----------
G.I. TRUCKING COMPANY
Salaries and wages ........................................ 48.3% 46.9%
Supplies and expenses ..................................... 9.3 8.1
Operating taxes and licenses .............................. 2.3 2.4
Insurance ................................................. 2.3 3.3
Communications and utilities .............................. 1.3 1.4
Depreciation and amortization ............................. 2.8 2.3
Rents and purchased transportation ........................ 31.3 31.0
Other ..................................................... 2.4 2.8
----------- -----------
100.0% 98.2%
----------- -----------
CLIPPER
Cost of services .......................................... 87.1% 87.8%
Selling, administrative and general ....................... 12.8 13.6
(Gain) on sale of revenue equipment ....................... - (0.1)
----------- -----------
99.9% 101.3%
----------- -----------
TREADCO, INC.
Cost of sales ............................................. 67.6% 70.6%
Selling, administrative and general ....................... 32.4 30.0
----------- -----------
100.0% 100.6%
----------- -----------
OPERATING INCOME
ABF Freight System, Inc. ..................................... 8.2% 6.3 %
G. I. Trucking Company ....................................... 0.0 1.8
Clipper ...................................................... 0.1 (1.3)
Treadco, Inc. ................................................ 0.0 (0.6)
</TABLE>
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Unaudited) - continued
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000, COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Consolidated revenues from continuing operations of the Company for the three
months ended March 31, 2000 were $443.0 million compared to $394.4 million for
the first quarter 1999, representing an increase of 12.3% due primarily to
increases in revenues for ABF, G.I. Trucking and Clipper. The Company's
operating income from continuing operations increased 48.4% to $26.3 million for
first quarter 2000 from $17.7 million for first quarter 1999. Increases in
operating income from continuing operations are attributable to improved
operations at ABF, Clipper and Treadco, offset in part by decreases in operating
income from first quarter 1999 for G.I. Trucking. Income from continuing
operations for the three months ended March 31, 2000 was $13.2 million, or $0.55
per common share (diluted), compared to $7.5 million, or $0.32 per common share
(diluted), for first quarter 1999. The improvement in income from continuing
operations for first quarter 2000, as compared to first quarter 1999, reflects
primarily the improvements in operating income.
ABF FREIGHT SYSTEM, INC.
Effective January 1, 1999 and September 13, 1999, ABF implemented overall rate
increases of 5.5% and 5.1%, respectively. ABF did not implement a rate increase
on January 1, 2000. Revenues for the three months ended March 31, 2000 increased
12.3% to $331.8 million from $295.5 million in the first quarter of 1999. ABF
generated operating income of $27.2 million during the first quarter of 2000,
compared to $18.7 million during the same period in 1999.
ABF's increase in revenue is due to an increase in LTL revenue per hundredweight
and an increase in LTL tonnage. LTL revenue per hundredweight increased 5.3% to
$20.20 for the three months ended March 31, 2000 compared to $19.18 in the first
quarter of 1999, reflecting a continuing favorable pricing environment. ABF's
LTL tonnage increased 6.8% for the three months ended March 31, 2000, compared
to the same period in 1999. There were 65 workdays in the first quarter of 2000
and 63 workdays in the first quarter of 1999. ABF's LTL tonnage increased 3.5%
on a per-day basis. ABF implemented a fuel surcharge on July 7, 1999, based on
the increase in diesel fuel prices compared to an index price. The fuel
surcharge in effect during the first quarter of 2000 ranged from 2.0% to 4.0% of
revenue. There was no fuel surcharge in effect during the first quarter of 1999.
ABF's operating ratio improved to 91.8% for the three months ended March 31,
2000 from 93.7% during the same period in 1999, as a result of the revenue yield
improvements and increases in tonnage previously described and as a result of
changes in certain operating expense categories as follows:
Salaries and wages expense decreased as a percent of revenue by 3.6% for the
three months ended March 31, 2000 compared to the same period in 1999. The
decrease is due in part to lower linehaul and dock labor costs due to
retirements and a lower effective wage rate associated with more new hires,
offset in part by an increase in incentive pay amounts. Wage rates for new hires
increase to full-scale levels over a two-year period. The improvement is also
due, in part, to favorable claims experience for workers' compensation.
Supplies and expenses increased 2.6% as a percent of revenue for the three
months ended March 31, 2000, compared to the same period in 1999. This change is
due primarily to higher diesel fuel prices, which increased 103.4% on an average
price-per-gallon basis when first quarter 2000 is compared to first quarter
1999. The previously mentioned fuel surcharge on revenue is intended to offset
the fuel cost increase. In addition, trailer repair costs were higher due to
ongoing trailer refurbishing and the installation of conspicuity tape to road
and
17
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Unaudited) - continued
- --------------------------------------------------------------------------------
city trailers, in accordance with federal regulations. Such regulations
require that the installation process be complete by June 1, 2001. As of March
31, 2000, the Company had completed the installation on approximately 91% of all
road trailers and city trailers.
Operating taxes and licenses decreased 0.2% as a percent of revenue for the
three months ended March 31, 2000, compared to the same period in 1999 due in
part to a fuel marker fee refund received in the first quarter of 2000 from the
State of Alabama.
Insurance expense decreased 0.2% as a percent of revenue for the three months
ended March 31, 2000, compared to the same period in 1999. This improvement was
due primarily to favorable cargo claims experience.
Rents and purchased transportation expense decreased 0.4% as a percent of
revenue for the three months ended March 31, 2000, compared to the same period
in 1999, due primarily to the disposal of tractors under operating leases. Late
in the first quarter 2000, ABF began purchasing replacement road tractors. In
addition, total rail costs, as a percent of revenue, declined as a result of a
decline in rail utilization for the three months ended March 31, 2000 to 16.2%
of total miles from 16.5% during the same period in 1999.
G.I. TRUCKING COMPANY
Effective October 1, 1999, G.I. Trucking implemented a general rate increase of
5.5%. G.I. Trucking revenues increased 19.6% to $37.7 million for the three
months ended March 31, 2000 from $31.5 million during the same period in 1999.
The revenue increase resulted from an increase in G.I. Trucking's tonnage of
17.7% for the three months ended March 31, 2000, compared to the same period in
1999. There were 65 workdays in the first quarter of 2000 and 63 workdays in the
first quarter of 1999. G.I. Trucking's LTL tonnage increased 14.1% on a per-day
basis. In addition, revenue per hundredweight increased 1.6% to $10.89 in the
first quarter of 2000 from $10.73 in the first quarter of 1999. During the early
part of first quarter 2000, G.I. Trucking expanded its operational capabilities
in the states of Texas, New Mexico, Oklahoma, Kansas and parts of Missouri, in
preparation for adding new business from an existing carrier partner. This
business began February 1 and steadily grew through March 2000. In addition,
G.I. Trucking increased its sales management and sales staff throughout its
system by nearly 50% over 1999 levels. G.I. Trucking implemented a fuel
surcharge during the last week of August 1999, based upon a West Coast average
fuel index. The fuel surcharge in effect during the first quarter of 2000 ranged
from 2.6% to 4.6% of revenue. There was no fuel surcharge in effect during the
first quarter of 1999.
G.I. Trucking's operating ratio increased to 100.0% for the three months ended
March 31, 2000 from 98.2% during the same period in 1999. G.I. Trucking's
operating ratio was negatively impacted by start-up costs associated with the
expansion described above. In addition, the increase in the operating ratio
results from changes in certain operating expenses as follows:
Salaries and wages expense increased 1.4% as a percent of revenue during the
three months ended March 31, 2000, compared to the same period in 1999. The
increase is due primarily to unfavorable claims experience for workers'
compensation and increased salaries and benefits related to the addition of
sales staff and the expansion described above, offset, in part, by lower pension
costs.
Supplies and expenses increased 1.2% as a percent of revenue for the three
months ended March 31, 2000, compared to the same period in 1999. The increase
is due primarily to higher fuel costs, which increased in total
18
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Unaudited) - continued
- --------------------------------------------------------------------------------
dollars by 127.2% when the first quarter of 2000 is compared to the first
quarter of 1999. G.I. Trucking's fuel surcharge on revenue is intended to offset
the fuel cost increase.
Insurance expense decreased 1.0% as a percent of revenue for the three months
ended March 31, 2000, compared to the same period in 1999. This decrease is due
to favorable claims experience for bodily injury and property damage and cargo
claims during the first quarter of 2000, as compared to the first quarter 1999.
Depreciation and amortization increased 0.5% as a percent of revenue for the
three months ended March 31, 2000, compared to the same period in 1999, due
primarily to G.I. Trucking's increase in fleet size when the first quarter of
2000 is compared to the first quarter of 1999.
Rents and purchased transportation expenses increased 0.3% as a percent of
revenue for the three months ended March 31, 2000 as compared to the same period
in 1999. This increase is due primarily to an increase in purchased
transportation costs resulting from higher fuel costs passed through from
purchased transportation providers and additional linehaul miles run in order to
meet customer service needs. The previously mentioned fuel surcharge is intended
to offset the fuel increase included in purchased transportation costs. This
increase is offset in part by a decline in terminal rent costs as a percent of
revenue. This decline resulted from higher revenue levels and the fact that
terminal rents are primarily fixed in nature.
CLIPPER
Revenues for Clipper were $29.6 million for the three months ended March 31,
2000, representing an increase of 21.1% from first quarter 1999 revenues of
$24.5 million. Clipper continued its fourth quarter 1999 trend of revenue growth
with LTL shipments increasing 5.1% for the first quarter of 2000, compared to
the same period in 1999. LTL revenue per hundredweight increased 0.6% to $19.08
from $18.96 in the first quarter of 1999. Intermodal shipments increased 1.3%
for the three months ended March 31, 2000 compared to the same period in 1999.
Intermodal revenue per shipment for the first quarter 2000 increased 15.0% from
the same period in 1999.
Clipper's operating ratio improved to 99.9% for the three months ended March 31,
2000 from 101.3% during the same period in 1999, primarily as a result of volume
and margin improvements on its intermodal and produce shipments. Clipper's
margins improved, in part, as a result of a higher level of rail utilization for
the first quarter of 2000. Clipper's rail utilization in the first quarter of
2000 was 63.5% of total miles versus 51.9% for the first quarter of 1999. Rail
costs per mile for Clipper are less expensive than over-the-road costs per mile.
In addition, selling, administrative and general costs declined 0.8% as a
percent of revenue as a result of cost reductions implemented because of lower
revenues in previous quarters.
TREADCO, INC.
Revenues for Treadco increased 0.8% to $41.3 million for the three months ended
March 31, 2000, compared to $40.9 million for the same period in 1999. For the
three months ended March 31, 2000, "same store" sales increased 0.3% compared to
the three months ended March 31, 1999. "New store" sales accounted for 0.5% of
the increase from the three months ended March 31, 1999. "Same store" sales
include locations that have been in existence for the entire periods presented.
"New store" sales resulted from the addition of a new sales-only location.
Revenues from retreading for the three months ended March 31, 2000 were $15.9
million, representing a decrease of 1.4% from $16.1 million for the same period
in 1999, due to a decrease in units sold of approximately 2.9% from the same
period in 1999. This decrease was offset, in part, by an increase in the average
sales price per unit of approximately 1.5% from the same period in 1999.
Declines in retread units sold
19
<PAGE> 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Unaudited) - continued
- --------------------------------------------------------------------------------
resulted from less customer demand and a more competitive marketplace. Rising
fuel costs have had a negative impact on customer demand during the quarter.
Revenues from new tires decreased 0.5% to $20.1 million for the three months
ended March 31, 2000 from $20.3 million during the same period in 1999, due
primarily to a change in the mix of new tires sold. Units sold increased 2.0%
from the three months ended March 31, 1999, due to an increase in new tires sold
on national accounts which are sold on a commission basis. Commissions received
from new tire manufacturers for new tires sold on national accounts were lower
during the three months ended March 31, 2000 compared to the same period in 1999
resulting in a 2.5% decline in the sales price per new tire unit sold. Service
revenues for the three months ended March 31, 2000 increased 14.4% to $5.2
million from $4.6 million for the three months ended March 31, 1999. Treadco
continues to emphasize service by adding service equipment and personnel at its
locations.
Treadco's operating ratio improved to 100.0% during the three months ended March
31, 2000, from 100.6% during the same period in 1999. Improvements in Treadco's
operating ratio resulted from improvements in retread, new tire and service
margins which are reflected in cost of sales as a 3.0% of revenue improvement,
offset by an increase in selling, administrative and general expenses of 2.4% of
revenue. Selling, administrative and general expenses increased primarily as a
result of higher salaries and wages due to increased salesmen's commissions and
increased service and inventory control personnel. In addition, selling,
administrative and general costs were adversely impacted by increased bad debt
expense and higher fuel costs, which increased truck expense.
INCOME TAXES
The difference between the effective tax rate for the three months ended March
31, 2000 and the federal statutory rate resulted from state income taxes,
amortization of nondeductible goodwill and other nondeductible expenses.
OTHER ASSETS
Other assets increased $7.8 million from December 31, 1999 to March 31, 2000,
due primarily to incentive pay deferrals and matching contributions to the
Company's Voluntary Savings Plan assets, which are held in a trust account.
ACCRUED EXPENSES
Accrued expenses decreased $9.3 million from December 31, 1999 to March 31,
2000, due primarily to the payment of accrued corporate and ABF incentive
amounts in January 2000.
OTHER LIABILITIES
Other liabilities increased $5.3 million from December 31, 1999 to March 31,
2000, due primarily to $4.9 million in salary deferrals and matching
contributions to the Company's Voluntary Savings Plan.
20
<PAGE> 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Unaudited) - continued
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Net income plus depreciation and amortization was $26.6 million for the three
months ended March 31, 2000 compared to $18.6 million for the same period in
1999. Working capital changes for the first quarter of 2000 resulted in a
decrease in cash provided by operations of $14.6 million compared to an increase
in cash provided by operations from working capital changes of $5.3 million in
the first quarter of 1999. This decrease is due primarily to the payment of
accrued corporate and ABF incentive amounts in January 2000. During the first
quarter of 2000, cash provided by operations, proceeds from assets sales of $3.5
million and borrowings were used to purchase revenue equipment and other
property and equipment in the amount of $19.8 million. During the first quarter
of 1999, cash provided by operations and proceeds from the sale of assets of
$3.8 million were used to purchase revenue equipment and other assets in the
amount of $11.0 million and to pay down the Company's debt.
The Company is party to a $250 million credit agreement (the "Credit Agreement")
with Societe Generale as Administrative Agent and with Bank of America National
Trust and Savings Association and Wells Fargo Bank (Texas), N.A., as
Co-Documentation Agents. The Credit Agreement provides for up to $250 million of
revolving credit loans (including letters of credit) and extends to June 2003.
At March 31, 2000, there were $111.7 million of Revolver Advances and
approximately $22.5 million of letters of credit outstanding. At March 31, 2000,
the Company had approximately $115.8 million of borrowing availability under the
Credit Agreement. The Credit Agreement contains various covenants, which limit,
among other things, indebtedness, distributions, and disposition of assets, and
require the Company to meet certain quarterly financial ratio tests. As of March
31, 2000, the Company was in compliance with the covenants.
The Company is party to an interest rate swap on a notional amount of $110.0
million. The purpose of the swap is to limit the Company's exposure to increases
in interest rates on $110.0 million of bank borrowings over the seven-year term
of the swap. The interest rate under the swap is fixed at 5.845% plus the Credit
Agreement margin, which at March 31, 2000 was 0.40%.
During 1999, the Company entered into $26.1 million in capital lease obligations
for the purchase of revenue equipment. The Company has not entered into any
capital lease obligations in 2000.
In 2000 the Company forecasts total spending of $85.0 to $95.0 million for
capital expenditures net of proceeds from equipment sales. Of the $85.0 to $95.0
million, ABF is budgeted for $63.0 to $73.0 million to be used primarily for
revenue equipment and facilities. Treadco is budgeted for approximately $4.0
million of expenditures to be used primarily for retreading and service
equipment and facilities and G.I. Trucking is budgeted for approximately $10.0
million of expenditures to be used primarily for revenue equipment. Clipper is
budgeted for approximately $4.0 million of expenditures to be used primarily for
revenue equipment.
For the year 2000 the Company forecasts total revenues of approximately $1.9
billion. Included in the $1.9 billion are forecasted revenues for ABF of
approximately $1.4 billion, G.I. Trucking of approximately $160.0 million,
Clipper of approximately $131.0 million and Treadco of approximately $195.0
million.
Management believes, based upon the Company's current levels of operations, the
Company's cash, capital resources, borrowings available under the Credit
Agreement and cash flow from operations will be sufficient to finance current
and future operations and meet all present and future debt service requirements.
21
<PAGE> 22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Unaudited) - continued
- --------------------------------------------------------------------------------
SEASONALITY
ABF and G.I. Trucking are affected by seasonal fluctuations, which affect
tonnage to be transported. Freight shipments, operating costs and earnings are
also affected adversely by inclement weather conditions. The third calendar
quarter of each year usually has the highest tonnage levels while the first
quarter has the lowest. Clipper's operations are similar to motor carrier
operations with revenues being weaker in the first quarter and stronger during
the months of September and October. Treadco's operations are somewhat seasonal
with the last nine months of the calendar year generally having the highest
levels of sales.
FORWARD-LOOKING STATEMENTS
Statements contained in the Management's Discussion and Analysis section of this
report that are not based on historical facts are "forward-looking statements."
Terms such as "estimate," "expect," "predict," "plan," "anticipate," "believe,"
"intend," "should," "would," "scheduled," and similar expressions and the
negatives of such terms are intended to identify forward-looking statements.
Such statements are by their nature subject to uncertainties and risk, including
but not limited to union relations; availability and cost of capital; shifts in
market demand; weather conditions; the performance and needs of industries
served by Arkansas Best's subsidiaries; actual future costs of operating
expenses such as fuel and related taxes; self-insurance claims and employee
wages and benefits; actual costs of continuing investments in technology, the
timing and amount of capital expenditures; competitive initiatives and pricing
pressures; general economic conditions; and other financial, operational and
legal risks and uncertainties detailed from time to time in the Company's SEC
public filings.
22
<PAGE> 23
ITEM 2a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------
INTEREST RATE INSTRUMENTS
The Company is a party to an interest rate swap agreement which was effective
April 1, 1998. The swap agreement is a contract to exchange floating interest
rate payments for fixed rate payments over the life of the instrument. The
notional amount is used to measure interest to be paid or received and does not
represent the exposure to credit loss. The purpose of the swap is to limit the
Company's exposure to increases in interest rates on the notional amount of bank
borrowings over the term of the swap. The fixed interest rate under the swap is
5.845% plus the Credit Agreement margin (currently .40%). This instrument is not
recorded on the balance sheet of the Company. Details regarding the swap, as of
March 31, 2000, are as follows:
<TABLE>
<CAPTION>
Notional Rate Rate Fair
Amount Maturity Paid Received Value(2)
------- ------- ---- --------- ----------
<S> <C> <C> <C> <C>
$110.0 million April 1, 2005 5.845% Plus Credit Agreement LIBOR rate(1) $5.6 million
Margin (currently .40%) Plus Credit Agreement
Margin (currently .40%)
</TABLE>
(1) LIBOR rate is determined two London Banking Days prior to the first day of
every month and continues up to and including the maturity date.
(2) The fair value is an amount estimated by Societe Generale ("process agent")
that the Company would have received at March 31, 2000 to terminate the
agreement.
OTHER MARKET RISKS
Since December 31, 1999, there have been no significant changes in the Company's
other market risks, as reported in the Company's Form 10-K Annual Report.
23
<PAGE> 24
PART II.
OTHER INFORMATION
ARKANSAS BEST CORPORATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, the Company is named as a defendant in legal
actions, the majority of which arise out of the normal course of its business.
The Company is not a party to any pending legal proceeding which the Company's
management believes to be material to the financial condition of the Company.
The Company maintains liability insurance in excess of self-retention levels of
certain risks arising out of the normal course of its business (see Note E to
the Company's unaudited consolidated financial statements).
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
Financial Data Schedule
(b) REPORTS ON FORM 8-K.
None.
24
<PAGE> 25
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: May 9, 2000 /s/ David E. Loeffler
-------------------------------------------------
David E. Loeffler
Vice President-Treasurer, Chief Financial Officer
and Principal Accounting Officer
25
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ARKANSAS
BEST CORPORATION QUARTERLY REPORT 10-Q FOR THE QUARTER ENDED MARCH 31, 2000, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,232
<SECURITIES> 0
<RECEIVABLES> 189,333<F1>
<ALLOWANCES> 5,293
<INVENTORY> 32,817
<CURRENT-ASSETS> 245,852
<PP&E> 640,362<F2>
<DEPRECIATION> 297,035
<TOTAL-ASSETS> 747,698
<CURRENT-LIABILITIES> 279,118
<BONDS> 173,457<F3>
0
15
<COMMON> 198
<OTHER-SE> 233,047
<TOTAL-LIABILITY-AND-EQUITY> 747,698
<SALES> 40,771
<TOTAL-REVENUES> 443,015
<CGS> 27,904
<TOTAL-COSTS> 416,734
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 879<F4>
<INTEREST-EXPENSE> 4,521
<INCOME-PRETAX> 22,555
<INCOME-TAX> 9,383
<INCOME-CONTINUING> 13,172
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,172
<EPS-BASIC> 0.61
<EPS-DILUTED> 0.55
<FN>
<F1>TRADE-NET
<F2>GROSS
<F3>L-T
<F4>A/R
</FN>
</TABLE>
