-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JAyNE9w9vivrScalDeJ2P+kIreJkXiVqmqCvW5L8oKLa0Z6V3F9ocUvqsB2cfAZH 5jpmOhz/Uybgx7+4oR55Hw== 0000894405-94-000016.txt : 19941111 0000894405-94-000016.hdr.sgml : 19941111 ACCESSION NUMBER: 0000894405-94-000016 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19940930 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19941110 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARKANSAS BEST CORP /DE/ CENTRAL INDEX KEY: 0000894405 STANDARD INDUSTRIAL CLASSIFICATION: 4213 IRS NUMBER: 710673405 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19969 FILM NUMBER: 94558440 BUSINESS ADDRESS: STREET 1: 1000 SOUTH 21 ST CITY: FORT SMITH STATE: AR ZIP: 72901 BUSINESS PHONE: 5017856000 MAIL ADDRESS: STREET 1: P O BOX 48 CITY: FORT SMITH STATE: AR ZIP: 72902 8-K/A 1 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) 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 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 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 EX-99 2 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 CLIPPER EXXPRESS COMPANY Balance Sheets December 31, 1993 and 1992
Assets 1993 1992 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 =========== =========== Liabilities and Stockholders' Equity 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 =========== =========== See accompanying notes to financial statements.
CLIPPER EXXPRESS COMPANY Statements of Earnings and Retained Earnings Years Ended December 31, 1993 and 1992
1993 1992 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 ============ ============ See accompanying notes to financial statements.
CLIPPER EXXPRESS COMPANY Statements of Cash Flows Years Ended December 31, 1993 and 1992
1993 1992 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 1993 1992 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 $ -- ========== ========== See accompanying notes to financial statements.
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. 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. 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:
Year Affiliate Nonaffiliate 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
EX-99 3 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 AGRICULTURAL EXPRESS OF AMERICA, INC. Balance Sheets December 31, 1993 and 1992
Assets 1993 1992 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 ========== ========== Liabilities and Stockholders' Equity 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 ========== ========== See accompanying notes to financial statements.
AGRICULTURAL EXPRESS OF AMERICA, INC. Statements of Earnings and Retained Earnings Years Ended December 31, 1993 and 1992
1993 1992 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 =========== =========== See accompanying notes to financial statements.
AGRICULTURAL EXPRESS OF AMERICA, INC. Statements of Cash Flows Years Ended December 31, 1993 and 1992
1993 1992 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 ========== ========== See accompanying notes to financial statements.
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. 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. 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:
Affiliate Non-Affiliate 1994 $8,652 $10,400 1995 8,652 11,000 1996 8,652 -- 1997 8,652 --
EX-99 4 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 AGILE FREIGHT SYSTEM, INC. Balance Sheets December 31, 1993 and 1992
1993 1992 Assets 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 ========== ========== Liabilities and Stockholders' Equity (Deficit) 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 ========== ========== See accompanying notes to financial statements.
AGILE FREIGHT SYSTEM, INC. Statements of Operations and Retained Earnings (Deficit) Years Ended December 31, 1993 and 1992
1993 1992 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 ========== ========== See accompanying notes to financial statements.
AGILE FREIGHT SYSTEM, INC. Statements of Cash Flows Years Ended December 31, 1993 and 1992
1993 1992 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 ========== ========= See accompanying notes to financial statements.
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. 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). EX-99 5 CLIPPER EXXPRESS COMPANY Financial Statements June 30, 1994 and 1993 CLIPPER EXXPRESS COMPANY Balance Sheets
June 30 December 31 1994 1993 (Unaudited) (Note) 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 =========== =========== 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. See accompanying notes to financial statements.
CLIPPER EXXPRESS COMPANY Statements of Earnings and Retained Earnings (Unaudited)
Six Months Ended June 30 1994 1993 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 ============ ============ See accompanying notes to financial statements.
CLIPPER EXXPRESS COMPANY Statements of Cash Flows (Unaudited)
Six Months Ended June 30 1994 1993 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 Six Months Ended June 30 1994 1993 Supplemental disclosure of cash flow information: State income taxes paid $ 55,235 $ 57,400 ========== ========== Interest paid $ -- $ 3,082 ========== ========== See accompanying notes to financial statements.
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. EX-99 6 AGRICULTURAL EXPRESS OF AMERICA, INC. Financial Statements June 30, 1994 and 1993 AGRICULTURAL EXPRESS OF AMERICA, INC. Balance Sheets
June 30 December 31 1994 1993 (Unaudited) (Note) 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 ========== ========== 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. See accompanying notes to financial statements.
AGRICULTURAL EXPRESS OF AMERICA, INC. Statements of Earnings and Retained Earnings (Unaudited)
Six Months Ended June 30 1994 1993 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 =========== =========== See accompanying notes to financial statements.
AGRICULTURAL EXPRESS OF AMERICA, INC. Statements of Cash Flows (Unaudited)
Six Months Ended June 30 1994 1993 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 $ -- ========== ========== See accompanying notes to financial statements.
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. EX-99 7 AGILE FREIGHT SYSTEM, INC. Financial Statements June 30, 1994 and 1993 AGILE FREIGHT SYSTEM, INC. Balance Sheets
June 30 December 31 1994 1993 (Unaudited) (Note) 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 ========== ========== 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. See accompanying notes to financial statements.
AGILE FREIGHT SYSTEM, INC. Statements of Operations and Retained Earnings (Deficit) (Unaudited)
Six Months Ended June 30 1994 1993 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) ========== ========== See accompanying notes to financial statements.
AGILE FREIGHT SYSTEM, INC. Statements of Cash Flows
Six Months Ended June 30 1994 1993 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 ========== ========= See accompanying notes to financial statements.
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. EX-99 8 ARKANSAS BEST CORPORATION Pro Forma Financial Information 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. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, 1993
Historical --------------------------------------- Arkansas Best Clipper Traveller Corporation Group Group Adjustments Pro Forma ------------- --------- ----------- ----------- ---------- 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 ========== ======== ========== See notes to pro forma condensed consolidated financial statements.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Six Months Ended June 30, 1994
Historical --------------------------------------- Arkansas Best Clipper Traveller Corporation Group Group Adjustments Pro Forma ------------- --------- ----------- ----------- ----------- 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 ========== ======== ========== See notes to pro forma condensed consolidated financial statements.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET June 30, 1994
Arkansas Best Clipper Traveller Corporation Group Group Adjustments Pro Forma ------------- --------- ----------- ----------- ----------- 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 Arkansas Best Clipper Traveller Corporation Group Group Adjustments Pro Forma ------------- --------- ----------- ----------- ---------- 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 ========== ======== ======== ======== ========== See notes to pro forma condensed consolidated financial statements.
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. -----END PRIVACY-ENHANCED MESSAGE-----