-----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, mVL1MHXGjnT3Dc9iDy2Binz5GGvHveG2qCviJRlzffowRXUw4jE2Qm+1WwLl/0qd a7OX3NzmMJG8S83C/+3BcA== 0000894405-95-000005.txt : 19950517 0000894405-95-000005.hdr.sgml : 19950516 ACCESSION NUMBER: 0000894405-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARKANSAS BEST CORP /DE/ CENTRAL INDEX KEY: 0000894405 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 710673405 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19969 FILM NUMBER: 95538209 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 10-Q 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, 1995 -------------------- [ ] 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 -------- ARKANSAS BEST CORPORATION - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 6711 71-0673405 - ------------------------- ------------------------- ---------------------- (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Classification Identification No.) incorporation or Code No.) organization) 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.) 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 May 1, 1995 --------------------------------- -------------------------------- Common Stock, $.01 par value 19,513,708 shares ARKANSAS BEST CORPORATION INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets -- March 31, 1995 and December 31, 1994 3 Consolidated Statements of Operations -- For the Three Months Ended March 31, 1995 and 1994 5 Consolidated Statements of Cash Flows -- For the Three Months Ended March 31, 1995 and 1994 7 Notes to Consolidated Financial Statements -- March 31, 1995 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 20 Item 2. Changes in Securities 20 Item 3. Defaults Upon Senior Securities 20 Item 4. Submission of Matters to a Vote of Security Holders 20 Item 5. Other Information 20 Item 6. Exhibits and Reports on Form 8-K 20 SIGNATURES 21 EXHIBITS Exhibit 11. Statement Re: Computation of Earnings Per Share 22 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ARKANSAS BEST CORPORATION CONSOLIDATED BALANCE SHEETS
March 31 December 31 1995 1994 (unaudited) (note) ($ thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 8,796 $ 3,458 Trade receivables, less allowances for doubtful accounts (1995 -- $2,848,000; 1994 -- $2,825,000 128,118 136,144 Inventories -- Note C 35,292 32,463 Prepaid expenses 12,043 13,734 --------- --------- TOTAL CURRENT ASSETS 184,249 185,799 PROPERTY, PLANT AND EQUIPMENT Land and structures 127,598 110,424 Revenue equipment 201,968 200,250 Manufacturing equipment 7,747 7,467 Service, office and other equipment 44,957 40,516 Leasehold improvements 9,447 9,421 Construction in progress - 13,939 --------- --------- 391,717 382,017 Less allowances for depreciation and amortization (173,449) (166,436) --------- --------- 218,268 215,581 OTHER ASSETS 14,224 15,705 GOODWILL, less amortization (1995 -- $20,970,000; 1994 --$19,794,000) 150,844 151,960 --------- --------- $ 567,585 $ 569,045 ========= =========
ARKANSAS BEST CORPORATION CONSOLIDATED BALANCE SHEETS
March 31 December 31 1995 1994 (unaudited) (note) ($ thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdraft $ - $ 5,989 Bank drafts payable 10,915 10,779 Trade accounts payable 50,294 49,368 Accrued expenses 86,667 82,157 Federal and state income taxes 6,301 5,786 Deferred federal income taxes 4,159 4,159 Current portion of long-term debt 64,472 65,161 --------- --------- TOTAL CURRENT LIABILITIES 222,808 223,399 LONG-TERM DEBT, less current portion 57,016 59,295 OTHER LIABILITIES 5,979 5,915 DEFERRED FEDERAL INCOME TAXES 25,958 28,842 MINORITY INTEREST 35,348 34,989 SHAREHOLDERS' EQUITY Preferred stock, $.01 par value, authorized 10,000,000 shares, issued 1,495,000 shares 15 15 Common stock, $.01 par value, authorized 70,000,000 shares; issued and outstanding 19,513,708 shares 195 195 Additional paid-in capital 207,636 207,636 Predecessor basis adjustment (15,371) (15,371) Retained earnings 28,001 24,130 --------- --------- TOTAL SHAREHOLDERS' EQUITY 220,476 216,605 CONTINGENCIES -- Note F --------- --------- $ 567,585 $ 569,045 ========= ========= See notes to consolidated financial statements.
ARKANSAS BEST CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31 1995 1994 (unaudited) ($ thousands,except per share data) OPERATING REVENUES Carrier operations $ 244,477 $ 234,326 Forwarding operations 28,768 - Tire operations 33,214 29,405 Service and other 4,748 1,250 --------- --------- 311,207 264,981 OPERATING EXPENSES AND COSTS -Note E Carrier operations 233,123 223,263 Forwarding operations 28,143 - Tire operations 31,497 27,581 Service and other 5,090 1,519 --------- --------- 297,853 252,363 --------- --------- OPERATING INCOME 13,354 12,618 OTHER INCOME Gain on asset sales 313 318 Other 157 148 --------- --------- 470 466 OTHER EXPENSES Interest 2,128 1,344 Other 1,449 1,014 Minority interest in subsidiary 489 490 --------- --------- 4,066 2,848 --------- --------- INCOME BEFORE INCOME TAXES 9,758 10,236 FEDERAL AND STATE INCOME TAXES (CREDIT) - Note D Current 7,500 5,843 Deferred (2,884) (1,182) --------- --------- 4,616 4,661 --------- --------- NET INCOME $ 5,142 $ 5,575 ========= ========= ARKANSAS BEST CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Continued) Three Months Ended March 31 1995 1994 (unaudited) ($ thousands, except per share data) EARNINGS PER COMMON SHARE: NET INCOME $ 0.21 $ 0.23 ========= ========= AVERAGE COMMON SHARES OUTSTANDING: 19,566,404 19,339,389 ========== ========== CASH DIVIDENDS PAID PER COMMON SHARE $ 0.01 $ 0.01 ========= ========= See notes to consolidated financial statements.
ARKANSAS BEST CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31 1995 1994 (unaudited) ($ thousands) OPERATING ACTIVITIES Net income $ 5,142 $ 5,575 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,792 6,658 Amortization of intangibles 1,176 779 Other amortization 161 111 Provision for losses on accounts receivable 597 770 Provision for deferred income taxes (2,884) (1,182) Gain on asset sales (313) (318) Gain on issuance of subsidiary stock (20) (45) Minority interest in subsidiary 489 490 Changes in operating assets and liabilities: Accounts receivable 7,429 (6,865) Inventories and prepaid expenses (1,138) (987) Other assets 1,260 404 Accounts payable, bank drafts payable, taxes payable, accrued expenses and other liabilities 6,151 17,229 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 25,842 22,619 INVESTING ACTIVITIES Purchases of property, plant and equipment, less capitalized leases (10,565) (8,387) Proceeds from asset sales 2,112 1,635 --------- --------- NET CASH USED BY INVESTING ACTIVITIES (8,453) (6,752) ARKANSAS BEST CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Three Months Ended March 31 1995 1994 (unaudited) ($ thousands) FINANCING ACTIVITIES Proceeds from commercial paper agreement $ - $ 1,000 Borrowings under revolving credit facilities 5,000 2,000 Principal payments under term loan facility (500) - Payments under revolving credit facilities (6,000) (2,000) Principal payments on other long-term debt (3,182) (6,777) Dividends paid to minority shareholders of subsidiary (110) (109) Dividends paid (1,270) (1,267) Net decrease in cash overdrafts (5,989) - --------- --------- NET CASH USED BY FINANCING ACTIVITIES (12,051) (7,153) --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 5,338 8,714 Cash and cash equivalents at beginning of period 3,458 - --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,796 $ 8,714 ========= ========= See notes to consolidated financial statements.
ARKANSAS BEST CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1995 NOTE A -- ORGANIZATION Arkansas Best Corporation (the "Company") is a diversified holding company engaged through its subsidiaries primarily in motor carrier operations, freight forwarding operations and truck tire retreading and sales. Principal subsidiaries owned are ABF Freight System, Inc., ("ABF"), Treadco, Inc. ("TREADCO"), and, effective September 30, 1994, Clipper Exxpress Company ("Clipper"). NOTE B -- FINANCIAL STATEMENT PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information 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, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. 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, 1994. NOTE C -- INVENTORIES
March 31 December 31 1995 1994 ($ thousands) Finished goods $ 26,878 $ 22,764 Materials 6,200 7,487 Repair parts, supplies and other 2,214 2,212 -------- -------- $ 35,292 $ 32,463 ======== ========
NOTE D -- FEDERAL AND STATE INCOME TAXES
Three Months Ended March 31 1995 1994 ($ thousands) Income tax at regular rates $ 3,415 $ 3,583 Percent 35.0% 35.0% State taxes less federal benefits 685 596 Percent 7.0% 5.8% Amortization of nondeductible goodwill 266 265 Percent 2.7% 2.6% Minority interest 166 167 Percent 1.7% 1.6% Other items 84 50 Percent 0.9% 0.5% ------- ------- Income tax expense $ 4,616 $ 4,661 Percent 47.3% 45.5% ======= =======
NOTE E -- OPERATING EXPENSES AND COSTS
Three Months Ended March 31 1995 1994 (unaudited) ($ thousands) Carrier Operations: Salaries and wages $165,175 $155,442 Supplies and expenses 26,372 24,502 Operating taxes and licenses 10,335 9,238 Insurance 4,485 4,368 Communications and utilities 5,802 5,726 Depreciation and amortization 6,393 5,889 Rents and purchased transportation 13,615 16,762 Other 946 1,336 -------- -------- 233,123 223,263 Forwarding Operations: Cost of services 24,488 - Selling, administrative and general 3,655 - -------- -------- 28,143 - Tire Operations: Cost of sales 24,781 21,548 Selling, administrative and general 6,716 6,033 -------- -------- 31,497 27,581 Service and Other 5,090 1,519 -------- -------- $297,853 $252,363 ======== ========
NOTE F -- LEGAL PROCEEDINGS AND ENVIRONMENTAL MATTERS Various legal actions, the majority of which arise in the normal course of business, are pending. None of these other legal actions is expected to have a material adverse effect on the Company's financial condition. The Company generally maintains liability insurance against risks arising out of the normal course of its business, subject to certain self-insured retention limits. ABF stores some fuel for its tractors and trucks in 98 underground tanks located in 27 states. Maintenance of such tanks is regulated at the federal and, in some cases, state levels. ABF believes that it is in substantial compliance with all such regulations. ABF is not aware of any leaks from such tanks that could reasonably be expected to have a material adverse effect on the Company. Environmental regulations have been adopted by the United States Environmental Protection Agency ("EPA") that will require ABF to upgrade its underground tank systems by December 1998. ABF currently estimates that such upgrades, which are currently in process, will not 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 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 $250,000 over the last five years, or believes its obligations with respect to such sites would involve immaterial monetary liability, although there can be no assurances in this regard. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The Company is engaged, through its motor carrier subsidiaries, in LTL shipments of general commodities. The Company is also engaged through its 46%-owned subsidiary, Treadco, Inc., in truck tire retreading and new truck tire sales and, through its freight forwarding subsidiaries, in intermodal marketing and freight logistics services. The Company owns approximately 46% of Treadco, whose shares are traded on the Nasdaq Stock Exchange. Treadco is consolidated with the Company for financial reporting purposes as a result of its control of Treadco by reason of its stock ownership, board representation and provision of management services. The ownership interests of the other stockholders are reflected as minority interest. On September 30, 1994, the Company purchased all the outstanding stock of Clipper Exxpress Company ("Clipper") and two affiliated companies collectively (the "Clipper Group"). Beginning October 1, 1994, the operations of the Clipper Group are presented in the forwarding operations segment. On October 12, 1994, the Company issued 310,191 shares of common stock for all the outstanding stock of Traveller Enterprises and subsidiaries and Commercial Warehouse Company, collectively (the "Traveller Group"). Segment Data The following tables reflect information prepared on a business segment basis, which includes reclassification of certain expenses and costs between the Company and its subsidiaries and elimination of the effects of intercompany transactions. Operating profit on a business segment basis differs from operating income as reported in the Company's Consolidated Financial Statements. Other income and other expenses (which include amortization expense), except for interest expense and minority interest, which appear below the operating income line in the Company's Statement of Operations, have been allocated to individual segments for the purpose of calculating operating profit on a segment basis.
Three Months Ended March 31 1995 1994 ($ thousands) OPERATING REVENUES Carrier operations $244,477 $234,326 Forwarding operations 28,768 - Tire operations 33,214 29,405 Other 4,748 1,250 -------- -------- $311,207 $264,981 ======== ======== OPERATING EXPENSES AND COSTS CARRIER OPERATIONS Salaries and wages $165,175 $155,442 Supplies and expenses 26,372 24,502 Operating taxes and licenses 10,335 9,238 Insurance 4,485 4,368 Communications and utilities 5,802 5,726 Depreciation and amortization 6,393 5,889 Rents and purchased transportation 13,615 16,762 Other 946 1,336 Other non-operating (net) 319 179 -------- -------- 233,442 223,442 FORWARDING OPERATIONS Cost of services 24,488 - Selling, administrative and general 3,655 - Other non-operating (net) 426 - -------- -------- 28,569 - TIRE OPERATIONS Cost of sales 24,781 21,548 Selling, administrative and general 6,716 6,033 Other non-operating (net) 125 197 -------- -------- 31,622 27,778 SERVICE AND OTHER 5,199 1,691 -------- -------- $298,832 $252,911 ======== ======== Three Months Ended March 31 1995 1994 ($ thousands) OPERATING PROFIT (LOSS) Carrier operations $ 11,035 $ 10,884 Forwarding operations 199 - Tire operations 1,592 1,627 Other (451) (441) -------- -------- TOTAL OPERATING PROFIT 12,375 12,070 MINORITY INTEREST 489 490 INTEREST EXPENSE 2,128 1,344 -------- -------- INCOME BEFORE INCOME TAXES $ 9,758 $ 10,236 ======== ========
The following table sets forth for the periods indicated a summary of the Company's operations as a percentage of revenues presented on a business segment basis as shown in the table on the preceding page. The basis of presentation for business segment data differs from the basis of presentation for data the Company provides to the Interstate Commerce Commission.
Three Months Ended March 31 1995 1994 CARRIER OPERATIONS Salaries and wages 67.6% 66.3% Supplies and expenses 10.8 10.5 Operating taxes and licenses 4.2 3.9 Insurance 1.8 1.9 Communications and utilities 2.4 2.4 Depreciation and amortization 2.6 2.5 Rents and purchased transportation 5.6 7.2 Other 0.4 0.6 Other non-operating (net) 0.1 0.1 ---- ---- Total Carrier Operations 95.5% 95.4% ==== ==== FORWARDING OPERATIONS Cost of sales 85.1% - Selling, administrative and general 12.7 - Other non-operating (net) 1.5 - ---- ---- Total Forwarding Operations 99.3% - ==== ==== TIRE OPERATIONS Cost of sales 74.6% 73.3% Selling, administrative and general 20.2 20.5 Other non-operating (net) 0.4 0.7 ---- ---- Total Tire Operations 95.2% 94.5% ==== ====
Results of Operations Three Months Ended March 31, 1995 as Compared with Three Months Ended March 31, 1994 Consolidated revenues of the Company for the three months ended March 31, 1995 were $311.2 million compared to $265.0 million for the first three months of 1994. Operating profit for the Company was $12.4 million for the three months ended March 31, 1995 compared to operating profit of $12.1 million for the first three months of 1994. Net income for the three months ended March 31, 1995 was $5.1 million, or $.21 per common share, compared to net income of $5.6 million, or $.23 per common share for the first three months of 1994. Earnings per common share for the three months ended March 31, 1995 and 1994 give consideration to preferred stock dividends of $1.1 million. Average common shares outstanding for the three months ended March 31, 1995 were 19.6 million shares compared to 19.3 million shares for the first three months of 1994. Outstanding shares for the three months ended March 31, 1995 and 1994 do not assume conversion of preferred stock to common shares, because conversion would be anti-dilutive for these periods. Motor Carrier Operations Segment. Revenues from the carrier operations segment for the three months ended March 31, 1995 were $244.5 million, compared to $234.3 million for the first three months of 1994. ABF Freight System, Inc. ("ABF"), the Company's largest subsidiary, accounted for 98% of the carrier operations segment revenues. For the three months ended March 31, 1995, ABF's total tonnage increased 2.1%, consisting of a 3.0% increase in less-than-truckload ("LTL") tonnage and a 0.9% decrease in truckload tonnage compared to the first three months of 1994. ABF's tonnage levels during the first three months of 1995 were negatively affected by a soft economy, while March 1994 was favorably impacted by a pre-strike surge in business. For the three months ended March 31, 1995, ABF's revenue per hundredweight increased 2.4% over the first three months of 1994. Effective January 1, 1995, ABF implemented a general freight rate increase of 4%. The diminished effect is primarily the result of pricing that is on a contract basis which can only be increased when the contract is renewed. Motor carrier segment operating expenses as a percent of revenues increased to 95.5% for the three months ended March 31, 1995 from 95.4% during the first three months of 1994. Salaries and wages expense as a percent of revenues increased to 67.6% for the three months ended March 31,1995 compared to 66.3% for the first three months of 1994, resulting primarily from contractual wage increases which went into effect in April 1994 under the new collective bargaining agreement. Under the new agreement, employee wages and benefits will increase an average of 3.3% annually effective April 1, 1995, 3.8% on April 1, 1996 and 3.9% on April 1, 1997. Supplies and expenses as a percent of revenues increased to 10.8% for the three months ended March 31, 1995 from 10.5% for the first three months of 1994 as fixed costs were not covered by revenue growth. Operating taxes and licenses as a percent of revenues increased to 4.2% for the three months ended March 31, 1995 from 3.9% for the first three months of 1994 resulting primarily from an increase in fuel taxes. Rents and purchased transportation expense as a percent of revenues decreased to 5.6% for the three months ended March 31, 1995 from 7.2% for the first three months of 1994 resulting primarily from a reduction in the utilization of alternate modes of outside transportation. Forwarding Operations Segment. Effective September 30,1994, with the purchase of the Clipper Group, the Company began reporting a new business segment, forwarding operations. The Company's consolidated financial statements for the three months ended March 31, 1995 include only current year financial information for the forwarding operations segment and therefore, comparisons of results of operations are not presented. Tire Operations Segment. Treadco's revenues for the three months ended March 31, 1995 increased 13.0% to $33.2 million from $29.4 million for the first three months of 1994. For the three months ended March 31, 1995, "same store" sales accounted for all of the increase from the three months ended March 31, 1994. "Same store" sales include both production locations and satellite sales locations that have been in existence for the three months ended March 31, 1995 and 1994. "Same store" sales increased primarily as a result of a higher demand for both new replacement and retreaded truck tires during the period and an increase in market share in the areas served. Revenues from retreading for the three months ended March 31, 1995 increased 6.9% to $17.7 million from $16.6 million for the first three months of 1994. Revenues from new tire sales increased 20.8% to $15.5 million for the three months ended March 31, 1995 from $12.8 million for the first three months of 1994. In approximately one year, the first group of Treadco's existing Bandag, Inc. franchise agreements will expire. Of Treadco's 26 Bandag franchise agreements, seven expire in June 1996, one in August 1996, eight in the summer of 1997 and the remaining ten in the summer of 1998. In the event the first group of franchises are not renewed, Treadco believes that while short- term operating inefficiencies might occur, it would be able to meet its production needs. However, if the franchises are not renewed, Treadco believes there could be a disruption in its relationship with some customers because of Bandag's national marketing presence. Treadco's margins continue to be squeezed primarily as a result of Bandag's three tread rubber price increases which totaled 9.6% since the first quarter of 1994. So far Treadco has been unsuccessful in fully passing along these increased costs. Also during the same period, Treadco has seen increased competition as Bandag has granted additional franchises in some locations currently served by Treadco. Although Treadco believes Bandag is displeased with Treadco's exploring alternative retreading processes, Treadco believes it is in compliance with the terms of each franchise agreement and that there is no existing cause for termination of any franchise agreement. Tire operations segment operating expenses as a percent of revenues were 95.2% for the three months ended March 31, 1995 compared to 94.5% for the first three months of 1994. Cost of sales for the tire operations segment as a percent of revenues increased to 74.6% for the three months ended March 31, 1995 from 73.3% for the first three months of 1994, resulting primarily from Bandag price increases on tread rubber, which Treadco has been unsuccessful, so far, in fully passing along to its customers. Selling, administrative and general expenses for the tire operations segment decreased to 20.2% for the three months ended March 31, 1995 from 20.5% for the first three months of 1994. The decrease resulted primarily from the increase in sales and the fact that a portion of selling, administrative and general expenses are fixed costs. Interest. Interest expense was $2.1 million for the three months ended March 31, 1995 compared to $1.3 million during 1994 as a result of increased levels of debt outstanding. The increase in long-term debt consisted primarily of debt incurred in the acquisition of the Clipper Group and a term loan used to finance construction of the Company's corporate office building which was completed in 1995. Income Taxes. The difference between the effective tax rate for the three months ended March 31, 1995 and the federal statutory rate resulted primarily from state income taxes, amortization of nondeductible goodwill, minority interest, and other nondeductible expenses (see Note D to the unaudited consolidated financial statements). Liquidity and Capital Resources The Company and certain banks are parties to a Credit Agreement with Societe Generale, as Agent and NationsBank of Texas as Co-Agent (the "Credit Agreement") which provides funds available under a three-year Revolving Credit Facility of $150 million, including $40 million for letters of credit. There were no borrowings outstanding under the Revolving Credit Facility and approximately $32.7 million of letters of credit outstanding at March 31, 1995. The Revolving Credit Facility is payable on June 30, 1998. Outstanding revolving credit advances may not exceed a borrowing base calculated using the Company's revenue equipment, real property, the Treadco common stock owned by the Company, eligible receivables and other eligible assets. At March 31, 1995, the borrowing base was $128.2 million. The Company has paid and will continue to pay certain customary fees for such commitments and loans. Amounts advanced under the revolving credit facility bear interest, at the Company's option, at a rate per annum of either:(i) the greater of (a) the agent bank's prime rate and (b) the Federal Funds Rate plus 1/2%; or (ii) LIBOR plus 3/4%. The Credit Agreement contains various covenants which limit, among other things, dividends, indebtedness, capital expenditures, loans and investments, as well as requiring the Company to meet certain financial tests. As of March 31, 1995, these covenants have been met. If there is an event of default which is not remedied or waived within 10 days, the Credit Agreement will become secured to the extent of amounts then outstanding of all of the Company's receivables (excluding receivables sold under the receivables purchase agreement), revenue equipment, real property and common stock included in the borrowing base (subject to certain exceptions). The Company has outstanding 1,495,000 shares of Preferred Stock which is convertible at the option of the holder into Common Stock at the rate of 2.5397 shares of Common Stock for each share of Preferred Stock. Annual dividends are $2.875 and are cumulative. The Preferred Stock is redeemable at the Company's option on or after February 15, 1996 at $52.0125 per share plus accumulated unpaid dividends, and is exchangeable at the option of the Company for the Company's 5 3/4% Convertible Subordinated Debentures due February 15, 2018 at a rate of $50 principal amount of debentures for each share of Preferred Stock. The holders of the Preferred Stock have no voting rights unless dividends are in arrears six quarters or more, at which time the holders have the right to elect two directors of the Company until all dividends have been paid. In March, 1994, ABF entered into a receivables purchase agreement which allows ABF to sell an interest of up to $55 million in a pool of receivables. At March 31, 1995, ABF had $40 million of receivables financed through this facility. Treadco is a party to a revolving credit facility with Societe Generale (the "Treadco Credit Agreement") providing for borrowings of up to the lesser of $12 million or the applicable borrowing base. At March 31, 1995, the borrowing base was $26.4 million. Borrowings under the Treadco Credit Agreement are collateralized by accounts receivable and inventory. Borrowings under the agreement bear interest, at Treadco's option, at 3/4% above the bank's LIBOR rate, or at the higher of the bank's prime rate or the "federal funds rate" plus 1/2%. At March 31, 1995, the interest rate was 9%. At March 31, 1995, Treadco had $2 million outstanding under the Treadco Credit Agreement. Treadco pays a commitment fee of 3/8% on the unused amount under the Treadco Credit Agreement. The Treadco Credit Agreement contains various covenants which limit, among other things, dividends, disposition of receivables, indebtedness and investments, as well as requiring Treadco to meet certain financial tests which have been met. Under the Treadco Credit Agreement, Treadco's assets are subject to pledge and, therefore, are available for use only by that subsidiary. On September 30, 1994, the Company paid an initial payment of $54 million to the Clipper Group shareholders from cash on hand and funds provided under its existing lines of credit. The final $6.8 million payment (subject to certain closing audit and other contractual adjustments) which is due May 15, 1995 will be funded from cash and/or funds provided under its existing lines of credit. On October 12, 1994, the Company issued 310,191 shares of common stock for all of the outstanding stock of the Traveller Group. The final number of shares that will be issued in conjunction with this transaction are subject to certain closing audit adjustments. Management believes, based upon the Company's current levels of operations and anticipated growth, 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. Seasonality The motor carrier segment is 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. Forwarding operations are similar to the motor carrier segment 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 six months of the calendar year generally having the highest levels of sales. 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 generally maintains liability insurance against risks arising out of the normal course of its business (see Note F 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. Exhibit 11 - Statement Re: Computation of Earnings Per Share. (b) Reports on Form 8-K. None. 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 11, 1995 s/Donald L. Neal ----------------- ------------------------------------ Donald L. Neal - Senior Vice President - Chief Financial Officer, and Principal Accounting Officer FORM 10-Q LIST OF EXHIBITS ARKANSAS BEST CORPORATION The following exhibit is filed with this report. Exhibit No. Page 11 Statement Re: Computation of Earnings per Share EX-11 2 EXHIBIT 11 EXHIBIT 11 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE ARKANSAS BEST CORPORATION
Three Months Ended March 31 1995 1994 (Thousands, except per share data) PRIMARY: Average shares outstanding 19,513,708 19,195,794 Net effect of dilutive stock options -- Based on the treasury stock method using average market price 52,696 143,595 ---------- ---------- Average common shares outstanding 19,566,404 19,339,389 ========== ========== Net income $ 5,142 $ 5,575 Less: Preferred stock dividend 1,075 1,075 ---------- ---------- Net income available for common $ 4,067 $ 4,500 ========== ========== Per common and common equivalent share: Income per common share $ 0.21 $ 0.23 ========== ========== Fully-diluted earnings per common share are not presented, as such calculations would be anti-dilutive.
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ARKANSAS BEST CORPORATION FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000894405 ARKANSAS BEST CORPORATION 1,000 3-MOS DEC-31-1995 MAR-31-1995 8,796 0 130,966 2,848 35,292 184,249 391,717 173,449 567,585 222,808 57,016 195 0 15 220,266 567,585 33,214 311,207 31,497 297,853 0 597 2,128 9,758 4,616 5,142 0 0 0 5,142 .21 .21
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