ACQUISITION

6 Months Ended

Jun. 30, 2012

ACQUISITION

ACQUISITION

NOTE C — ACQUISITION

On June 15, 2012, the Company acquired 100% of the common stock of Panther for $180.8 million in cash, net of cash acquired, which included a preliminary net working capital adjustment. The acquisition was funded with cash on hand and a $100.0 million secured Term Loan (see Note F). The results of Panther’s operations subsequent to the acquisition date have been included in the accompanying consolidated financial statements. As one of North America’s largest providers of expedited transportation services with expanding service offerings in premium freight logistics and freight forwarding, Panther provides the Company access to a greater portion of the transportation and logistics market. The acquisition of Panther enhances the Company’s end-to-end logistics solutions and expands the Company’s customer base and business diversification. Panther is reported as the Premium Logistics and Expedited Freight Services operating segment (see Note K).

The following table summarizes the estimated fair values of the acquired assets and liabilities at the acquisition date. The Company is in the process of assessing the fair value of acquired assets and liabilities and obtaining third-party valuations of certain intangible assets. These fair value assessments require a significant amount of judgment and have not been completed; therefore, the preliminary measurements are subject to change. See further discussion of acquired goodwill and intangibles in Note D.

	Preliminary
	Allocation
	(in thousands)
Accounts receivable	$	31,764
Prepaid expenses	5,819
Deferred income taxes	573
Property and equipment (excluding acquired software)	7,450
Software	32,400
Intangible assets	68,600
Other assets	4,295
Total identifiable assets acquired	150,901
Accounts payable	12,265
Accrued expenses and other current liabilities	4,571
Deferred income taxes	32,216
Total liabilities	49,052
Net identifiable assets acquired	101,849
Goodwill	78,944
Cash paid, net of cash acquired	$	180,793

The estimated fair value of accounts receivable acquired was $31.8 million, having a gross contractual amount of $32.2 million as of June 15, 2012. The Company expects $0.4 million to be uncollectible. The preliminary value assigned to acquired software reflects estimated reproduction costs, less an obsolescence allowance. The recorded amount of acquired software is expected to be amortized on a straight-line basis over seven years. Software is included within property, plant and equipment in the Company’s consolidated balance sheets.

The Panther acquisition has been recorded using the purchase method of accounting and, accordingly, the Panther operations have been included in the Company’s consolidated results of operations since the date of acquisition. Revenues of $10.8 million and net income of $0.2 million related to Panther from the acquisition date through June 30, 2012 were included in the accompanying consolidated statements of comprehensive income. The Company recognized $2.1 million of acquisition related costs in second quarter 2012, which have been included in operating expenses and costs in the accompanying consolidated statements of comprehensive income. For segment reporting purposes, these transaction costs have been reported within “Other.”

The following unaudited pro forma supplemental information presents the Company’s consolidated results of operations as if the Panther acquisition had occurred on January 1, 2011:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2012		2011		2012			2011
	($ thousands, except per share data)
Revenue	$	563,889	$	559,389	$	1,056,486		$	1,050,518
Income (loss) before income taxes	$	9,494	$	10,773	$	(13,001	)	$	(7,299	)
Net income attributable to Arkansas Best Corporation	$	5,839	$	6,689	$	(7,657	)	$	(4,771	)
Diluted EPS	$	0.22	$	0.25	$	(0.30	)	$	(0.19	)

The pro forma information is based on historical information adjusted to include the pro forma effect of applying the Company’s accounting policies, eliminating sales transactions between the Company and Panther, adjusting amortization expense for the estimated acquired fair value and the amortization periods of software and intangible assets, adjusting interest expense and interest income for the actual financing of the acquisition, eliminating transaction expenses related to the acquisition and the related tax effects of these adjustments. The pro forma information has also been adjusted for the impact on the income tax provision or benefit, as applicable, resulting from changes in deferred tax asset valuation allowances which were primarily attributable to the Panther acquisition (see Note E). The pro forma information is presented for illustrative purposes only and does not reflect either the realization of potential cost savings or any related integration costs. Certain cost savings may result from the Panther acquisition, although there can be no assurance that cost savings will be achieved. This pro forma information does not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred as of the date indicated, nor does the pro forma information intend to be a projection of results that may be obtained in the future.