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ABF Reports a 95.7% Operating Ratio for Second Quarter 2003 (FORT SMITH, Arkansas, July 18, 2003) -- Arkansas Best Corporation (Nasdaq: ABFS) today announced second quarter 2003 net income of $15.2 million, or $0.60 per diluted common share. For the second quarter of 2002, net income was $6.5 million, or $0.26 per diluted common share. This year’s second quarter net income includes a $12.1 million pre-tax gain ($8.4 million after-tax, or $0.33 per diluted common share) on the sale of its 19% interest in Wingfoot Commercial Tire Systems, LLC and a $1.2 million charge ($0.03 per diluted common share) related to the company’s interest rate swap. Arkansas Best’s revenue, during the second quarter of 2003, was $377.9 million. ABF Freight System, Inc.® ABF Freight System, the company’s largest subsidiary, had second quarter 2003 revenues of $337.2 million, a per-day increase of 9.4% compared to second quarter 2002 revenue of $308.1 million. Billed LTL revenue per hundredweight, including fuel surcharge, was $23.49, an increase of 7.6% over last year’s second quarter figure of $21.83. Billed LTL revenue per hundredweight, excluding fuel surcharge, was $22.71, an increase of 6.1% over last year’s second quarter figure of $21.41. Approximately one-half of the yield increase, net of fuel surcharge, was a result of changes in the profile of additional freight hauled since September 2002. “Despite the lack of meaningful changes in the soft economy, we continue to be encouraged by the pricing environment,” said Robert A. Young III, Arkansas Best President and Chief Executive Officer. “ABF’s increases on contracts and deferred pricing agreements have been favorable by historical standards and the prospects for retention of the July 14 general rate increase are good.” ABF’s second quarter LTL tonnage per day increased 2.0% compared to the same period last year. This increase is generally what we would expect, given normal, seasonal trends from the first quarter to the second quarter. “ABF remains focused on individual account profitability when evaluating new business opportunities and when reviewing freight being handled for existing customers,” said Mr. Young. ABF’s second quarter 2003 operating ratio of 95.7% was adversely affected by increased non-union health, pension and other fringe costs. “ABF experienced increases in the severity of large, non-union medical claims compared to last year. Non-union pension costs increased due to lower interest rates and market losses occurring in previous years,” said Mr. Young. “The increase in these costs over the second quarter of 2002 added approximately one percentage point to ABF’s second quarter 2003 operating ratio.” “Productivity measures at ABF were very near levels for the same period last year despite additional shipment handling associated with ABF’s transit time improvements and premium services provided at pickup and delivery,” said Mr. Young. “These measures did show improvement over the first quarter of this year.” “To grow, ABF will continue to emphasize expense control in order to hold down customer costs while providing shippers with value-added services. ABF will continue to develop niche markets that provide compensatory prices and reasonable profit margins,” said Mr. Young. “ABF will continue to improve shipment transit times within its traditional markets. For example, ABF has reduced shipment transit times on two-thirds of its lanes during the last few years and further improvements are underway. ABF is actively exploring opportunities to be more effective in shorter-haul lanes by utilizing provisions in the new labor contract for flexible, premium service employees. “Last week, Yellow Corporation announced that it had entered into a definitive agreement to acquire Roadway Corporation. This development will have a significant impact on the long-haul, LTL industry,” said Mr. Young. “The combining of these two competitors could, over time, result in opportunities for additional business for ABF and improved pricing due to eventual reductions in industry capacity.” Credit Ratings Improvement On May 28, Standard & Poor’s upgraded Arkansas Best’s corporate credit rating to BBB+ from BBB. The upgrade represents a rise to a higher investment grade rating. In its press release announcing these changes, Standard & Poor’s stated that the rating upgrade was driven by “the company’s strong operating results and decreasing debt levels, which support solid credit measures, despite the continued weak economic environment.” Russell 2000® Index On July 9, the Frank Russell Company announced that for the fourth year in a row, Arkansas Best will be included in the Russell 2000® Index. This index measures the performance of the smallest 2,000 securities included in the Russell 3000® Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization. As described by the Frank Russell Company, the Russell 2000® Index is America’s best-known benchmark of small-stock performance.
Conference Call Arkansas Best Corporation will host a conference call with company executives to discuss the 2003 second quarter results. The call will be today, Friday, July 18, at 11:00 a.m. EDT. Interested parties are invited to listen by calling (877) 275-1257. Following the call, a recorded playback will be available through the end of July. To listen to the playback, dial (800) 642-1687. The conference call ID for the playback is 1361150. The conference call and playback can also be accessed, through Thursday, July 31, on Arkansas Best’s Internet Web site at www.arkbest.com. Forward-Looking Statements
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: Statements contained in this press release that are not based on historical facts are “forward-looking statements.” Terms such as “estimate,” “forecast,” “expect,” “predict,” “plan,” “anticipate,” “believe,” “intend,” “should,” “would,” “scheduled,” and similar expressions and the negatives of such terms are intended to identify forward-looking statements. Such statements are by their nature subject to uncertainties and risk, including, but not limited to, union relations; availability and cost of capital; shifts in market demand; weather conditions; the performance and needs of industries served by Arkansas Best’s subsidiaries; actual future costs of operating expenses such as fuel and related taxes; self-insurance claims and employee wages and benefits; actual costs of continuing investments in technology, the timing and amount of capital expenditures; competitive initiatives and pricing pressures; general economic conditions; and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission (“SEC”) public filings. The following tables show financial data and operating statistics on Arkansas Best Corporation and its subsidiary companies. ABF FREIGHT SYSTEM, INC. OPERATING STATISTICS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003
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