ABF Reports a Third Quarter Operating Ratio of 89.2%

(FORT SMITH, Arkansas, October 21, 2004) — Arkansas Best Corporation (Nasdaq: ABFS) today announced third quarter 2004 net income of $27.4 million, or $1.07 per diluted common share.  For the third quarter of 2003, net income was $17.0 million, or $0.67 per diluted common share.  Arkansas Best’s revenue during the third quarter of 2004 was $461.9 million, an increase of 12.6% over the third quarter of 2003.

ABF Freight System, Inc.®

ABF Freight System, Inc., the company’s largest subsidiary, had third quarter 2004 revenue of $427.9 million, a per-day increase of 16.3% compared to third quarter 2003 revenue of $368.1 million.  ABF’s third quarter 2004 operating ratio was 89.2% versus an operating ratio of 92.0% during the third quarter of 2003.  “By taking advantage of available operating leverage during a period of strong business levels, ABF produced outstanding third quarter results,” said Robert A. Young III, Arkansas Best Chairman, President and Chief Executive Officer.  “ABF’s quarterly operating ratio was the second best of any third quarter in the last twenty-five years, surpassed only by the third quarter of the highly profitable year of 2000.  ABF’s operating income during this quarter exceeded that of the third quarter of 2000 by over twelve percent.”

ABF’s third quarter 2004 LTL tonnage per day increased 10.0% compared to the same period last year.  “The third quarter began with an unusually strong July increase in year-over-year LTL tonnage that sustained the upward monthly trend of the second quarter,” said Mr. Young.  “Though the rate of LTL tonnage growth slowed somewhat in August and September, the overall third quarter increase in ABF’s core business can certainly be categorized as strong.  Versus the second quarter of 2004, ABF’s third quarter LTL tonnage per day increased 4.9%.  “This level of sequential, LTL tonnage growth is two percent better than the average increase between these same time periods during the previous five-year period,” said Mr. Young.      

“Through the first nineteen days of October, average daily tonnage figures in our core LTL business are slightly over nine percent higher than the comparable period last year.  We continue to be encouraged by the positive tonnage pattern ABF is experiencing so far in the fourth quarter,” said Mr. Young.

Billed LTL revenue per hundredweight, excluding fuel surcharge, was $24.50, an increase of 1.7% over last year’s third quarter figure of $24.10.  “ABF’s average LTL shipment was approximately two percent larger than in last year’s third quarter.  LTL length of haul decreased by about two percent, when compared to the same period of 2003.  Both of these profile changes have an adverse effect on nominal yield growth,” said Mr. Young.  “The LTL pricing environment remained firm as industry capacity continued to tighten during the historically busy third quarter.  ABF is working with its customers to provide the best possible value in moving their goods.” 

ABF’s truckload tonnage per day in the third quarter grew by 14.1% when compared to last year.  Billed truckload revenue per hundredweight, excluding fuel surcharge, increased by 4.7% over last year’s third quarter figure.  “The shortage of available truckload capacity continued to provide ABF with opportunities to handle full-load, spot shipments at favorable prices,” said Mr. Young.  “In these situations however, ABF gives initial consideration to devoting available system resources to its core LTL customer base.”   

“As a result of improving business levels and recent employee retirements, ABF has experienced an increased demand for additional employees in specific locations, particularly for over-the-road drivers, city drivers and freight handlers.  Although the ABF positions are highly desirable in the industry, our pace of hiring has been slower than we would have preferred, due to the improvement in the economy and to ABF’s high employee standards related to safety and work experience.  As a result, ABF used a higher-than-normal percentage of rail for linehaul movement and a greater level of overtime.  Fortunately, our employment efforts are being successful.  We expect to continue our recruitment efforts as freight volumes increase into 2005,” said Mr. Young.

Productivity measures at ABF® were generally equal to those experienced during the third quarter of last year.  “In many cases, additional business enhances the productivity of ABF’s dock and city employees,” said Mr. Young.  “However, in certain locations, productivity has been negatively impacted because of high freight volumes.  During these busy times, ABF continues to emphasize the timeliness and efficiency of shipment handling in order to preserve established standards of customer service.”  

“ABF’s third quarter LTL tonnage per day remains more than two percent below that of the same period of 2000.  As a result, ABF still has some additional operating leverage in its terminal network.  During the third quarter, ABF maintained its focus on strict control of overhead and fixed costs,” said Mr. Young.  “Going forward, ABF will prudently add both personnel and capital resources as required to profitably handle business levels.”  

On September 30 of this year, the U.S. Congress voted to extend the current Hours of Service regulations until no later than September 30, 2005.  This followed a mid-July 2004 ruling, by the U.S. Court of Appeals for the District of Columbia, that vacated those rules.  “ABF believes that the existing rules have had a positive impact on highway safety and the welfare of our employees,” said Mr. Young. 

Credit Ratings Outlook

On October 15, Standard & Poor’s revised its outlook on Arkansas Best Corporation to positive from stable.  At the same time, Standard & Poor’s affirmed Arkansas Best’s BBB+ corporate credit rating.  In its press release announcing this change, Standard & Poor’s stated, “The change to a positive outlook was driven by the company’s continued strong operating performance, which has resulted from increased tonnage levels, improved pricing and management initiatives to control costs and improve productivity.”  In addition, Standard & Poor’s stated, “Ratings on Arkansas Best Corporation reflect the company’s solid competitive position, moderate financial policies and strong financial profile.”

Common Stock Purchase

During the third quarter of 2004, Arkansas Best did not make any open market purchases of its common stock.  Since February 2003, as a part of a previously announced program to repurchase up to a maximum of $25 million of its common stock, Arkansas Best has purchased a total of 471,500 shares totaling $12.4 million.  Arkansas Best plans to continue making open-market purchases of its stock on an opportunistic basis. 

Conference Call

Arkansas Best Corporation will host a conference call with company executives to discuss the 2004 third quarter results.  The call will be today, Thursday, October 21, at 12:00 Noon EDT (11:00 a.m. CDT).  Interested parties are invited to listen by calling (877) 275-1257.  Following the call, a recorded playback will be available through the end of October.  To listen to the playback, dial (800) 642-1687.  The conference call ID for the playback is 1162464.  The conference call and playback can also be accessed, through Sunday, October 31, on Arkansas Best’s Internet Web site at www.arkbest.com.

Company Description

Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a diversified transportation holding company with two primary operating subsidiaries.  ABF Freight System, Inc., in continuous service since 1923, provides national transportation of less-than-truckload (“LTL”) general commodities throughout North America.  Clipper is an intermodal marketing company that provides domestic freight services utilizing rail and over-the-road transportation.

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 NINE MONTHS ENDED SEPTEMBER 30, 2004

 

Three Months Ended September 30

 

Nine Months Ended September 30

 

2004

2003

% Change

 

2004

2003

% Change

 

 

 

 

 

 

 

 

Billed Rev*/CWT            LTL

 $       26.04

 $   24.89

   4.6%

 

  $     25.35

  $    24.32

   4.2%

                                   TL

 $          9.92

 $     9.11

   8.9%

 

  $       9.38

  $      8.75

   7.2%

                                   Total

 $       22.84

 $   21.84

   4.6%

 

  $     22.18

  $    21.36

   3.8%

 

 

 

 

 

 

 

 

Billed Rev*/CWT            LTL

 $       24.50

 $   24.10

   1.7%

 

  $     24.04

  $    23.45

   2.5%

  (without fuel surcharge)   TL

 $         9.22

 $     8.81

   4.7%

 

  $       8.86

  $      8.53

   3.9%

                                   Total

 $       21.47

 $   21.15

   1.5%

 

  $     21.03

  $    20.61

   2.0%

 

 

 

 

 

 

 

 

Billed Rev*/Shipment     LTL

 $     259.83

 $  243.82

   6.6%

 

  $   250.48

  $  236.98

   5.7%

                                   TL

 $  1,613.55

$1,489.78  

   8.3%

 

  $1,538.84

 $1,423.61

   8.1%

                                   Total

 $     280.14

 $  261.43

   7.2%

 

  $   269.40

  $  253.45

   6.3%

 

 

 

 

 

 

 

 

Billed Rev*/Shipment     LTL

 $     244.49

 $  236.06

   3.6%

 

  $   237.53

  $  228.47

   4.0%

  (without fuel surcharge)   TL

 $  1,500.11

 $1,441.42

   4.1%

 

  $1,452.82

 $1,387.04

   4.7%

                                   Total      

 $     263.33

 $  253.09  

   4.0%

 

  $   255.37

  $  244.56

   4.4%

 

 

 

 

 

 

 

 

Tonnage                      LTL

      749,781

   681,485

  10.0%

 

  2,116,305

 1,983,958

   6.7%

(tons)                          TL

      186,170

   163,158

  14.1%

 

     523,345

    466,184

  12.3%

                                  Total

      935,951

   844,643

  10.8%

 

  2,639,650

 2,450,142

   7.7%

 

 

 

 

 

 

 

 

Shipments                   LTL

   1,502,977

 1,391,605

   8.0%

 

  4,283,408

 4,072,283

   5.2%

                                  TL

        22,896

      19,946

  14.8%

 

       63,825

      57,323

  11.3%

                                  Total

   1,525,873

 1,411,551

   8.1%

 

  4,347,233

 4,129,606

    5.3%

* Billed Revenue does not include revenue deferral required for financial statement purposes under the Company’s revenue recognition policy.

There were 64 workdays in the three months ended September 30, 2004 and in the three months ended September 30, 2003.
There were 192 workdays in the nine months ended September 30, 2004 and 191 workdays in the nine months ended September 30, 2003.
Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.

Contact:  Mr. David E. Loeffler, Senior Vice President, Chief Financial Officer and Treasurer
              Telephone: (479) 785-6157

              Mr. David Humphrey, Director of Investor Relations
              Telephone: (479) 785-6200