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ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | 6 Months Ended
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Jun. 30, 2013
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | NOTE A — ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION Arkansas Best Corporation (the “Company”), the parent holding company, is a freight transportation services and integrated logistics solutions provider. The Company’s principal operations are conducted through its Freight Transportation segment, which consists of ABF Freight System, Inc. and certain other subsidiaries of the Company (collectively “ABF”). The Company’s other reportable operating segments are Premium Logistics and Expedited Freight Services, Truck Brokerage and Management, Emergency and Preventative Maintenance, and Household Goods Moving Services (see Note K). ABF represented approximately 78% of the Company’s total revenues before other revenues and intercompany eliminations for the six months ended June 30, 2013. As of June 2013, approximately 75% of ABF’s employees were covered under a collective bargaining agreement, the National Master Freight Agreement (the “NMFA”), with the International Brotherhood of Teamsters (the “IBT”). Prior to the March 31, 2013 expiration of the NMFA, ABF and the IBT agreed to an extension of the collective bargaining agreement under the same terms and conditions of the existing contract. Subsequent and similar extensions were agreed to, the most recent of which is effective through August 31, 2013. On June 27, 2013, a new five-year collective bargaining agreement, the ABF National Master Freight Agreement (the “2013 ABF NMFA”), was ratified by a majority of ABF’s IBT member employees who chose to vote. A majority of the supplements to the 2013 ABF NMFA were also approved. ABF is currently seeking approval of the remaining supplemental agreements. Upon ratification of the remaining supplemental agreements, the 2013 ABF NMFA will be implemented and remain in effect through March 31, 2018. The primary changes to the labor agreement under the 2013 ABF NMFA include an immediate 7% wage rate reduction from the implementation date through March 31, 2014 followed by wage rate increases of 2% in the next three years and a 2.5% increase in the fifth year of the contract; a one-week reduction in annual compensated vacation effective for employee anniversary dates on or after April 1, 2013; the option to expand the use of purchased transportation; and increased flexibility in labor work rules. The 2013 ABF NMFA and the related supplemental agreements provide for continued contributions to health, welfare, and pension plans for which the rates would be applied retroactively back to August 1, 2013 and are estimated to increase an average of approximately 3.5% to 4.5% annually over the life of the agreement. Not all of the contract changes would be implemented immediately upon ratification of the remaining supplements and, therefore, expected net cost reductions would be realized over time. In the event the remaining supplemental agreements are not ratified, a work stoppage, the loss of customers, or other events could occur that could have a material adverse effect on the Company’s competitive position, results of operations, cash flows, and financial position in 2013 and subsequent years. In the event of a temporary work stoppage, the Company plans to meet its liquidity needs primarily through existing liquidity, cash flows from its non-asset-based operations, available net working capital, funds from the sale or financing of other assets, reduction of spending levels, and elimination of dividends. On June 15, 2012, the Company acquired 100% of the common stock of Panther Expedited Services, Inc. (“Panther”), which is reported as the Premium Logistics and Expedited Freight Services segment (see Note K). See Note C for further discussion of the Panther acquisition. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the “Commission”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2012 Annual Report on Form 10-K and other current filings with the Commission. The consolidated balance sheet as of June 30, 2013 was affected by curtailment of the Company’s nonunion defined benefit pension plan (see Note G). In the opinion of management, all other adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included. Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosed amounts of contingent liabilities, and the reported amounts of revenues and expenses. If the underlying estimates and assumptions upon which the financial statements and accompanying notes are based change in future periods, actual amounts may differ from those included in the accompanying consolidated financial statements.

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