Arkansas Best's first quarter 2012 results were impacted by a number of unusual items which are listed below with the corresponding diluted per share effect:
Low corporate tax benefit rate - ($0.18/share)
High ABF workers' compensation costs - ($0.13/share)
Investments in sales, customer service and IT for all subsidiaries - ($0.12/share)
The unusually low corporate tax benefit rate is below historical levels because of limitations on the amount of deferred tax assets that could be recorded during the quarter. Depending on the financial results during the remainder of the year, Arkansas Best's quarterly tax rates will vary and the 2012 full year tax rate could be substantially lower than past, full year tax rates. ABF's workers' compensation claims costs were significantly above ten-year historical averages due to unfavorable severity on new and existing claims and increases in loss development, driven by claims experience.
This cost increase is very unusual for ABF. On a positive note, organic investments are being made for ABF and the non-asset based subsidiaries in sales, customer service and information technology ("IT") to improve operating efficiencies and support specific growth opportunities. The investments being made are expected to improve the operating results of these companies during 2012.
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