General

Arkansas Best Corporation (the "Company"), the parent holding company, is a freight transportation services and solutions provider. The Company's principal operations are conducted through its Freight Transportation segment, which consists of ABF Freight System, Inc. and other subsidiaries of the Company that are engaged in freight transportation (collectively "ABF"). The Company's other reportable operating segments, primarily non-asset-based businesses utilizing the services of third-party providers, are Premium Logistics and Expedited Freight Services (Panther Expedited Services, Inc. ("Panther") acquired on June 15, 2012), Truck Brokerage and Management, Emergency and Preventative Maintenance, and Household Goods Moving Services (see additional segment description in Note K to the Company's consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q).

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") describes the principal factors affecting results of operations, liquidity and capital resources, and critical accounting policies of the Company. This discussion should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and the Company's Annual Report on Form 10-K for the year ended December 31, 2011. The Company's 2011 Annual Report on Form 10-K includes additional information about significant accounting policies, practices and the transactions that underlie the Company's financial results, as well as a detailed discussion of the most significant risks and uncertainties to which its financial and operating results are subject. The 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain reclassifications have been made to the financial and operational results that were presented in the June 30, 2011 Form 10-Q to conform to the current year's presentation of reportable operating segments.

Results of Operations



Consolidated Results



                                              Three Months Ended           Six Months Ended
                                                   June 30                     June 30
                                              2012          2011          2012          2011
                                                              ($ thousands)
OPERATING REVENUES
Freight Transportation                     $  445,740    $  452,126    $  846,295    $  849,398
Premium Logistics and Expedited Freight
Services                                       10,835             -        10,835             -
Truck Brokerage and Management                 10,021         6,411        18,060        11,511
Emergency and Preventative Maintenance         30,101        23,341        52,479        45,618
Household Goods Moving Services                20,479        25,241        35,531        41,112
Other and eliminations                         (6,633 )      (8,569 )     (11,790 )     (14,158 )
Total consolidated operating revenues      $  510,543    $  498,550    $  951,410    $  933,481

OPERATING INCOME (LOSS)
Freight Transportation                     $    7,677    $    7,598    $  (14,300 )  $  (15,460 )
Premium Logistics and Expedited Freight
Services                                          480             -           480             -
Truck Brokerage and Management                    655           568         1,049           953
Emergency and Preventative Maintenance            694           917           558         1,839
Household Goods Moving Services                   165           948          (626 )       1,084
Other and eliminations                         (2,470 )      (1,033 )      (2,947 )      (1,410 )
Total consolidated operating income
(loss)                                     $    7,201    $    8,998    $  (15,786 )  $  (12,994 )

NET INCOME (LOSS) ATTRIBUTABLE TO
ARKANSAS BEST CORPORATION                  $   11,841    $    5,298    $   (6,321 )  $   (7,510 )

DILUTED EARNINGS (LOSS) PER SHARE          $     0.44    $     0.20    $    (0.25 )  $    (0.30 )

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

Consolidated revenues for the three and six months ended June 30, 2012 increased 2.4% and 1.9%, respectively, compared to the same prior-year periods, primarily reflecting the revenues of the acquired operations of Panther (reported as the Premium Logistics and Expedited Freight Services segment) since the June 15, 2012 acquisition date. In addition, higher revenues reported by the Truck Brokerage and Management and Emergency and Preventative Maintenance segments contributed to the consolidated revenue growth. Freight Transportation revenues, which represented 89.0% of the Company's consolidated revenues for the six months ended June 30, 2012, were slightly lower on a per-day basis for the three and six months ended June 30, 2012 compared to the same prior-year periods. The declines in Freight Transportation revenues reflect decreases in tonnage per day of 6.3% and 8.4% for the three and six months ended June 30, 2012, respectively, partially offset by 4.7% and 7.9% increases in billed revenue per hundredweight, including fuel surcharges, for the same periods.

The Company's consolidated operating results and earnings per share primarily represent the operating results of ABF reported as the Freight Transportation segment. Consolidated operating results and earnings per share for the three- and six- month periods ended June 30, 2012 were impacted by the items identified in the non-GAAP table(1) shown below.

                                             Three Months Ended          Six Months Ended
                                                   June 30                   June 30
                                              2012          2011        2012         2011
                                                             ($ thousands)

Operating Income (Loss)
Amounts on a GAAP basis                    $     7,201    $  8,998    $ (15,786 )  $ (12,994 )
Transaction costs(2)                             2,129           -        2,129            -
Operating income (loss), as adjusted       $     9,330    $  8,998    $ (13,657 )  $ (12,994 )

Net Income (Loss) Attributable to
Arkansas Best Corporation
Amounts on a GAAP basis                    $    11,841    $  5,298    $  (6,321 )  $  (7,510 )
Tax benefits(3)                                 (7,973 )         -       (3,333 )          -
Transaction costs, after-tax(2)                  1,294           -        1,294            -
Net income (loss) attributable to
Arkansas Best Corporation, as adjusted     $     5,162    $  5,298    $  (8,360 )  $  (7,510 )

Diluted Earnings (Loss) Per Share
Amounts on a GAAP basis                    $      0.44    $   0.20    $   (0.25 )  $   (0.30 )
Tax benefits(3)                                  (0.31 )         -        (0.13 )          -
Transaction costs, after-tax(2)                   0.05           -         0.05            -
Diluted earnings (loss) per share, as
adjusted                                   $      0.18    $   0.20    $   (0.33 )  $   (0.30 )

(2) Transaction costs associated with the June 15, 2012 acquisition of Panther Expedited Services, Inc. (See Note C to the Company's consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.)

(3) Tax benefits relate to reductions in deferred tax asset valuation allowances. (See the Income Taxes section within MD&A for further discussion of deferred tax valuation allowances.)

The Company's year-to-date 2012 operating results were also impacted by certain items that did not change in accordance with business levels:

† $7.8 million increase in costs associated with sales, customer service and information technology. The Company is investing in additional sales personnel and information technology to enhance customer service levels in the Freight Transportation segment and to more fully develop the Company's non-asset-based businesses.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued

† $4.2 million increase in workers' compensation claims costs. These costs in the Freight Transportation segment were above the ten-year historical average as a percent of revenue due to increased severity on new and existing claims and the impact of unfavorable experience on the ultimate expected development of claims. Workers' compensation claims costs are accrued when claims are incurred, and, as a result, associated expense may fluctuate depending on the frequency or severity of claims incurred from period to period. Therefore, the higher level of workers' compensation claims costs in the first half of 2012 is not indicative of future costs.

† $3.7 million increase in pension and retirement expenses. The increase in pension and retirement expenses includes higher expenses for the Company's nonunion defined benefit pension plan resulting from a historically low discount rate used to remeasure plan obligations at December 31, 2011 and lower than expected returns on pension investments in 2011.

† $3.5 million increase in depreciation expense in the Freight Transportation segment. Depreciation expense increased in 2012 due to a higher number of road tractors and trailers acquired in 2011 at higher per-unit costs.

† $2.6 million decrease in insurance expense in the Freight Transportation segment resulting from lower severity of third-party casualty claims in the first half of 2012 compared to the same prior year period.

In addition to the above items, the consolidated net loss comparison for the six months ended June 30, 2012 versus the same period of 2011 was impacted by $1.6 million lower income from changes in the cash surrender value of life insurance policies. A portion of the Company's cash surrender value of variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. The Company recognized gains associated with changes in the cash surrender value and proceeds from life insurance policies of $1.2 million in other income within the consolidated statement of comprehensive income for the six months ended June 30, 2012, compared to gains of $2.8 million for the same prior-year period.

Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA")

Adjusted EBITDA increased approximately 11% in both the three- and six- month periods of 2012 versus the same prior year periods. Management believes EBITDA to be relevant and useful information, as EBITDA is a standard measure commonly reported and widely used by analysts, investors and others to measure financial performance and ability to service debt obligations. However, these financial measures should not be construed as better measurements than operating income
(loss), operating cash flow, net income (loss) or earnings (loss) per share, as defined by GAAP. Other companies may calculate Adjusted EBITDA differently and, therefore, the Company's Adjusted EBITDA may not be comparable to similarly titled measures of other companies.