NOTE N — OPERATING SEGMENT DATA

The Company uses the “management approach” to determine its reportable operating segments, as well as to determine the basis of reporting the operating segment information. The management approach focuses on financial information that management uses to make operating decisions. Management uses operating revenues, operating expense categories, operating ratios, operating income, and key operating statistics to evaluate performance and allocate resources to the Company’s operations.

The Company’s reportable operating segments are as follows:

Freight Transportation (ABF Freight), the Company’s principal operating segment, includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries. The operations of ABF Freight include, national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. ABF Freight also provides motor carrier services in Canada, Puerto Rico, and, through arrangements with other trucking companies, Mexico. Revenue and expense for freight transportation related to consumer household goods self-move services provided by ABF Freight are reported in the ABF Freight segment and certain support costs related to these services are allocated to ABF Freight from the ABF Moving segment.

Premium Logistics (Panther), which was formerly named Premium Logistics & Expedited Freight Services, provides expedited freight transportation services to commercial and government customers and offers premium logistics services that involve the rapid deployment of highly specialized equipment to meet extremely specific linehaul requirements, such as temperature control, hazardous materials, geofencing (routing a shipment across a mandatory, defined route with satellite monitoring and automated alerts concerning any deviation from the route), specialized government cargo, security services, and life sciences. Through its premium logistics and global freight forwarding businesses, Panther offers domestic and international freight transportation with air, ocean, and ground service offerings. The segment provides services to the ABF Freight and ABF Logistics segments. Revenue and expense associated with these intersegment transactions are eliminated in consolidation.

Emergency & Preventative Maintenance (FleetNet) includes the results of operations of FleetNet America, Inc., the subsidiary of the Company that provides roadside assistance and equipment services for commercial vehicles through a network of third-party service providers. FleetNet provides services to the ABF Freight and Panther segments. Revenue and expense associated with these intersegment transactions are eliminated in consolidation.

Transportation Management (ABF Logistics), which was formerly named Domestic & Global Transportation Management, includes the results of operations of the Company’s businesses which provide freight brokerage and intermodal transportation services, worldwide ocean shipping solutions, and transportation and warehouse management services.

Household Goods Moving Services (ABF Moving) includes the results of operations of the Company’s subsidiaries that provide transportation, warehousing, and delivery services to the consumer, corporate, and military household goods moving markets. Certain costs incurred by ABF Moving in support of consumer self-move services provided by ABF Freight are allocated to the ABF Freight segment. Revenue and expense associated with these intersegment allocations are eliminated in consolidation.

The Company’s other business activities and operating segments that are not reportable include ArcBest Corporation and certain other subsidiaries. Certain costs incurred by the parent holding company are allocated to the reporting segments. The Company eliminates intercompany transactions in consolidation. However, the information used by the Company’s management with respect to its reportable segments is before intersegment eliminations of revenues and expenses.

Further classifications of operations or revenues by geographic location are impracticable and, therefore, are not provided. The Company’s foreign operations are not significant.

The following table reflects reportable operating segment information for the years ended December 31:

	2014			2013			2012
	(in thousands)
REVENUES
Freight Transportation (ABF Freight)	$	1,930,990		$	1,761,716		$	1,701,495
Premium Logistics (Panther)(1)	316,668			246,849			132,326
Emergency & Preventative Maintenance (FleetNet)	158,581			137,546			115,968
Transportation Management (ABF Logistics)	152,632			105,223			66,431
Household Goods Moving Services (ABF Moving)	94,628			82,169			77,619
Other and eliminations	(40,806		)	(33,954		)	(27,840		)
Total consolidated revenues	$	2,612,693		$	2,299,549		$	2,065,999

OPERATING EXPENSES
Freight Transportation (ABF Freight)
Salaries, wages, and benefits	$	1,121,177		$	1,075,259		$	1,071,084
Fuel, supplies, and expenses	360,850			332,433			329,284
Operating taxes and licenses	46,955			43,865			43,336
Insurance	24,960			21,823			20,742
Communications and utilities	15,398			15,027			14,713
Depreciation and amortization	68,752			72,971			78,672
Rents and purchased transportation	229,443			180,689			156,810
Gain on sale of property and equipment	(1,471		)	(576		)	(711		)
Pension settlement expense(3)	5,309			1,831			—
Other	9,524			8,361			7,365
Total Freight Transportation (ABF Freight)	1,880,897			1,751,683			1,721,295

Premium Logistics (Panther)(1)
Purchased transportation	235,006			188,561			101,559
Depreciation and amortization	11,362			10,516			5,438
Salaries, benefits, insurance, and other	54,660			40,816			22,927
Total Premium Logistics (Panther)	301,028			239,893			129,924

Emergency & Preventative Maintenance (FleetNet)	155,459			134,272			114,033
Transportation Management (ABF Logistics)	148,797			102,250			63,418
Household Goods Moving Services (ABF Moving)	91,449			80,319			76,927
Other and eliminations(3)	(34,176		)	(27,938		)	(25,030		)
Total consolidated operating expenses(3)	$	2,543,454		$	2,280,479		$	2,080,567

OPERATING INCOME (LOSS)
Freight Transportation (ABF Freight)	$	50,093		$	10,033		$	(19,800	)
Premium Logistics (Panther)(1)	15,640			6,956			2,402
Emergency & Preventative Maintenance (FleetNet)	3,122			3,274			1,935
Transportation Management (ABF Logistics)	3,835			2,973			3,013
Household Goods Moving Services (ABF Moving)	3,179			1,850			692
Other and eliminations	(6,630		)	(6,016		)	(2,810		)
Total consolidated operating income (loss)	$	69,239		$	19,070		$	(14,568	)

OTHER INCOME (COSTS)
Interest and dividend income(1)	$	851		$	681		$	808
Interest and other related financing costs(1)	(3,190		)	(4,183		)	(5,273		)
Other, net(2)	3,712			3,893			2,041
Total other income (costs)	1,373			391			(2,424		)

INCOME (LOSS) BEFORE INCOME TAXES	$	70,612		$	19,461		$	(16,992	)

(1)

Includes the operations of Panther since the June 15, 2012 acquisition date (see Note D).

(2)

Includes changes in cash surrender value and proceeds of life insurance policies.

(3)

Pension settlement expense totaled $6.6 million (pre-tax) on a consolidated basis for the year ended December 31, 2014, of which $5.3 million was reported by ABF Freight, $1.1 million was reported in other and eliminations, and $0.2 million was reported by non-asset-based segments. Pension settlement expense totaled $2.1 million (pre-tax) for the year ended December 31, 2013, of which $1.8 million was reported by ABF Freight and $0.3 million was reported in other and eliminations.

The following table presents operating expenses by category on a consolidated basis:

	For the year ended December 31
	2014		2013		2012
	(in thousands)
OPERATING EXPENSES
Salaries, wages, and benefits	$	1,231,783	$	1,166,185	$	1,141,064
Rents, purchased transportation, and other costs of services	759,252		598,604		437,604
Fuel, supplies, and expenses	353,385		321,887		315,182
Depreciation and amortization	86,222		88,389		87,754
Other	112,812		105,414		98,963
	$	2,543,454	$	2,280,479	$	2,080,567

The following table provides asset, capital expenditure, and depreciation and amortization information by reportable operating segment:

	December 31
	2014		2013		2012
	(in thousands)
ASSETS
Freight Transportation (ABF Freight)	$	621,734	$	530,678	$	550,676
Premium Logistics (Panther)	218,135		216,747		222,280
Emergency & Preventative Maintenance (FleetNet)	23,532		21,517		18,413
Transportation Management (ABF Logistics)	37,571		27,836		15,437
Household Goods Moving Services (ABF Moving)	22,276		20,941		21,754
Other and eliminations(1)	204,374		199,607		205,902
	$	1,127,622	$	1,017,326	$	1,034,462

	For the year ended December 31
	2014		2013		2012
	(in thousands)
CAPITAL EXPENDITURES, GROSS
Freight Transportation (ABF Freight)(2)	$	78,766	$	11,091	$	68,235
Premium Logistics (Panther)(3)	6,414		3,854		1,579
Emergency & Preventative Maintenance (FleetNet)	550		1,314		685
Transportation Management (ABF Logistics)	158		286		45
Household Goods Moving Services (ABF Moving)	424		493		416
Other and eliminations	4,496		9,367		4,291
	$	90,808	$	26,405	$	75,251

	For the year ended December 31
	2014		2013		2012
	(in thousands)
DEPRECIATION AND AMORTIZATION EXPENSE(1)
Freight Transportation (ABF Freight)	$	68,752	$	72,971	$	78,672
Premium Logistics (Panther)(3)(4)	11,362		10,516		5,438
Emergency & Preventative Maintenance (FleetNet)(5)	961		540		497
Transportation Management (ABF Logistics)	1,006		640		364
Household Goods Moving Services (ABF Moving)	1,384		1,247		769
Other and eliminations	2,757		2,475		2,014
	$	86,222	$	88,389	$	87,754

(1)

Other and eliminations includes certain assets held by the parent holding company for strategic reasons, including unrestricted and restricted cash, cash equivalents, and short-term investments, as well as certain assets held for the benefit of multiple segments, including land and structures of the Company’s corporate headquarters and information systems equipment. Depreciation and amortization associated with these assets is allocated to the reporting segments. Depreciation and amortization expense includes amortization of internally developed capitalized software which has not been included in gross capital expenditures presented in the table.

(2)

Includes assets acquired through notes payable and capital leases of $55.3 million in 2014, less than $0.1 million in 2013, and $38.0 million in 2012.

(3)

Includes operations of the Premium Logistics segment since the June 15, 2012 acquisition of Panther.

(4)

Includes amortization of intangibles of $4.2 million in 2014 (see Note E). Amortization of intangibles which totaled $4.2 million and $2.3 million has been included for 2013 and 2012, respectively, to conform to the current year presentation. Amortization of intangibles was previously reported in the footnote to the depreciation and amortization expense by operating segment table in Note N to the consolidated financial statements in Part II, Item 8 of the Company’s 2013 Annual Report on Form 10-K.

(5)

Includes amortization of intangibles which totaled $0.2 million in 2014 (see Note E).