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OPERATING SEGMENT DATA | 3 Months Ended
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Mar. 31, 2015
OPERATING SEGMENT DATA |
OPERATING SEGMENT DATA | NOTE J — 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 the Company’s 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 impacted by seasonal fluctuations, as described below; therefore, operating results for the interim periods presented may not necessarily be indicative of the results for the fiscal year. 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. 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.
ABF Freight is impacted by seasonal fluctuations which affect tonnage and shipment levels and, consequently, revenues and operating results. Earnings of the ABF Freight segment are adversely affected by the impact of inclement weather conditions on freight shipments and operating costs. The second and third calendar quarters of each year usually have the highest tonnage levels while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, may influence quarterly tonnage levels.
| · |  | Premium Logistics (Panther) 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.
Panther’s operations are influenced by seasonal fluctuations that impact customers’ supply chains and the resulting demand for expedited services. Expedited shipments may decline during winter months because of post-holiday slowdowns but can be subject to short-term increases, depending on the impact of weather disruptions to customers’ supply chains. Plant shutdowns during summer months may affect shipments for automotive and manufacturing customers, but severe weather events can result in higher demand for expedited services.
| · |  | 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.
Emergency roadside service events of the FleetNet segment are favorably impacted by severe weather conditions that affect commercial vehicle operations, and the segment’s results of operations will be influenced by seasonal variations in service event volume.
| · |  | Transportation Management (ABF Logistics) 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.
The industries and markets served by ABF Logistics are impacted by seasonal fluctuations which affect tonnage and shipment levels and, consequently, revenues and operating results of the segment. The second and third calendar quarters of each year usually have the highest tonnage levels while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, may influence quarterly business levels. However, seasonal fluctuations are less apparent in the operating results of ABF Logistics than in the industry as a whole because of business growth in the segment.
| · |  | 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.
Operating results for ABF Moving are impacted by the state of the national economy, including housing, unemployment, and U.S. mobility, as well as decisions made by the U.S. military which affect personnel moves. Operations of the segment are also impacted by seasonal fluctuations, resulting in higher business levels in the second and third quarters as the demand for moving services is typically higher in the summer months. 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 three months ended March 31:
|  | Three Months Ended |
|  | March 31 |
|  | 2015 |  | 2014 |
|  | (in thousands) |
REVENUES |  |  |  |  |
Freight Transportation (ABF Freight) |  | $ | 441,207 |  | $ | 428,871 |
Premium Logistics (Panther) |  | 75,292 |  | 72,226 |
Emergency & Preventative Maintenance (FleetNet) |  | 42,489 |  | 41,699 |
Transportation Management (ABF Logistics) |  | 47,372 |  | 29,717 |
Household Goods Moving Services (ABF Moving) |  | 18,568 |  | 14,750 |
Other and eliminations |  | (11,652 | ) | (9,359 | )
Total consolidated operating revenues |  | $ | 613,276 |  | $ | 577,904 |
OPERATING EXPENSES |  |  |  |  |
Freight Transportation (ABF Freight) |  |  |  |  |
Salaries, wages, and benefits |  | $ | 278,371 |  | $ | 261,154 |
Fuel, supplies, and expenses |  | 79,026 |  | 90,791 |
Operating taxes and licenses |  | 11,996 |  | 11,493 |
Insurance |  | 5,785 |  | 5,395 |
Communications and utilities |  | 3,985 |  | 4,242 |
Depreciation and amortization |  | 17,400 |  | 16,338 |
Rents and purchased transportation |  | 41,844 |  | 47,420 |
Gain on sale of property and equipment |  | (244 | ) | (203 | )
Pension settlement expense(1) |  | 840 |  | 2,890 |
Other |  | 2,161 |  | 1,535 |
Total Freight Transportation (ABF Freight) |  | 441,164 |  | 441,055 |
Premium Logistics (Panther) |  |  |  |  |
Purchased transportation |  | 56,044 |  | 54,573 |
Depreciation and amortization(2) |  | 2,924 |  | 2,737 |
Salaries, benefits, insurance, and other |  | 15,129 |  | 11,552 |
Total Premium Logistics (Panther) |  | 74,097 |  | 68,862 |
Emergency & Preventative Maintenance (FleetNet) |  | 41,319 |  | 40,298 |
Transportation Management (ABF Logistics) |  | 46,597 |  | 29,182 |
Household Goods Moving Services (ABF Moving) |  | 18,931 |  | 15,591 |
Other and eliminations(1) |  | (10,112 | ) | (8,382 | )
Total consolidated operating expenses(1) |  | $ | 611,996 |  | $ | 586,606 |
OPERATING INCOME (LOSS) |  |  |  |  |
Freight Transportation (ABF Freight) |  | $ | 43 |  | $ | (12,184 | )
Premium Logistics (Panther) |  | 1,195 |  | 3,364 |
Emergency & Preventative Maintenance (FleetNet) |  | 1,170 |  | 1,401 |
Transportation Management (ABF Logistics) |  | 775 |  | 535 |
Household Goods Moving Services (ABF Moving) |  | (363 | ) | (841 | )
Other and eliminations |  | (1,540 | ) | (977 | )
Total consolidated operating income (loss) |  | $ | 1,280 |  | $ | (8,702 | )
OTHER INCOME (COSTS) |  |  |  |  |
Interest and dividend income |  | $ | 234 |  | $ | 190 |
Interest and other related financing costs |  | (1,002 | ) | (808 | )
Other, net |  | 400 |  | 365 |
Total other costs |  | (368 | ) | (253 | )
INCOME (LOSS) BEFORE INCOME TAXES |  | $ | 912 |  | $ | (8,955 | )
| (1) |  | Pension settlement expense totaled $1.1 million (pre-tax) and $3.7 million (pre-tax) on a consolidated basis for the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015, pre-tax pension settlement expense of $0.8 million was reported by ABF Freight, $0.2 million was reported in Other and eliminations, and $0.1 million was reported by the non-asset-based segments. For the three months ended March 31, 2014, pre-tax pension settlement expense of $2.9 million was reported by ABF Freight, $0.7 million was reported in Other and eliminations, and $0.1 million was reported by the non-asset-based segments.
| (2) |  | Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software.
The following table presents operating expenses by category on a consolidated basis for the three months ended March 31:
|  | Three Months Ended |
|  | March 31 |
|  | 2015 |  | 2014 |
|  | (in thousands) |
OPERATING EXPENSES |  |  |  |  |
Salaries, wages, and benefits |  | $ | 306,916 |  | $ | 286,801 |
Rents, purchased transportation, and other costs of services |  | 177,966 |  | 164,126 |
Fuel, supplies, and expenses |  | 75,902 |  | 88,774 |
Depreciation and amortization |  | 22,232 |  | 20,453 |
Other |  | 28,980 |  | 26,452 |
|  | $ | 611,996 |  | $ | 586,606 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 + Details
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