NOTE F — PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

Nonunion Defined Benefit Pension, Supplemental Benefit, and Postretirement Health Benefit Plans

The following is a summary of the components of net periodic benefit cost:

	Three Months Ended June 30
	Nonunion Defined						Supplemental				Postretirement
	Benefit Pension Plan						Benefit Plan				Health Benefit Plan
	2015			2014			2015		2014		2015			2014
	(in thousands)

Service cost	$	—		$	—		$	—	$	—	$	102		$	70
Interest cost	1,223			1,522			30		49		229			197
Expected return on plan assets	(2,359		)	(2,605		)	—		—		—			—
Amortization of prior service credit	—			—			—		—		(48		)	(48		)
Pension settlement expense	597			909			—		—		—			—
Amortization of net actuarial loss	815			636			40		57		213			23

Net periodic benefit cost	$	276		$	462		$	70	$	106	$	496		$	242

	Six Months Ended June 30
	Nonunion Defined						Supplemental				Postretirement
	Benefit Pension Plan						Benefit Plan				Health Benefit Plan
	2015			2014			2015		2014		2015			2014
	(in thousands)

Service cost	$	—		$	—		$	—	$	—	$	203		$	140
Interest cost	2,543			3,242			61		98		457			394
Expected return on plan assets	(4,761		)	(5,436		)	—		—		—			—
Amortization of prior service credit	—			—			—		—		(95		)	(95		)
Pension settlement expense	1,716			4,600			—		—		—			—
Amortization of net actuarial loss	1,636			1,134			80		113		426			46

Net periodic benefit cost	$	1,134		$	3,540		$	141	$	211	$	991		$	485

Nonunion Defined Benefit Pension Plan

The Company’s nonunion defined benefit pension plan covers substantially all noncontractual employees hired before January 1, 2006. In June 2013, the Company amended the nonunion defined benefit pension plan to freeze the participants’ final average compensation and years of credited service as of July 1, 2013. The plan amendment did not impact the vested benefits of retirees or former employees whose benefits have not yet been paid from the plan. Effective July 1, 2013, participants of the nonunion defined benefit pension plan who were active employees of the Company became eligible for the discretionary defined contribution feature of the Company’s nonunion defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate.

In consideration of the freeze of the accrual of benefits, the investment strategy has become more focused on reducing investment, interest rate, and longevity risks in the plan. As part of this strategy, in January 2014, the plan purchased a nonparticipating annuity contract from an insurance company to settle the pension obligation related to the vested benefits of 375 plan participants and beneficiaries receiving monthly benefit payments at the time of the contract purchase. The Company recognized pension settlement expense as a component of net periodic benefit cost for the three and six months ended June 30, 2014 of $0.9 million (pre-tax), or $0.6 million (after-tax), and $4.6 million (pre-tax), or $2.8 million (after-tax), respectively, related to the $25.4 million nonparticipating annuity contract purchased in first quarter 2014 and to lump-sum distributions which amounted to $8.4 million and $22.5 million for the three and six months ended June 30, 2014, respectively.

The Company recognized total settlement expense as a component of net periodic benefit cost for the three and six months ended June 30, 2015 of $0.6 million (pre-tax), or $0.4 million (after-tax), and $1.7 million (pre-tax), or $1.0 million (after-tax), respectively, related to lump-sum distributions which amounted to $4.8 million and $12.4 million for the three and six months ended June 30, 2015, respectively. Upon recognition of pension settlement expense, a corresponding reduction in the unrecognized net actuarial loss of the plan is recorded. The remaining pre-tax unrecognized net actuarial loss will continue to be amortized over the average remaining future years of service of the plan participants, which is approximately eight years. The Company will incur additional quarterly settlement expense related to lump-sum distributions from the nonunion defined benefit pension plan during the remainder of 2015.

The following table discloses the changes in the projected benefit obligation (the “PBO”) and plan assets of the nonunion defined benefit pension plan for the six months ended June 30, 2015:

	Nonunion Defined
	Benefit Pension Plan
	(in thousands)
Change in projected benefit obligation
Projected benefit obligation at December 31, 2014	$	174,410
Interest cost	2,543
Actuarial gain(1)	(1,971		)
Benefits paid	(12,562		)

Projected benefit obligation at June 30, 2015	162,420

Change in plan assets
Fair value of plan assets at December 31, 2014	158,265
Actual return on plan assets	3,687
Employer contributions	50
Benefits paid	(12,562		)

Fair value of plan assets at June 30, 2015	149,440

Funded status at June 30, 2015(2)	$	(12,980	)

Accumulated benefit obligation	$	162,420

⁽¹⁾

Actuarial (gain)/loss from remeasurement upon settlements was primarily impacted by changes in the discount rate since the previous remeasurement date. The discount rates used to remeasure the PBO upon settlement were 3.5%, 3.0%, and 3.2% at the June 30, 2015, March 31, 2015, and December 31, 2014 measurement dates, respectively.

⁽²⁾

Noncurrent liability recognized within pension and postretirement liabilities in the accompanying consolidated balance sheet at June 30, 2015.

Based upon currently available actuarial information, the Company does not have a required minimum contribution to its nonunion defined benefit pension plan for 2015. The plan has a revised adjusted funding target attainment percentage (“AFTAP”) of 108.5% as of the January 1, 2015 valuation date. The AFTAP is determined by measurements prescribed by the Internal Revenue Code, which differ from the funding measurements for financial statement reporting purposes.

Multiemployer Plans

ABF Freight contributes to multiemployer pension and health and welfare plans, which have been established pursuant to the Taft-Hartley Act, to provide benefits for its contractual employees. ABF Freight’s contributions generally are based on the time worked by its contractual employees, in accordance with the ABF NMFA and other related supplemental agreements. ABF Freight recognizes as expense the contractually required contributions for each period and recognizes as a liability any contributions due and unpaid.

The 25 multiemployer pension plans to which ABF Freight contributes vary greatly in size and in funded status. ABF Freight’s contribution obligations to these plans are specified in the ABF NMFA, which was implemented on November 3, 2013 and will remain in effect through March 31, 2018. The funding obligations to the pension plans are intended to satisfy the requirements imposed by the Pension Protection Act of 2006 (the “PPA”), which was permanently extended by the

Multiemployer Pension Reform Act of 2014 (the “Reform Act”) included in the Consolidated and Further Continuing Appropriations Act of 2015. Provisions of the Reform Act include, among others, providing qualifying plans the ability to self-correct funding issues, subject to various requirements and restrictions, including applying to the Pension Benefit Guaranty Corporation for the suspension of certain benefits. Any actions taken by trustees of multiemployer pension plans under the Reform Act to improve funding will not reduce benefit rates ABF Freight is obligated to pay under the ABF NMFA. Through the term of its current collective bargaining agreement, ABF Freight’s contribution obligations generally will be satisfied by making the specified contributions when due. However, the Company cannot determine with any certainty the contributions that will be required under future collective bargaining agreements for its contractual employees.

Approximately one half of ABF Freight’s total contributions to multiemployer pension plans are made to the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”). The funded percentage of the Central States Pension Plan, as set forth in information provided by the Central States Plan, was 48.4% as of January 1, 2014. ABF Freight received an Actuarial Status Certification for the Central States Pension Plan dated March 31, 2015, in which the plan’s actuary certified that, as of January 1, 2015, the plan was in critical and declining status, as defined by the Reform Act. Critical and declining status is applicable to critical status plans that are projected to become insolvent anytime in the current plan year or during the next 14 plan years, or if the plan is projected to become insolvent within the next 19 plan years and either the plan’s ratio of inactive participants to active participants exceeds two to one or the plan’s funded percentage is less than 80%.

The multiemployer plan administrators have provided to the Company no other significant changes in information related to multiemployer plans from the information disclosed in the Company’s 2014 Annual Report on Form 10-K. ABF Freight has not received notification of any plan reorganization or plan insolvency. If ABF Freight was to completely withdraw from certain multiemployer pension plans, under current law, the Company would have material liabilities for its share of the unfunded vested liabilities of each such plan. However, ABF Freight currently has no intention to withdraw from any such plan, which withdrawal generally would have to be effected through collective bargaining.