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OPERATING SEGMENT DATA | 12 Months Ended
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Dec. 31, 2016
OPERATING SEGMENT DATA |
OPERATING SEGMENT DATA | NOTE M – OPERATING SEGMENT DATA On November 3, 2016, the Company announced its plan to implement a new corporate structure to better serve its customers. The new corporate structure unified the Company’s sales, pricing, customer service, marketing, and capacity sourcing functions effective January 1, 2017, and allows the Company to operate as one logistics provider under the ArcBest brand. 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 revenues, operating expense categories, operating ratios, operating income, and key operating statistics to evaluate performance and allocate resources to the Company’s operations. As a result of implementing its new corporate structure and management’s focus on the corresponding segment results to make operating decisions, the Company combined the Premium Logistics (Panther), Transportation Management (ABF Logistics), and Household Goods Moving Services (ABF Moving) reportable operating segments into a single asset‑light logistics operation reported under the ArcBest segment for the quarter and year ended December 31, 2016. The Company has restated certain prior year operating segment data to conform to the current year presentation. Segment revenues and expenses were adjusted to eliminate certain intercompany charges consistent with the manner in which they are reported under the new corporate structure. Certain intercompany charges among the previously reported Panther, ABF Logistics, and ABF Moving segments which were previously eliminated in the “Other and eliminations” line, are now eliminated within the ArcBest segment. There was no impact on the Company’s consolidated revenues, operating expenses, operating income, or earnings per share as a result of the restatements. See Note O for further discussion of restructuring activities. The Company’s reportable operating segments are as follows:
| · |  | Asset-Based (formerly the Freight Transportation segment), which includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries. The operations include, national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. In addition, the segment operations include freight transportation related to certain consumer household goods self-move services.
| · |  | ArcBest, which represents the combined operations of the former Premium Logistics (Panther), Transportation Management (ABF Logistics), and Household Goods Moving Services (ABF Moving) segments. The ArcBest segment includes the results of operations of the Company’s businesses which provide: expedite freight transportation services; premium logistics services; third-party truckload and truckload-dedicated brokerage; international freight transportation with air, ocean, and ground service offerings; household goods moving services to commercial and government customers; warehousing management and distribution services; and managed transportation solutions.
| · |  | FleetNet (formerly the Emergency & Preventative Maintenance segment) includes the results of operations of FleetNet America, Inc. and certain other subsidiaries that provide roadside assistance and maintenance management services for commercial vehicles through a network of third-party service providers. FleetNet provides services to the Asset-Based and ArcBest segments.
The Company’s other business activities that are not reportable operating segments 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:
|  | 2016 |  | 2015(1) |  | 2014(1) |
|  | (in thousands) |
REVENUES |  |  |  |  |  |  |  |  |  |
Asset-Based |  | $ | 1,916,394 |  | $ | 1,916,579 |  | $ | 1,928,531 |
ArcBest(2) |  |  | 640,734 |  |  | 590,436 |  |  | 535,915 |
FleetNet |  |  | 162,629 |  |  | 174,952 |  |  | 158,581 |
Other and eliminations |  |  | (19,538) |  |  | (15,062) |  |  | (10,334) |
Total consolidated revenues |  | $ | 2,700,219 |  | $ | 2,666,905 |  | $ | 2,612,693 |
OPERATING EXPENSES |  |  |  |  |  |  |  |  |  |
Asset-Based |  |  |  |  |  |  |  |  |  |
Salaries, wages, and benefits |  | $ | 1,212,411 |  | $ | 1,172,489 |  | $ | 1,118,830 |
Fuel, supplies, and expenses |  |  | 282,627 |  |  | 307,345 |  |  | 360,760 |
Operating taxes and licenses |  |  | 48,436 |  |  | 48,992 |  |  | 46,955 |
Insurance |  |  | 29,335 |  |  | 28,847 |  |  | 24,938 |
Communications and utilities |  |  | 18,079 |  |  | 16,129 |  |  | 15,398 |
Depreciation and amortization |  |  | 83,570 |  |  | 74,765 |  |  | 68,752 |
Rents and purchased transportation |  |  | 199,156 |  |  | 197,073 |  |  | 229,443 |
Gain on sale of property and equipment |  |  | (2,979) |  |  | (1,735) |  |  | (1,471) |
Pension settlement expense(3) |  |  | 2,274 |  |  | 2,404 |  |  | 5,309 |
Other |  |  | 8,741 |  |  | 7,834 |  |  | 9,524 |
Restructuring costs(4) |  |  | 1,173 |  |  | — |  |  | — |
Total Asset-Based |  |  | 1,882,823 |  |  | 1,854,143 |  |  | 1,878,438 |
ArcBest(2) |  |  |  |  |  |  |  |  |  |
Purchased transportation |  |  | 501,853 |  |  | 460,238 |  |  | 406,989 |
Salaries, wages, and benefits |  |  | 70,857 |  |  | 62,438 |  |  | 55,159 |
Supplies and expenses |  |  | 19,279 |  |  | 15,500 |  |  | 20,195 |
Depreciation and amortization |  |  | 14,151 |  |  | 13,375 |  |  | 13,329 |
Other |  |  | 19,692 |  |  | 18,093 |  |  | 17,589 |
Restructuring costs(4) |  |  | 8,038 |  |  | — |  |  | — |
Total ArcBest |  |  | 633,870 |  |  | 569,644 |  |  | 513,261 |
FleetNet |  |  | 160,204 |  |  | 171,998 |  |  | 155,459 |
Other and eliminations |  |  | (5,648) |  |  | (4,376) |  |  | (3,704) |
Total consolidated operating expenses(3) |  | $ | 2,671,249 |  | $ | 2,591,409 |  | $ | 2,543,454 |
OPERATING INCOME |  |  |  |  |  |  |  |  |  |
Asset-Based |  | $ | 33,571 |  | $ | 62,436 |  | $ | 50,093 |
ArcBest(2) |  |  | 6,864 |  |  | 20,792 |  |  | 22,654 |
FleetNet |  |  | 2,425 |  |  | 2,954 |  |  | 3,122 |
Other and eliminations |  |  | (13,890) |  |  | (10,686) |  |  | (6,630) |
Total consolidated operating income |  | $ | 28,970 |  | $ | 75,496 |  | $ | 69,239 |
OTHER INCOME (COSTS) |  |  |  |  |  |  |  |  |  |
Interest and dividend income |  | $ | 1,523 |  | $ | 1,284 |  | $ | 851 |
Interest and other related financing costs |  |  | (5,150) |  |  | (4,400) |  |  | (3,190) |
Other, net(5) |  |  | 2,944 |  |  | 354 |  |  | 3,712 |
Total other income (costs) |  |  | (683) |  |  | (2,762) |  |  | 1,373 |
INCOME BEFORE INCOME TAXES |  | $ | 28,287 |  | $ | 72,734 |  | $ | 70,612 |
| (1) |  | Certain restatements have been made to the prior year’s operating segment data to conform to the current year presentation, reflecting the realignment of the Company’s corporate structure as previously discussed in this Note.
| (2) |  | The 2016 periods include the operations of LDS since the September 2, 2016 acquisition date and the operations of Bear, which was acquired in December 2015.
| (3) |  | Pension settlement expense totaled $3.2 million (pre‑tax) on a consolidated basis for each of the years ended December 31, 2016 and 2015, of which $2.3 million and $2.4 million, respectively, was reported by the Asset-Based segment. Pension settlement expense totaled $6.6 million (pre‑tax) for the year ended December 31, 2014, of which $5.3 million was reported by the Asset-Based segment.
| (4) |  | Restructuring costs relate to the realignment of the Company’s corporate structure.
| (5) |  | Includes proceeds and changes in cash surrender value of life insurance policies.
The following table provides asset, capital expenditure, and depreciation and amortization information by reportable operating segment:
|  |  |  | December 31 |  |  |
|  | 2016 |  | 2015(1) |  | 2014(1)
|  | (in thousands)
ASSETS |  |  |  |  |  |  |  |  |
Asset-Based |  | $ | 791,117 |  | $ | 694,059 |  | $ | 621,734
ArcBest |  |  | 330,345 |  |  | 315,859 |  |  | 275,426
FleetNet |  |  | 21,627 |  |  | 21,958 |  |  | 23,532
Other and eliminations(2) |  |  | 166,903 |  |  | 231,033 |  |  | 206,930
|  | $ | 1,309,992 |  | $ | 1,262,909 |  | $ | 1,127,622
|  | For the year ended December 31
|  | 2016 |  | 2015(1) |  | 2014(1)
|  | (in thousands)
CAPITAL EXPENDITURES, GROSS |  |  |  |  |  |  |  |  |
Asset-Based(3) |  | $ | 110,170 |  | $ | 122,542 |  | $ | 78,766
ArcBest |  |  | 6,154 |  |  | 24,219 |  |  | 6,996
FleetNet |  |  | 403 |  |  | 1,007 |  |  | 550
Other and eliminations |  |  | 34,910 |  |  | 11,249 |  |  | 4,496
|  | $ | 151,637 |  | $ | 159,017 |  | $ | 90,808
|  | For the year ended December 31
|  | 2016 |  | 2015(1) |  | 2014(1)
|  | (in thousands)
DEPRECIATION AND AMORTIZATION EXPENSE(2) |  |  |  |  |  |  |  |  |
Asset-Based |  | $ | 83,570 |  | $ | 74,765 |  | $ | 68,752
ArcBest(4) |  |  | 14,151 |  |  | 13,375 |  |  | 13,329
FleetNet(5) |  |  | 1,209 |  |  | 1,119 |  |  | 961
Other and eliminations |  |  | 4,123 |  |  | 3,783 |  |  | 3,180
|  | $ | 103,053 |  | $ | 93,042 |  | $ | 86,222
| (1) |  | Certain restatements have been made to the prior year’s operating segment data to conform to the current year presentation, reflecting the realignment of the Company’s corporate structure as previously discussed in this Note.
| (2) |  | 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.
| (3) |  | Includes assets acquired through notes payable and capital leases of $83.4 million in 2016, $80.6 million in 2015, and $55.3 million in 2014.
| (4) |  | Includes amortization of intangibles of $4.0 million, $3.7 million, and $4.2 million in 2016, 2015, and 2014, respectively.
| (5) |  | Includes amortization of intangibles which totaled $0.3 million, $0.3 million, and $0.2 million in 2016, 2015, and 2014, respectively.
The following table presents operating expenses by category on a consolidated basis:
|  | For the year ended December 31 |
|  | 2016 |  | 2015(1) |  | 2014(1) |
|  | (in thousands) |
OPERATING EXPENSES |  |  |  |  |  |  |  |  |  |
Salaries, wages, and benefits |  | $ | 1,345,672 |  | $ | 1,297,129 |  | $ | 1,231,130 |
Rents, purchased transportation, and other costs of services |  |  | 823,683 |  |  | 790,612 |  |  | 754,495 |
Fuel, supplies, and expenses |  |  | 270,138 |  |  | 292,039 |  |  | 353,489 |
Depreciation and amortization(2) |  |  | 103,053 |  |  | 93,042 |  |  | 86,222 |
Other |  |  | 118,390 |  |  | 118,587 |  |  | 118,118 |
Restructuring |  |  | 10,313 |  |  | — |  |  | — |
|  | $ | 2,671,249 |  | $ | 2,591,409 |  | $ | 2,543,454 |
| (1) |  | Certain restatements have been made to the prior year’s operating expense data to conform to the current year presentation, reflecting the realignment of the Company’s corporate structure as previously discussed in this Note.
| (2) |  | Includes amortization of intangible assets.

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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 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: 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=68060357&loc=d3e9038-108599 Reference 3: 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=68060357&loc=d3e8971-108599 Reference 4: 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=68060357&loc=d3e8595-108599 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=68060357&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 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: 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=68060357&loc=d3e8844-108599 Reference 8: 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=68060357&loc=d3e8984-108599 Reference 9: 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=68060357&loc=d3e9031-108599 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=68060357&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 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: 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=68060357&loc=d3e8864-108599 Reference 13: 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=68060357&loc=d3e8924-108599 Reference 14: 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=68060357&loc=d3e8906-108599 + Details
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