OPERATING SEGMENT DATA

12 Months Ended

Dec. 31, 2011

OPERATING SEGMENT DATA

OPERATING SEGMENT DATA

NOTE M – 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.

Certain reclassifications have been made to the prior year’s operating segment data to conform to the presentation of the Company’s operating segments which met the quantitative requirements for separate disclosure for the year ended December 31, 2011. There was no impact on consolidated total assets, operating income or loss, or net income or loss attributable to the Company as a result of these reclassifications.

For the year ended December 31, 2011, the following operating segments of the Company met the quantitative thresholds for reportable segment disclosure:

·Freight Transportation, the Company’s principal operating segment, consists of ABF Freight System, Inc. and other subsidiaries of the Company that are engaged in freight transportation (collectively “ABF”). Freight Transportation was previously reported as the ABF operating segment. ABF Freight System, Inc.’s self-move service operations provided by U-Pack Moving® are also reported in the Freight Transportation segment.

The operations of ABF include, in the aggregate, national, inter-regional and regional transportation of general commodities through standard, expedited and guaranteed LTL services. ABF is headquartered in Fort Smith, Arkansas. The ABF transportation system operates throughout North America, providing direct service to over 98% of the cities in the United States having a population of 30,000 or more. ABF also offers global customizable supply chain solutions and provides motor carrier services in Canada, Puerto Rico and, through arrangements with other trucking companies, in Mexico.

·Truck Brokerage and Management represents the Company’s transportation brokerage services subsidiary, FreightValue, Inc. The results of Truck Brokerage and Management were previously managed through and included in the ABF operating segment. Prior period amounts related to this segment have been reclassified from Freight Transportation to conform to the current year’s presentation.

·Emergency and Preventative Maintenance represents FleetNet America, Inc., the subsidiary of the Company which provides roadside assistance and equipment services for commercial vehicles through a network of third-party service providers. Prior period results of this segment have been reclassified from the Company’s operations other than ABF to conform to the current year’s presentation.

·Special Services Logistics includes Albert Companies, Inc. and Moving Solutions, Inc., the Company’s subsidiaries which provide transportation, warehousing and delivery services to the consumer, corporate and military household goods moving markets. These subsidiaries were previously reported in the Company’s operations other than ABF, and prior period amounts related to this segment have been reclassified to conform to the current year’s presentation.

Albert Companies, Inc. provides moving, storage and relocation services. Moving Solutions, Inc. provides sales, marketing, information technology and customer service to facilitate the Company’s moving businesses. Certain costs incurred by Special Services Logistics in support of ABF Freight System, Inc.’s self-move services are allocated to Freight Transportation at cost. The segment revenue and expense associated with these allocations are eliminated in consolidation.

The Company’s other business activities and operating segments that are not reportable include Arkansas Best Corporation, the parent holding company, 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:

	2011			2010			2009
	($ thousands)
OPERATING REVENUES
Freight Transportation	$	1,730,773		$	1,514,108		$	1,371,055
Truck Brokerage and Management	25,429			19,241			13,363
Emergency and Preventative Maintenance	92,554			74,927			59,568
Special Services Logistics(1)	85,611			63,733			30,525
Other and eliminations	(26,758		)	(14,145		)	(1,610		)
Total consolidated operating revenues	$	1,907,609		$	1,657,864		$	1,472,901
OPERATING EXPENSES AND COSTS
Freight Transportation(2)
Salaries, wages and benefits	$	1,061,213		$	1,004,267		$	969,912
Fuel, supplies and expenses	333,779			262,420			221,584
Operating taxes and licenses	45,469			43,539			42,314
Insurance	24,490			18,745			20,352
Communications and utilities	15,118			14,655			14,393
Depreciation and amortization	70,810			68,695			72,180
Rents and purchased transportation	169,212			154,119			126,159
Gain on sale of property and equipment	(2,370		)	(1,338		)	(1,412		)
Pension settlement expense	1,125			178			4,588
Goodwill impairment charge	–			–			63,958
Other	8,318			8,568			7,328
Total Freight Transportation operating expenses and costs	1,727,164			1,573,848			1,541,356
Truck Brokerage and Management(2)	23,539			17,868			11,527
Emergency and Preventative Maintenance	89,572			72,208			58,668
Special Services Logistics(1)	82,893			62,014			28,247
Other and eliminations	(25,318		)	(13,529		)	1,809
Total consolidated operating expenses and costs	$	1,897,850		$	1,712,409		$	1,641,607
OPERATING INCOME (LOSS)
Freight Transportation(2)	$	3,609		$	(59,740	)	$	(170,301	)
Truck Brokerage and Management(2)	1,890			1,373			1,836
Emergency and Preventative Maintenance	2,982			2,719			900
Special Services Logistics(1)	2,718			1,719			2,278
Other and eliminations	(1,440		)	(616		)	(3,419		)
Total consolidated operating income (loss)	$	9,759		$	(54,545	)	$	(168,706	)
OTHER INCOME (EXPENSE)
Interest and dividend income	$	1,069		$	1,194		$	2,853
Interest expense and other related financing costs	(3,953		)	(2,852		)	(2,389		)
Other, net(3)	2,618			2,406			2,724
	(266)			748			3,188
INCOME (LOSS) BEFORE INCOME TAXES	$	9,493		$	(53,797	)	$	(165,518	)

(1)	The Special Services Logistics segment was established in the second quarter of 2009.
(2)	The measurement of operating income for the Truck Brokerage and Management operating segment was changed in 2010 to include certain intercompany cost allocations. While it is impracticable to recalculate the cost allocations for all prior year periods, management estimated such amounts to be approximately $0.2 million in 2010 and $0.5 million in 2009. If the segment information was presented on a comparable basis for all periods, Truck Brokerage and Management operating expenses and costs would increase by $0.2 million in 2010 and $0.5 million in 2009 with corresponding decreases in operating income for those years, and Freight Transportation operating expenses and costs would decrease by the same amounts with corresponding increases in operating income for those years.
(3)	Other, net includes gains on cash surrender value and proceeds of life insurance policies.

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

	2011		2010		2009
	($ thousands)
ASSETS
Freight Transportation	$	600,239	$	565,461	$	579,492
Truck Brokerage and Management	6,225		5,250		4,429
Emergency and Preventative Maintenance	13,634		12,373		9,559
Special Services Logistics	20,687		18,016		15,721
Other and eliminations(1)	275,435		259,851		260,345
	$	916,220	$	860,951	$	869,546
CAPITAL EXPENDITURES, GROSS
Freight Transportation(2)	$	78,875	$	44,637	$	47,048
Truck Brokerage and Management	163		12		–
Emergency and Preventative Maintenance	307		311		334
Special Services Logistics	480		209		115
Other and eliminations	3,812		2,596		1,092
	$	83,637	$	47,765	$	48,589
DEPRECIATION AND AMORTIZATION EXPENSE
Freight Transportation	$	70,810	$	68,695	$	72,180
Truck Brokerage and Management	154		153		–
Emergency and Preventative Maintenance	476		514		501
Special Services Logistics	332		323		243
Other and eliminations	1,970		1,880		2,302
	$	73,742	$	71,565	$	75,226

(1)

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.

(2)

Includes assets acquired through capital leases and notes payable of $30.4 million, $36.3 million and $0.5 million in 2011, 2010 and 2009, respectively.