OPERATING SEGMENT DATA

6 Months Ended

Jun. 30, 2012

OPERATING SEGMENT DATA

OPERATING SEGMENT DATA

NOTE K — 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 current year presentation of the Company’s operating segments. 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.

The Company’s reportable operating segments are impacted by seasonal fluctuations, as described below, and as a result, 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, the Company’s principal operating segment, consists of ABF and ABF’s self-move service operations provided by U-Pack Moving®. Freight Transportation was reported as the ABF operating segment in the Company’s June 30, 2011 Quarterly Report on Form 10-Q.

ABF is impacted by seasonal fluctuations which affect tonnage and shipment levels and, consequently, revenues and operating results. 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 and Expedited Freight Services represents Panther, which the Company acquired on June 15, 2012 (see Note C). The segment provides expedited 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-controlled, 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. The segment provides services to the Freight Transportation and Truck Brokerage and Management segments. Segment revenue and expense associated with these transactions are eliminated in consolidation.

Operations of the Premium Logistics and Expedited Freight Services segment are impacted by seasonal fluctuations. 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 hurricanes and other weather events can result in higher demand for expedited services.

·Truck Brokerage and Management represents the Company’s transportation brokerage services subsidiary, FreightValue, Inc. The results of Truck Brokerage and Management were managed through and included in the ABF operating segment in the Company’s June 30, 2011 Quarterly Report on Form 10-Q. Prior-year amounts related to this segment have been reclassified from Freight Transportation to conform to the current year’s presentation.

The truck brokerage industry is impacted by seasonal fluctuations which affect tonnage and shipment levels and, consequently, revenues and operating results. 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. However, seasonal fluctuations are less apparent in the operating results of Truck Brokerage and Management than in the industry as a whole because of business growth in the segment.

·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-year results of this segment have been reclassified from the Company’s operations other than ABF to conform to the current year’s presentation.

Emergency roadside services are impacted by weather conditions that affect commercial vehicle operations, and the segment’s results of operations will be influenced by seasonal variations in business levels.

·Household Goods Moving Services, previously reported as 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 reported in the Company’s operations other than ABF in the Company’s June 30, 2011 Quarterly Report on Form 10-Q. Prior-year amounts related to this segment have been reclassified to conform to the current year’s presentation. Certain costs incurred by Household Goods Moving Services 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.

Operations of the Household Goods Moving Services segments are impacted by seasonal fluctuations, resulting in higher business levels in the second and third calendar quarters of the year 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 Arkansas Best Corporation, the parent holding company, and 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 and six months ended June 30:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
	($ thousands)
OPERATING REVENUES
Freight Transportation	$	445,740		$	452,126		$	846,295		$	849,398
Premium Logistics and Expedited Freight Services	10,835			—			10,835			—
Truck Brokerage and Management	10,021			6,411			18,060			11,511
Emergency and Preventative Maintenance	30,101			23,341			52,479			45,618
Household Goods Moving Services	20,479			25,241			35,531			41,112
Other and eliminations	(6,633		)	(8,569		)	(11,790		)	(14,158		)
Total consolidated operating revenues	$	510,543		$	498,550		$	951,410		$	933,481
OPERATING EXPENSES AND COSTS
Freight Transportation
Salaries, wages and benefits	$	269,488		$	273,065		$	535,005		$	535,365
Fuel, supplies and expenses	82,893			88,010			163,658			167,127
Operating taxes and licenses	10,823			11,572			21,623			22,993
Insurance	5,587			6,511			10,471			12,991
Communications and utilities	3,464			3,723			7,268			7,697
Depreciation and amortization	19,477			17,341			38,058			34,542
Rents and purchased transportation	44,285			43,170			81,043			81,525
Gain on sale of property and equipment	(231		)	(784		)	(513		)	(883		)
Other	2,277			1,920			3,982			3,501
Total Freight Transportation operating expenses and costs	438,063			444,528			860,595			864,858
Premium Logistics and Expedited Freight Services
Purchased transportation	8,247			—			8,247			—
Depreciation and amortization	473			—			473			—
Other	1,635			—			1,635			—
Total Premium Logistics and Expedited Freight Services	10,355			—			10,355			—
Truck Brokerage and Management	9,366			5,843			17,011			10,558
Emergency and Preventative Maintenance	29,407			22,424			51,921			43,779
Household Goods Moving Services	20,314			24,293			36,157			40,028
Other and eliminations	(4,163		)	(7,536		)	(8,843		)	(12,748		)
Total consolidated operating expenses and costs	$	503,342		$	489,552		$	967,196		$	946,475
OPERATING INCOME (LOSS)
Freight Transportation	$	7,677		$	7,598		$	(14,300	)	$	(15,460	)
Premium Logistics and Expedited Freight Services	480			—			480			—
Truck Brokerage and Management	655			568			1,049			953
Emergency and Preventative Maintenance	694			917			558			1,839
Household Goods Moving Services	165			948			(626		)	1,084
Other and eliminations	(2,470		)	(1,033		)	(2,947		)	(1,410		)
Total consolidated operating income (loss)	$	7,201		$	8,998		$	(15,786	)	$	(12,994	)
OTHER INCOME (EXPENSE)
Interest and dividend income	$	215		$	273		$	469		$	516
Interest expense and other related financing costs	(1,112		)	(932		)	(2,255		)	(1,927		)
Other, net(1)	(220		)	281			1,120			2,892
	(1,117		)	(378		)	(666		)	1,481
INCOME (LOSS) BEFORE INCOME TAXES	$	6,084		$	8,620		$	(16,452	)	$	(11,513	)

(1)Other, net includes changes in cash surrender value and proceeds of life insurance policies.

The following table provides asset information by reportable operating segment:

	June 30		December 31
	2012		2011
	($ thousands)
ASSETS
Freight Transportation	$	611,316	$	600,239
Premium Logistics and Expedited Freight Services	232,323		—
Truck Brokerage and Management	8,154		6,225
Emergency and Preventative Maintenance	17,721		13,634
Household Goods Moving Services	25,416		20,687
Other and eliminations(1)	172,101		275,435
Total	$	1,067,031	$	916,220

(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.