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. Financial information of Global Supply Chain Services and Supply Chain Services, businesses which provide ocean container transport and warehousing services, respectively, have been reclassified from the Freight Transportation segment to “Other and eliminations.” There was no impact on consolidated amounts as a result of these reclassifications. Effective July 1, 2013, the Company formed a new operating segment, ABF Logistics, consisting of Global Supply Chain Services, Supply Chain Services, and the Company’s transportation brokerage services subsidiary, FreightValue, Inc.®, which was reported as the Truck Brokerage and Management segment as of June 30, 2013.

The Company’s reportable operating segments are impacted by seasonal fluctuations, as described below, and 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, the Company’s principal operating segment, includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries of the Company (collectively “ABF”). ABF Freight System, Inc.’s self-move service operations provided by U-Pack Moving® are also reported in the Freight Transportation segment.

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 includes the results of operations of Panther, which the Company acquired on June 15, 2012 (see Note C). The segment 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 Freight Transportation and Truck Brokerage and Management segments. Revenue and expense associated with these intersegment transactions are eliminated in consolidation.

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

· Truck Brokerage and Management includes the results of operations of the Company’s transportation brokerage services subsidiary, FreightValue, Inc.

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 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.

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

· Household Goods Moving Services includes the results of operations of Albert Companies, Inc. and Moving Solutions, Inc., the Company’s subsidiaries that provide transportation, warehousing, and delivery services to the consumer, corporate, and military household goods moving markets. For the three and six months ended June 30, 2013, the Household Goods Moving Services segment includes the results of the logistics company acquired by Albert Companies, Inc. on May 31, 2013 (see Note C). 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. Revenue and expense associated with these intersegment 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. A substantial portion of the 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
	2013			2012			2013			2012
	(in thousands)

OPERATING REVENUES
Freight Transportation	$	446,750		$	440,351		$	854,031		$	836,864
Premium Logistics and Expedited Freight Services	60,431			10,835			113,683			10,835
Truck Brokerage and Management	16,335			10,021			30,939			18,060
Emergency and Preventative Maintenance	32,935			30,101			65,457			52,479
Household Goods Moving Services	21,252			20,479			34,828			35,531
Other and eliminations	(804		)	(1,244		)	(1,352		)	(2,359		)
Total consolidated operating revenues	$	576,899		$	510,543		$	1,097,586		$	951,410

OPERATING EXPENSES AND COSTS
Freight Transportation
Salaries, wages, and benefits	$	272,641		$	268,995		$	539,819		$	534,057
Fuel, supplies, and expenses	82,441			82,696			165,773			163,336
Operating taxes and licenses	10,939			10,823			21,929			21,624
Insurance	6,068			5,585			10,552			10,466
Communications and utilities	3,879			3,459			7,812			7,258
Depreciation and amortization	18,967			19,464			38,541			38,037
Rents and purchased transportation	44,260			39,681			82,729			72,897
Gain on sale of property and equipment	(182		)	(231		)	(394		)	(513		)
Other	2,240			2,258			4,322			3,940
Total Freight Transportation	441,253			432,730			871,083			851,102

Premium Logistics and Expedited Freight Services
Purchased transportation	46,233			8,247			87,270			8,247
Depreciation and amortization	2,594			473			5,144			473
Other	10,098			1,635			20,627			1,635
Total Premium Logistics and Expedited Freight Services	58,925			10,355			113,041			10,355

Truck Brokerage and Management	15,643			9,366			29,480			17,011
Emergency and Preventative Maintenance	32,125			29,407			63,935			51,921
Household Goods Moving Services	20,304			20,314			34,111			36,157
Other and eliminations	232			1,170			870			650
Total consolidated operating expenses and costs	$	568,482		$	503,342		$	1,112,520		$	967,196

OPERATING INCOME (LOSS)
Freight Transportation	$	5,497		$	7,621		$	(17,052	)	$	(14,238	)
Premium Logistics and Expedited Freight Services	1,506			480			642			480
Truck Brokerage and Management	692			655			1,459			1,049
Emergency and Preventative Maintenance	810			694			1,522			558
Household Goods Moving Services	948			165			717			(626		)
Other and eliminations	(1,036		)	(2,414		)	(2,222		)	(3,009		)
Total consolidated operating income (loss)	$	8,417		$	7,201		$	(14,934	)	$	(15,786	)

OTHER INCOME (EXPENSE)
Interest and dividend income	$	161		$	215		$	332		$	469
Interest expense and other related financing costs	(1,079		)	(1,112		)	(2,286		)	(2,255		)
Other, net(1)	366			(220		)	1,450			1,120
	(552		)	(1,117		)	(504		)	(666		)
INCOME (LOSS) BEFORE INCOME TAXES	$	7,865		$	6,084		$	(15,438	)	$	(16,452	)

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