NOTE J — 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.

The Company’s reportable operating segments are impacted by seasonal fluctuations, as described below; 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 (ABF Freight), the Company’s principal operating segment, includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries. The operations of ABF Freight include, national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. Revenue and expense for freight transportation related to consumer household goods self-move services provided by ABF Freight are reported in the ABF Freight segment and certain support costs related to these services are allocated to ABF Freight from the ABF Moving segment.

ABF Freight is impacted by seasonal fluctuations which affect tonnage and shipment levels and, consequently, revenues and operating results. Earnings of the ABF Freight segment are adversely affected by the impact of inclement weather conditions on freight shipments and operating costs. 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 (Panther) 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 ABF Freight and ABF Logistics segments. Revenue and expense associated with these intersegment transactions are eliminated in consolidation.

Panther’s operations 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 severe weather events can result in higher demand for expedited services.

Emergency & Preventative Maintenance (FleetNet) 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. FleetNet provides services to the ABF Freight and Panther segments. Revenue and expense associated with these intersegment transactions are eliminated in consolidation.

Emergency roadside service events of the FleetNet segment are favorably impacted by severe weather conditions that affect commercial vehicle operations, and the segment’s results of operations will be influenced by seasonal variations in service event volume.

Transportation Management (ABF Logistics) includes the results of operations of the Company’s businesses which provide freight brokerage and intermodal transportation services, worldwide ocean shipping solutions, and transportation and warehouse management services.

The industries and markets served by ABF Logistics are impacted by seasonal fluctuations which affect tonnage and shipment levels and, consequently, revenues and operating results of the segment. 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 business levels. However, seasonal fluctuations are less apparent in the operating results of ABF Logistics than in the industry as a whole because of business growth in the segment.

Household Goods Moving Services (ABF Moving) includes the results of operations of the Company’s subsidiaries that provide transportation, warehousing, and delivery services to the consumer, corporate, and military household goods moving markets. Certain costs incurred by ABF Moving in support of consumer self-move services provided by ABF Freight are allocated to the ABF Freight segment. Revenue and expense associated with these intersegment allocations are eliminated in consolidation.

Operating results for ABF Moving are impacted by the state of the national economy, including housing, unemployment, and U.S. mobility, as well as decisions made by the U.S. military which affect personnel moves. Operations of the segment are also impacted by seasonal fluctuations, resulting in higher business levels in the second and third quarters 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 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 three months ended March 31:

	Three Months Ended
	March 31
	2015			2014
	(in thousands)
REVENUES
Freight Transportation (ABF Freight)	$	441,207		$	428,871
Premium Logistics (Panther)	75,292			72,226
Emergency & Preventative Maintenance (FleetNet)	42,489			41,699
Transportation Management (ABF Logistics)	47,372			29,717
Household Goods Moving Services (ABF Moving)	18,568			14,750
Other and eliminations	(11,652		)	(9,359		)
Total consolidated operating revenues	$	613,276		$	577,904
OPERATING EXPENSES
Freight Transportation (ABF Freight)
Salaries, wages, and benefits	$	278,371		$	261,154
Fuel, supplies, and expenses	79,026			90,791
Operating taxes and licenses	11,996			11,493
Insurance	5,785			5,395
Communications and utilities	3,985			4,242
Depreciation and amortization	17,400			16,338
Rents and purchased transportation	41,844			47,420
Gain on sale of property and equipment	(244		)	(203		)
Pension settlement expense(1)	840			2,890
Other	2,161			1,535
Total Freight Transportation (ABF Freight)	441,164			441,055
Premium Logistics (Panther)
Purchased transportation	56,044			54,573
Depreciation and amortization(2)	2,924			2,737
Salaries, benefits, insurance, and other	15,129			11,552
Total Premium Logistics (Panther)	74,097			68,862
Emergency & Preventative Maintenance (FleetNet)	41,319			40,298
Transportation Management (ABF Logistics)	46,597			29,182
Household Goods Moving Services (ABF Moving)	18,931			15,591
Other and eliminations(1)	(10,112		)	(8,382		)
Total consolidated operating expenses(1)	$	611,996		$	586,606
OPERATING INCOME (LOSS)
Freight Transportation (ABF Freight)	$	43		$	(12,184	)
Premium Logistics (Panther)	1,195			3,364
Emergency & Preventative Maintenance (FleetNet)	1,170			1,401
Transportation Management (ABF Logistics)	775			535
Household Goods Moving Services (ABF Moving)	(363		)	(841		)
Other and eliminations	(1,540		)	(977		)
Total consolidated operating income (loss)	$	1,280		$	(8,702	)
OTHER INCOME (COSTS)
Interest and dividend income	$	234		$	190
Interest and other related financing costs	(1,002		)	(808		)
Other, net	400			365
Total other costs	(368		)	(253		)
INCOME (LOSS) BEFORE INCOME TAXES	$	912		$	(8,955	)

(1)

Pension settlement expense totaled $1.1 million (pre-tax) and $3.7 million (pre-tax) on a consolidated basis for the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015, pre-tax pension settlement expense of $0.8 million was reported by ABF Freight, $0.2 million was reported in Other and eliminations, and $0.1 million was reported by the non-asset-based segments. For the three months ended March 31, 2014, pre-tax pension settlement expense of $2.9 million was reported by ABF Freight, $0.7 million was reported in Other and eliminations, and $0.1 million was reported by the non-asset-based segments.

(2)

Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software.

The following table presents operating expenses by category on a consolidated basis for the three months ended March 31:

	Three Months Ended
	March 31
	2015		2014
	(in thousands)
OPERATING EXPENSES
Salaries, wages, and benefits	$	306,916	$	286,801
Rents, purchased transportation, and other costs of services	177,966		164,126
Fuel, supplies, and expenses	75,902		88,774
Depreciation and amortization	22,232		20,453
Other	28,980		26,452
	$	611,996	$	586,606