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 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.

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.

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.

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.

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.

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. ABF Freight provides transportation services to ABF Moving. Certain costs incurred by ABF Moving in support of consumer self-move services provided by ABF Freight are allocated to the ABF Freight segment.

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 years ended December 31:


	2015		2014		2013
	(in thousands)
REVENUES
Freight Transportation (ABF Freight)	$	1,918,450	$	1,930,990	$	1,761,716
Premium Logistics (Panther)		300,368		316,668		246,849
Transportation Management (ABF Logistics)		203,529		152,632		105,223
Emergency & Preventative Maintenance (FleetNet)		174,952		158,581		137,546
Household Goods Moving Services (ABF Moving)		119,252		94,628		82,169
Other and eliminations		(49,646)		(40,806)		(33,954)
Total consolidated revenues	$	2,666,905	$	2,612,693	$	2,299,549
OPERATING EXPENSES
Freight Transportation (ABF Freight)
Salaries, wages, and benefits	$	1,174,357	$	1,121,177	$	1,075,259
Fuel, supplies, and expenses		307,348		360,850		332,433
Operating taxes and licenses		48,992		46,955		43,865
Insurance		28,847		24,960		21,823
Communications and utilities		16,129		15,398		15,027
Depreciation and amortization		74,765		68,752		72,971
Rents and purchased transportation		197,073		229,443		180,689
Gain on sale of property and equipment		(1,734)		(1,471)		(576)
Pension settlement expense(1)		2,404		5,309		1,831
Other		7,833		9,524		8,361
Total Freight Transportation (ABF Freight)		1,856,014		1,880,897		1,751,683
Premium Logistics (Panther)
Purchased transportation		220,994		235,006		188,561
Depreciation and amortization		11,436		11,362		10,516
Salaries, benefits, insurance, and other		57,140		54,660		40,816
Total Premium Logistics (Panther)		289,570		301,028		239,893

Transportation Management (ABF Logistics)		197,668		148,797		102,250
Emergency & Preventative Maintenance (FleetNet)		171,998		155,459		134,272
Household Goods Moving Services (ABF Moving)		114,416		91,449		80,319
Other and eliminations(1)		(38,257)		(34,176)		(27,938)
Total consolidated operating expenses(1)	$	2,591,409	$	2,543,454	$	2,280,479
OPERATING INCOME
Freight Transportation (ABF Freight)	$	62,436	$	50,093	$	10,033
Premium Logistics (Panther)		10,798		15,640		6,956
Transportation Management (ABF Logistics)		5,861		3,835		2,973
Emergency & Preventative Maintenance (FleetNet)		2,954		3,122		3,274
Household Goods Moving Services (ABF Moving)		4,836		3,179		1,850
Other and eliminations		(11,389)		(6,630)		(6,016)
Total consolidated operating income	$	75,496	$	69,239	$	19,070
OTHER INCOME (COSTS)
Interest and dividend income	$	1,284	$	851	$	681
Interest and other related financing costs		(4,400)		(3,190)		(4,183)
Other, net(2)		354		3,712		3,893
Total other income (costs)		(2,762)		1,373		391
INCOME BEFORE INCOME TAXES	$	72,734	$	70,612	$	19,461

⁽¹⁾

Pension settlement expense totaled $3.2 million (pre‑tax) on a consolidated basis for the year ended December 31, 2015, of which $2.4 million was reported by ABF Freight, $0.7 million was reported in Other and eliminations, and $0.1 million was reported by asset‑light logistics segments. Pension settlement expense totaled $6.6 million (pre‑tax) on a consolidated basis for the year ended December 31, 2014, of which $5.3 million was reported by ABF Freight, $1.1 million was reported in Other and eliminations, and $0.2 million was reported by asset‑light logistics segments. Pension settlement expense totaled $2.1 million (pre‑tax) for the year ended December 31, 2013, of which $1.8 million was reported by ABF Freight and $0.3 million was reported in Other and eliminations.

⁽²⁾

Includes changes in cash surrender value and proceeds of life insurance policies.

The following table presents operating expenses by category on a consolidated basis:


	For the year ended December 31
	2015		2014		2013
	(in thousands)
OPERATING EXPENSES
Salaries, wages, and benefits	$	1,295,197	$	1,231,783	$	1,166,185
Rents, purchased transportation, and other costs of services		780,428		759,252		598,604
Fuel, supplies, and expenses		300,370		353,385		321,887
Depreciation and amortization(1)		93,042		86,222		88,389
Other		122,372		112,812		105,414
	$	2,591,409	$	2,543,454	$	2,280,479

⁽¹⁾

Includes amortization of intangible assets.

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


	December 31
	2015		2014		2013
	(in thousands)
ASSETS
Freight Transportation (ABF Freight)	$	694,059	$	621,734	$	530,678
Premium Logistics (Panther)		216,075		218,135		216,747
Transportation Management (ABF Logistics)		75,023		37,571		27,836
Emergency & Preventative Maintenance (FleetNet)		21,958		23,532		21,517
Household Goods Moving Services (ABF Moving)		28,547		22,276		20,941
Other and eliminations(1)		227,247		204,374		199,607
	$	1,262,909	$	1,127,622	$	1,017,326


	For the year ended December 31
	2015		2014		2013
	(in thousands)
CAPITAL EXPENDITURES, GROSS
Freight Transportation (ABF Freight)(2)	$	122,542	$	78,766	$	11,091
Premium Logistics (Panther)		23,275		6,414		3,854
Transportation Management (ABF Logistics)		241		158		286
Emergency & Preventative Maintenance (FleetNet)		1,007		550		1,314
Household Goods Moving Services (ABF Moving)		703		424		493
Other and eliminations		11,249		4,496		9,367
	$	159,017	$	90,808	$	26,405


	For the year ended December 31
	2015		2014		2013
	(in thousands)
DEPRECIATION AND AMORTIZATION EXPENSE(1)
Freight Transportation (ABF Freight)	$	74,765	$	68,752	$	72,971
Premium Logistics (Panther)(3)		11,436		11,362		10,516
Transportation Management (ABF Logistics)(4)		1,138		1,006		640
Emergency & Preventative Maintenance (FleetNet)(5)		1,119		961		540
Household Goods Moving Services (ABF Moving)		1,186		1,384		1,247
Other and eliminations		3,398		2,757		2,475
	$	93,042	$	86,222	$	88,389

⁽¹⁾

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.

⁽²⁾

Includes assets acquired through notes payable and capital leases of $80.6 million in 2015, $55.3 million in 2014, and less than $0.1 million in 2013.

⁽³⁾

Includes amortization of intangibles of $3.6 million, $4.2 million, and $4.2 million in 2015, 2014, and 2013, respectively.

⁽⁴⁾

Includes amortization of intangibles which totaled $0.1 million in 2015.

⁽⁵⁾

Includes amortization of intangibles which totaled $0.3 million and $0.2 million in 2015 and 2014, respectively.