Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

OLD DOMINION FREIGHT LINE, INC.

BALANCE SHEETS

		December 31,
(In thousands, except share and per share data)		2012				2011
ASSETS
Current assets:
Cash and cash equivalents		$	12,857			$	75,850
Customer receivables, less allowances of $8,561 and $9,173, respectively		219,039				213,481
Other receivables		1,324				4,441
Prepaid expenses and other current assets		21,754				18,614
Deferred income taxes		20,054				19,466
Total current assets		275,028				331,852
Property and equipment:
Revenue equipment		922,030				789,984
Land and structures		874,768				738,359
Other fixed assets		225,298				214,816
Leasehold improvements		6,128				5,773
Total property and equipment		2,028,224				1,748,932
Less: Accumulated depreciation		(648,919		)		(621,982		)
Net property and equipment		1,379,305				1,126,950
Goodwill		19,463				19,463
Other assets		38,718				34,809
Total assets		$	1,712,514			$	1,513,074
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	44,891			$	42,096
Compensation and benefits		80,047				66,740
Claims and insurance accruals		33,990				35,934
Other accrued liabilities		20,906				20,654
Income taxes payable		6,327				32
Current maturities of long-term debt		38,978				39,354
Total current liabilities		225,139				204,810
Long-term debt		201,429				229,831
Other non-current liabilities		106,791				86,998
Deferred income taxes		153,186				134,916
Total long-term liabilities		461,406				451,745
Total liabilities		686,545				656,555
Commitments and contingent liabilities
Shareholders’ equity
Common stock - $0.10 par value, 140,000,000 shares authorized, 86,164,917 and 86,164,986 shares outstanding at December 31, 2012 and 2011, respectively		8,616				8,616
Capital in excess of par value		134,401				134,403
Retained earnings		882,952				713,500
Total shareholders’ equity		1,025,969				856,519
Total liabilities and shareholders’ equity		$	1,712,514			$	1,513,074

The accompanying notes are an integral part of these financial statements.

OLD DOMINION FREIGHT LINE, INC.

STATEMENTS OF OPERATIONS

		Year Ended December 31,
(In thousands, except share and per share data)		2012				2011				2010
Revenue from operations		$	2,110,483			$	1,882,541			$	1,480,998
Operating expenses:
Salaries, wages and benefits		1,066,551				956,079				808,819
Operating supplies and expenses		378,534				355,186				244,291
General supplies and expenses		58,908				49,900				41,580
Operating taxes and licenses		67,526				63,284				55,420
Insurance and claims		29,681				27,693				25,329
Communications and utilities		19,980				18,104				15,218
Depreciation and amortization		110,743				90,820				80,362
Purchased transportation		70,426				63,257				50,489
Building and office equipment rents		13,514				13,689				15,244
Miscellaneous expenses, net		9,366				10,457				6,507
Total operating expenses		1,825,229				1,648,469				1,343,259
Operating income		285,254				234,072				137,739
Non-operating expense (income):
Interest expense		11,541				14,067				12,613
Interest income		(113		)		(180		)		(148		)
Other expense, net		728				101				848
Total non-operating expense		12,156				13,988				13,313
Income before income taxes		273,098				220,084				124,426
Provision for income taxes		103,646				80,614				48,775
Net income		$	169,452			$	139,470			$	75,651
Earnings per share:
Basic		$1.97				$1.63				$0.90
Diluted		$1.97				$1.63				$0.90
Weighted average shares outstanding:
Basic		86,164,964				85,719,728				83,890,483
Diluted		86,164,964				85,719,728				83,890,483

The accompanying notes are an integral part of these financial statements.

OLD DOMINION FREIGHT LINE, INC.

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

									Capital in
		Common Stock							Excess of				Retained
(In thousands)		Shares			Amount				Par Value				Earnings				Total
Balance as of December 31, 2009		83,891			$	8,389			$	86,232			$	498,379			$	593,000
Net income		—			—				—				75,651				75,651
Other		—			—				(2		)		—				(2		)
Balance as of December 31, 2010		83,891			$	8,389			$	86,230			$	574,030			$	668,649
Issuance and sale of common stock		2,274			227				48,173				—				48,400
Net income		—			—				—				139,470				139,470
Balance as of December 31, 2011		86,165			$	8,616			$	134,403			$	713,500			$	856,519
Net income		—			—				—				169,452				169,452
Other		—			—				(2		)		—				(2		)
Balance as of December 31, 2012		86,165			$	8,616			$	134,401			$	882,952			$	1,025,969

The accompanying notes are an integral part of these financial statements.

OLD DOMINION FREIGHT LINE, INC.

STATEMENTS OF CASH FLOWS

		Year Ended December 31,
(In thousands)		2012				2011				2010
Cash flows from operating activities:
Net income		$	169,452			$	139,470			$	75,651
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		110,743				90,820				80,362
Loss on sale of property and equipment		78				1,263				758
Deferred income taxes		17,682				43,348				7,624
Changes in assets and liabilities:
Customer and other receivables, net		(5,410		)		(40,414		)		(36,169		)
Prepaid expenses and other assets		(7,956		)		(2,952		)		(13,314		)
Accounts payable		2,795				12,875				(4,247		)
Compensation, benefits and other accrued liabilities		13,559				17,626				22,476
Claims and insurance accruals		7,458				6,696				3,831
Income taxes, net		9,264				3,224				(3,613		)
Other liabilities		10,391				5,978				7,163
Net cash provided by operating activities		328,056				277,934				140,522
Cash flows from investing activities:
Purchase of property and equipment		(373,193		)		(250,768		)		(106,347		)
Proceeds from sale of property and equipment		12,018				5,436				2,604
Net cash used in investing activities		(361,175		)		(245,332		)		(103,743		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		412				96,010				—
Principal payments under long-term debt agreements		(40,284		)		(40,382		)		(36,681		)
Net proceeds (payments) on revolving line of credit		10,000				(66,230		)		1,183
Proceeds from stock issuance, net of issuance costs		—				48,400				—
Other financing activities, net		(2		)		—				(2		)
Net cash (used in) provided by financing activities		(29,874		)		37,798				(35,500		)
(Decrease) increase in cash and cash equivalents		(62,993		)		70,400				1,279
Cash and cash equivalents at beginning of year		75,850				5,450				4,171
Cash and cash equivalents at end of year		$	12,857			$	75,850			$	5,450
Income taxes paid		$	74,932			$	34,579			$	44,893
Interest paid		$	13,728			$	14,011			$	13,561
Capitalized interest		$	1,963			$	895			$	682
Supplemental disclosure of noncash investing and financing activities:
Acquisition of property and equipment by capital lease		$	1,094			$	8,570			$	1,183

The accompanying notes are an integral part of these financial statements.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 1. Significant Accounting Policies

Business

We are a leading, less-than-truckload (“LTL”), union-free motor carrier providing regional, inter-regional and national LTL service and value-added services from a single integrated organization. In addition to our core LTL services, we offer our customers a broad range of value-added services including ground and air expedited transportation, container delivery, truckload brokerage, supply chain consulting, warehousing and consumer household pickup and delivery services. We also offer worldwide freight forwarding services.

We have one operating segment and no single customer exceeds 10% of our revenue.

Basis of Presentation

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Certain amounts in prior years have been reclassified to conform prior years’ financial statements to the current presentation.

Unless the context requires otherwise, references in these Notes to “Old Dominion,” the “Company,” “we,” “us” and “our” refer to Old Dominion Freight Line, Inc.

Revenue and Expense Recognition

We recognize revenue based upon when our transportation services have been completed in accordance with the bill of lading contract, our general tariff provisions or contractual agreements with our customers. Generally, this occurs when we complete the delivery of a shipment. For transportation services not completed at the end of a reporting period, we use a percentage of completion method to allocate the appropriate revenue to each separate reporting period. Under this method, we develop a factor for each uncompleted shipment by dividing the actual number of days in transit at the end of a reporting period by that shipment’s standard delivery time schedule. This factor is applied to the total revenue for that shipment and revenue is allocated between reporting periods accordingly.

Expenses are recognized when incurred.

Allowances for Uncollectible Accounts and Revenue Adjustments

We maintain an allowance for uncollectible accounts for estimated losses resulting from the inability of our customers to make required payments. We estimate this allowance by analyzing the aging of our customer receivables, our historical loss experience and other trends and factors affecting the credit risk of our customers. Write-offs occur when we determine an account to be uncollectible and could differ from our allowance estimate as a result of factors such as changes in the overall economic environment or risks surrounding our customers. Additional allowances may be required if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments. We periodically review the underlying assumptions in our estimate of the allowance for uncollectible accounts to ensure that the allowance reflects the most recent trends and factors.

We also maintain an allowance for estimated revenue adjustments resulting from future billing corrections, customer allowances, money-back service guarantees and other miscellaneous revenue adjustments. These revenue adjustments are recorded in our revenue from operations. We use historical experience, trends and current information to update and evaluate these estimates.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of customer receivables. We perform initial and ongoing credit evaluations of our customers to minimize credit risk. We generally do not require collateral but may require prepayment of our services under certain circumstances. Credit risk is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographic regions.

Cash and Cash Equivalents

We consider cash on hand and deposits in banks along with certificates of deposit and short-term marketable securities with original maturities of three months or less as cash and cash equivalents.

Property and Equipment

Property and equipment are stated at cost. Major additions and improvements are capitalized, while maintenance and repairs that do not improve or extend the lives of the respective assets are charged to expense as incurred. We capitalize the cost of tires mounted on purchased revenue equipment as a part of the total equipment cost. Subsequent replacement tires are expensed at the time those tires are placed in service.

Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the related assets. The following table provides the estimated useful lives by asset type:

Structures		7 to 30 years
Revenue equipment		4 to 15 years
Other equipment		2 to 20 years
Leasehold improvements		Lesser of economic life or life of lease

Depreciation expense, which includes the amortization of capital leases, was $109.8 million, $89.9 million and $79.4 million for 2012, 2011 and 2010, respectively.

During the first quarter of 2010, we completed an evaluation of the estimated useful lives and salvage values for our equipment and determined that the actual period of service of certain revenue equipment exceeded that of our previously estimated useful lives. As a result, we extended the estimated useful lives of most of our tractors to 9 years from 7 years and extended the estimated useful lives of our trailers to 15 years from 12. In addition, we reduced the estimated salvage values associated with this equipment to more accurately reflect the value we believe such equipment will have at the end of its respective useful lives. We made similar changes to the estimated useful lives and salvage values for certain of our other equipment but the results of these changes had less of an impact on our future depreciation expense. As a result of the impact on depreciation from these changes that were effective January 1, 2010, income from continuing operations and net income in 2010 increased by approximately $12.7 million and $7.7 million, respectively.

Goodwill and Other Intangible Assets

Intangible assets have been acquired in connection with business combinations and are comprised of goodwill and other intangible assets. Goodwill is calculated as the excess cost over the fair value of assets acquired and is not subject to amortization. We review our goodwill balance annually for impairment, unless circumstances dictate more frequent assessments. During the fourth quarter of 2011, we adopted Accounting Standards Update (“ASU”) 2011-08, Testing Goodwill for Impairment, which permits an initial assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. This initial assessment provides a basis for determining whether it is necessary to perform the two-step goodwill impairment test required by Accounting Standards Codification (“ASC”) Topic 350. In the fourth quarter of 2012, we performed the qualitative assessment of goodwill and determined it was more likely than not that the fair value of our reporting unit would be greater than its carrying amount. Therefore, we determined it was not necessary to perform the two-step goodwill impairment test. Furthermore, there has been no historical impairment of our goodwill.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Other intangible assets include the value of acquired customer lists and related non-compete agreements and are amortized on a straight-line basis over their estimated useful lives, none of which exceeds ten years. The gross carrying amount of our other intangible assets totaled $8.1 million as of December 31, 2012 and 2011. Accumulated amortization for these assets was $5.7 million and $4.7 million as of December 31, 2012 and 2011, respectively. The net carrying amounts of our other intangible assets are included in “Other assets” on our Balance Sheets. Amortization expense was $0.9 million for 2012, 2011 and 2010. Annual amortization expense for the next five years for these intangible assets is estimated to be:

(In thousands)
2013	$	712
2014	$	695
2015	$	495
2016	$	315
2017	$	210

Long-Lived Assets

We assess the realizable value of our long-lived assets and evaluate such assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Claims and Insurance Accruals

At December 31, 2012, we maintained a self-insured retention ("SIR") of $2.75 million per occurrence for bodily injury and property damage ("BIPD") claims; a deductible of $100,000 per claim for cargo loss and damage; and deductible of $1.0 million per occurrence for workers' compensation claims. We also had an SIR of $400,000 per occurrence (with a $200,000 aggregate over our retention level) for group health claims. We fully self-insured long-term disability claims to a maximum of $3,000 per month for our salaried and non-salaried employees until April 2, 2010 and July 1, 2011, respectively. We subsequently began to offer elective long-term disability coverage to our employees and, therefore, we have no liability for new long-term disability claims after those dates.

Claims and insurance accruals reflect the estimated cost of claims for cargo loss and damage, BIPD, workers' compensation, long-term disability, group health and group dental not covered by insurance. These accruals include amounts for future claims development and claims incurred but not reported, which are primarily based on historical claims development experience. The related costs for cargo loss and damage and BIPD are charged to insurance and claims expense, while the related costs for workers' compensation, long-term disability, group health and dental are charged to employee benefits expense.

Our liability for claims and insurance totaled $93.5 million and $86.0 million at December 31, 2012 and 2011, respectively. The long-term portions of those reserves were $59.5 million and $50.1 million for 2012 and 2011, respectively, which were included in “Other non-current liabilities” on our Balance Sheets.

Advertising

The costs of advertising our services are expensed as incurred and are included in “General supplies and expenses” on our Statements of Operations. Advertising costs charged to expense totaled $11.0 million, $8.3 million and $6.3 million for 2012, 2011 and 2010, respectively.

Common Stock Split

On August 13, 2012, we announced a three-for-two common stock split for shareholders of record as of the close of business on the record date, August 24, 2012. On September 7, 2012, those shareholders received one additional share of common stock for every two shares owned. In lieu of fractional shares, shareholders received a cash payment based on the average of the high and low sales prices of our common stock on the record date.

On August 2, 2010, we announced a three-for-two common stock split for shareholders of record as of the close of business on the record date, August 9, 2010. On August 23, 2010, those shareholders received one additional share of common

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

stock for every two shares owned. In lieu of fractional shares, shareholders received a cash payment based on the average of the high and low sales prices of the common stock on the record date.

All references in this report to shares outstanding, weighted average shares outstanding and earnings per share amounts have been restated retroactively to reflect these stock splits.

Fair Values of Financial Instruments

The carrying values of financial instruments, such as cash and cash equivalents, customer and other receivables and trade payables, approximate their fair value due to the short maturities of these instruments. The carrying value of our long-term debt was $240.4 million and $269.2 million at December 31, 2012 and 2011, respectively. The estimated fair value of our long-term debt was $247.9 million and $276.6 million at December 31, 2012 and 2011, respectively. The fair value measurement of our senior notes was determined using market interest rates for similar issuances of private debt. Since this methodology is based upon indicative market interest rates, the measurement is categorized as Level 2 under the three-level fair value hierarchy as established by the Financial Accounting Standards Board (the “FASB”). The fair value of our other long-term debt approximates carrying value.

Comprehensive Income

The Company has no components of other comprehensive income. Accordingly, net income equals comprehensive income for all periods presented in this report.

Earnings Per Share

Earnings per common share is computed using the weighted-average number of common shares outstanding during the period. There were no potentially dilutive shares outstanding at the end of each period presented in this report.

Note 2. Long-term Debt

Long-term debt consisted of the following:

		December 31,
(In thousands)		2012				2011
Senior notes		$	227,143			$	262,857
Revolving credit facility		10,000				—
Capitalized lease and other obligations		3,264				6,328
Total long-term debt		240,407				269,185
Less: Current maturities		(38,978		)		(39,354		)
Total maturities due after one year		$	201,429			$	229,831

We have three outstanding unsecured senior note agreements with an aggregate amount outstanding of $227.1 million at December 31, 2012. These notes call for periodic principal payments with maturities that range from 2015 to 2021, of which $35.7 million is due in the next twelve months. Interest rates on these notes are fixed and range from 4.00% to 5.85%. The effective average interest rate on our outstanding senior note agreements was 5.07% and 5.17% at December 31, 2012 and 2011, respectively.

We have a five-year, $200.0 million senior unsecured revolving credit facility pursuant to the terms of a second amended and restated credit agreement on August 10, 2011 (the “Credit Agreement”), with Wells Fargo Bank, National Association (“Wells Fargo”) serving as administrative agent for the lenders. Of the $200.0 million line of credit commitments, $150.0 million may be used for letters of credit and $20.0 million may be used for borrowings under the Wells Fargo Sweep Plus Loan Program. This sweep program is a daily cash management tool that automatically initiates borrowings to cover overnight cash requirements up to an aggregate of $20.0 million. In addition, we have the right to request an increase in the line of credit commitments up to a total of $300.0 million in minimum increments of $25.0 million. At our option, revolving loans under the facility bear interest at either: (a) the Applicable Margin Percentage for Base Rate Loans plus the higher of Wells Fargo’s prime rate, the federal funds rate plus 0.5% per annum, or the one month LIBOR Rate plus 1.0% per annum; (b) the LIBOR Rate plus

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

the Applicable Margin Percentage for LIBOR Loans; or (c) the LIBOR Market Index Rate (“LIBOR Index Rate”) plus the Applicable Margin Percentage for LIBOR Market Index Loans. The Applicable Margin Percentage is determined by a pricing grid in the Credit Agreement and ranges from 1.0% to 1.875%. The Applicable Margin Percentage was 1.125% at December 31, 2012 and 2011, respectively, and ranged from 1.0% to 1.125% during 2012. Revolving loans under the sweep program bear interest at the LIBOR Index Rate.

The outstanding balance of borrowings on the line of credit facility was $10.0 million and zero at December 31, 2012 and 2011, respectively. There were $52.4 million and $49.9 million of outstanding letters of credit at December 31, 2012 and 2011, respectively.

Commitment fees ranging from 0.175% to 0.30% are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement. Letter of credit fees equal to the applicable margin for Adjusted LIBOR Rate loans are charged quarterly in arrears on the daily average aggregate stated amount of all letters of credit outstanding during the quarter. The commitment fees ranged from 0.175% to 0.20% and letter of credit fees ranged from 1.0% to 1.125% during 2012. In addition, the Company will pay to Wells Fargo as issuer of letters of credit (i) a facing fee with respect to each letter of credit in an amount equal to 0.125% of the daily average aggregate Stated Amount thereof, payable quarterly in arrears and calculated on an actual/360-day basis and (ii) such fees and charges customarily charged in connection with the issuance and administration of such letters of credit. Wells Fargo, as administrative agent, shall also receive an annual administrative fee for providing such services.

Our Credit Agreement limits the amount of dividends that could be paid to shareholders to the greater of (i) $20.0 million, (ii) the amount of dividends paid in the immediately preceding fiscal year, or (iii) an amount equal to 25% of net income from the immediately preceding fiscal year. We did not declare or pay a dividend on our common stock in 2012 or 2011, and we have no plans to declare or pay a dividend in 2013.

Our three outstanding senior note agreements and the Credit Agreement contain customary covenants, including financial covenants that require us to observe a maximum ratio of debt to total capital and a minimum fixed charge coverage ratio. Any future wholly-owned subsidiaries of the Company would be required to guarantee payment of all of our obligations under these agreements.

Capitalized lease obligations are collateralized by property and equipment with a net book value of $7.6 million at December 31, 2012.

As of December 31, 2012, aggregate maturities of long-term debt are as follows:

(In thousands)
2013	$	38,978
2014	35,715
2015	35,714
2016	35,000
2017	—
Thereafter	95,000
	$	240,407

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 3. Shareholders’ Equity

On February 2, 2011, we entered into an At-The-Market Equity Offering Sales Agreement with Stifel, Nicolaus & Company, Incorporated (“Stifel Nicolaus Weisel”) pursuant to which we had the ability to issue and sell, from time to time over a 12-month period through or to Stifel Nicolaus Weisel, shares of our common stock having an aggregate offering price of up to $100.0 million (the “ATM program”). The ATM program was conducted pursuant to the Company’s automatic shelf registration statement on Form S-3 (File No. 333-162709), filed by the Company on October 28, 2009 with the SEC, and a prospectus supplement, filed by the Company on February 2, 2011 with the SEC. Sales of the Company’s common stock in the offering were made by means of ordinary brokers’ transactions on the Nasdaq, in privately negotiated transactions, or otherwise at prevailing market prices at the time of sale. Set forth below is information regarding our ATM program. Shares and per share amounts have been adjusted for the three-for-two common stock split effected on September 7, 2012.

Period		Aggregate Number of Shares Sold			Aggregate Gross Proceeds				Aggregate Net Proceeds				Average Sales Price Per Share
First quarter 2011		2,274,568			$	49,575,000			$	48,400,000			$	21.79

There were no subsequent issuances pursuant to the ATM program through February 2, 2012, which was the date on which the ATM program expired. The Company's automatic shelf registration statement expired in October 2012.

Note 4. Leases

We lease certain information systems under capital leases. We also lease other assets under operating leases, which primarily consist of real estate leases for 68 of our 218 service center locations at December 31, 2012.

Certain operating leases provide for renewal options. Renewal options and length of renewals vary by lease and are typically offered at their fair rental value. We have not made any residual value guarantees related to our operating leases; therefore, we have no corresponding liability recorded on our Balance Sheets.

Assets under capital leases are included in property and equipment as follows:

		December 31,
(In thousands)		2012				2011
Information systems		$	9,910			$	12,232
Less: Accumulated amortization		(2,270		)		(3,065		)
		$	7,640			$	9,167

Future minimum annual lease payments as of December 31, 2012 are as follows:

(In thousands)		Capital Leases				Operating Leases				Total
2013		$	3,308			$	15,823			$	19,131
2014		—				11,977				11,977
2015		—				7,566				7,566
2016		—				5,707				5,707
2017		—				4,801				4,801
Thereafter		—				19,136				19,136
Total minimum lease payments		3,308				$	65,010			$	68,318
Less: Amount representing interest		(44		)
Present value of capitalized lease obligations		$	3,264

Aggregate expense under operating leases was $19.1 million, $19.5 million and $21.0 million for 2012, 2011 and 2010, respectively. Certain operating leases include rent escalation provisions, which we recognize as expense on a straight-line basis.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 5. Income Taxes

The components of the provision for income taxes are as follows:

		Year Ended December 31,
(In thousands)		2012				2011				2010
Current:
Federal		$	74,074			$	27,470			$	34,255
State		11,890				9,796				6,896
		85,964				37,266				41,151
Deferred:
Federal		14,978				39,934				6,695
State		2,704				3,414				929
		17,682				43,348				7,624
Total provision for income taxes		$	103,646			$	80,614			$	48,775

The following is a reconciliation of the U.S. statutory federal income tax rates with our effective income tax rates for 2012, 2011 and 2010:

		Year Ended December 31,
(In thousands)		2012				2011				2010
Tax provision at statutory rate		$	95,584			$	77,029			$	43,549
State income taxes, net of federal benefit		10,211				7,480				5,002
Meals and entertainment disallowance		828				721				616
Tax credits		(2,609		)		(4,453		)		(744		)
Other, net		(368		)		(163		)		352
Total provision for income taxes		$	103,646			$	80,614			$	48,775

Deferred tax assets and liabilities consist of the following:

		December 31,
(In thousands)		2012				2011
Deferred tax assets:
Claims and insurance reserves		$	32,499			$	30,003
Allowance for doubtful accounts		2,829				2,827
Accrued vacation		12,399				9,339
Deferred compensation		17,734				14,441
Other		9,764				5,992
Total deferred tax assets		75,225				62,602
Valuation allowance		(559		)		—
Net deferred tax assets		74,666				62,602
Deferred tax liabilities:
Depreciation and amortization		(197,875		)		(169,309		)
Unrecognized revenue		(8,171		)		(6,995		)
Other		(1,752		)		(1,748		)
Total deferred tax liabilities		(207,798		)		(178,052		)
Net deferred tax liability		$	(133,132	)		$	(115,450	)

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Our net deferred tax liability consists of the following:

		December 31,
(In thousands)		2012				2011
Current deferred tax asset		$	20,054			$	19,466
Noncurrent deferred tax liability		(153,186		)		(134,916		)
Net deferred tax liability		$	(133,132	)		$	(115,450	)

As of December 31, 2012, the Company had various state tax credit carryforwards of approximately $3.8 million that are scheduled to expire in five to fifteen years. As of December 31, 2012, the Company has established a valuation allowance in the amount of $559,000 due to the uncertainty of realization of these tax credits.

We are subject to U.S. federal income tax, as well as income tax of multiple state tax jurisdictions. We remain open to examination by the Internal Revenue Service for tax years 2009 through 2012. We remain open to examination by state tax jurisdictions for tax years 2008 through 2012.

Changes in our liability for unrecognized tax benefits could affect our effective tax rate, if recognized, but we do not expect any material changes within the next twelve months. The Company's liability for unrecognized tax benefits was immaterial as of December 31, 2012 and 2011. Interest and penalties related to uncertain tax positions, which are immaterial, are recorded in our Provision for Income Taxes on our Statement of Operations.

Note 6. Related Person Transactions

Family Relationships

Each of Earl E. Congdon, John R. Congdon, David S. Congdon and John R. Congdon, Jr. are related to one another and served in various executive management positions and/or on our Board of Directors during 2012. We have entered into amended and restated employment agreements with Earl E. Congdon and David S. Congdon, which are incorporated by reference as exhibits to our Annual Report on Form 10-K. We regularly disclose the amount of compensation that we pay to these individuals, as well as any of their family members employed by us and whose compensation from time to time may require disclosure, in the proxy statement for our Annual Meeting of Shareholders.

During 2012, John R. Congdon resigned from his position as Senior Vice President but continues to be employed by the Company. In connection with his resignation as a Senior Vice President, the Board of Directors and Mr. Congdon agreed to terminate the amended and restated employment agreement between the Company and John R. Congdon.

Transactions with Old Dominion Truck Leasing, Inc.

Old Dominion Truck Leasing, Inc. (“Leasing”) is a North Carolina corporation whose voting stock is owned by an Earl E. Congdon Revocable Trust; the John R. Congdon Revocable Trust; and members of Earl E. Congdon’s and John R. Congdon’s families. Leasing is primarily engaged in the business of purchasing and leasing tractors, trailers and other vehicles. John R. Congdon is Chairman of the Board of Leasing, and Earl E. Congdon is Vice Chairman of the Board of Leasing. Since 1986, we have combined our requirements with Leasing for the purchase of tractors, trailers, equipment, parts, tires and fuel. We believe that the termination of this arrangement would not have a material adverse impact on our financial results.

We purchased $239,000, $278,000 and $242,000 of maintenance and other services from Leasing in 2012, 2011 and 2010, respectively. We intend to continue to purchase maintenance and other services from Leasing, provided that Leasing’s prices continue to be favorable to us.

We also paid Leasing $86,000 for leased equipment in 2010. These payments were for long-term leases for tractors used in our linehaul operations. We received no commission or other financial benefit from Leasing or any other party in connection with these lease transactions. We did not lease any equipment from Leasing in 2012 or 2011.

We charged Leasing $18,000, $18,000 and $17,000 for the rental of property in 2012, 2011 and 2010, respectively. No other services were provided to Leasing for the years ended December 31, 2012, 2011 and 2010.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Split-Dollar Life Insurance Policies

We are the owner of two split-dollar life insurance contracts insuring the life of John R. Congdon. The net cash surrender value for these policies was $6.8 million and $6.6 million at December 31, 2012 and 2011, respectively, and is included on our Balance Sheets under the caption “Other assets.” At December 31, 2012, these policies provided for an aggregate of $8.9 million in net death benefits due to the Company, of which we have endorsed $2.0 million to Mr. Congdon’s children.

Note 7. Employee Benefit Plans

Defined Contribution Plan

Substantially all employees meeting certain service requirements are eligible to participate in our 401(k) employee retirement plan. Employee contributions are limited to a percentage of their compensation, as defined in the plan. We make contributions based upon the greater of a percentage of employee contributions or ten percent of net income. Company contributions for 2012, 2011 and 2010 were $16.9 million, $13.9 million and $7.6 million, respectively.

Deferred Compensation Plan

We maintain a nonqualified deferred compensation plan for the benefit of certain eligible employees whose contributions to the 401(k) employee retirement plan are limited due to provisions of the Internal Revenue Code. Participating employees may elect to defer receipt of a percentage of their compensation, as defined in the plan, and the deferred amount is credited to each participant’s deferred compensation account. The plan is not funded and the Company does not make a matching contribution to this plan. Although the plan is not funded, participants are allowed to select investment options for which their deferrals and future earnings are deemed to be invested. Participant accounts are adjusted daily to reflect participant deferrals and the performance of their deemed investments. The amounts owed to the participants totaled $30.0 million and $24.6 million at December 31, 2012 and 2011, respectively.

Note 8. Share-Based Compensation

On May 16, 2005, our Board of Directors approved, and the Company adopted, the Old Dominion Freight Line, Inc. Phantom Stock Plan, as amended effective January 1, 2009, May 18, 2009 and May 17, 2011 (the “Phantom Stock Plan”). The Phantom Stock Plan expired in May 2012; however, the Board of Directors approved the Old Dominion Freight Line, Inc. 2012 Phantom Stock Plan (the "2012 Plan") in October 2012, as described below. Each share of phantom stock awarded to eligible employees under the Phantom Stock Plan represents a contractual right to receive an amount in cash equal to the fair market value of a share of our common stock on the settlement date, which generally is the earlier of the eligible employee’s (i) termination from the Company after reaching 55 years of age, (ii) death or (iii) disability. No shares of common stock will be issued pursuant to the Phantom Stock Plan, as the awards are settled in cash after the required vesting period has been satisfied and upon termination of employment. The maximum number of shares of phantom stock that were available for awards under the Phantom Stock Plan was 843,750. Our Board of Directors approved the initial grant under this plan at its January 2006 meeting and authorized grants annually thereafter until the Phantom Stock Plan's expiration.

Phantom Stock Plan awards vest upon the earlier to occur of the following: the date of a change of control in our ownership; the fifth anniversary of the grant date of the award, provided the participant is employed by us on that date; the date of the participant’s death while employed by us; the date of the participant’s total disability; or the date the participant attains the age of 65 while employed by us. Awards that are not vested upon termination of employment are forfeited. If termination occurs prior to attaining the age of 55, all vested and unvested awards are generally forfeited unless the termination results from death or total disability. The Phantom Stock Plan does, however, provide the Board of Directors with discretionary authority to modify and/or accelerate the vesting of awards.

On May 28, 2008, our Board of Directors approved, and the Company adopted, the Old Dominion Freight Line, Inc. Director Phantom Stock Plan, as amended on April 1, 2011 (the “Director Phantom Stock Plan” and together with the Phantom Stock Plan, the “Phantom Plans”). Under the Director Phantom Stock Plan, each non-employee eligible director shall be granted an annual award of phantom shares equal to $50,000 on the grant date. Prior to the 2011 grant, the annual award to each non-employee eligible director was equal to $30,000 on the grant date. For each vested share, participants are entitled to an amount in cash equal to the fair market value of a share of our common stock on the date that service as a director terminates for any reason. No shares of common stock will be issued pursuant to the Director Phantom Stock Plan, as the awards are

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

settled in cash. Our Board of Directors approved the initial grant under this plan at its May 2008 meeting and have authorized grants annually thereafter.

Director Phantom Stock Plan awards vest upon the earlier to occur of the following: the one-year anniversary of the grant date; the date of the first annual meeting of shareholders that occurs after the grant date provided the participant is still in service as a director; the date of a change of control in our ownership provided that the participant is still in service as a director; or the date of the participant’s death or total disability while still in service as a director. Awards that are not vested upon termination of service as a director are forfeited.

A summary of the changes in the number of outstanding phantom stock awards during the year ended December 31, 2012 for the Phantom Plans is provided below. Of these awards, 277,701 and 201,876 phantom shares were vested at December 31, 2012 and 2011, respectively.

		Phantom Stock Plan			Director Phantom Stock Plan
Balance of shares outstanding at December 31, 2011		422,173			50,231
Granted		111,661			10,125
Settled		(61,195	)		—
Forfeited		(5,012	)		—
Balance of shares outstanding at December 31, 2012		467,627			60,356

Provisions for the granting of phantom stock shares under the Phantom Stock Plan expired in May 2012. The Board of Directors, however, authorized grants outside the Phantom Stock Plan in July and August of 2012 to retiring employees totaling 4,481 phantom shares with terms and conditions similar to those in the Phantom Stock Plan. These shares vested immediately and the settlement resulted in additional compensation expense of $129,000.

On October 30, 2012, our Board of Directors approved and we adopted the 2012 Plan. Under the 2012 Plan, 1,000,000 shares of phantom stock may be awarded, each of which represent a contractual right to receive an amount in cash equal to the fair market value of a share of our common stock on the settlement date. Each award vests in 20% increments on the anniversary of the grant date provided that the participant (i) has been continuously employed by us since the grant date, (ii) has been continuously employed by us for ten years and (iii) has reached the age of 65. Vesting also occurs on the earliest of (i) a change in control, (ii) death or (iii) total disability. Unvested shares are forefeited upon termination of employment, although our Board of Directors has authority to modify and/or accelerate the vesting of awards.

Participants in the 2012 Plan are entitled to receive amounts due on vested shares on the settlement date, which is the earliest of the date of the participant's (i) termination of employment for any reason other than for cause, (ii) death or (ii) disability. Unless the award agreement specifies otherwise, payments will be made in cash over 24 substantially equal monthly payments.

There were no awards of phantom stock made in 2012 under the 2012 Plan.

Awards of phantom stock are accounted for as a liability under The Financial Accounting Standards Board Accounting Standards CodificationTM (“FASC”) 718, Compensation – Stock Compensation. FASC 718 requires changes in the fair value of our liability to be recognized as compensation cost over the requisite service period for the percentage of requisite service rendered each period. Changes in the fair value of the liability that occur after the requisite service period are recognized as compensation cost during the period in which the changes occur. We remeasure the liability for the outstanding awards at the end of each reporting period based on the closing price of our common stock at that date, and the compensation cost is based on the change in fair value for each reporting period. The liability for these awards totaled $16.2 million and $10.9 million at December 31, 2012 and 2011, respectively. Cash payments for settled shares of phantom stock were $1.1 million, $0.5 million and zero for 2012, 2011 and 2010, respectively. Compensation costs totaled $6.4 million, $4.2 million and $4.4 million for 2012, 2011 and 2010, respectively. Unrecognized compensation cost related to all unvested shares as of December 31, 2012 was $3.7 million based on the price of our common stock on that date.

Note 9. Commitments and Contingencies

We are involved in various legal proceedings and claims that have arisen in the ordinary course of our business that have not been fully adjudicated. Many of these are covered in whole or in part by insurance. Our management does not believe that these actions, when finally concluded and determined, will have a material adverse effect upon our financial position, liquidity or results of operations.

Note 10. Quarterly Financial Information (Unaudited)

A summary of our unaudited quarterly financial information for 2012 and 2011 is provided below. Our tonnage levels and revenue mix are subject to seasonal trends common in the motor carrier industry. Financial results in the first quarter are normally lower due to reduced shipments during the winter months. Harsh winter weather can also adversely impact our performance by reducing demand and increasing operating expenses.

		Quarter
(In thousands, except per share data)		First				Second				Third				Fourth				Total
2012
Revenue		$	497,140			$	541,505			$	544,493			$	527,345			$	2,110,483
Operating income		54,218				82,588				80,932				67,516				285,254
Net income		31,095				47,832				51,044				39,481				169,452
Net income per share:
Basic and diluted		0.36				0.56				0.59				0.46				1.97
2011
Revenue		$	422,679			$	480,255			$	494,475			$	485,132			$	1,882,541
Operating income		37,921				64,645				68,194				63,312				234,072
Net income		21,573				39,383				38,631				39,883				139,470
Net income per share:
Basic and diluted		0.26				0.46				0.45				0.46				1.63

Note 11. Subsequent Events

Management evaluated all subsequent events and transactions through the issuance date of these financial statements, and concluded that no subsequent events or transactions have occurred that require recognition or disclosure in our financial statements.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

Old Dominion Freight Line, Inc.

We have audited the accompanying balance sheets of Old Dominion Freight Line, Inc. as of December 31, 2012 and 2011, and the related statements of operations, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2012. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Old Dominion Freight Line, Inc. at December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Old Dominion Freight Line, Inc.'s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2013, expressed an unqualified opinion thereon.

			/s/ Ernst & Young LLP

Charlotte, North Carolina

February 28, 2013