Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

OLD DOMINION FREIGHT LINE, INC.

BALANCE SHEETS

		December 31,
(In thousands, except share and per share data)		2013				2012
ASSETS
Current assets:
Cash and cash equivalents		$	30,174			$	12,857
Customer receivables, less allowances of $8,067 and $8,561, respectively		248,069				219,039
Other receivables		10,225				1,324
Prepaid expenses and other current assets		21,262				21,754
Deferred income taxes		23,249				20,054
Total current assets		332,979				275,028
Property and equipment:
Revenue equipment		1,009,936				922,030
Land and structures		990,256				874,768
Other fixed assets		266,563				225,298
Leasehold improvements		6,378				6,128
Total property and equipment		2,273,133				2,028,224
Less: Accumulated depreciation		(730,074		)		(648,919		)
Net property and equipment		1,543,059				1,379,305
Goodwill		19,463				19,463
Other assets		36,588				38,718
Total assets		$	1,932,089			$	1,712,514
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	36,788			$	44,891
Compensation and benefits		97,187				80,047
Claims and insurance accruals		38,784				33,990
Other accrued liabilities		21,480				20,906
Income taxes payable		2,168				6,327
Current maturities of long-term debt		35,715				38,978
Total current liabilities		232,122				225,139
Long-term debt		155,714				201,429
Other non-current liabilities		123,054				106,791
Deferred income taxes		189,117				153,186
Total long-term liabilities		467,885				461,406
Total liabilities		700,007				686,545
Commitments and contingent liabilities
Shareholders’ equity
Common stock - $0.10 par value, 140,000,000 shares authorized, 86,164,917 shares outstanding at December 31, 2013 and 2012		8,616				8,616
Capital in excess of par value		134,401				134,401
Retained earnings		1,089,065				882,952
Total shareholders’ equity		1,232,082				1,025,969
Total liabilities and shareholders’ equity		$	1,932,089			$	1,712,514

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)		2013				2012				2011
Revenue from operations		$	2,337,648			$	2,134,579			$	1,903,800
Operating expenses:
Salaries, wages and benefits		1,170,773				1,066,551				956,079
Operating supplies and expenses		385,201				378,534				355,186
General supplies and expenses		69,765				58,908				49,900
Operating taxes and licenses		71,599				67,526				63,284
Insurance and claims		30,910				29,681				27,693
Communications and utilities		23,142				19,980				18,104
Depreciation and amortization		127,072				110,743				90,820
Purchased transportation		106,435				94,522				84,516
Building and office equipment rents		11,920				13,514				13,689
Miscellaneous expenses, net		2,393				9,366				10,457
Total operating expenses		1,999,210				1,849,325				1,669,728
Operating income		338,438				285,254				234,072
Non-operating expense (income):
Interest expense		9,620				11,541				14,067
Interest income		(147		)		(113		)		(180		)
Other expense, net		279				728				101
Total non-operating expense		9,752				12,156				13,988
Income before income taxes		328,686				273,098				220,084
Provision for income taxes		122,573				103,646				80,614
Net income		$	206,113			$	169,452			$	139,470
Earnings per share:
Basic		$2.39				$1.97				$1.63
Diluted		$2.39				$1.97				$1.63
Weighted average shares outstanding:
Basic		86,164,917				86,164,964				85,719,728
Diluted		86,164,917				86,164,964				85,719,728

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, 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
Net income		—			—				—				206,113				206,113
Balance as of December 31, 2013		86,165			$	8,616			$	134,401			$	1,089,065			$	1,232,082

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)		2013				2012				2011
Cash flows from operating activities:
Net income		$	206,113			$	169,452			$	139,470
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		127,072				110,743				90,820
(Gain) loss on sale of property and equipment		(5,743		)		78				1,263
Deferred income taxes		32,736				17,682				43,348
Changes in assets and liabilities:
Customer and other receivables, net		(30,063		)		(5,410		)		(40,414		)
Prepaid expenses and other assets		1,910				(7,956		)		(2,952		)
Accounts payable		(8,103		)		2,795				12,875
Compensation, benefits and other accrued liabilities		17,714				13,559				17,626
Claims and insurance accruals		6,952				7,458				6,696
Income taxes, net		(12,027		)		9,264				3,224
Other liabilities		14,105				10,391				5,978
Net cash provided by operating activities		350,666				328,056				277,934
Cash flows from investing activities:
Purchase of property and equipment		(295,606		)		(373,193		)		(250,768		)
Proceeds from sale of property and equipment		11,235				12,018				5,436
Net cash used in investing activities		(284,371		)		(361,175		)		(245,332		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		—				412				96,010
Principal payments under long-term debt agreements		(38,978		)		(40,284		)		(40,382		)
Net (payments) proceeds on revolving line of credit		(10,000		)		10,000				(66,230		)
Proceeds from stock issuance, net of issuance costs		—				—				48,400
Other financing activities, net		—				(2		)		—
Net cash (used in) provided by financing activities		(48,978		)		(29,874		)		37,798
Increase (decrease) in cash and cash equivalents		17,317				(62,993		)		70,400
Cash and cash equivalents at beginning of year		12,857				75,850				5,450
Cash and cash equivalents at end of year		$	30,174			$	12,857			$	75,850
Income taxes paid		$	102,448			$	74,932			$	34,579
Interest paid		$	11,585			$	13,728			$	14,011
Capitalized interest		$	1,731			$	1,963			$	895

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 other logistics services from a single integrated organization. In addition to our core LTL services, we offer a broad range of value-added services including international freight forwarding, ground and air expedited transportation, container delivery, truckload brokerage, supply chain consulting, warehousing and consumer household pickup and delivery.

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.

Prior Period Adjustments

During the second quarter of 2013, we determined that the costs of purchased transportation for certain truckload brokerage and international freight forwarding services, which were previously netted against revenue, met the criteria to be presented separately in operating expenses in accordance with Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition. As a result, the accompanying Statements of Operations include correcting adjustments to increase both revenue and purchased transportation expense in the amounts of $24.1 million and $21.3 million for the years ended December 31, 2012 and 2011, respectively. There was no effect on retained earnings, operating income, net income, earnings per share or cash flows for any period presented.

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.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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.

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 $126.4 million, $109.8 million and $89.9 million for 2013, 2012 and 2011, 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 as a single reporting unit, unless circumstances dictate more frequent assessments, and in accordance with Accounting Standards Update (“ASU”) 2011-08, Testing Goodwill for Impairment. ASU 2011-08 permits an initial assessment, commonly referred to as "step zero", 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 and also provides a basis for determining whether it is necessary to perform the two-step goodwill impairment test required by ASC Topic 350.

In the fourth quarter of 2013, 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, 2013 and 2012. Accumulated amortization for these assets was $6.4 million and $5.7 million as of December 31, 2013 and 2012, respectively. The net carrying amounts of our other intangible assets are included in “Other assets” on our Balance Sheets. Amortization expense was $0.7 million for 2013 and $0.9 million for 2012 and 2011, respectively. Annual amortization expense for the next five years for these intangible assets is estimated to be:

(In thousands)
2014	$	695
2015	$	495
2016	$	315
2017	$	210
2018	$	8

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, 2013, 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 a deductible of $1.0 million per occurrence for workers' compensation claims. We also had an SIR of $400,000 per occurrence (with a $400,000 aggregate over our retention level) for group health claims.

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 $100.4 million and $93.5 million at December 31, 2013 and 2012, respectively. The long-term portions of those reserves were $61.6 million and $59.5 million for 2013 and 2012, respectively, which were included in “Other non-current liabilities” on our Balance Sheets.

Share-Based Compensation

Awards of phantom stock to employees and directors are accounted for as a liability under ASC topic 718, Compensation - Stock Compensation. ASC topic 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.

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 $16.7 million, $11.0 million and $8.3 million for 2013, 2012 and 2011, respectively.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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.

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

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 $191.4 million and $240.4 million at December 31, 2013 and 2012, respectively. The estimated fair value of our long-term debt was $196.5 million and $247.9 million at December 31, 2013 and 2012, 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.

Supplemental Disclosure of Noncash Investing and Financing Activities

Investing and financing activities that are not reported in the Statements of Cash Flows due to their non-cash nature are summarized below:

		Year Ended December 31,
(In thousands)		2013				2012				2011
Acquisition of property and equipment by capital lease		$	—			$	1,094			$	8,570

In addition, during the fourth quarter of 2013, we completed a nonmonetary exchange of property. We acquired a service center with a fair value of $6.6 million, which resulted in a gain of $3.4 million. The resulting gain was recorded in "Miscellaneous expenses, net" on our Statements of Operations.

Recent Accounting Pronouncements

The FASB has issued various new accounting standards and updates during 2013 that are effective for future periods. We have evaluated these new standards and believe the adoption will not materially impact our financial condition or results of operations.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2. Long-term Debt

Long-term debt consisted of the following:

		December 31,
(In thousands)		2013				2012
Senior notes		$	191,429			$	227,143
Revolving credit facility		—				10,000
Capitalized lease and other obligations		—				3,264
Total long-term debt		191,429				240,407
Less: Current maturities		(35,715		)		(38,978		)
Total maturities due after one year		$	155,714			$	201,429

We have three outstanding unsecured senior note agreements with an aggregate amount outstanding of $191.4 million at December 31, 2013. 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 weighted average interest rate on our outstanding senior note agreements was 4.99% and 5.07% at December 31, 2013 and 2012, 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 dated 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. We utilize the sweep program to manage our daily cash needs, as the sweep program 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 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% based upon the ratio of debt to total capitalization. The Applicable Margin Percentage was 1.0% and 1.125% at December 31, 2013 and 2012, respectively, and ranged from 1.0% to 1.125% during 2013. Revolving loans under the sweep program bear interest at the LIBOR Index Rate.

There was no outstanding balance of borrowings on the line of credit facility at December 31, 2013 and there was $10.0 million outstanding at December 31, 2012. There were $57.7 million and $52.4 million of outstanding letters of credit at December 31, 2013 and 2012, respectively.

Commitment fees ranging from 0.175% to 0.30% are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement based upon the ratio of debt to total capitalization. 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 2013. 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 2013 or 2012, and we have no plans to declare or pay a dividend in 2014.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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.

As of December 31, 2013, aggregate maturities of long-term debt are as follows:

(In thousands)
2014	$	35,715
2015	35,714
2016	25,000
2017	—
2018	50,000
Thereafter	45,000
	$	191,429

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 assets under operating leases, which primarily consist of real estate leases for 63 of our 221 service center locations at December 31, 2013. Certain operating leases provide for renewal options, which can 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.

Future minimum annual lease payments for assets under operating leases as of December 31, 2013 are as follows:

(In thousands)		Total
2014		$	15,931
2015		10,833
2016		7,508
2017		5,684
2018		4,623
Thereafter		14,210
Total minimum lease payments		$	58,789

Aggregate expense under operating leases was $17.9 million, $19.1 million and $19.5 million for 2013, 2012 and 2011, respectively. Certain operating leases include rent escalation provisions, which we recognize as expense on a straight-line basis.

We did not have any assets under capital leases at December 31, 2013. At December 31, 2012, we leased certain information systems under capital leases with a gross carrying value of $9.9 million and accumulated amortization of $2.3 million.

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)		2013				2012				2011
Current:
Federal		$	74,202			$	74,074			$	27,470
State		15,635				11,890				9,796
		89,837				85,964				37,266
Deferred:
Federal		28,593				14,978				39,934
State		4,143				2,704				3,414
		32,736				17,682				43,348
Total provision for income taxes		$	122,573			$	103,646			$	80,614

The following is a reconciliation of the U.S. statutory federal income tax rates with our effective income tax rates for 2013, 2012 and 2011:

		Year Ended December 31,
(In thousands)		2013				2012				2011
Tax provision at statutory rate		$	115,040			$	95,584			$	77,029
State income taxes, net of federal benefit		12,083				10,211				7,480
Meals and entertainment disallowance		872				828				721
Tax credits		(5,422		)		(2,609		)		(4,453		)
Other, net		—				(368		)		(163		)
Total provision for income taxes		$	122,573			$	103,646			$	80,614

Deferred tax assets and liabilities consist of the following:

		December 31,
(In thousands)		2013				2012
Deferred tax assets:
Claims and insurance reserves		$	35,200			$	32,499
Allowance for doubtful accounts		1,595				2,829
Accrued vacation		14,873				12,399
Deferred compensation		22,067				17,734
Other		10,648				9,764
Total deferred tax assets		84,383				75,225
Valuation allowance		(460		)		(559		)
Net deferred tax assets		83,923				74,666
Deferred tax liabilities:
Depreciation and amortization		(239,971		)		(197,875		)
Unrecognized revenue		(8,169		)		(8,171		)
Other		(1,651		)		(1,752		)
Total deferred tax liabilities		(249,791		)		(207,798		)
Net deferred tax liability		$	(165,868	)		$	(133,132	)

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Our net deferred tax liability consists of the following:

		December 31,
(In thousands)		2013				2012
Current deferred tax asset		$	23,249			$	20,054
Noncurrent deferred tax liability		(189,117		)		(153,186		)
Net deferred tax liability		$	(165,868	)		$	(133,132	)

As of December 31, 2013, the Company had various state tax credit carryforwards of approximately $3.8 million that are scheduled to expire in five to fifteen years. The Company recorded a valuation allowance in the amount of $460,000 and $559,000 as of December 31, 2013 and 2012, respectively, 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 2010 through 2013. We remain open to examination by various state tax jurisdictions for tax years 2009 through 2013.

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, 2013 and 2012. Interest and penalties related to uncertain tax positions, which are immaterial, are recorded in our Provision for Income Taxes on our Statements of Operations.

Note 6. Related Person Transactions

Family Relationships

Each of Earl E. Congdon, David S. Congdon and John R. Congdon, Jr. are related to one another and served in various management positions and/or on our Board of Directors during 2013. We have 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, who was the brother of Earl E. Congdon, resigned from his position as Senior Vice President. At that time, the Board of Directors and John R. Congdon mutually agreed to terminate his amended and restated employment agreement. He continued to be employed by the Company in a management position and as a member of our Board of Directors until his death in October 2013.

Transactions with Old Dominion Truck Leasing, Inc.

Old Dominion Truck Leasing, Inc. (“Leasing”) is a North Carolina corporation whose voting stock is beneficially owned by members of the Congdon family. Leasing is primarily engaged in the business of leasing tractors, trailers and other vehicles as well as providing contract dedicated fleet services. John R. Congdon served as Chairman of the Board of Leasing until October 2013 and was succeeded in that position by John R. Congdon, Jr. Earl E. Congdon and David S. Congdon currently serve as members of Leasing’s Board of Directors. 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 $299,000, $239,000 and $278,000 of maintenance and other services from Leasing in 2013, 2012 and 2011, 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 charged Leasing $18,000, $18,000 and $18,000 for the rental of property in 2013, 2012 and 2011, respectively. No other services were provided to Leasing for the years ended December 31, 2013, 2012 and 2011.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Split-Dollar Life Insurance Policies

We owned two split-dollar life insurance contracts insuring the life of John R. Congdon that were terminated upon Mr. Congdon's death in October 2013. The death benefits under these policies totaled an aggregate of $9.3 million, of which we received $7.3 million in December 2013 and Mr. Congdon’s beneficiaries received $2.0 million. At December 31, 2012, the net cash surrender value for these policies totaled $6.8 million and was included on our Balance Sheet under the caption “Other Assets.”

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 2013, 2012 and 2011 were $20.6 million, $16.9 million and $13.9 million, respectively.

Deferred Compensation Plan

We maintain a nonqualified deferred compensation plan for the benefit of certain eligible employees, including those 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 $36.6 million and $30.0 million at December 31, 2013 and 2012, respectively.

Note 8. Share-Based Compensation

On October 30, 2012, our Board of Directors approved and we adopted the Old Dominion Freight Line, Inc. 2012 Phantom Stock Plan (the "2012 Phantom Stock Plan"). Under the 2012 Phantom Stock Plan, 1,000,000 shares of phantom stock may be awarded, each of which 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 is the earliest of the date of the participant's (i) termination of employment for any reason other than for cause, (ii) death or (iii) total disability. 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. No shares of common stock will be issued pursuant to the 2012 Phantom Stock Plan, as the awards are settled in cash after the required vesting period has been satisfied and upon termination of employment. Unvested shares are forefeited upon termination of employment, although our Board of Directors has authority to

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

modify and/or accelerate the vesting of awards. Our Board of Directors approved the initial grants under the 2012 Phantom Stock Plan at its January 2013 meeting.

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” and together with the 2012 Phantom Stock Plan, the “Employee Phantom Plans”). The Phantom Stock Plan expired in May 2012; however, grants under the Phantom Stock Plan remain outstanding. 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) total 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.

Phantom Stock Plan awards vest upon the earlier to occur of the following: (i) the date of a change of control in our ownership; (ii) the fifth anniversary of the grant date of the award, provided the participant is employed by us on that date; (iii) the date of the participant’s death while employed by us; (iv) the date of the participant’s total disability; or (v) 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.

A summary of cash payments for settled shares and compensation costs recognized in “Salaries, wages and benefits” on our Statements of Operations for the Employee Phantom Plans is provided below:

		Year Ended December 31,
(In thousands)		2013				2012				2011
Cash payments for settled shares		$	1,404			$	1,077			$	519
Compensation costs		7,639				5,404				3,719

Unrecognized compensation cost for all unvested shares under the Employee Phantom Plans as of December 31, 2013 was $7.6 million based on the price of our common stock on that date.

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 Employee Phantom Plans, 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 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: (i) the one-year anniversary of the grant date; (ii) 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; (iii) the date of a change of control in our ownership provided that the participant is still in service as a director; or (iv) 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.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

A summary of cash payments for settled shares and compensation costs recognized in “Miscellaneous expenses, net” on our Statements of Operations for the Director Phantom Stock Plan is provided below:

		Year Ended December 31,
(In thousands)		2013				2012				2011
Cash payments for settled shares		$	—			$	—			$	6
Compensation costs		1,214				989				513

Unrecognized compensation cost for all unvested shares under the Director Phantom Stock Plan as of December 31, 2013 was $0.2 million based on the price of our common stock on that date.

A summary of the changes in the number of outstanding phantom stock awards during the year ended December 31, 2013 for the Phantom Plans is provided below. Of these awards, 266,740 and 277,701 phantom shares were vested at December 31, 2013 and 2012, respectively.

		Employee Phantom Plans			Director Phantom Stock Plan			Total
Balance of shares outstanding at December 31, 2012		467,627			60,356			527,983
Granted		92,120			7,161			99,281
Settled		(70,090	)		—			(70,090	)
Forfeited		—			—			—
Balance of shares outstanding at December 31, 2013		489,657			67,517			557,174

The liability for phantom stock awards under the Phantom Plans consists of the following:

		December 31,
(In thousands)		2013				2012
Employee Phantom Plans		$	20,210			$	13,976
Director Phantom Stock Plan		3,422				2,207
Total		$	23,632			$	16,183

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, some of which are covered 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.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 10. Quarterly Financial Information (Unaudited)

A summary of our unaudited quarterly financial information for 2013 and 2012 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
2013
Revenue (1)		$	538,416			$	590,304			$	616,458			$	592,470			$	2,337,648
Operating income		65,944				97,573				98,076				76,845				338,438
Net income		40,553				58,255				60,149				47,156				206,113
Net income per share:
Basic and diluted		0.47				0.68				0.70				0.55				2.39
2012
Revenue (1)		$	502,819			$	547,452			$	550,511			$	533,797			$	2,134,579
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

(1)	Our 2012 and first quarter of 2013 revenue has been adjusted for an immaterial correction related to how we present the costs of purchased transportation for certain truckload brokerage and international freight forwarding services. For more information on these adjustments, see Note 1.

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, 2013 and 2012, 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, 2013. 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, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2013, 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, 2013, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated February 28, 2014 expressed an unqualified opinion thereon.

			/s/ Ernst & Young LLP

Charlotte, North Carolina

February 28, 2014