Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

OLD DOMINION FREIGHT LINE, INC.

BALANCE SHEETS

		December 31,
(In thousands, except share and per share data)		2014				2013
ASSETS
Current assets:
Cash and cash equivalents		$	34,787			$	30,174
Customer receivables, less allowances of $9,069 and $8,067, respectively		303,170				248,069
Other receivables		44,730				10,225
Prepaid expenses and other current assets		21,085				21,262
Deferred income taxes		29,371				23,249
Total current assets		433,143				332,979
Property and equipment:
Revenue equipment		1,158,108				1,009,936
Land and structures		1,088,372				990,256
Other fixed assets		321,310				266,563
Leasehold improvements		6,982				6,378
Total property and equipment		2,574,772				2,273,133
Less: Accumulated depreciation		(831,527		)		(730,074		)
Net property and equipment		1,743,245				1,543,059
Goodwill		19,463				19,463
Other assets		40,386				36,588
Total assets		$	2,236,237			$	1,932,089
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	45,314			$	36,788
Compensation and benefits		106,200				97,187
Claims and insurance accruals		42,271				38,784
Other accrued liabilities		26,139				21,480
Income taxes payable		—				2,168
Current maturities of long-term debt		35,714				35,715
Total current liabilities		255,638				232,122
Long-term debt		120,000				155,714
Other non-current liabilities		145,752				123,054
Deferred income taxes		220,783				189,117
Total long-term liabilities		486,535				467,885
Total liabilities		742,173				700,007
Commitments and contingent liabilities
Shareholders’ equity
Common stock - $0.10 par value, 140,000,000 shares authorized, 86,094,297 and 86,164,917 shares outstanding at December 31, 2014 and 2013, respectively		8,609				8,616
Capital in excess of par value		134,401				134,401
Retained earnings		1,351,054				1,089,065
Total shareholders’ equity		1,494,064				1,232,082
Total liabilities and shareholders’ equity		$	2,236,237			$	1,932,089

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)		2014				2013				2012
Revenue from operations		$	2,787,897			$	2,337,648			$	2,134,579
Operating expenses:
Salaries, wages and benefits		1,381,277				1,170,773				1,066,551
Operating supplies and expenses		432,675				385,201				378,534
General supplies and expenses		83,165				69,765				58,908
Operating taxes and licenses		83,417				71,599				67,526
Insurance and claims		36,145				30,910				29,681
Communications and utilities		25,507				23,142				19,980
Depreciation and amortization		146,466				127,072				110,743
Purchased transportation		129,312				106,435				94,522
Building and office equipment rents		10,679				11,920				13,514
Miscellaneous expenses, net		17,947				2,393				9,366
Total operating expenses		2,346,590				1,999,210				1,849,325
Operating income		441,307				338,438				285,254
Non-operating expense (income):
Interest expense		6,610				9,620				11,541
Interest income		(108		)		(147		)		(113		)
Other expense, net		2,291				279				728
Total non-operating expense		8,793				9,752				12,156
Income before income taxes		432,514				328,686				273,098
Provision for income taxes		165,000				122,573				103,646
Net income		$	267,514			$	206,113			$	169,452
Earnings per share:
Basic		$3.10				$2.39				$1.97
Diluted		$3.10				$2.39				$1.97
Weighted average shares outstanding:
Basic		86,162,137				86,164,917				86,164,964
Diluted		86,162,137				86,164,917				86,164,964

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, 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
Net income		—			—				—				267,514				267,514
Share repurchases		(71	)		(7		)		—				(5,525		)		(5,532		)
Balance as of December 31, 2014		86,094			$	8,609			$	134,401			$	1,351,054			$	1,494,064

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)		2014				2013				2012
Cash flows from operating activities:
Net income		$	267,514			$	206,113			$	169,452
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		146,466				127,072				110,743
(Gain) loss on sale of property and equipment		(716		)		(5,743		)		78
Deferred income taxes		25,544				32,736				17,682
Changes in assets and liabilities:
Customer and other receivables, net		(54,443		)		(30,063		)		(5,410		)
Prepaid expenses and other assets		(4,316		)		1,910				(7,956		)
Accounts payable		8,526				(8,103		)		2,795
Compensation, benefits and other accrued liabilities		13,672				17,714				13,559
Claims and insurance accruals		7,225				6,952				7,458
Income taxes, net		(36,758		)		(12,027		)		9,264
Other liabilities		18,960				14,105				10,391
Net cash provided by operating activities		391,674				350,666				328,056
Cash flows from investing activities:
Purchase of property and equipment		(367,680		)		(295,606		)		(373,193		)
Proceeds from sale of property and equipment		21,866				11,235				12,018
Net cash used in investing activities		(345,814		)		(284,371		)		(361,175		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		—				—				412
Principal payments under long-term debt agreements		(35,715		)		(38,978		)		(40,284		)
Net (payments) proceeds on revolving line of credit		—				(10,000		)		10,000
Payments for share repurchases		(5,532		)		—				—
Other financing activities, net		—				—				(2		)
Net cash used in financing activities		(41,247		)		(48,978		)		(29,874		)
Increase (decrease) in cash and cash equivalents		4,613				17,317				(62,993		)
Cash and cash equivalents at beginning of year		30,174				12,857				75,850
Cash and cash equivalents at end of year		$	34,787			$	30,174			$	12,857
Income taxes paid		$	176,221			$	102,448			$	74,932
Interest paid		$	9,710			$	11,585			$	13,728
Capitalized interest		$	2,884			$	1,731			$	1,963

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

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.

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.

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.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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. 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.

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 $145.8 million, $126.4 million and $109.8 million for 2014, 2013 and 2012, respectively.

Goodwill

Intangible assets have been acquired in connection with business combinations and are comprised of goodwill. 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 Accounting Standards Codification ("ASC") Topic 350.

In the fourth quarter of 2014, 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.

Claims and Insurance Accruals

At December 31, 2014, 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, 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" on our Statements of Operations, while the related costs for workers' compensation, group health and group dental are charged to "Salaries, wages and benefits" on our Statements of Operations.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Our liability for claims and insurance totaled $107.7 million and $100.4 million at December 31, 2014 and 2013, respectively. The long-term portions of those reserves were $65.4 million and $61.6 million for 2014 and 2013, 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 $19.3 million, $16.7 million and $11.0 million for 2014, 2013 and 2012, respectively.

Fair Values of Financial Instruments

The carrying values of financial instruments in current assets and current liabilities approximate their fair value due to the short maturities of these instruments. The carrying value of our long-term debt was $155.7 million and $191.4 million at December 31, 2014 and 2013, respectively. The estimated fair value of our long-term debt was $165.5 million and $202.2 million at December 31, 2014 and 2013, respectively. The fair value measurement of our senior notes was determined using a discounted cash flow analysis that factors in current market yields for comparable borrowing arrangements under our credit profile. Since this methodology is based upon market yields for comparable arrangments, the measurement is categorized as Level 2 under the three-level fair value hierarchy as established by the Financial Accounting Standards Board (the “FASB”).

Stock Repurchase Program

On November 10, 2014, we announced that our Board of Directors approved a stock repurchase program authorizing us to repurchase up to an aggregate of $200.0 million of our outstanding common stock. We may repurchase shares from time-to-time in open market purchases or through privately negotiated transactions. The program expires on November 6, 2016. Shares of our common stock repurchased by us under the repurchase program are canceled at the time of repurchase and are authorized but unissued shares of our common stock. As of December 31, 2014, we had repurchased 70,620 shares for approximately $5.5 million and had approximately $194.5 million still authorized under the program.

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)		2014				2013				2012
Acquisition of property and equipment by capital lease		$	—			$	—			$	1,094

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

In addition, during 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

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU supersedes the previous revenue recognition requirements in ASC 605—Revenue Recognition and most industry-specific guidance throughout the ASC. The core principle within this ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The Company continues to assess the method of application and impact, if any, of the adoption of ASU 2014-09 on its financial position, results of operations and cash flows.

In June 2014, the FASB issued ASU 2014-12, Compensation—Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target, which affects vesting and could be achieved after the requisite service period, be treated as a performance condition under the existing guidance in ASC Topic 718. This ASU is effective for annual and interim periods beginning after December 15, 2015, and early adoption is permitted. The Company does not believe the adoption of ASU 2014-12 will have a material impact on its financial position, results of operations or cash flows.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties About and Entity’s Ability to Continue as a Going Concern. The core principle within this ASU provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. This ASU is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company does not believe the adoption of ASU 2014-15 will have a material impact on its financial position, results of operations or cash flows.

Note 2. Long-term Debt

Long-term debt consisted of the following:

		December 31,
(In thousands)		2014				2013
Senior notes		$	155,714			$	191,429
Revolving credit facility		—				—
Total long-term debt		155,714				191,429
Less: Current maturities		(35,714		)		(35,715		)
Total maturities due after one year		$	120,000			$	155,714

We have three outstanding unsecured senior note agreements with an aggregate amount outstanding of $155.7 million at December 31, 2014. 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 4.87% and 4.99% at December 31, 2014 and 2013, 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, as amended on November 7, 2014 (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

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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 remained at 1.0% during 2014 and ranged from 1.0% to 1.125% during 2013. Revolving loans under the sweep program bear interest at the LIBOR Index Rate. There were $63.2 million and $57.7 million of outstanding letters of credit at December 31, 2014 and 2013, 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 were 0.175% during 2014 and ranged from 0.175% to 0.2% during 2013. Letter of credit fees were 1.0% during 2014 and 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 restricted payments, including dividends and/or share repurchases, to (i) $40.0 million during the same fiscal quarter or (ii) $200.0 million in the aggregate after November 7, 2014. We did not declare or pay a dividend on our common stock in 2014 or 2013, and we have no plans to declare or pay a dividend in 2015. During the fourth quarter of 2014 we repurchased $5.5 million of our common stock, which represents the full amount repurchased under the program in 2014.

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, 2014, aggregate maturities of long-term debt are as follows:

(In thousands)
2015	$	35,714
2016	25,000
2017	—
2018	50,000
2019	—
Thereafter	45,000
	$	155,714

Note 3. Leases

We lease certain assets under operating leases, which primarily consist of real estate leases for 46 of our 222 service center locations at December 31, 2014. 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.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Future minimum annual lease payments for assets under operating leases as of December 31, 2014 are as follows:

(In thousands)		Total
2015		$	13,956
2016		10,438
2017		7,522
2018		5,411
2019		2,784
Thereafter		10,671
Total minimum lease payments		$	50,782

Aggregate expense under operating leases was $16.5 million, $17.9 million and $19.1 million for 2014, 2013 and 2012, 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, 2014 or December 31, 2013.

Note 4. Income Taxes

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

		Year Ended December 31,
(In thousands)		2014				2013				2012
Current:
Federal		$	123,598			$	74,202			$	74,074
State		15,858				15,635				11,890
		139,456				89,837				85,964
Deferred:
Federal		21,542				28,593				14,978
State		4,002				4,143				2,704
		25,544				32,736				17,682
Total provision for income taxes		$	165,000			$	122,573			$	103,646

The following is a reconciliation of income tax expense calculated using the U.S. statutory federal income tax rate with our income tax expense for 2014, 2013 and 2012:

		Year Ended December 31,
(In thousands)		2014				2013				2012
Tax provision at statutory rate		$	151,380			$	115,040			$	95,584
State income taxes, net of federal benefit		14,120				12,083				10,211
Meals and entertainment disallowance		959				872				828
Tax credits		(1,307		)		(5,422		)		(2,609		)
Other, net		(152		)		—				(368		)
Total provision for income taxes		$	165,000			$	122,573			$	103,646

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Deferred tax assets and liabilities consist of the following:

		December 31,
(In thousands)		2014				2013
Deferred tax assets:
Claims and insurance reserves		$	36,690			$	35,200
Allowance for doubtful accounts		2,161				1,595
Accrued vacation		19,291				14,873
Deferred compensation		28,648				22,067
Other		12,924				10,648
Total deferred tax assets		99,714				84,383
Valuation allowance		(559		)		(460		)
Net deferred tax assets		99,155				83,923
Deferred tax liabilities:
Depreciation and amortization		(279,324		)		(239,971		)
Unrecognized revenue		(9,506		)		(8,169		)
Other		(1,737		)		(1,651		)
Total deferred tax liabilities		(290,567		)		(249,791		)
Net deferred tax liability		$	(191,412	)		$	(165,868	)

Our net deferred tax liability consists of the following:

		December 31,
(In thousands)		2014				2013
Current deferred tax asset		$	29,371			$	23,249
Noncurrent deferred tax liability		(220,783		)		(189,117		)
Net deferred tax liability		$	(191,412	)		$	(165,868	)

As of December 31, 2014, the Company had various state tax credit carryforwards of approximately $4.3 million that are scheduled to expire in five to fifteen years.

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 2011 through 2014. We remain open to examination by various state tax jurisdictions for tax years 2010 through 2014.

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, 2014 and 2013. 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 5. Related Party 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 2014. 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.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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, Jr. serves as Chairman of the Board of Leasing. Earl E. Congdon and David S. Congdon currently serve as members of Leasing’s Board of Directors. We collaborate with Leasing for the purchase of certain equipment, although we do not believe this has a material impact on our financial results.

We purchased $298,000, $299,000 and $239,000 of maintenance and other services from Leasing in 2014, 2013 and 2012, 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 $17,500, $18,000 and $18,000 for the rental of property in 2014, 2013 and 2012, respectively. No other services were provided to Leasing for the years ended December 31, 2014, 2013 and 2012.

Note 6. 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 the employee’s compensation, as defined in the plan. We match a percentage of our employees’ contributions up to certain maximum limits. In addition, we may also provide a discretionary matching contribution as specified in the plan. Our employer contributions, net of forfeitures, for 2014, 2013 and 2012 were $26.4 million, $20.6 million and $16.9 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 $42.7 million and $36.6 million at December 31, 2014 and 2013, respectively.

Note 7. 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, as amended on January 29, 2015 (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 modify and/or accelerate the vesting of awards.

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, May 17, 2011 and January 29, 2015 (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

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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)		2014				2013				2012
Cash payments for settled shares		$	2,401			$	1,404			$	1,077
Compensation costs		11,249				7,639				5,404

Unrecognized compensation cost for all unvested shares under the Employee Phantom Plans as of December 31, 2014 was $15.0 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, February 20, 2014 and August 7, 2014 (the “Director Phantom Stock Plan” and together with the Employee Phantom Plans, the “Phantom Plans”). Under the Director Phantom Stock Plan, each eligible non-employee director shall be granted an annual award of phantom shares. Each eligible non-employee director received shares equal to $80,000 on the 2014 grant date and shares equal to $50,000 on each of the 2013 and 2012 grant dates. 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 to be made 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.

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)		2014				2013				2012
Cash payments for settled shares		$	—			$	—			$	—
Compensation costs		2,193				1,214				989

Unrecognized compensation cost for all unvested shares under the Director Phantom Stock Plan as of December 31, 2014 was $0.3 million based on the price of our common stock on that date.

OLD DOMINION FREIGHT LINE, INC.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

A summary of the changes in the number of outstanding phantom stock awards during the year ended December 31, 2014 for the Phantom Plans is provided below. Of these awards, 325,921 and 266,740 phantom shares were vested at December 31, 2014 and 2013, respectively.

		Employee Phantom Plans			Director Phantom Stock Plan			Total
Balance of shares outstanding at December 31, 2013		489,657			67,517			557,174
Granted		62,731			8,220			70,951
Settled		(992	)		—			(992	)
Forfeited		—			—			—
Balance of shares outstanding at December 31, 2014		551,396			75,737			627,133

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

		December 31,
(In thousands)		2014				2013
Employee Phantom Plans		$	29,058			$	20,210
Director Phantom Stock Plan		5,614				3,422
Total		$	34,672			$	23,632

Note 8. Commitments and Contingencies

We are involved in various legal proceedings and claims that have arisen in the ordinary course of our business and have not been fully adjudicated, some of which are covered in whole or in part by insurance. Certain of these claims include class-action allegations. We do not believe that the resolution of any of these legal proceedings or claims will have a material adverse effect upon our financial position, results of operations or cash flows.

Note 9. Quarterly Financial Information (Unaudited)

A summary of our unaudited quarterly financial information for 2014 and 2013 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
2014
Revenue		$	620,276			$	702,987			$	743,586			$	721,048			$	2,787,897
Operating income		80,052				122,695				126,262				112,298				441,307
Net income		45,887				73,849				77,909				69,869				267,514
Earnings per share:
Basic and diluted		0.53				0.86				0.90				0.81				3.10
2013
Revenue		$	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
Earnings per share:
Basic and diluted		0.47				0.68				0.70				0.55				2.39

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, 2014 and 2013, 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, 2014. 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, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, 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, 2014, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2015 expressed an unqualified opinion thereon.

			/s/ Ernst & Young LLP

Charlotte, North Carolina

February 26, 2015