Unless the context requires otherwise, references in this report to "Old Dominion," the "Company," "we," "us" and "our" refer to Old Dominion Freight Line, Inc.

Overview

We are a leading non-union less-than-truckload ("LTL") motor carrier providing multi-regional service among six regions in the United States and next-day and second-day service within each of these regions. We operate as one business segment and offer an expanding array of innovative products and services through our four branded product groups, OD-Domestic, OD-Expedited, OD-Global and OD-Technology with direct service to 48 states within the Southeast, Gulf Coast, Northeast, Midwest, Central and West regions of the country. In addition to domestic LTL services, we offer container delivery services to and from all of North America, Central America, South America and the Far East. We also offer a broad range of expedited, logistical and warehousing services for both our domestic and global markets.

Our revenue is derived from transporting shipments and providing logistical services to our customers, whose demand for our services is generally tied to the overall health of the U.S. domestic economy. We compete with regional, inter-regional and national LTL carriers and, to a lesser extent, with truckload carriers, small package carriers, airfreight carriers and railroads. We believe we provide greater geographic coverage than most of our regional competitors and our transit times are generally faster than those of our principal national competitors. Our diversified mix and scope of regional and inter-regional services enable us to provide our customers with a single source to meet their LTL shipping needs, and we believe this provides us with a distinct advantage over our regional, multi-regional and national competition. Additionally, we offer our services through one operating company, as opposed to many of our competitors that offer a similar mix of services through multiple operating companies or divisions, and we believe this approach allows us to be more responsive to the needs of our customers.

In analyzing the components of our revenue, we monitor changes and trends in the following key metrics:

• Revenue Per Hundredweight - This measurement reflects our pricing policies, which are influenced by competitive market conditions and our growth objectives. Generally, freight is rated by a class system, which is established by the National Motor Freight Traffic Association, Inc. Light, bulky freight typically has a higher class and is priced at higher revenue per hundredweight than dense, heavy freight. Changes in the class, packaging of the freight and length of haul of the shipment can also affect this average. Fuel surcharges, accessorial charges and revenue adjustments, excluding adjustments for undelivered freight, are included in this measurement. Although we include revenue for undelivered freight in this measure, we defer such revenue for financial statement purposes in accordance with our revenue recognition policy. Including deferred revenue in our revenue per hundredweight measurements matches total billed revenue with the corresponding shipments, which we believe results in a better indicator of changes in our yields.

• Weight Per Shipment - Fluctuations in weight per shipment can indicate changes in the class, or mix, of freight we receive from our customers as well as changes in the number of units included in a shipment. Generally, increases in weight per shipment indicate higher demand for our customers' products and overall increased economic activity. Many shippers began consolidating their shipments during 2008 in an effort to reduce the impact of the high cost of diesel fuel on their transportation costs. In doing so, these shippers caused an increase in our weight per shipment by shipping the same volume of goods with fewer shipments. This trend has continued despite the decline in diesel fuel prices.

• Revenue Per Shipment - This measurement is primarily determined by the three metrics listed above and is used, in conjunction with the number of shipments we receive, to calculate total revenue, excluding adjustments for undelivered freight.

Our primary revenue focus is to increase shipment and tonnage growth within our existing infrastructure, generally referred to as increasing density, thereby maximizing asset utilization and labor productivity. We measure density over many different functional areas of our operations including revenue per service center, linehaul load factor, pickup and delivery ("P&D") stops per hour, P&D shipments per hour, platform pounds handled per hour and platform shipments per hour. In addition to our focus on density, it is critical for us to obtain an appropriate yield on the shipments we handle. We manage our yields by focusing on individual account profitability. We believe yield management and improvements in density are key components in our ability to produce profitable growth.

Our primary cost elements are direct wages and benefits associated with the movement of freight; operating supplies and expenses; and depreciation of our equipment fleet and service center facilities. We gauge our overall success in managing these costs by monitoring our operating ratio, a measure of profitability calculated by dividing total operating expenses by revenue, which also allows industry-wide comparisons with our competition.

We continually upgrade our technological capabilities to improve our customer service and lower our operating costs. Our technology provides customers with visibility of their shipments throughout our network, increases the productivity of our workforce and provides key metrics from which we can monitor our processes.

We are subject to market changes in insurance rates, and we continue to evaluate our balance of excess insurance coverage and self-insurance to minimize that cost. We are self-insured for bodily injury and property damage claims up to $2,750,000 per occurrence. Cargo loss and damage claims are self-insured up to $100,000 per occurrence. We are exposed to workers' compensation claims up to $1,000,000 per occurrence, through either self-insurance or insurance deductibles, for the states in which we operate. We are insured for group health claims under a graduated aggregating policy, where we are exposed to claims up to $350,000 per occurrence, plus an additional $235,000 for claims exceeding $650,000. Our long-term disability claims are self-insured to a maximum per individual of $3,000 per month.

The following table sets forth, for the periods indicated, expenses and other items as a percentage of revenue from operations:

                                                   Three Months Ended
                                                        March 31,
                                                   2009           2008
           Revenue from operations                  100.0 %        100.0 %


           Operating expenses:
           Salaries, wages and benefits              59.9           54.7
           Operating supplies and expenses           13.8           20.0
           General supplies and expenses              3.2            3.0
           Operating taxes and licenses               4.0            3.6
           Insurance and claims                       2.3            2.2
           Communications and utilities               1.3            1.1
           Depreciation and amortization              7.8            5.7
           Purchased transportation                   2.7            2.9
           Building and office equipment rents        1.1            1.0
           Miscellaneous expenses, net                0.5            0.1


           Total operating expenses                  96.6           94.3


           Operating income                           3.4            5.7

           Interest expense, net *                    1.1            0.9
           Other expense, net                         0.1            0.2


           Income before income taxes                 2.2            4.6

           Provision for income taxes                 0.9            1.8


           Net income                                 1.3 %          2.8 %

* For the purpose of this table, interest expense is presented net of interest income.

Results of Operations

Key financial and operating metrics for the three-month periods ended March 31,
2009 and 2008 are presented below:



                                          Three Months Ended
                                               March 31,
                                          2009          2008         Change       % Change
 Work days                                     63            64            (1 )       (1.6 )%
 Revenue (in thousands)                 $ 295,143     $ 368,174     $ (73,031 )      (19.8 )%
 Operating ratio                             96.6 %        94.3 %         2.3 %        2.4 %
 Net income (in thousands)              $   3,973     $  10,389     $  (6,416 )      (61.8 )%
 Basic and diluted earnings per share   $    0.11     $    0.28     $   (0.17 )      (60.7 )%
 Total tons (in thousands)                  1,178         1,345          (167 )      (12.4 )%
 Shipments (in thousands)                   1,412         1,711          (299 )      (17.5 )%
 Weight per shipment (lbs.)                 1,668         1,573            95          6.0 %
 Revenue per hundredweight              $   12.57     $   13.78     $   (1.21 )       (8.8 )%
 Revenue per shipment                   $  209.65     $  216.65     $   (7.00 )       (3.2 )%
 Average length of haul (miles)               927           922             5          0.5 %

The first quarter of 2009 presented an unprecedented set of operating challenges. The recessionary economy resulted in exceptionally weak freight demand and a pricing environment as competitive as we have ever experienced. As a result, our tonnage declined 12.4% and revenue declined 19.8% in comparison to the first quarter of 2008. Despite the decline in tonnage, we continued to focus on yield management throughout the quarter by maintaining our pricing discipline. We also focused on matching our labor costs with the decline in revenue and tonnage, improving productivity and managing our variable costs. In doing so, we achieved reductions in almost every major cost category on our Statement of Operations. We believe our ability to operate profitably in the first quarter was substantially attributable to our focus on yield management and cost control; however, the reduction in our costs did not keep pace with the significant decrease in revenue, particularly with respect to fuel surcharges, and our costs generally increased when measured as a percentage of our revenue. As a result, our operating ratio increased to 96.6% from 94.3% for the prior-year quarter and net income decreased 61.8% to $3,973,000 for the first quarter of 2009.

Revenue

The 19.8% decline in first quarter revenue was primarily due to decreases in both tonnage and revenue per hundredweight. The decline in tonnage resulted from the net impact of the 17.5% decrease in shipments and 6.0% increase in weight per shipment. While an increase in weight per shipment is generally an indicator of an improving economy, we believe the increase in the first quarter of 2009 instead is attributable to changes in customer shipping patterns. Many shippers consolidated their freight into heavier shipments in an ongoing effort to reduce their transportation costs. We also believe that freight demand in the LTL industry will not improve until there is a general recovery in the domestic economy or a significant decrease in industry capacity. As a result, we anticipate that we could experience additional declines in shipments and tonnage in future periods when compared to prior-year levels.

Revenue per hundredweight decreased 8.8% to $12.57 in the first quarter of 2009 from $13.78 in the same period of 2008, despite a general rate increase that we implemented on February 16, 2009. Our revenue per hundredweight was negatively impacted by a decrease in fuel surcharge revenue, which resulted from a significant decline in diesel fuel prices during the quarter, as well as a 6.0% increase in weight per shipment. Excluding fuel surcharges, revenue per hundredweight declined only 1%, which further reflects our commitment to maintaining pricing discipline in this competitive environment.

We believe our superior level of customer service differentiates us in the marketplace and has been critical to our ability to maintain our pricing. We continuously monitor the components of our pricing, including base freight rates and fuel surcharges, and address individual account profitability issues with our customers, when necessary, as part of our effort to minimize the negative impact on our profitability that would likely result from a rapid and significant change in any of our operating expenses. However, a prolonged recession and competitive forces may continue to impact our ability to increase our pricing, which could have a material adverse impact on our revenue and net income.

Fuel surcharge revenue decreased to 8.3% of revenue from 15.5% for the first quarter of 2008. Most of our tariffs and contracts provide for a fuel surcharge, which is recorded as additional revenue, as diesel fuel prices increase above stated levels. These levels are generally indexed to the U.S. Department of Energy's published fuel prices that reset each week. The fuel surcharge is one of many components included in the overall negotiated price of the transportation services provided to our customers.

Operating Costs and Other Expenses

Salaries, wages and benefits increased to 59.9% of revenue for the first quarter of 2009 from 54.7% for the first quarter of 2008. This increase, as a percent of revenue, is primarily the result of the deleveraging effect of the decline in tonnage and our commitment to maintaining our service schedules and on-time performance. As a result, driver wages increased to 23.7% of revenue for the first quarter of 2009 from 21.7% in the prior-year quarter. Platform wages as a percentage of revenue remained relatively consistent at 7.1% of revenue for the first quarter of 2009 as compared to 7.0% for the comparable period of the prior year.

While our salaries, wages and benefits increased as a percent of revenue, the $24,800,000 overall decrease is attributable to the 12.7% reduction in the total number of full-time employees from March 31, 2008 to March 31, 2009 and the improved productivity of our employees, which partially offset the impact on our operating ratio of the annual wage increase provided to our workforce in September 2008. We were able to improve the efficiency of our linehaul, P&D and dock operations as compared to the first quarter of 2008, as evidenced by the 3.5% increase in our linehaul laden load average, 1.4% increase in P&D stops per hour, 3.4% increase in P&D shipments per hour and 20.4% increase in platform pounds handled per hour.

Employee benefit costs increased to 34.7% of salaries and wages from 34.1% in the first quarter of 2008 as a result of increased costs for our employees' group health and dental coverage. Group health and dental costs increased to 13.0% of total salary and wages in the first quarter of 2009 from 11.3% in the prior-year quarter, due primarily to an increase in the severity of our claims.

Operating supplies and expenses decreased to 13.8% of revenue for the first quarter of 2009 from 20.0% for the first quarter of 2008. This significant decline is primarily due to a 57.8% decrease in diesel fuel costs, which is the largest component of operating supplies and expenses. The decrease in diesel fuel costs is the result of a significant decline in fuel prices combined with the impact of a 17.1% decrease in gallons consumed. The reduction in our consumption of diesel fuel also lowered fuel tax expense and was the primary reason for the $1,429,000 reduction in "Operating taxes and licenses." We do not use diesel fuel hedging instruments and are therefore subject to market price fluctuations.

Depreciation and amortization expense increased to 7.8% of revenue for the first quarter of 2009 from 5.7% of revenue for the same period of 2008. This increase is due to the impact of the decline in revenue on these fixed costs and our investment in revenue equipment and real estate during 2008 and the first quarter of 2009. We made a strategic decision to accelerate our tractor purchases planned for 2009 into the first quarter while also retaining the tractors to be replaced, the majority of which were fully depreciated. While this course of action increased our depreciation expense, we believe additional equipment capacity puts us in a stronger position to accommodate an increase in the demand for our services that may result from potential business failures or consolidation in the LTL industry due to the recessionary economy.

We purchase transportation services from other motor carriers and railroads for linehaul and P&D services. We also contract with lease operators for our container operations and occasionally incur short-term leases for tractors, trailers and other revenue producing equipment when necessary. We utilize these services when it is economically beneficial or when there are imbalances of freight flow within our service center network. Purchased transportation decreased to 2.7% of revenue in the first quarter of 2009 from 2.9% in same period of 2008, as we decreased the use of purchased linehaul and P&D services. The expansion of our service center network and the increased use of our personnel and equipment during a period of declining shipments allowed us to reduce our use of these services.

Miscellaneous expenses increased to 0.5% of revenue from 0.1% in the first quarter of 2008. The increase in these costs is primarily attributable to the increase in our allowance for uncollectible accounts. We increased our allowance for uncollectible accounts during the first quarter of 2009 due to an overall increase in the aging of our customer receivables, which we believe increases the risk of not collecting payment for our services.

Our effective tax rate was 39.3% for the first quarter of 2009 as compared to 39.0% for the prior-year quarter. The effective tax rate exceeded the federal statutory rate of 35.0% primarily due to the impact of state taxes and, to a lesser extent, certain non-deductible items.