Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 03, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | ARCBEST CORP /DE/ | |
Entity Central Index Key | 894,405 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 25,684,118 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 159,307 | $ 120,772 |
Short-term investments | 68,013 | 56,401 |
Accounts receivable, less allowances (2018 – $8,057; 2017 – $7,657) | 309,112 | 279,074 |
Other accounts receivable, less allowances (2018 – $952; 2017 – $921) | 19,548 | 19,491 |
Prepaid expenses | 19,912 | 22,183 |
Prepaid and refundable income taxes | 4,665 | 12,296 |
Other | 9,509 | 12,132 |
TOTAL CURRENT ASSETS | 590,066 | 522,349 |
PROPERTY, PLANT AND EQUIPMENT | ||
Land and structures | 338,902 | 344,224 |
Revenue equipment | 818,674 | 793,523 |
Service, office, and other equipment | 190,109 | 179,950 |
Software | 131,139 | 129,589 |
Leasehold improvements | 9,131 | 8,888 |
TOTAL PROPERTY, PLANT AND EQUIPMENT, GROSS | 1,487,955 | 1,456,174 |
Less allowances for depreciation and amortization | 896,738 | 865,010 |
PROPERTY, PLANT AND EQUIPMENT, net | 591,217 | 591,164 |
GOODWILL | 108,320 | 108,320 |
INTANGIBLE ASSETS, net | 71,206 | 73,469 |
DEFERRED INCOME TAXES | 6,226 | 5,965 |
OTHER LONG-TERM ASSETS | 65,261 | 64,374 |
TOTAL ASSETS | 1,432,296 | 1,365,641 |
CURRENT LIABILITIES | ||
Accounts payable | 176,034 | 129,099 |
Income taxes payable | 511 | 324 |
Accrued expenses | 221,880 | 211,237 |
Current portion of long-term debt | 51,562 | 61,930 |
TOTAL CURRENT LIABILITIES | 449,987 | 402,590 |
LONG-TERM DEBT, less current portion | 198,070 | 206,989 |
PENSION AND POSTRETIREMENT LIABILITIES | 36,169 | 39,827 |
OTHER LONG-TERM LIABILITIES | 38,456 | 15,616 |
DEFERRED INCOME TAXES | 41,099 | 49,157 |
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2018: 28,541,578 shares; 2017: 28,495,628 shares | 285 | 285 |
Additional paid-in capital | 322,895 | 319,436 |
Retained earnings | 449,442 | 438,379 |
Treasury stock, at cost, 2018: 2,857,460 shares; 2017: 2,851,578 shares | (86,265) | (86,064) |
Accumulated other comprehensive loss | (17,842) | (20,574) |
TOTAL STOCKHOLDERS' EQUITY | 668,515 | 651,462 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,432,296 | $ 1,365,641 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowances (in dollars) | $ 8,057 | $ 7,657 |
Other accounts receivable, allowances (in dollars) | $ 952 | $ 921 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 70,000,000 | 70,000,000 |
Common stock, issued shares | 28,541,578 | 28,495,628 |
Treasury stock, at cost, shares | 2,857,460 | 2,851,578 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
REVENUES | $ 793,350 | $ 720,368 | $ 1,493,351 | $ 1,371,456 |
OPERATING EXPENSES | 790,194 | 694,601 | 1,477,470 | 1,355,589 |
OPERATING INCOME | 3,156 | 25,767 | 15,881 | 15,867 |
OTHER INCOME (COSTS) | ||||
Interest and dividend income | 714 | 285 | 1,240 | 559 |
Interest and other related financing costs | (2,013) | (1,389) | (4,072) | (2,704) |
Other, net | (1,123) | (528) | (3,324) | (2,234) |
TOTAL OTHER INCOME (COSTS) | (2,422) | (1,632) | (6,156) | (4,379) |
INCOME BEFORE INCOME TAXES | 734 | 24,135 | 9,725 | 11,488 |
INCOME TAX PROVISION (BENEFIT) | (499) | 8,358 | (1,462) | 3,118 |
NET INCOME | $ 1,233 | $ 15,777 | $ 11,187 | $ 8,370 |
EARNINGS PER COMMON SHARE | ||||
Basic (in dollars per share) | $ 0.05 | $ 0.61 | $ 0.43 | $ 0.32 |
Diluted (in dollars per share) | $ 0.05 | $ 0.60 | $ 0.42 | $ 0.32 |
AVERAGE COMMON SHARES OUTSTANDING | ||||
Basic (in shares) | 25,670,325 | 25,767,791 | 25,656,674 | 25,726,363 |
Diluted (in shares) | 26,699,549 | 26,291,641 | 26,653,282 | 26,378,436 |
CASH DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share) | $ 0.08 | $ 0.08 | $ 0.16 | $ 0.16 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
NET INCOME | $ 1,233 | $ 15,777 | $ 11,187 | $ 8,370 |
Pension and other postretirement benefit plans: | ||||
Net actuarial gain (loss), net of tax of: (2018 – Three-month period $450, Six-month period $1,349; 2017 – Three-month period $64, Six-month period $999) | 1,300 | (98) | 3,890 | (1,569) |
Pension settlement expense, net of tax of: (2018 – Three-month period $111, Six-month period $279; 2017 – Three-month period $290, Six-month period $1,051) | 320 | 454 | 806 | 1,650 |
Amortization of unrecognized net periodic benefit costs, net of tax of: (2018 – Three-month period $171, Six-month period $390; 2017 – Three-month period $352, Six-month period $753) | ||||
Net actuarial loss | 511 | 581 | 1,160 | 1,241 |
Prior service credit | (18) | (29) | (35) | (58) |
Interest rate swap and foreign currency translation: | ||||
Change in unrealized income on interest rate swap, net of tax of: (2018 – Three-month period $7, Six-month period $275; 2017 – Three-month period $52, Six-month period $140) | 343 | 81 | 779 | 216 |
Change in foreign currency translation, net of tax of: (2018 – Three-month period $78, Six month-period $103; 2017 – Three-month period $134, Six-month period $58) | (220) | (208) | (292) | (89) |
OTHER COMPREHENSIVE INCOME, net of tax | 2,236 | 781 | 6,308 | 1,391 |
TOTAL COMPREHENSIVE INCOME | $ 3,469 | $ 16,558 | $ 17,495 | $ 9,761 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net actuarial loss, tax expense (benefit) | $ 450 | $ (64) | $ 1,349 | $ (999) |
Pension settlement expense, tax | 111 | 290 | 279 | 1,051 |
Amortization of unrecognized net periodic benefit costs, tax | 171 | 352 | 390 | 753 |
Change in unrealized income (loss) on interest rate swap, tax expense (benefit) | (7) | 52 | 275 | 140 |
Change in foreign currency translation, tax expense (benefit) | $ (78) | $ (134) | $ (103) | $ (58) |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total |
Balances at Dec. 31, 2016 | $ (23,417) | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | $ 8,370 | |||||
Other comprehensive income, net of tax | 1,391 | 1,391 | ||||
Balances at Jun. 30, 2017 | (22,026) | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Adjustments to beginning retained earnings for adoption of accounting standards | ASC Topic 606 and ASC Topic 220 | $ 3,992 | (3,576) | 416 | |||
Adjusted Balances | $ 285 | $ 319,436 | 442,371 | $ (86,064) | (24,150) | 651,878 |
Balances at Dec. 31, 2017 | $ 285 | 319,436 | 438,379 | $ (86,064) | (20,574) | 651,462 |
Balances (in shares) at Dec. 31, 2017 | 28,496 | 2,852 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 11,187 | 11,187 | ||||
Other comprehensive income, net of tax | 6,308 | 6,308 | ||||
Issuance of common stock under share-based compensation plans (in shares) | 46 | |||||
Tax effect of share-based compensation plans | (85) | (85) | ||||
Share-based compensation expense | 3,544 | 3,544 | ||||
Purchase of treasury stock | $ (201) | (201) | ||||
Purchase of treasury stock (in shares) | 5 | |||||
Dividends declared on common stock | (4,116) | (4,116) | ||||
Balances at Jun. 30, 2018 | $ 285 | $ 322,895 | $ 449,442 | $ (86,265) | $ (17,842) | $ 668,515 |
Balances (in shares) at Jun. 30, 2018 | 28,542 | 2,857 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
OPERATING ACTIVITIES | ||
Net income | $ 11,187 | $ 8,370 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 51,409 | 48,332 |
Amortization of intangibles | 2,264 | 2,271 |
Pension settlement expense | 1,085 | 2,701 |
Share-based compensation expense | 3,544 | 3,599 |
Provision for losses on accounts receivable | 1,069 | 1,053 |
Deferred income tax benefit | (10,818) | 2,687 |
Gain on sale of property and equipment | (166) | (412) |
Changes in operating assets and liabilities: | ||
Receivables | (31,281) | (21,091) |
Prepaid expenses | 2,393 | (2,549) |
Other assets | 2,018 | (3,100) |
Income taxes | 8,024 | 458 |
Multiemployer pension fund withdrawal liability | 37,922 | |
Accounts payable, accrued expenses, and other liabilities | 40,914 | 9,007 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 119,564 | 51,326 |
INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment, net of financings | (24,763) | (27,123) |
Proceeds from sale of property and equipment | 2,074 | 2,751 |
Purchases of short-term investments | (26,006) | (6,223) |
Proceeds from sale of short-term investments | 14,647 | 9,065 |
Capitalization of internally developed software | (5,997) | (4,323) |
NET CASH USED IN INVESTING ACTIVITIES | (40,045) | (25,853) |
FINANCING ACTIVITIES | ||
Borrowings under accounts receivable securitization program | 10,000 | |
Payments on long-term debt | (33,694) | (34,948) |
Net change in book overdrafts | (2,888) | (2,478) |
Deferred financing costs | (275) | |
Payment of common stock dividends | (4,116) | (4,144) |
Purchases of treasury stock | (201) | (3,611) |
Payments for tax withheld on share-based compensation | (85) | (2,690) |
NET CASH USED IN FINANCING ACTIVITIES | (40,984) | (38,146) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | 38,535 | (12,673) |
Cash and cash equivalents and restricted cash at beginning of period | 120,772 | 115,242 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | 159,307 | 102,569 |
NONCASH INVESTING ACTIVITIES | ||
Equipment financed | 14,407 | 38,593 |
Accruals for equipment received | $ 8,649 | $ 3,179 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | 6 Months Ended |
Jun. 30, 2018 | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | NOTE A – ORGANIZATIO ArcBest Corporation (the “Company”) is the parent holding company of businesses providing integrated logistics solutions. The Company’s operations are conducted through its three reportable operating segments: Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”); ArcBest ® , the Company’s asset-light logistics operation; and FleetNet. References to the Company in this Quarterly Report on Form 10-Q are primarily to the Company and its subsidiaries on a consolidated basis. The Asset-Based segment represented approximately 69% of the Company’s total revenues before other revenues and intercompany eliminations for the six months ended June 30, 2018. As of June 2018, approximately 82% of the Asset-Based segment’s employees were covered under a collective bargaining agreement, the ABF National Master Freight Agreement (the “ABF NMFA”), with the International Brotherhood of Teamsters (the “IBT”), which was extended through July 31, 2018 to allow for the ratification process of the new agreement to take place. On May 10, 2018, a new collective bargaining agreement, the ABF National Master Freight Agreement (the “2018 ABF NMFA”), was ratified by a majority of ABF’s IBT member employees who chose to vote. A majority of the supplements to the 2018 ABF NMFA also passed. Following ratification of the remaining supplements, the 2018 ABF NMFA was implemented on July 29, 2018, effective retroactive to April 1, 2018, and will remain in effect through June 30, 2023. The major economic provisions of the 2018 ABF NMFA include restoration of one week of vacation which begins accruing on anniversary dates on or after April 1, 2018, with the new vacation eligibility schedule being the same as the applicable 2008 to 2013 supplemental agreements; wage rate increases in each year of the contract, beginning July 1, 2018; ratification bonuses for qualifying employees; profit-sharing bonuses upon the Asset-Based segment’s achievement of certain annual operating ratios for any full calendar year under the contract; and changes to purchased transportation provisions with certain protections for road drivers as specified in the contract. The 2018 ABF NMFA and the related supplemental agreements provide for contributions to multiemployer pension plans frozen at the current rates for each fund, continuation of existing health coverage, and annual contribution rate increases to multiemployer health and welfare plans maintained for the benefit of ABF's employees who are members of the IBT. Under the 2018 ABF NMFA, the contractual wage and benefits costs, including the ratification bonuses and vacation restoration, are estimated to increase approximately 2.0% on a compounded annual basis through the end of the agreement. Financial Statement Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2017 Annual Report on Form 10-K and other current filings with the SEC. In the opinion of management, all adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included. As previously disclosed in our 2017 Annual Report on Form 10-K, the Company modified the presentation of segment expenses allocated from shared services during the third quarter of 2017. Previously, expenses allocated from company-wide functions were categorized in individual segment expense line items by type of expense. Allocated expenses are now presented on a single shared services line within the Company’s operating segment disclosures. Reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on each segment’s total expenses as a result of the reclassifications. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts may differ from those estimates. Accounting Policies The Company’s accounting policies are described in Note B to the consolidated financial statements included in Part II, Item 8 of the Company’s 2017 Annual Report on Form 10-K. The following policies have been updated during the six months ended June 30, 2018 for the adoption of accounting standard updates disclosed within this Note. Goodwill: Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill is not amortized, but rather is evaluated for impairment annually or more frequently if indicators of impairment exist. The Company’s measurement of goodwill impairment involves a comparison of the estimated fair value of a reporting unit to its carrying value. Fair value is derived using a combination of valuation methods, including earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue multiples (market approach) and the present value of discounted cash flows (income approach). For annual and interim impairment tests, the Company is required to record an impairment charge, if any, by the amount a reporting unit’s fair value is exceeded by the carrying value of the reporting unit, limited to the carrying value of goodwill included in the reporting unit. The Company’s annual impairment testing is performed as of October 1. Revenue Recognition: Revenues are recognized when or as control of the promised services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Asset-Based Segment Asset-Based segment revenues primarily consist of less-than-truckload freight delivery. Performance obligations are satisfied upon final delivery of the freight to the specified destination. Revenue is recognized based on the relative transit time in each reporting period with expenses recognized as incurred. A bill-by-bill analysis is used to establish estimates of revenue in transit for recognition in the appropriate period. Because the bill-by-bill methodology utilizes the approximate location of the shipment in the delivery process to determine the revenue to recognize, management believes it to be a reliable method. Certain contracts may provide for volume-based or other discounts which are accounted for as variable consideration. The Company estimates these amounts based on the expected discounts earned by customers and revenue is recognized based on the estimates. Revenue adjustments may also occur due to rating or other billing adjustments. The Company estimates revenue adjustments based on historical information and revenue is recognized accordingly at the time of shipment. Management believes that actual amounts will not vary significantly from estimates of variable consideration. Revenue, purchased transportation expense, and third-party service expenses are reported on a gross basis for certain shipments and services where the Company utilizes a third-party carrier for pickup, linehaul, delivery of freight, or performance of services but remains primarily responsible for fulfilling delivery to the customer and maintains discretion in setting the price for the services. ArcBest Segment ArcBest segment revenues consist primarily of asset-light logistics services using third-party vendors to provide transportation services. ArcBest segment revenue is generally recognized based on the relative transit time in each reporting period using estimated standard delivery times for freight in transit at the end of the reporting period. Purchased transportation expense is recognized as incurred consistent with the recognition of revenue. Revenue and purchased transportation expense are reported on a gross basis for shipments and services where the Company uses a third-party carrier for pickup and delivery but remains primarily responsible to the customer for delivery and has discretion in setting the price for the service. FleetNet Segment FleetNet segment revenues consist of service fee revenue, roadside repair revenue and routine maintenance services. Service fee revenue for the FleetNet segment is recognized upon response to the service event. Repair revenue for the FleetNet segment is recognized upon completion of the service by third-party vendors. Revenue and expense from repair and maintenance services performed by third-party vendors are reported on a gross basis as FleetNet controls the services prior to transfer to the customer and remains primarily responsible to the customer for completion of the services. Other Recognition and Disclosure The Company records deferred revenue when cash payments are received or due in advance of performance under the contract. Deferred revenues totaled $3.6 million and $0.6 million at June 30, 2018 and December 31, 2017, respectively, and are recorded in accrued expenses in the consolidated balance sheet. Payment terms with customers may vary depending on the service provided, location or specific agreement with the customer. The term between invoicing and when payment is due is not significant. For certain services, payment is required before the services are provided to the customer. The Company expenses sales commissions when incurred because the amortization period is one year or less. The Company has elected to apply the practical expedient to not disclose the value of unsatisfied performance obligations for contracts with an original length of one year or less or contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed . Adopted Accounting Pronouncements Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , (“ASC Topic 606”) provides a single comprehensive revenue recognition model for all contracts with customers and contains principles to apply to determine the measurement of revenue and the timing of when it is recognized. On January 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic method of accounting under ASC Topic 605, Revenue Recognition , (“ASC Topic 605”). The Company’s major service lines for presentation of disaggregated revenues from contracts with customers are consistent with the Company’s reportable operating segments as presented in Note J. The primary impact of adopting ASC Topic 606 was to recognize ArcBest segment revenue over time instead of at final delivery of the shipment. As a result, revenue will generally be recorded earlier under ASC Topic 606 compared to ASC Topic 605. Asset-Based and FleetNet segment revenues were not impacted. The Company recorded a net increase to opening retained earnings of $0.4 million as of January 1, 2018 due to the cumulative impact of adopting ASC Topic 606. The impact to revenues for the three and six months ended June 30, 2018 was an increase of $1.1 million and $0.8 million, respectively, and the impact to purchased transportation expense was an increase of $0.8 million and $0.5 million, respectively, as a result of applying ASC Topic 606. Effective January 1, 2018, the Company adopted an amendment to ASC Topic 715, Compensation – Retirement Benefits , (“ASC Topic 715”) which requires changes to the financial statement presentation of certain components of net periodic benefit cost related to pension and other postretirement benefits accounted for under ASC Topic 715. The amendment requires the service cost component of net periodic benefit cost to continue to be included in the same line item as other compensation costs arising from services rendered by the related employees, but requires the other components of net periodic benefit cost, including pension settlement expense, to be presented separately from the service cost component and outside of the subtotal of income from operations. The provisions of the amendment are required to be applied retrospectively and were effective for the Company beginning January 1, 2018. The Company has not incurred service cost under its nonunion defined benefit pension plan or its supplemental benefit plan (the “SBP”) since the accrual of benefits under the plans were frozen on July 1, 2013 and December 31, 2009, respectively; however, the Company incurs service cost under its postretirement health benefit plan which will continue to be reported within operating expenses in the consolidated statements of operations. The other components of net periodic benefit cost (including pension settlement charges) of the nonunion defined benefit pension plan, the SBP, and the postretirement health benefit plan are reported within the other line item of other income (costs) beginning in first quarter 2018. As a result of retrospectively applying the provisions of the amendment, $1.0 million and $3.4 million was reclassified from operating expenses to other income (costs) for the three and six months ended June 30, 2017, respectively. There was no change to consolidated net income (loss) or earnings (loss) per share as a result of the change in presentation under the new standard. In February 2018, the Financial Accounting Standards Board (the “FASB”) issued an amendment to ASC Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , (“ASC Topic 220”) which allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Reform Act”). The Company early adopted this amendment for first quarter 2018 and adjusted the tax effect of items within accumulated other comprehensive income to reflect the appropriate tax rate under the Tax Reform Act in the period of adoption. As a result of applying the provisions of the amendment, the Company elected to reclassify $3.6 million of stranded income tax effects from accumulated other comprehensive loss to retained earnings as of January 1, 2018. Amounts recognized in other comprehensive income or loss related to the Company’s nonunion defined benefit pension plan, supplemental benefit plan, and postretirement health benefit plan are subsequently expensed as components of net periodic benefit cost by amortizing unrecognized net actuarial losses over the average remaining active service period of the plan participants and amortizing unrecognized prior service credits over the remaining years of service until full eligibility of the active participants at the time of the plan amendment which created the prior service credit. A corridor approach is not used for determining the amounts of net actuarial losses to be amortized. Amounts recognized in other comprehensive income or loss related to the change in unrealized gain or loss on the Company’s interest rate swap agreements are reclassified out of accumulated other comprehensive loss into income (loss) in the period during which the hedged transaction affects earnings. Effective January 1, 2018, the Company early adopted an amendment to ASC Topic 350, Intangibles – Goodwill and Other, Simplifying the Test of Goodwill Impairment, which removes Step 2 of the goodwill impairment test. For annual and interim impairment tests, the Company is required to record an impairment charge, if any, by the amount a reporting unit’s fair value is exceeded by the carrying value of the reporting unit, limited to the carrying value of goodwill included in the reporting unit. The adoption of the amendment did not have an impact on the consolidated financial statements for the six months ended June 30, 2018. Accounting Pronouncements Not Yet Adopted ASC Topic 842, Leases , (“ASC Topic 842”) which is effective for the Company beginning January 1, 2019, requires lessees to recognize right-of-use assets and lease liabilities for operating leases with terms greater than 12 months. The standard also requires additional qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued an amendment to ASC Topic 842 which provides an optional transition method that will give companies the option to use the effective date as the date of initial application upon transition. The Company plans to elect this transition method and, as a result, will not adjust comparative period financial information or make the new required lease disclosures for periods before the effective date. The Company has established an implementation team which is in the process of implementing the new accounting standard, including accumulating necessary information, assessing the current lease portfolio, and implementing software to meet the new reporting requirements. The Company is also evaluating current processes and controls and identifying necessary changes to support the adoption of the new standard. The Company anticipates it will exclude short-term leases from accounting under ASC Topic 842 and plans to elect the package of practical expedients upon transition that will retain lease classification and other accounting conclusions made in the assessment of existing lease contracts. Management expects the new standard to have a material impact on the Company’s consolidated balance sheets related to the addition of the right-of-use asset and associated lease liabilities; however, the impact on the consolidated statements of operations is expected to be minimal, if any. As the impact of this standard is non-cash in nature, no impact is expected on the Company’s consolidated statements of cash flows. ASC Topic 815, Derivatives and Hedging , was amended to change the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results to simplify hedge accounting treatment and better align an entity’s risk management activities and financial reporting for hedging relationships. The amendment is effective for the Company beginning January 1, 2019 and is not expected to have a significant impact on the consolidated financial statements. Management believes there is no other new accounting guidance issued but not yet effective that is relevant to the Company’s current financial statements. |
FINANCIAL INSTRUMENTS AND FAIR
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2018 | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | NOTE B – FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Financial Instruments The following table presents the components of cash and cash equivalents and short-term investments: June 30 December 31 2018 2017 (in thousands) Cash and cash equivalents Cash deposits (1) $ 106,924 $ 86,510 Variable rate demand notes (1)(2) 15,041 19,744 Money market funds (3) 37,342 14,518 Total cash and cash equivalents $ 159,307 $ 120,772 Short-term investments Certificates of deposit (1) $ 68,013 $ 56,401 (1) Recorded at cost plus accrued interest, which approximates fair value. (2) Amounts may be redeemed on a daily basis with the original issuer. (3) Recorded at fair value as determined by quoted market prices (see amounts presented in the table of financial assets and liabilities measured at fair value within this Note). The Company’s long-term financial instruments are presented in the table of financial assets and liabilities measured at fair value within this Note. Concentrations of Credit Risk of Financial Instruments The Company is potentially subject to concentrations of credit risk related to its cash, cash equivalents, and short-term investments. The Company reduces credit risk by maintaining its cash deposits primarily in FDIC-insured accounts and placing its short-term investments primarily in FDIC-insured certificates of deposit. However, certain cash deposits and certificates of deposit may exceed federally insured limits. At June 30, 2018 and December 31, 2017, cash and cash equivalents totaling $92.6 million and $61.1 million, respectively, were not FDIC insured. Fair Value Disclosure of Financial Instruments Fair value disclosures are made in accordance with the following hierarchy of valuation techniques based on whether the inputs of market data and market assumptions used to measure fair value are observable or unobservable: · Level 1 — Quoted prices for identical assets and liabilities in active markets. · Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. · Level 3 — Unobservable inputs (Company’s market assumptions) that are significant to the valuation model. Fair value and carrying value disclosures of financial instruments are presented in the following table: June 30 December 31 2018 2017 (in thousands) Carrying Fair Carrying Fair Value Value Value Value Credit Facility (1) $ 70,000 $ 70,000 $ 70,000 $ 70,000 Accounts receivable securitization borrowings (2) 45,000 45,000 45,000 45,000 Notes payable (3) 134,258 132,522 153,441 152,131 $ 249,258 $ 247,522 $ 268,441 $ 267,131 (1) The revolving credit facility (the “Credit Facility”) carries a variable interest rate based on LIBOR, plus a margin, that is considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). (2) Borrowings under the Company’s accounts receivable securitization program carry a variable interest rate based on LIBOR, plus a margin. The borrowings are considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). (3) Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy). Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the assets and liabilities that are measured at fair value on a recurring basis: June 30, 2018 Fair Value Measurements Using Quoted Prices Significant Significant In Active Observable Unobservable Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in thousands) Assets: Money market funds (1) $ 37,342 $ 37,342 $ — $ — Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2) 2,453 2,453 — — Interest rate swaps (3) 1,535 — 1,535 — $ 41,330 $ 39,795 $ 1,535 $ — Liabilities: Contingent consideration (4) $ 4,092 $ — $ — $ 4,092 December 31, 2017 Fair Value Measurements Using Quoted Prices Significant Significant In Active Observable Unobservable Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in thousands) Assets: Money market funds (1) $ 14,518 $ 14,518 $ — $ — Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2) 2,359 2,359 — — Interest rate swaps (3) 481 — 481 — $ 17,358 $ 16,877 $ 481 $ — Liabilities: Contingent consideration (4) $ 6,970 $ — $ — $ 6,970 (1) Included in cash and cash equivalents. (2) Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities. (3) Included in other long-term assets. The fair values of the interest rate swaps were determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves (Level 2 inputs) adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are considered to be in Level 3 of the fair value hierarchy. The Company assessed Level 3 inputs as insignificant to the valuation at June 30, 2018 and December 31, 2017 and considers the interest rate swap valuations in Level 2 of the fair value hierarchy. (4) Included in accrued expenses as of June 30, 2018 and included in accrued expenses and other long-term liabilities based on when expected payouts become due as of December 31, 2017. The estimated fair value of contingent consideration for an earn-out agreement related to the September 2016 acquisition of LDS was determined by assessing Level 3 inputs with a discounted cash flow approach using various probability-weighted scenarios. The Level 3 assessments utilize a Monte Carlo simulation with inputs including scenarios of estimated revenues and gross margins to be achieved for the applicable performance periods, probability weightings assigned to the performance scenarios, and the discount rate applied, which was 12.0% and 12.5% as of June 30, 2018 and December 31, 2017, respectively. Subsequent changes to the fair value as a result of recurring assessments will be recognized in operating income. The following table provides the changes in fair value of the liabilities measured at fair value using inputs categorized in Level 3 of the fair value hierarchy: Contingent Consideration (in thousands) Balances at December 31, 2017 $ 6,970 Payments (1) (3,528) Change in fair value included in operating expenses 650 Balances at June 30, 2018 $ 4,092 (1) Payments released from escrow account reported in other current assets in the consolidated balance sheet. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE C – GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired. Goodwill by reportable operating segment consisted of $107.7 million and $0.6 million reported in the ArcBest and FleetNet segments, respectively, for both June 30, 2018 and December 31, 2017. Intangible assets consisted of the following: June 30, 2018 December 31, 2017 Weighted-Average Accumulated Net Accumulated Net Amortization Period Cost Amortization Value Cost Amortization Value (in years) (in thousands) (in thousands) Finite-lived intangible assets Customer relationships 14 $ 60,431 $ 21,938 $ 38,493 $ 60,431 $ 19,745 $ 40,686 Driver network 3 3,200 3,200 — 3,200 3,200 — Other 9 1,032 619 413 1,032 549 483 13 64,663 25,757 38,906 64,663 23,494 41,169 Indefinite-lived intangible assets Trade name N/A 32,300 N/A 32,300 32,300 N/A 32,300 Total intangible assets N/A $ 96,963 $ 25,757 $ 71,206 $ 96,963 $ 23,494 $ 73,469 The future amortization for intangible assets and acquired software as of June 30, 2018 were as follows: Intangible Acquired Total Assets Software (1) (in thousands) 2018 $ 3,318 $ 2,257 $ 1,061 2019 5,463 4,482 981 2020 4,471 4,454 17 2021 4,418 4,412 6 2022 4,385 4,385 — Thereafter 18,916 18,916 — Total amortization $ 40,971 $ 38,906 $ 2,065 (1) Acquired software is reported in property, plant and equipment. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2018 | |
INCOME TAXES | |
INCOME TAXES | NOTE D – INCOME TAXES On December 22, 2017, H.R. 1/Public Law 115-97 which includes tax legislation titled Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. Effective January 1, 2018, the Tax Reform Act reduced the U.S. federal corporate tax rate from 35% to 21%. As a result of the Tax Reform Act, the Company recorded a provisional reduction of net deferred income tax liabilities of approximately $24.5 million at December 31, 2017, pursuant to the provisions of ASC Topic 740, Income Taxes , which requires the impact of tax law changes to be recognized in the period in which the legislation is enacted. An additional provisional reduction of net deferred income tax liabilities of less than $0.1 million and $2.6 million was recognized in the three and six months ended June 30, 2018, respectively. The additional reductions relate to the reversal of temporary differences through the Company’s fiscal tax year end of February 28, 2018. State tax rates vary among states and average approximately 6.0% to 6.5%, although some state rates are higher and a small number of states do not impose an income tax. The effective tax benefit rate was 68.0% and 15.0% for the three and six months ended June 30, 2018, respectively, compared to an effective tax rate of 34.6% and 27.1% for the three and six months ended June 30, 2017, respectively. In addition to the provisional effect on net deferred tax liabilities, the Company recorded a provisional reduction in current income tax expense of approximately $1.3 million at December 31, 2017, as a result of the Tax Reform Act, to reflect the Company’s use of a fiscal year rather than a calendar year for U.S. income tax filing. Due to the fact that the Company’s current fiscal tax year includes the effective date of the rate change under the Tax Reform Act, taxes are required to be calculated by applying a blended rate to the taxable income for the current taxable year ending February 28, 2018. The blended rate is calculated based on the ratio of days in the fiscal year prior to and after the effective date of the rate change. In computing total tax expense for the three and six months ended June 30, 2018, a 32.74% blended federal statutory rate was applied to the two months ended February 28, 2018, and a projected combined tax rate of 26.5% (based on the federal statutory rate of 21% plus applicable state tax rates) was applied to the months of March 2018 through June 2018. For the six months ended June 30, 2018, the difference between the Company’s effective tax rate and the federal statutory rate primarily results from the $2.6 million provisional reduction of net deferred income tax liabilities, as previously discussed, and the $1.2 million alternative fuel tax credit related to the year ended December 31, 2017 which was recognized in first quarter 2018 due to the February 2018 passage of the Bipartisan Budget Act of 2018 which retroactively reinstated the alternative fuel tax credit that had previously expired on December 31, 2016. For the three and six months ended June 30, 2018 and 2017, the difference between the Company’s effective tax rate and the federal statutory rate also resulted from state income taxes, nondeductible expenses, changes in tax valuation allowances, deferred tax benefit related to future state rate changes, the tax benefit from the vesting of stock awards, and changes in the cash surrender value of life insurance. As of June 30, 2018, the Company’s deferred tax liabilities, which will reverse in future years, exceeded the deferred tax assets. The Company evaluated the total deferred tax assets at June 30, 2018 and concluded that, other than for certain deferred tax assets related to state net operating loss and contribution carryforwards, the assets did not exceed the amount for which realization is more likely than not. In making this determination, the Company considered the future reversal of existing taxable temporary differences, future taxable income, and tax planning strategies. Valuation allowances for deferred tax assets totaled $0.7 million and $0.8 million at June 30, 2018 and December 31, 2017, respectively. The Company established a reserve for uncertain tax positions of less than $0.1 million at December 31, 2016, and maintained the reserve at June 30, 2018, due to uncertainty of how the IRS will interpret regulations related to research and development credits claimed on the Company’s 2015 federal return. The Company established a reserve for an uncertain tax position of $0.9 million at March 31, 2018, and maintained the reserve at June 30, 2018, due to credits taken on amended federal returns. The Company paid state and foreign income taxes of $2.5 million and $0.4 million during the six months ended June 30, 2018 and 2017, respectively. During the six months ended June 30, 2018 and 2017, the Company received refunds of $1.1 million and $0.1 million, respectively, of federal and state income taxes that were paid in prior years. |
LONG-TERM DEBT AND FINANCING AR
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | 6 Months Ended |
Jun. 30, 2018 | |
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | |
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | NOTE E – LONG-TERM DEBT AND FINANCING ARRANGEMENTS Long-Term Debt Obligations Long-term debt consisted of borrowings outstanding under the Company’s revolving credit facility and accounts receivable securitization program, both of which are further described in Financing Arrangements within this Note, and notes payable and capital lease obligations related to the financing of revenue equipment (tractors and trailers used primarily in Asset-Based segment operations), real estate, and certain other equipment as follows: June 30 December 31 2018 2017 (in thousands) Credit Facility (interest rate of 3.6% (1) at June 30, 2018) $ 70,000 $ 70,000 Accounts receivable securitization borrowings (interest rate of 2.9% at June 30, 2018) 45,000 45,000 Notes payable (weighted-average interest rate of 2.9% at June 30, 2018) 134,258 153,441 Capital lease obligations (weighted-average interest rate of 5.6% at June 30, 2018) 374 478 249,632 268,919 Less current portion 51,562 61,930 Long-term debt, less current portion $ 198,070 $ 206,989 (1) The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.35% based on the margin of the Credit Facility as of June 30, 2018. Scheduled maturities of long-term debt obligations as of June 30, 2018 were as follows: Accounts Receivable Credit Securitization Notes Capital Lease Total Facility (1) Program (1) Payable Obligations (2) (in thousands) Due in one year or less $ 59,036 $ 2,771 $ 1,507 $ 54,521 $ 237 Due after one year through two years 80,391 3,069 46,271 30,908 143 Due after two years through three years 29,575 3,097 — 26,471 7 Due after three years through four years 25,258 3,076 — 22,177 5 Due after four years through five years 77,443 70,050 — 7,393 — Due after five years 225 — — 225 — Total payments 271,928 82,063 47,778 141,695 392 Less amounts representing interest 22,296 12,063 2,778 7,437 18 Long-term debt $ 249,632 $ 70,000 $ 45,000 $ 134,258 $ 374 (1) The future interest payments included in the scheduled maturities due are calculated using variable interest rates based on the LIBOR swap curve, plus the anticipated applicable margin. (2) Minimum payments of capital lease obligations include maximum amounts due under rental adjustment clauses contained in the capital lease agreements. Assets securing notes payable or held under capital leases were included in property, plant and equipment as follows: June 30 December 31 2018 2017 (in thousands) Revenue equipment $ 257,827 $ 269,950 Land and structures (service centers) 1,794 1,794 Software 486 486 Service, office, and other equipment 101 100 Total assets securing notes payable or held under capital leases 260,208 272,330 Less accumulated depreciation and amortization (1) 92,558 87,691 Net assets securing notes payable or held under capital leases $ 167,650 $ 184,639 (1) Amortization of assets under held capital leases and depreciation of assets securing notes payable are included in depreciation expense. Financing Arrangements Credit Facility The Company has a revolving credit facility (the “Credit Facility”) under its second amended and restated credit agreement (the “Credit Agreement”) with an initial maximum credit amount of $200.0 million, including a swing line facility in an aggregate amount of up to $20.0 million and a letter of credit sub-facility providing for the issuance of letters of credit up to an aggregate amount of $20.0 million. The Company may request additional revolving commitments or incremental term loans thereunder up to an aggregate additional amount of $100.0 million, subject to certain additional conditions as provided in the Credit Agreement. As of June 30, 2018, the Company had available borrowing capacity of $130.0 million under the Credit Facility. Principal payments under the Credit Facility are due upon maturity of the facility on July 7, 2022; however, borrowings may be repaid, at the Company’s discretion, in whole or in part at any time, without penalty, subject to required notice periods and compliance with minimum prepayment amounts. Borrowings under the Credit Agreement can either be, at the Company’s election: (i) at an alternate base rate (as defined in the Credit Agreement) plus a spread; or (ii) at a Eurodollar rate (as defined in the Credit Agreement) plus a spread. The applicable spread is dependent upon the Company’s adjusted leverage ratio (as defined in the Credit Agreement). The Credit Agreement contains conditions, representations and warranties, events of default, and indemnification provisions that are customary for financings of this type, including, but not limited to, a minimum interest coverage ratio, a maximum adjusted leverage ratio, and limitations on incurrence of debt, investments, liens on assets, certain sale and leaseback transactions, transactions with affiliates, mergers, consolidations, purchases and sales of assets, and certain restricted payments. The Company was in compliance with the covenants under the Credit Agreement at June 30, 2018. Interest Rate Swaps The Company has a five-year interest rate swap agreement with a $50.0 million notional amount maturing on January 2, 2020. The Company receives floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 1.85% over the life of the agreement. The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.35% based on the margin of the Credit Facility as of June 30, 2018. The fair value of the interest rate swap of $0.5 million and $0.1 million was recorded in other long-term assets in the consolidated balance sheet at June 30, 2018 and December 31, 2017, respectively. In June 2017, the Company entered into a forward-starting interest rate swap agreement with a $50.0 million notional amount which will start on January 2, 2020 upon maturity of the current interest rate swap agreement, and mature on June 30, 2022. The Company will receive floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 1.99% over the life of the agreement. The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.49% based on the margin of the Credit Facility as of June 30, 2018. The fair value of the interest rate swap of $1.0 million and $0.4 million was recorded in other long-term assets in the consolidated balance sheet at June 30, 2018 and December 31, 2017, respectively. The unrealized gain or loss on the interest rate swap instruments was reported as a component of accumulated other comprehensive loss, net of tax, in stockholders’ equity at June 30, 2018 and December 31, 2017, and the change in the unrealized income (loss) on the interest rate swaps for the three months ended June 30, 2018 and 2017 was reported in other comprehensive loss, net of tax, in the consolidated statements of comprehensive income. The interest rate swaps are subject to certain customary provisions that could allow the counterparty to request immediate payment of the fair value liability upon violation of any or all of the provisions. The Company was in compliance with all provisions of the interest rate swap agreements at June 30, 2018. Accounts Receivable Securitization Program The Company’s accounts receivable securitization program, which matures on April 1, 2020, allows for cash proceeds of $125.0 million to be provided under the facility and has an accordion feature allowing the Company to request additional borrowings up to $25.0 million, subject to certain conditions. Under this program, certain subsidiaries of the Company continuously sell a designated pool of trade accounts receivables to a wholly owned subsidiary which, in turn, may borrow funds on a revolving basis. This wholly owned consolidated subsidiary is a separate bankruptcy-remote entity, and its assets would be available only to satisfy the claims related to the lender’s interest in the trade accounts receivables. Borrowings under the accounts receivable securitization program bear interest based upon LIBOR, plus a margin, and an annual facility fee. The securitization agreement contains representations and warranties, affirmative and negative covenants, and events of default that are customary for financings of this type, including a maximum adjusted leverage ratio covenant. As of June 30, 2018, $45.0 million was borrowed under the program. The Company was in compliance with the covenants under the accounts receivable securitization program at June 30, 2018. The accounts receivable securitization program includes a provision under which the Company may request and the letter of credit issuer may issue standby letters of credit, primarily in support of workers’ compensation and third-party casualty claims liabilities in various states in which the Company is self-insured. The outstanding standby letters of credit reduce the availability of borrowings under the program. As of June 30, 2018, standby letters of credit of $17.7 million have been issued under the program, which reduced the available borrowing capacity to $62.3 million. In August 2018, the Company amended and extended its accounts receivable securitization program to modify certain covenants and conditions and extend the maturity date of the program to October 1, 2021. Letter of Credit Agreements and Surety Bond Programs As of June 30, 2018, the Company had letters of credit outstanding of $18.3 million (including $17.7 million issued under the accounts receivable securitization program). The Company has programs in place with multiple surety companies for the issuance of surety bonds in support of its self-insurance program. As of June 30, 2018, surety bonds outstanding related to the self-insurance program totaled $53.1 million. Notes Payable and Capital Leases The Company has financed the purchase of certain revenue equipment, other equipment, and software through promissory note arrangements, including $14.3 million and $14.4 million for revenue equipment and software during the three and six months ended June 30, 2018, respectively. The Company financed the purchase of an additional $19.9 million of revenue equipment through promissory note arrangements as of August 1, 2018. |
PENSION AND OTHER POSTRETIREMEN
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2018 | |
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS | |
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS | NOTE F – PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS Nonunion Defined Benefit Pension, Supplemental Benefit, and Postretirement Health Benefit Plans The following is a summary of the components of net periodic benefit cost: Three Months Ended June 30 Nonunion Defined Supplemental Postretirement Benefit Pension Plan Benefit Plan Health Benefit Plan 2018 2017 2018 2017 2018 2017 (in thousands) Service cost $ — $ — $ — $ — $ 91 $ 122 Interest cost 1,108 1,149 27 25 210 265 Expected return on plan assets (378) (2,054) — — — — Amortization of prior service credit — — — — (24) (48) Pension settlement expense 431 744 — — — — Amortization of net actuarial loss (1) 592 757 20 21 76 174 Net periodic benefit cost $ 1,753 $ 596 $ 47 $ 46 $ 353 $ 513 Six Months Ended June 30 Nonunion Defined Supplemental Postretirement Benefit Pension Plan Benefit Plan Health Benefit Plan 2018 2017 2018 2017 2018 2017 (in thousands) Service cost $ — $ — $ — $ — $ 183 $ 244 Interest cost 2,123 2,389 54 51 419 530 Expected return on plan assets (779) (4,221) — — — — Amortization of prior service credit — — — — (47) (95) Pension settlement expense 1,085 2,701 — — — — Amortization of net actuarial loss (1) 1,370 1,643 40 41 152 347 Net periodic benefit cost $ 3,799 $ 2,512 $ 94 $ 92 $ 707 $ 1,026 (1) The Company amortizes actuarial losses over the average remaining active service period of the plan participants and does not use a corridor approach. Nonunion Defined Benefit Pension Plan The Company’s nonunion defined benefit pension plan covers substantially all noncontractual employees hired before January 1, 2006. In June 2013, the Company amended the nonunion defined benefit pension plan to freeze the participants’ final average compensation and years of credited service as of July 1, 2013. The plan amendment did not impact the vested benefits of retirees or former employees whose benefits have not yet been paid from the plan. Effective July 1, 2013, participants of the nonunion defined benefit pension plan who were active employees of the Company became eligible for the discretionary defined contribution feature of the Company’s nonunion 401(k) and defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate. In November 2017, an amendment was executed to terminate the nonunion defined benefit pension plan with a termination date of December 31, 2017. The plan has filed for a determination letter from the IRS regarding the qualification of the plan termination. Following receipt of a favorable determination letter, benefit election forms will be provided to plan participants and they will have an election window in which they can choose any form of payment allowed by the plan for immediate commencement of payment or defer payment until a later date. Until a favorable determination letter is received and the benefit election forms are distributed to participants, the methodologies for establishing plan assumptions will continue to be consistent with those used prior to the amendment to terminate the plan. Pension settlement charges related to the plan termination, including settlements for lump sum benefit distributions and the cost to purchase an annuity contract to settle the pension obligation related to benefits for which participants elect to defer payment until a later date, may occur in 2018. However, the timing of recognizing these settlements in the consolidated financial statements is highly dependent on when and if the plan receives the favorable determination letter from the IRS. The Company recognized pension settlement expense as a component of net periodic benefit cost of the nonunion defined benefit pension plan for the three and six months ended June 30, 2018 of $0.4 million (pre-tax), or $0.3 million (after-tax), and $1.1 million (pre-tax), or $0.8 million (after-tax), respectively, related to $3.7 million and $8.5 million of lump-sum benefit distributions from the plan for the three and six months ended June 30, 2018, respectively. For the three and six months ended June 30, 2017, pension settlement expense of $0.7 million (pre-tax), or $0.5 million (after-tax), and $2.7 million (pre-tax), or $1.7 million (after-tax) was recognized related to $4.9 million and $9.7 million of lump-sum distributions from the plan for the three and six months ended June 30, 2017, respectively, which included a $7.6 million nonparticipating annuity contract purchased from an insurance company during the first quarter 2017 to settle the pension obligation related to the vested benefits of approximately 50 plan participants and beneficiaries receiving monthly benefit payments at the time of the contract purchase. Upon recognition of pension settlement expense, a corresponding reduction in the unrecognized net actuarial loss of the plan is recorded. The remaining pre-tax unrecognized net actuarial loss will continue to be amortized over the average remaining future years of service of the active plan participants. The Company will incur additional quarterly settlement expense related to lump-sum distributions from the nonunion defined benefit pension plan during the remainder of 2018. The following table discloses the changes in benefit obligations and plan assets of the nonunion defined benefit pension plan for the six months ended June 30, 2018: Nonunion Defined Benefit Pension Plan (in thousands) Change in benefit obligations Benefit obligations at December 31, 2017 $ 137,417 Interest cost 2,123 Actuarial gain (1) (4,924) Benefits paid (8,578) Benefit obligations at June 30, 2018 126,038 Change in plan assets Fair value of plan assets at December 31, 2017 124,831 Actual return on plan assets 1,093 Benefits paid (8,578) Fair value of plan assets at June 30, 2018 117,346 Funded status at period end (2) $ (8,692) Accumulated benefit obligation $ 126,038 (1) Primarily related to the impact of an increase in the discount rate at the June 30, 2018 remeasurement upon settlement compared to the discount rate at the December 31, 2017 measurement date. (2) Noncurrent liability recognized within pension and postretirement liabilities in the accompanying consolidated balance sheet at June 30, 2018. Based upon currently available actuarial information, and except for the impact of funding for plan termination, the Company does not expect to have cash outlays for required minimum contributions to its nonunion defined benefit pension plan in 2018. The plan’s preliminary adjusted funding target attainment percentage (“AFTAP”) is 112.97% as of the January 1, 2018 valuation date. The AFTAP is determined by measurements prescribed by the Internal Revenue Code, which differ from the funding measurements for financial statement reporting purposes. Multiemployer Plans ABF Freight System, Inc. and certain other subsidiaries reported in the Company’s Asset-Based operating segment (“ABF Freight”) contribute to multiemployer pension and health and welfare plans, which have been established pursuant to the Taft-Hartley Act, to provide benefits for its contractual employees. ABF Freight’s contributions generally are based on the time worked by its contractual employees, in accordance with the 2018 ABF NMFA and other related supplemental agreements. ABF Freight recognizes as expense the contractually required contributions for each period and recognizes as a liability any contributions due and unpaid. The 25 multiemployer pension plans to which ABF Freight contributes vary greatly in size and in funded status. Contribution obligations to these plans are generally specified in the 2018 ABF NMFA, which will remain in effect through June 30, 2023. The funding obligations to the pension plans are intended to satisfy the requirements imposed by the Pension Protection Act of 2006, which was permanently extended by the Multiemployer Pension Reform Act (the “Reform Act”) included in the Consolidated and Further Continuing Appropriations Act of 2015. Provisions of the Reform Act include, among others, providing qualifying plans the ability to self-correct funding issues, subject to various requirements and restrictions, including applying to the U.S. Department of the Treasury for the reduction of certain accrued benefits. Through the term of its current collective bargaining agreement, ABF Freight’s contribution obligations generally will be satisfied by making the specified contributions when due. However, the Company cannot determine with any certainty the contributions that will be required under future collective bargaining agreements for ABF Freight’s contractual employees. If ABF Freight was to completely withdraw from certain multiemployer pension plans, under current law, ABF Freight would have material liabilities for its share of the unfunded vested liabilities of each such plan. Approximately one half of ABF Freight’s total contributions to multiemployer pension plans are made to the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”). ABF Freight received an Actuarial Certification of Plan Status for the Central States Pension Plan dated March 30, 2018, in which the plan’s actuary certified that, as of January 1, 2018, the plan is in critical and declining status, as defined by the Reform Act. Critical and declining status is applicable to critical status plans that are projected to become insolvent anytime within the next 14 plan years, or if the plan is projected to become insolvent within the next 19 plan years and either the plan’s ratio of inactive participants to active participants exceeds two to one or the plan’s funded percentage is less than 80%. On July 9, 2018, ABF Freight reached a tentative agreement with the Teamster bargaining representatives for the Northern and Southern New England Supplemental Agreements on terms for new supplemental agreements for 2018-2023 (the “New England Supplemental Agreements”). The New England Supplemental Agreements were ratified by the local unions in the region covered by the supplements on July 25, 2018. In accordance with the New England Supplemental Agreements, ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018. The New England Pension Fund is a multiemployer pension plan in critical and declining status to which ABF Freight made approximately 3% of its total multiemployer pension contributions in 2017. The New England Pension Fund was previously restructured to utilize a “two pool approach,” which effectively subdivides the plan assets and liabilities between two groups of beneficiaries. In accordance with ABF Freight’s transition agreement with the New England Pension Fund, ABF Freight agreed to withdraw from the original pool to which it has historically been a participant (“Existing Employer Pool”) and transition to the direct attribution liability pool (“New Employer Pool”), which does not have an associated unfunded liability. The terms of the transition are pursuant to the Second Chance Policy on Retroactive Withdrawal Liability, as recently adopted by the New England Pension Fund. ABF Freight’s transition agreement with the New England Pension Fund triggered a withdrawal liability settlement which satisfies ABF Freight’s existing potential withdrawal liability obligations to the Existing Employer Pool and minimizes the potential for future increases in withdrawal liability under the New Employer Pool. ABF Freight will transition to the New Employer Pool at a lower pension contribution rate than its current contribution rate under the Existing Employer Pool, and the new contribution rate will be frozen for a period of 10 years. ABF Freight recognized a one-time charge of $37.9 million (pre-tax) to record the withdrawal liability in June 2018 when the transition agreement was determined to be probable. The withdrawal liability is equal to the present value of the future withdrawal liability payments, discounted at a 4.5% interest rate. The discount rate was determined using the 20-year U.S. Treasury rate plus a spread, which is the rate that would be available to ABF Freight for long-term financing of a similar maturity (Level 2 of the fair value hierarchy). The withdrawal liability will be settled through the initial lump sum cash payment of $15.1 million, which is recorded in accounts payable and is expected to be made in third quarter 2018, plus monthly payments to the New England Pension Fund over a period of 23 years with an aggregate present value of $22.8 million, which is recorded in other long-term liabilities. In accordance with current tax law, these payments are deductible for income taxes when paid. The multiemployer plan administrators have provided to the Company no other significant changes in information related to multiemployer plans from the information disclosed in the Company’s 2017 Annual Report on Form 10-K. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2018 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE G – STOCKHOLDERS’ EQUITY Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss were as follows: June 30 December 31 2018 2017 (in thousands) Pre-tax amounts: Unrecognized net periodic benefit costs $ (17,929) $ (25,768) Interest rate swap 1,535 481 Foreign currency translation (2,289) (1,894) Total $ (18,683) $ (27,181) After-tax amounts: Unrecognized net periodic benefit costs $ (17,285) $ (19,715) Interest rate swap 1,134 292 Foreign currency translation (1,691) (1,151) Total $ (17,842) $ (20,574) The following is a summary of the changes in accumulated other comprehensive loss, net of tax, by component for the six months ended June 30, 2018 and 2017: Unrecognized Interest Foreign Net Periodic Rate Currency Total Benefit Costs Swap Translation (in thousands) Balances at December 31, 2017 $ (20,574) $ (19,715) $ 292 $ (1,151) Adjustment to beginning balance of accumulated other comprehensive loss for adoption of accounting standard (1) (3,576) (3,391) 63 (248) Balances at January 1, 2018 (24,150) (23,106) 355 (1,399) Other comprehensive income (loss) before reclassifications 4,377 3,890 779 (292) Amounts reclassified from accumulated other comprehensive loss 1,931 1,931 — — Net current-period other comprehensive income (loss) 6,308 5,821 779 (292) Balances at June 30, 2018 $ (17,842) $ (17,285) $ 1,134 $ (1,691) Balances at December 31, 2016 $ (23,417) $ (21,886) $ (329) $ (1,202) Other comprehensive income (loss) before reclassifications (1,442) (1,569) 216 (89) Amounts reclassified from accumulated other comprehensive loss 2,833 2,833 — — Net current-period other comprehensive income 1,391 1,264 216 (89) Balances at June 30, 2017 $ (22,026) $ (20,622) $ (113) $ (1,291) (1) The Company elected to reclassify the stranded income tax effects in accumulated other comprehensive loss to retained earnings as of January 1, 2018 as a result of adopting an amendment to ASC Topic 220 (see Note A) . The following is a summary of the significant reclassifications out of accumulated other comprehensive loss by component: Unrecognized Net Periodic Benefit Costs (1)(2) Six Months Ended June 30 2018 2017 (in thousands) Amortization of net actuarial loss $ (1,562) $ (2,031) Amortization of prior service credit 47 95 Pension settlement expense (1,085) (2,701) Total, pre-tax (2,600) (4,637) Tax benefit 669 1,804 Total, net of tax $ (1,931) $ (2,833) (1) Amounts in parentheses indicate increases in expense or loss. (2) These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (see Note F). Dividends on Common Stock The following table is a summary of dividends declared during the applicable quarter: 2018 2017 Per Share Amount Per Share Amount (in thousands, except per share data) First quarter $ $ $ 0.08 $ 2,066 Second quarter $ $ $ 0.08 $ 2,078 On July 27, 2018, the Company’s Board of Directors declared a dividend of $0.08 per share to stockholders of record as of August 10, 2018. Treasury Stock The Company has a program to repurchase its common stock in the open market or in privately negotiated transactions. The program has no expiration date but may be terminated at any time at the Board of Directors’ discretion. Repurchases may be made using the Company’s cash reserves or other available sources. As of December 31, 2017, the Company had $31.7 million remaining under the program for repurchases of its common stock. During the six months ended June 30, 2018, the Company purchased 5,882 shares for an aggregate cost of $0.2 million, leaving $31.5 million available for repurchase of common stock under the program. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2018 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | NOTE H – SHARE-BASED COMPENSATION Stock Awards As of June 30, 2018 and December 31, 2017, the Company had outstanding restricted stock units granted under the 2005 Ownership Incentive Plan (the “2005 Plan”). The 2005 Plan, as amended, provides for the granting of 3.1 million shares, which may be awarded as incentive and nonqualified stock options, stock appreciation rights, restricted stock, or restricted stock units (“RSUs”). Restricted Stock Units A summary of the Company’s restricted stock unit award program is presented below: Weighted-Average Grant Date Units Fair Value Outstanding – January 1, 2018 1,459,260 $ 22.98 Granted 2,400 $ 33.85 Vested (48,039) $ 22.76 Forfeited (1) (5,611) $ 24.27 Outstanding – June 30, 2018 1,408,010 $ 23.00 1) Forfeitures are recognized as they occur. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2018 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE I – EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended Six Months Ended June 30 June 30 2018 2017 2018 2017 (in thousands, except share and per share data) Basic Numerator: Net income $ 1,233 $ 15,777 $ 11,187 $ 8,370 Effect of unvested restricted stock awards (4) (65) (31) (50) Adjusted net income $ 1,229 $ 15,712 $ 11,156 $ 8,320 Denominator: Weighted-average shares 25,670,325 25,767,791 25,656,674 25,726,363 Earnings per common share $ 0.05 $ 0.61 $ 0.43 $ 0.32 Diluted Numerator: Net income $ 1,233 $ 15,777 $ 11,187 $ 8,370 Effect of unvested restricted stock awards (4) (64) (30) (50) Adjusted net income $ 1,229 $ 15,713 $ 11,157 $ 8,320 Denominator: Weighted-average shares 25,670,325 25,767,791 25,656,674 25,726,363 Effect of dilutive securities 1,029,224 523,850 996,608 652,073 Adjusted weighted-average shares and assumed conversions 26,699,549 26,291,641 26,653,282 26,378,436 Earnings per common share $ 0.05 $ 0.60 $ 0.42 $ 0.32 Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested RSUs that receive dividends, which are considered participating securities. Beginning with 2015 grants, the RSU agreements were modified to remove dividend rights; therefore, the RSUs granted subsequent to 2015 are not participating securities. For each of the three- and six-month periods ended June 30, 2017 and 2018, outstanding stock awards of 0.1 million were not included in the diluted earnings per share calculation because their inclusion would have the effect of increasing the earnings per share. |
OPERATING SEGMENT DATA
OPERATING SEGMENT DATA | 6 Months Ended |
Jun. 30, 2018 | |
OPERATING SEGMENT DATA | |
OPERATING SEGMENT DATA | NOTE J – OPERATING SEGMENT DATA The Company uses the “management approach” to determine its reportable operating segments, as well as to determine the basis of reporting the operating segment information. The management approach focuses on financial information that the Company’s management uses to make operating decisions. Management uses revenues, operating expense categories, operating ratios, operating income, and key operating statistics to evaluate performance and allocate resources to the Company’s operations. As disclosed in the Company’s 2017 10-K, the Company modified the presentation of segment expenses allocated from shared services, during the third quarter of 2017. Previously, expenses related to company-wide functions were allocated to segment expense line items by type of expense. Allocated expenses are now presented on a single shared services line within the Company’s operating segment disclosures. Reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on each segment’s total expenses as a result of the reclassifications. Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, legal, and other company-wide services. Certain overhead costs are not attributable to any segment and remain unallocated in “Other and eliminations.” Included in unallocated costs are expenses related to investor relations, legal, the ArcBest Board of Directors, and certain executive compensation. Shared services costs attributable to the operating segments are predominantly allocated based upon estimated and planned resource utilization-related metrics such as estimated shipment levels, number of pricing proposals, or number of personnel supported. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the operating segments. Management believes the methods used to allocate expenses are reasonable. Effective January 1, 2018, the Company retrospectively adopted an amendment to ASC Topic 715 which requires changes to the financial statement presentation of certain components of net periodic benefit cost related to pension and other postretirement benefits accounted for under ASC Topic 715. As a result of adopting this amendment, the service cost component of net periodic benefit cost continues to be included in operating expenses in the consolidated financial statements, but the other components of net periodic benefit cost, including pension settlement expense, are presented in other income (costs) for the three and six months ended June 30, 2018 and 2017. The adoption of this accounting policy is further discussed in Note A and the detail of net periodic benefit costs is presented in Note F. The Company’s reportable operating segments are impacted by seasonal fluctuations which affect tonnage, shipment levels, and demand for services, as described below; therefore, operating results for the interim periods presented may not necessarily be indicative of the results for the fiscal year. The Company’s reportable operating segments are as follows: · Asset-Based, which includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”). The operations include national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. In addition, the segment operations include freight transportation related to certain consumer household goods self-move services. Freight shipments and operating costs of the Asset-Based segment can be adversely affected by inclement weather conditions. The second and third calendar quarters of each year usually have the highest tonnage levels while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, may influence quarterly freight tonnage levels. · The ArcBest segment includes the results of operations of the Company’s expedite, truckload, and truckload-dedicated businesses as well as its premium logistics services; international freight transportation with air, ocean, and ground service offerings; household goods moving services to consumer, commercial, and government customers; warehousing management and distribution services; and managed transportation solutions. Under the Company’s enhanced marketing approach to offer customers a single source of end-to-end logistics, the service offerings of the ArcBest segment continue to become more integrated. As such, management’s operating decisions have become more focused on the segment’s combined operations, rather than on individual service offerings within the segment’s operations. ArcBest segment operations are influenced by seasonal fluctuations that impact customers’ supply chains. The second and third calendar quarters of each year usually have the highest shipment levels while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, may impact quarterly business levels. Shipments of the ArcBest segment may decline during winter months because of post-holiday slowdowns, but expedite shipments can be subject to short-term increases depending on the impact of weather disruptions to customers’ supply chains. Plant shutdowns during summer months may affect shipments for automotive and manufacturing customers of the ArcBest segment, but severe weather events can result in higher demand for expedite services. Moving services of the ArcBest segment are impacted by seasonal fluctuations, generally resulting in higher business levels in the second and third quarters as the demand for household goods moving services is typically stronger in the summer months. · FleetNet includes the results of operations of FleetNet America, Inc. and certain other subsidiaries that provide roadside assistance and maintenance management services for commercial vehicles through a network of third-party service providers. FleetNet also provides services to the Asset-Based and ArcBest segments. Emergency roadside service events of the FleetNet segment are favorably impacted by extreme weather conditions that affect commercial vehicle operations and the segment’s results of operations will be influenced by seasonal variations in service event volume. The Company’s other business activities and operating segments that are not reportable include ArcBest Corporation and certain other subsidiaries. Certain costs incurred by the parent holding company and the Company’s shared services subsidiary are allocated to the reporting segments. The Company eliminates intercompany transactions in consolidation. However, the information used by the Company’s management with respect to its reportable segments is before intersegment eliminations of revenues and expenses. Further classifications of operations or revenues by geographic location are impracticable and, therefore, are not provided. The Company’s foreign operations are not significant. The following tables reflect reportable operating segment information: Three Months Ended Six Months Ended June 30 June 30 2018 2017 2018 2017 (in thousands) REVENUES Asset-Based $ 559,239 $ 514,537 $ 1,041,354 $ 978,893 ArcBest 199,987 175,929 381,920 328,805 FleetNet 46,792 36,501 94,551 76,739 Other and eliminations (12,668) (6,599) (24,474) (12,981) Total consolidated revenues $ 793,350 $ 720,368 $ 1,493,351 $ 1,371,456 OPERATING EXPENSES (1) Asset-Based Salaries, wages, and benefits $ 286,750 $ 286,904 $ 556,529 $ 566,284 Fuel, supplies, and expenses 65,040 58,541 127,233 116,931 Operating taxes and licenses 11,910 12,191 23,666 24,014 Insurance 7,979 7,602 14,607 14,720 Communications and utilities 4,135 4,168 8,656 8,685 Depreciation and amortization 21,362 20,716 42,292 41,234 Rents and purchased transportation 63,253 53,189 109,386 99,615 Shared services (2) 56,825 46,600 102,432 90,104 Multiemployer pension fund withdrawal liability charge (3) 37,922 — 37,922 — (Gain) loss on sale of property and equipment (266) 25 (399) (592) Other 948 1,673 2,247 3,178 Restructuring costs (4) — 33 — 173 Total Asset-Based 555,858 491,642 1,024,571 964,346 ArcBest Purchased transportation 162,920 139,432 311,292 261,419 Supplies and expenses 3,538 3,742 6,768 7,412 Depreciation and amortization 3,597 3,230 7,005 6,496 Shared services (2) 23,536 20,658 45,404 40,244 Other 2,546 2,873 4,427 5,338 Restructuring costs (4) 143 65 152 875 Total ArcBest 196,280 170,000 375,048 321,784 FleetNet 45,763 35,754 92,001 74,971 Other and eliminations (7,707) (2,795) (14,150) (5,512) Total consolidated operating expenses $ 790,194 $ 694,601 $ 1,477,470 $ 1,355,589 (1) As previously discussed in this Note, the Company retrospectively adopted an amendment to ASC Topic 715, effective January 1, 2018, which requires the components of net periodic benefit cost other than service cost to be presented within other income (costs) in the consolidated financial statements and, therefore, these costs are no longer classified within operating expenses within this table. (2) Certain reclassifications have been made to the prior year’s operating segment data to conform to the current year presentation, reflecting the modified presentation of segment expenses allocated from shared services as previously discussed in this Note. (3) ABF Freight recorded a one-time charge in June 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund (see Note F). (4) Restructuring costs relate to the realignment of the Company’s corporate structure (see Note K). Three Months Ended Six Months Ended June 30 June 30 2018 2017 2018 2017 (in thousands) OPERATING INCOME (1) Asset-Based $ 3,381 $ 22,895 $ 16,783 $ 14,547 ArcBest 3,707 5,929 6,872 7,021 FleetNet 1,029 747 2,550 1,768 Other and eliminations (4,961) (3,804) (10,324) (7,469) Total consolidated operating income $ 3,156 $ 25,767 $ 15,881 $ 15,867 OTHER INCOME (COSTS) Interest and dividend income $ 714 $ 285 $ 1,240 $ 559 Interest and other related financing costs (2,013) (1,389) (4,072) (2,704) Other, net (1)(2) (1,123) (528) (3,324) (2,234) Total other income (costs) (2,422) (1,632) (6,156) (4,379) INCOME BEFORE INCOME TAXES $ 734 $ 24,135 $ 9,725 $ 11,488 (1) As previously discussed in this Note, for the three and six months ended June 30, 2018 and 2017, the components of net periodic benefit cost other than service cost are presented within other income (costs) rather than within operating income (loss) in accordance with an amendment to ASC Topic 715, which the Company adopted retrospectively effective January 1, 2018. (2) Includes proceeds and changes in cash surrender value of life insurance policies. The following table presents operating expenses by category on a consolidated basis: Three Months Ended Six Months Ended June 30 June 30 2018 2017 2018 2017 (in thousands) OPERATING EXPENSES Salaries, wages, and benefits $ 355,913 $ 349,200 $ 684,670 $ 681,790 Rents, purchased transportation, and other costs of services 253,540 216,237 477,296 416,108 Fuel, supplies, and expenses 84,884 68,451 163,530 141,113 Depreciation and amortization (1) 27,187 25,209 53,673 50,603 Other 30,408 35,141 59,663 63,981 Multiemployer pension fund withdrawal liability charge (2) 37,922 — 37,922 — Restructuring costs (3) 340 363 716 1,994 $ 790,194 $ 694,601 $ 1,477,470 $ 1,355,589 (1) Includes amortization of intangible assets. (2) ABF Freight recorded a one-time charge in June 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund (see Note F). (3) Restructuring costs relate to the realignment of the Company’s corporate structure (see Note K). |
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES | 6 Months Ended |
Jun. 30, 2018 | |
RESTRUCTURING CHARGES | |
RESTRUCTURING CHARGES | NOTE K – RESTRUCTURING CHARGES On November 3, 2016, the Company announced its plan to implement an enhanced market approach to better serve its customers. The enhanced market approach unified the Company’s sales, pricing, customer service, marketing, and capacity sourcing functions effective January 1, 2017, and allows the Company to operate as one logistics provider under the ArcBest brand. As a result of the restructuring, the Company recorded $0.3 million and $0.7 million of restructuring charges in operating expenses during the three and six months ended June 30, 2018, respectively, and recorded $0.4 million and $2.0 million, primarily for employee-related costs, during the three and six months ended June 30, 2017, respectively. The Company estimates it will incur restructuring charges of approximately $1.0 million during 2018 primarily for consulting fees related to continued integration of systems and processes to further implement its enhanced market approach. |
LEGAL PROCEEDINGS, ENVIRONMENTA
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | 6 Months Ended |
Jun. 30, 2018 | |
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | |
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | NOTE L – LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS The Company is involved in various legal actions arising in the ordinary course of business. The Company maintains liability insurance against certain risks arising out of the normal course of its business, subject to certain self-insured retention limits. The Company routinely establishes and reviews the adequacy of reserves for estimated legal, environmental, and self-insurance exposures. While management believes that amounts accrued in the consolidated financial statements are adequate, estimates of these liabilities may change as circumstances develop. Considering amounts recorded, routine legal matters are not expected to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Environmental Matters The Company’s subsidiaries store fuel for use in tractors and trucks in 62 underground tanks located in 18 states. Maintenance of such tanks is regulated at the federal and, in most cases, state levels. The Company believes it is in substantial compliance with all such regulations. The Company’s underground storage tanks are required to have leak detection systems. The Company is not aware of any leaks from such tanks that could reasonably be expected to have a material adverse effect on the Company. The Company has received notices from the Environmental Protection Agency and others that it has been identified as a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act, or other federal or state environmental statutes, at several hazardous waste sites. After investigating the Company’s involvement in waste disposal or waste generation at such sites, the Company has either agreed to de minimis settlements or determined that its obligations, other than those specifically accrued with respect to such sites, would involve immaterial monetary liability, although there can be no assurances in this regard. At June 30, 2018 and December 31, 2017, the Company’s reserve, which was reported in accrued expenses, for estimated environmental cleanup costs of properties currently or previously operated by the Company totaled $0.6 million and $0.4 million, respectively. Amounts accrued reflect management’s best estimate of the future undiscounted exposure related to identified properties based on current environmental regulations, management’s experience with similar environmental matters, and testing performed at certain sites. |
ORGANIZATION AND DESCRIPTION 21
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | |
Financial Statement Presentation - Basis of accounting | The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2017 Annual Report on Form 10-K and other current filings with the SEC. In the opinion of management, all adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included. |
Reclassifications | As previously disclosed in our 2017 Annual Report on Form 10-K, the Company modified the presentation of segment expenses allocated from shared services during the third quarter of 2017. Previously, expenses allocated from company-wide functions were categorized in individual segment expense line items by type of expense. Allocated expenses are now presented on a single shared services line within the Company’s operating segment disclosures. Reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on each segment’s total expenses as a result of the reclassifications. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts may differ from those estimates. |
Goodwill | Goodwill: Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill is not amortized, but rather is evaluated for impairment annually or more frequently if indicators of impairment exist. The Company’s measurement of goodwill impairment involves a comparison of the estimated fair value of a reporting unit to its carrying value. Fair value is derived using a combination of valuation methods, including earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue multiples (market approach) and the present value of discounted cash flows (income approach). For annual and interim impairment tests, the Company is required to record an impairment charge, if any, by the amount a reporting unit’s fair value is exceeded by the carrying value of the reporting unit, limited to the carrying value of goodwill included in the reporting unit. The Company’s annual impairment testing is performed as of October 1. |
Revenue Recognition | Revenue Recognition: Revenues are recognized when or as control of the promised services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Asset-Based Segment Asset-Based segment revenues primarily consist of less-than-truckload freight delivery. Performance obligations are satisfied upon final delivery of the freight to the specified destination. Revenue is recognized based on the relative transit time in each reporting period with expenses recognized as incurred. A bill-by-bill analysis is used to establish estimates of revenue in transit for recognition in the appropriate period. Because the bill-by-bill methodology utilizes the approximate location of the shipment in the delivery process to determine the revenue to recognize, management believes it to be a reliable method. Certain contracts may provide for volume-based or other discounts which are accounted for as variable consideration. The Company estimates these amounts based on the expected discounts earned by customers and revenue is recognized based on the estimates. Revenue adjustments may also occur due to rating or other billing adjustments. The Company estimates revenue adjustments based on historical information and revenue is recognized accordingly at the time of shipment. Management believes that actual amounts will not vary significantly from estimates of variable consideration. Revenue, purchased transportation expense, and third-party service expenses are reported on a gross basis for certain shipments and services where the Company utilizes a third-party carrier for pickup, linehaul, delivery of freight, or performance of services but remains primarily responsible for fulfilling delivery to the customer and maintains discretion in setting the price for the services. ArcBest Segment ArcBest segment revenues consist primarily of asset-light logistics services using third-party vendors to provide transportation services. ArcBest segment revenue is generally recognized based on the relative transit time in each reporting period using estimated standard delivery times for freight in transit at the end of the reporting period. Purchased transportation expense is recognized as incurred consistent with the recognition of revenue. Revenue and purchased transportation expense are reported on a gross basis for shipments and services where the Company uses a third-party carrier for pickup and delivery but remains primarily responsible to the customer for delivery and has discretion in setting the price for the service. FleetNet Segment FleetNet segment revenues consist of service fee revenue, roadside repair revenue and routine maintenance services. Service fee revenue for the FleetNet segment is recognized upon response to the service event. Repair revenue for the FleetNet segment is recognized upon completion of the service by third-party vendors. Revenue and expense from repair and maintenance services performed by third-party vendors are reported on a gross basis as FleetNet controls the services prior to transfer to the customer and remains primarily responsible to the customer for completion of the services. Other Recognition and Disclosure The Company records deferred revenue when cash payments are received or due in advance of performance under the contract. Deferred revenues totaled $3.6 million and $0.6 million at June 30, 2018 and December 31, 2017, respectively, and are recorded in accrued expenses in the consolidated balance sheet. Payment terms with customers may vary depending on the service provided, location or specific agreement with the customer. The term between invoicing and when payment is due is not significant. For certain services, payment is required before the services are provided to the customer. The Company expenses sales commissions when incurred because the amortization period is one year or less. The Company has elected to apply the practical expedient to not disclose the value of unsatisfied performance obligations for contracts with an original length of one year or less or contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed . |
Accounting Pronouncements | Adopted Accounting Pronouncements Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , (“ASC Topic 606”) provides a single comprehensive revenue recognition model for all contracts with customers and contains principles to apply to determine the measurement of revenue and the timing of when it is recognized. On January 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic method of accounting under ASC Topic 605, Revenue Recognition , (“ASC Topic 605”). The Company’s major service lines for presentation of disaggregated revenues from contracts with customers are consistent with the Company’s reportable operating segments as presented in Note J. The primary impact of adopting ASC Topic 606 was to recognize ArcBest segment revenue over time instead of at final delivery of the shipment. As a result, revenue will generally be recorded earlier under ASC Topic 606 compared to ASC Topic 605. Asset-Based and FleetNet segment revenues were not impacted. The Company recorded a net increase to opening retained earnings of $0.4 million as of January 1, 2018 due to the cumulative impact of adopting ASC Topic 606. The impact to revenues for the three and six months ended June 30, 2018 was an increase of $1.1 million and $0.8 million, respectively, and the impact to purchased transportation expense was an increase of $0.8 million and $0.5 million, respectively, as a result of applying ASC Topic 606. Effective January 1, 2018, the Company adopted an amendment to ASC Topic 715, Compensation – Retirement Benefits , (“ASC Topic 715”) which requires changes to the financial statement presentation of certain components of net periodic benefit cost related to pension and other postretirement benefits accounted for under ASC Topic 715. The amendment requires the service cost component of net periodic benefit cost to continue to be included in the same line item as other compensation costs arising from services rendered by the related employees, but requires the other components of net periodic benefit cost, including pension settlement expense, to be presented separately from the service cost component and outside of the subtotal of income from operations. The provisions of the amendment are required to be applied retrospectively and were effective for the Company beginning January 1, 2018. The Company has not incurred service cost under its nonunion defined benefit pension plan or its supplemental benefit plan (the “SBP”) since the accrual of benefits under the plans were frozen on July 1, 2013 and December 31, 2009, respectively; however, the Company incurs service cost under its postretirement health benefit plan which will continue to be reported within operating expenses in the consolidated statements of operations. The other components of net periodic benefit cost (including pension settlement charges) of the nonunion defined benefit pension plan, the SBP, and the postretirement health benefit plan are reported within the other line item of other income (costs) beginning in first quarter 2018. As a result of retrospectively applying the provisions of the amendment, $1.0 million and $3.4 million was reclassified from operating expenses to other income (costs) for the three and six months ended June 30, 2017, respectively. There was no change to consolidated net income (loss) or earnings (loss) per share as a result of the change in presentation under the new standard. In February 2018, the Financial Accounting Standards Board (the “FASB”) issued an amendment to ASC Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , (“ASC Topic 220”) which allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Reform Act”). The Company early adopted this amendment for first quarter 2018 and adjusted the tax effect of items within accumulated other comprehensive income to reflect the appropriate tax rate under the Tax Reform Act in the period of adoption. As a result of applying the provisions of the amendment, the Company elected to reclassify $3.6 million of stranded income tax effects from accumulated other comprehensive loss to retained earnings as of January 1, 2018. Amounts recognized in other comprehensive income or loss related to the Company’s nonunion defined benefit pension plan, supplemental benefit plan, and postretirement health benefit plan are subsequently expensed as components of net periodic benefit cost by amortizing unrecognized net actuarial losses over the average remaining active service period of the plan participants and amortizing unrecognized prior service credits over the remaining years of service until full eligibility of the active participants at the time of the plan amendment which created the prior service credit. A corridor approach is not used for determining the amounts of net actuarial losses to be amortized. Amounts recognized in other comprehensive income or loss related to the change in unrealized gain or loss on the Company’s interest rate swap agreements are reclassified out of accumulated other comprehensive loss into income (loss) in the period during which the hedged transaction affects earnings. Effective January 1, 2018, the Company early adopted an amendment to ASC Topic 350, Intangibles – Goodwill and Other, Simplifying the Test of Goodwill Impairment, which removes Step 2 of the goodwill impairment test. For annual and interim impairment tests, the Company is required to record an impairment charge, if any, by the amount a reporting unit’s fair value is exceeded by the carrying value of the reporting unit, limited to the carrying value of goodwill included in the reporting unit. The adoption of the amendment did not have an impact on the consolidated financial statements for the six months ended June 30, 2018. Accounting Pronouncements Not Yet Adopted ASC Topic 842, Leases , (“ASC Topic 842”) which is effective for the Company beginning January 1, 2019, requires lessees to recognize right-of-use assets and lease liabilities for operating leases with terms greater than 12 months. The standard also requires additional qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued an amendment to ASC Topic 842 which provides an optional transition method that will give companies the option to use the effective date as the date of initial application upon transition. The Company plans to elect this transition method and, as a result, will not adjust comparative period financial information or make the new required lease disclosures for periods before the effective date. The Company has established an implementation team which is in the process of implementing the new accounting standard, including accumulating necessary information, assessing the current lease portfolio, and implementing software to meet the new reporting requirements. The Company is also evaluating current processes and controls and identifying necessary changes to support the adoption of the new standard. The Company anticipates it will exclude short-term leases from accounting under ASC Topic 842 and plans to elect the package of practical expedients upon transition that will retain lease classification and other accounting conclusions made in the assessment of existing lease contracts. Management expects the new standard to have a material impact on the Company’s consolidated balance sheets related to the addition of the right-of-use asset and associated lease liabilities; however, the impact on the consolidated statements of operations is expected to be minimal, if any. As the impact of this standard is non-cash in nature, no impact is expected on the Company’s consolidated statements of cash flows. ASC Topic 815, Derivatives and Hedging , was amended to change the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results to simplify hedge accounting treatment and better align an entity’s risk management activities and financial reporting for hedging relationships. The amendment is effective for the Company beginning January 1, 2019 and is not expected to have a significant impact on the consolidated financial statements. Management believes there is no other new accounting guidance issued but not yet effective that is relevant to the Company’s current financial statements. |
FINANCIAL INSTRUMENTS AND FAI22
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
Schedule components of cash and cash equivalents, short term investments, and restricted funds | June 30 December 31 2018 2017 (in thousands) Cash and cash equivalents Cash deposits (1) $ 106,924 $ 86,510 Variable rate demand notes (1)(2) 15,041 19,744 Money market funds (3) 37,342 14,518 Total cash and cash equivalents $ 159,307 $ 120,772 Short-term investments Certificates of deposit (1) $ 68,013 $ 56,401 (1) Recorded at cost plus accrued interest, which approximates fair value. (2) Amounts may be redeemed on a daily basis with the original issuer. (3) Recorded at fair value as determined by quoted market prices (see amounts presented in the table of financial assets and liabilities measured at fair value within this Note). |
Schedule of fair value and carrying value disclosures of financial instruments | June 30 December 31 2018 2017 (in thousands) Carrying Fair Carrying Fair Value Value Value Value Credit Facility (1) $ 70,000 $ 70,000 $ 70,000 $ 70,000 Accounts receivable securitization borrowings (2) 45,000 45,000 45,000 45,000 Notes payable (3) 134,258 132,522 153,441 152,131 $ 249,258 $ 247,522 $ 268,441 $ 267,131 (1) The revolving credit facility (the “Credit Facility”) carries a variable interest rate based on LIBOR, plus a margin, that is considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). (2) Borrowings under the Company’s accounts receivable securitization program carry a variable interest rate based on LIBOR, plus a margin. The borrowings are considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). (3) Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy). |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | June 30, 2018 Fair Value Measurements Using Quoted Prices Significant Significant In Active Observable Unobservable Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in thousands) Assets: Money market funds (1) $ 37,342 $ 37,342 $ — $ — Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2) 2,453 2,453 — — Interest rate swaps (3) 1,535 — 1,535 — $ 41,330 $ 39,795 $ 1,535 $ — Liabilities: Contingent consideration (4) $ 4,092 $ — $ — $ 4,092 December 31, 2017 Fair Value Measurements Using Quoted Prices Significant Significant In Active Observable Unobservable Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (in thousands) Assets: Money market funds (1) $ 14,518 $ 14,518 $ — $ — Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2) 2,359 2,359 — — Interest rate swaps (3) 481 — 481 — $ 17,358 $ 16,877 $ 481 $ — Liabilities: Contingent consideration (4) $ 6,970 $ — $ — $ 6,970 (1) Included in cash and cash equivalents. (2) Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities. (3) Included in other long-term assets. The fair values of the interest rate swaps were determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves (Level 2 inputs) adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are considered to be in Level 3 of the fair value hierarchy. The Company assessed Level 3 inputs as insignificant to the valuation at June 30, 2018 and December 31, 2017 and considers the interest rate swap valuations in Level 2 of the fair value hierarchy. (4) Included in accrued expenses as of June 30, 2018 and included in accrued expenses and other long-term liabilities based on when expected payouts become due as of December 31, 2017. The estimated fair value of contingent consideration for an earn-out agreement related to the September 2016 acquisition of LDS was determined by assessing Level 3 inputs with a discounted cash flow approach using various probability-weighted scenarios. The Level 3 assessments utilize a Monte Carlo simulation with inputs including scenarios of estimated revenues and gross margins to be achieved for the applicable performance periods, probability weightings assigned to the performance scenarios, and the discount rate applied, which was 12.0% and 12.5% as of June 30, 2018 and December 31, 2017, respectively. Subsequent changes to the fair value as a result of recurring assessments will be recognized in operating income. |
Schedule of changes in fair value of the liabilities | Contingent Consideration (in thousands) Balances at December 31, 2017 $ 6,970 Payments (1) (3,528) Change in fair value included in operating expenses 650 Balances at June 30, 2018 $ 4,092 (1) Payments released from escrow account reported in other current assets in the consolidated balance sheet. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of intangible assets | June 30, 2018 December 31, 2017 Weighted-Average Accumulated Net Accumulated Net Amortization Period Cost Amortization Value Cost Amortization Value (in years) (in thousands) (in thousands) Finite-lived intangible assets Customer relationships 14 $ 60,431 $ 21,938 $ 38,493 $ 60,431 $ 19,745 $ 40,686 Driver network 3 3,200 3,200 — 3,200 3,200 — Other 9 1,032 619 413 1,032 549 483 13 64,663 25,757 38,906 64,663 23,494 41,169 Indefinite-lived intangible assets Trade name N/A 32,300 N/A 32,300 32,300 N/A 32,300 Total intangible assets N/A $ 96,963 $ 25,757 $ 71,206 $ 96,963 $ 23,494 $ 73,469 |
Schedule of future amortization for intangible assets and acquired software | The future amortization for intangible assets and acquired software as of June 30, 2018 were as follows: Intangible Acquired Total Assets Software (1) (in thousands) 2018 $ 3,318 $ 2,257 $ 1,061 2019 5,463 4,482 981 2020 4,471 4,454 17 2021 4,418 4,412 6 2022 4,385 4,385 — Thereafter 18,916 18,916 — Total amortization $ 40,971 $ 38,906 $ 2,065 (1) Acquired software is reported in property, plant and equipment. |
LONG-TERM DEBT AND FINANCING 24
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | |
Schedule of long-term debt | June 30 December 31 2018 2017 (in thousands) Credit Facility (interest rate of 3.6% (1) at June 30, 2018) $ 70,000 $ 70,000 Accounts receivable securitization borrowings (interest rate of 2.9% at June 30, 2018) 45,000 45,000 Notes payable (weighted-average interest rate of 2.9% at June 30, 2018) 134,258 153,441 Capital lease obligations (weighted-average interest rate of 5.6% at June 30, 2018) 374 478 249,632 268,919 Less current portion 51,562 61,930 Long-term debt, less current portion $ 198,070 $ 206,989 (1) The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.35% based on the margin of the Credit Facility as of June 30, 2018. |
Scheduled maturities of long-term debt obligations | Accounts Receivable Credit Securitization Notes Capital Lease Total Facility (1) Program (1) Payable Obligations (2) (in thousands) Due in one year or less $ 59,036 $ 2,771 $ 1,507 $ 54,521 $ 237 Due after one year through two years 80,391 3,069 46,271 30,908 143 Due after two years through three years 29,575 3,097 — 26,471 7 Due after three years through four years 25,258 3,076 — 22,177 5 Due after four years through five years 77,443 70,050 — 7,393 — Due after five years 225 — — 225 — Total payments 271,928 82,063 47,778 141,695 392 Less amounts representing interest 22,296 12,063 2,778 7,437 18 Long-term debt $ 249,632 $ 70,000 $ 45,000 $ 134,258 $ 374 (1) The future interest payments included in the scheduled maturities due are calculated using variable interest rates based on the LIBOR swap curve, plus the anticipated applicable margin. (2) Minimum payments of capital lease obligations include maximum amounts due under rental adjustment clauses contained in the capital lease agreements. |
Schedule of assets securing notes payable or held under capital leases | June 30 December 31 2018 2017 (in thousands) Revenue equipment $ 257,827 $ 269,950 Land and structures (service centers) 1,794 1,794 Software 486 486 Service, office, and other equipment 101 100 Total assets securing notes payable or held under capital leases 260,208 272,330 Less accumulated depreciation and amortization (1) 92,558 87,691 Net assets securing notes payable or held under capital leases $ 167,650 $ 184,639 (1) Amortization of assets under held capital leases and depreciation of assets securing notes payable are included in depreciation expense. |
PENSION AND OTHER POSTRETIREM25
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS | |
Summary of the components of net periodic benefit cost | Three Months Ended June 30 Nonunion Defined Supplemental Postretirement Benefit Pension Plan Benefit Plan Health Benefit Plan 2018 2017 2018 2017 2018 2017 (in thousands) Service cost $ — $ — $ — $ — $ 91 $ 122 Interest cost 1,108 1,149 27 25 210 265 Expected return on plan assets (378) (2,054) — — — — Amortization of prior service credit — — — — (24) (48) Pension settlement expense 431 744 — — — — Amortization of net actuarial loss (1) 592 757 20 21 76 174 Net periodic benefit cost $ 1,753 $ 596 $ 47 $ 46 $ 353 $ 513 Six Months Ended June 30 Nonunion Defined Supplemental Postretirement Benefit Pension Plan Benefit Plan Health Benefit Plan 2018 2017 2018 2017 2018 2017 (in thousands) Service cost $ — $ — $ — $ — $ 183 $ 244 Interest cost 2,123 2,389 54 51 419 530 Expected return on plan assets (779) (4,221) — — — — Amortization of prior service credit — — — — (47) (95) Pension settlement expense 1,085 2,701 — — — — Amortization of net actuarial loss (1) 1,370 1,643 40 41 152 347 Net periodic benefit cost $ 3,799 $ 2,512 $ 94 $ 92 $ 707 $ 1,026 (1) The Company amortizes actuarial losses over the average remaining active service period of the plan participants and does not use a corridor approach. |
Schedule of changes in the projected benefit obligation and plan assets of the nonunion defined benefit pension plan | Nonunion Defined Benefit Pension Plan (in thousands) Change in benefit obligations Benefit obligations at December 31, 2017 $ 137,417 Interest cost 2,123 Actuarial gain (1) (4,924) Benefits paid (8,578) Benefit obligations at June 30, 2018 126,038 Change in plan assets Fair value of plan assets at December 31, 2017 124,831 Actual return on plan assets 1,093 Benefits paid (8,578) Fair value of plan assets at June 30, 2018 117,346 Funded status at period end (2) $ (8,692) Accumulated benefit obligation $ 126,038 (1) Primarily related to the impact of an increase in the discount rate at the June 30, 2018 remeasurement upon settlement compared to the discount rate at the December 31, 2017 measurement date. (2) Noncurrent liability recognized within pension and postretirement liabilities in the accompanying consolidated balance sheet at June 30, 2018. |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
STOCKHOLDERS' EQUITY | |
Components of accumulated other comprehensive loss | June 30 December 31 2018 2017 (in thousands) Pre-tax amounts: Unrecognized net periodic benefit costs $ (17,929) $ (25,768) Interest rate swap 1,535 481 Foreign currency translation (2,289) (1,894) Total $ (18,683) $ (27,181) After-tax amounts: Unrecognized net periodic benefit costs $ (17,285) $ (19,715) Interest rate swap 1,134 292 Foreign currency translation (1,691) (1,151) Total $ (17,842) $ (20,574) |
Summary of changes in accumulated other comprehensive loss, net of tax, by component | Unrecognized Interest Foreign Net Periodic Rate Currency Total Benefit Costs Swap Translation (in thousands) Balances at December 31, 2017 $ (20,574) $ (19,715) $ 292 $ (1,151) Adjustment to beginning balance of accumulated other comprehensive loss for adoption of accounting standard (1) (3,576) (3,391) 63 (248) Balances at January 1, 2018 (24,150) (23,106) 355 (1,399) Other comprehensive income (loss) before reclassifications 4,377 3,890 779 (292) Amounts reclassified from accumulated other comprehensive loss 1,931 1,931 — — Net current-period other comprehensive income (loss) 6,308 5,821 779 (292) Balances at June 30, 2018 $ (17,842) $ (17,285) $ 1,134 $ (1,691) Balances at December 31, 2016 $ (23,417) $ (21,886) $ (329) $ (1,202) Other comprehensive income (loss) before reclassifications (1,442) (1,569) 216 (89) Amounts reclassified from accumulated other comprehensive loss 2,833 2,833 — — Net current-period other comprehensive income 1,391 1,264 216 (89) Balances at June 30, 2017 $ (22,026) $ (20,622) $ (113) $ (1,291) (1) The Company elected to reclassify the stranded income tax effects in accumulated other comprehensive loss to retained earnings as of January 1, 2018 as a result of adopting an amendment to ASC Topic 220 (see Note A) . |
Summary of the significant reclassifications out of accumulated other comprehensive loss by component | Unrecognized Net Periodic Benefit Costs (1)(2) Six Months Ended June 30 2018 2017 (in thousands) Amortization of net actuarial loss $ (1,562) $ (2,031) Amortization of prior service credit 47 95 Pension settlement expense (1,085) (2,701) Total, pre-tax (2,600) (4,637) Tax benefit 669 1,804 Total, net of tax $ (1,931) $ (2,833) (1) Amounts in parentheses indicate increases in expense or loss. (2) These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (see Note F). |
Summary of dividends declared | 2018 2017 Per Share Amount Per Share Amount (in thousands, except per share data) First quarter $ $ $ 0.08 $ 2,066 Second quarter $ $ $ 0.08 $ 2,078 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
SHARE-BASED COMPENSATION | |
Summary of the Company's restricted stock unit award program | A summary of the Company’s restricted stock unit award program is presented below: Weighted-Average Grant Date Units Fair Value Outstanding – January 1, 2018 1,459,260 $ 22.98 Granted 2,400 $ 33.85 Vested (48,039) $ 22.76 Forfeited (1) (5,611) $ 24.27 Outstanding – June 30, 2018 1,408,010 $ 23.00 1) Forfeitures are recognized as they occur. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings (loss) per share | Three Months Ended Six Months Ended June 30 June 30 2018 2017 2018 2017 (in thousands, except share and per share data) Basic Numerator: Net income $ 1,233 $ 15,777 $ 11,187 $ 8,370 Effect of unvested restricted stock awards (4) (65) (31) (50) Adjusted net income $ 1,229 $ 15,712 $ 11,156 $ 8,320 Denominator: Weighted-average shares 25,670,325 25,767,791 25,656,674 25,726,363 Earnings per common share $ 0.05 $ 0.61 $ 0.43 $ 0.32 Diluted Numerator: Net income $ 1,233 $ 15,777 $ 11,187 $ 8,370 Effect of unvested restricted stock awards (4) (64) (30) (50) Adjusted net income $ 1,229 $ 15,713 $ 11,157 $ 8,320 Denominator: Weighted-average shares 25,670,325 25,767,791 25,656,674 25,726,363 Effect of dilutive securities 1,029,224 523,850 996,608 652,073 Adjusted weighted-average shares and assumed conversions 26,699,549 26,291,641 26,653,282 26,378,436 Earnings per common share $ 0.05 $ 0.60 $ 0.42 $ 0.32 |
OPERATING SEGMENT DATA (Tables)
OPERATING SEGMENT DATA (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
OPERATING SEGMENT DATA | |
Schedule of reportable operating segment information | The following tables reflect reportable operating segment information: Three Months Ended Six Months Ended June 30 June 30 2018 2017 2018 2017 (in thousands) REVENUES Asset-Based $ 559,239 $ 514,537 $ 1,041,354 $ 978,893 ArcBest 199,987 175,929 381,920 328,805 FleetNet 46,792 36,501 94,551 76,739 Other and eliminations (12,668) (6,599) (24,474) (12,981) Total consolidated revenues $ 793,350 $ 720,368 $ 1,493,351 $ 1,371,456 OPERATING EXPENSES (1) Asset-Based Salaries, wages, and benefits $ 286,750 $ 286,904 $ 556,529 $ 566,284 Fuel, supplies, and expenses 65,040 58,541 127,233 116,931 Operating taxes and licenses 11,910 12,191 23,666 24,014 Insurance 7,979 7,602 14,607 14,720 Communications and utilities 4,135 4,168 8,656 8,685 Depreciation and amortization 21,362 20,716 42,292 41,234 Rents and purchased transportation 63,253 53,189 109,386 99,615 Shared services (2) 56,825 46,600 102,432 90,104 Multiemployer pension fund withdrawal liability charge (3) 37,922 — 37,922 — (Gain) loss on sale of property and equipment (266) 25 (399) (592) Other 948 1,673 2,247 3,178 Restructuring costs (4) — 33 — 173 Total Asset-Based 555,858 491,642 1,024,571 964,346 ArcBest Purchased transportation 162,920 139,432 311,292 261,419 Supplies and expenses 3,538 3,742 6,768 7,412 Depreciation and amortization 3,597 3,230 7,005 6,496 Shared services (2) 23,536 20,658 45,404 40,244 Other 2,546 2,873 4,427 5,338 Restructuring costs (4) 143 65 152 875 Total ArcBest 196,280 170,000 375,048 321,784 FleetNet 45,763 35,754 92,001 74,971 Other and eliminations (7,707) (2,795) (14,150) (5,512) Total consolidated operating expenses $ 790,194 $ 694,601 $ 1,477,470 $ 1,355,589 (1) As previously discussed in this Note, the Company retrospectively adopted an amendment to ASC Topic 715, effective January 1, 2018, which requires the components of net periodic benefit cost other than service cost to be presented within other income (costs) in the consolidated financial statements and, therefore, these costs are no longer classified within operating expenses within this table. (2) Certain reclassifications have been made to the prior year’s operating segment data to conform to the current year presentation, reflecting the modified presentation of segment expenses allocated from shared services as previously discussed in this Note. (3) ABF Freight recorded a one-time charge in June 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund (see Note F). (4) Restructuring costs relate to the realignment of the Company’s corporate structure (see Note K). Three Months Ended Six Months Ended June 30 June 30 2018 2017 2018 2017 (in thousands) OPERATING INCOME (1) Asset-Based $ 3,381 $ 22,895 $ 16,783 $ 14,547 ArcBest 3,707 5,929 6,872 7,021 FleetNet 1,029 747 2,550 1,768 Other and eliminations (4,961) (3,804) (10,324) (7,469) Total consolidated operating income $ 3,156 $ 25,767 $ 15,881 $ 15,867 OTHER INCOME (COSTS) Interest and dividend income $ 714 $ 285 $ 1,240 $ 559 Interest and other related financing costs (2,013) (1,389) (4,072) (2,704) Other, net (1)(2) (1,123) (528) (3,324) (2,234) Total other income (costs) (2,422) (1,632) (6,156) (4,379) INCOME BEFORE INCOME TAXES $ 734 $ 24,135 $ 9,725 $ 11,488 (1) As previously discussed in this Note, for the three and six months ended June 30, 2018 and 2017, the components of net periodic benefit cost other than service cost are presented within other income (costs) rather than within operating income (loss) in accordance with an amendment to ASC Topic 715, which the Company adopted retrospectively effective January 1, 2018. (2) Includes proceeds and changes in cash surrender value of life insurance policies. The following table presents operating expenses by category on a consolidated basis: Three Months Ended Six Months Ended June 30 June 30 2018 2017 2018 2017 (in thousands) OPERATING EXPENSES Salaries, wages, and benefits $ 355,913 $ 349,200 $ 684,670 $ 681,790 Rents, purchased transportation, and other costs of services 253,540 216,237 477,296 416,108 Fuel, supplies, and expenses 84,884 68,451 163,530 141,113 Depreciation and amortization (1) 27,187 25,209 53,673 50,603 Other 30,408 35,141 59,663 63,981 Multiemployer pension fund withdrawal liability charge (2) 37,922 — 37,922 — Restructuring costs (3) 340 363 716 1,994 $ 790,194 $ 694,601 $ 1,477,470 $ 1,355,589 (1) Includes amortization of intangible assets. (2) ABF Freight recorded a one-time charge in June 2018 for the multiemployer pension plan withdrawal liability resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund (see Note F). (3) Restructuring costs relate to the realignment of the Company’s corporate structure (see Note K). |
ORGANIZATION AND DESCRIPTION 30
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Organization) (Details) | 6 Months Ended |
Jun. 30, 2018segment | |
Organization and description of business | |
Number of reportable operating segments | 3 |
Asset-Based | |
Organization and description of business | |
Percentage of the Company's revenues, before other revenues and intercompany eliminations, represented by the Asset-Based segment | 69.00% |
Estimated increase in compounded annual contractual wage and benefit contribution rates (as a percent) | 2.00% |
Asset-Based | Unionized employees concentration risk | Number of employees | |
Organization and description of business | |
Percentage of Asset-Based segment employees covered under collective bargaining agreement with the IBT | 82.00% |
ORGANIZATION AND DESCRIPTION 31
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Other Recognition and Disclosure) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Other Recognition and Disclosure | ||
Deferred revenue | $ 3.6 | $ 0.6 |
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract | true | |
Revenue, Practical Expedient, Remaining Performance Obligation | true |
ORGANIZATION AND DESCRIPTION 32
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (ASC Topic 606) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
ASC Topic 606 | ||||||
Retained earnings | $ 449,442 | $ 449,442 | $ 438,379 | |||
Revenues | 793,350 | $ 720,368 | 1,493,351 | $ 1,371,456 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | ASC Topic 606, Revenue from Contracts with Customers | ||||||
ASC Topic 606 | ||||||
Retained earnings | $ 400 | |||||
Revenues | 1,100 | 800 | ||||
Purchased transportation | $ 800 | $ 500 |
ORGANIZATION AND DESCRIPTION 33
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Other Accounting Pronouncements) (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 01, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Adopted Accounting Pronouncements | |||||
Decrease in operating expenses | $ 790,194 | $ 694,601 | $ 1,477,470 | $ 1,355,589 | |
Increase in other cost | 1,123 | 528 | 3,324 | 2,234 | |
Net income | $ 1,233 | 15,777 | 11,187 | 8,370 | |
ASC Topic 715, Compensation – Retirement Benefits | Adjustment | |||||
Adopted Accounting Pronouncements | |||||
Decrease in operating expenses | (1,000) | (3,400) | |||
Increase in other cost | 1,000 | 3,400 | |||
Net income | $ 0 | $ 0 | |||
EPS (in dollars per share) | $ 0 | $ 0 | |||
Accumulated Other Comprehensive Loss | ASC Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | |||||
Adopted Accounting Pronouncements | |||||
Reclassification from AOCI to Retained earnings tax effect | $ (3,600) | ||||
Retained Earnings | |||||
Adopted Accounting Pronouncements | |||||
Net income | $ 11,187 | ||||
Retained Earnings | ASC Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | |||||
Adopted Accounting Pronouncements | |||||
Reclassification from AOCI to Retained earnings tax effect | $ 3,600 |
FINANCIAL INSTRUMENTS AND FAI34
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Cash, Investments and Restricted Funds) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair value disclosure | ||
Cash and cash equivalents | $ 159,307 | $ 120,772 |
Short-term investments | 68,013 | 56,401 |
Concentrations of Credit Risk of Financial Instruments | ||
Cash and cash equivalents which are not FDIC-insured | 92,600 | 61,100 |
Cash deposits | ||
Fair value disclosure | ||
Cash and cash equivalents | 106,924 | 86,510 |
Variable rate demand notes | ||
Fair value disclosure | ||
Cash and cash equivalents | 15,041 | 19,744 |
Money market funds | ||
Fair value disclosure | ||
Cash and cash equivalents | 37,342 | 14,518 |
Certificates of deposit | ||
Fair value disclosure | ||
Short-term investments | $ 68,013 | $ 56,401 |
FINANCIAL INSTRUMENTS AND FAI35
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Debt) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Carrying Value | ||
Fair value disclosure | ||
Debt obligations | $ 249,258 | $ 268,441 |
Fair Value | ||
Fair value disclosure | ||
Debt obligations | 247,522 | 267,131 |
Level 2 | Credit Facility | Carrying Value | ||
Fair value disclosure | ||
Debt obligations | 70,000 | 70,000 |
Level 2 | Credit Facility | Fair Value | ||
Fair value disclosure | ||
Debt obligations | 70,000 | 70,000 |
Level 2 | Accounts receivable securitization program | Carrying Value | ||
Fair value disclosure | ||
Debt obligations | 45,000 | 45,000 |
Level 2 | Accounts receivable securitization program | Fair Value | ||
Fair value disclosure | ||
Debt obligations | 45,000 | 45,000 |
Level 2 | Notes payable | Carrying Value | ||
Fair value disclosure | ||
Debt obligations | 134,258 | 153,441 |
Level 2 | Notes payable | Fair Value | ||
Fair value disclosure | ||
Debt obligations | $ 132,522 | $ 152,131 |
FINANCIAL INSTRUMENTS AND FAI36
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Assets and Liabilities) (Details) - Recurring basis - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Assets: | ||
Assets | $ 41,330 | $ 17,358 |
Cash and cash equivalents | ||
Assets: | ||
Money market funds | 37,342 | 14,518 |
Other long-term assets | ||
Assets: | ||
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan | 2,453 | 2,359 |
Interest rate swaps | 1,535 | 481 |
Accrued and other long term liabilities | ||
Liabilities: | ||
Contingent consideration | 4,092 | 6,970 |
Level 1 | ||
Assets: | ||
Assets | 39,795 | 16,877 |
Level 1 | Cash and cash equivalents | ||
Assets: | ||
Money market funds | 37,342 | 14,518 |
Level 1 | Other long-term assets | ||
Assets: | ||
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan | 2,453 | 2,359 |
Level 2 | ||
Assets: | ||
Assets | 1,535 | 481 |
Level 2 | Other long-term assets | ||
Assets: | ||
Interest rate swaps | 1,535 | 481 |
Level 3 | Accrued and other long term liabilities | ||
Liabilities: | ||
Contingent consideration | $ 4,092 | $ 6,970 |
Level 3 | Accrued and other long term liabilities | LDS | ||
Liabilities: | ||
Discount rate (as a percent) | 12.00% | 12.50% |
FINANCIAL INSTRUMENTS AND FAI37
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (FV - Level 3) (Details) - Contingent Consideration $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Fair Value of liabilities level 3 hierarchy | |
Balance beginning of period | $ 6,970 |
Payments | (3,528) |
Change in fair value included in operating expenses | 650 |
Balance at end of period | $ 4,092 |
GOODWILL AND INTANGIBLE ASSET38
GOODWILL AND INTANGIBLE ASSETS (Goodwill) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Goodwill by reportable operating segment | ||
Goodwill | $ 108,320 | $ 108,320 |
ArcBest | ||
Goodwill by reportable operating segment | ||
Goodwill | 107,700 | 107,700 |
FleetNet | ||
Goodwill by reportable operating segment | ||
Goodwill | $ 600 | $ 600 |
GOODWILL AND INTANGIBLE ASSET39
GOODWILL AND INTANGIBLE ASSETS (Intangible) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Finite-lived intangible assets | ||
Weighted Average Amortization Period | 13 years | |
Cost | $ 64,663 | $ 64,663 |
Accumulated Amortization | 25,757 | 23,494 |
Net Value | 38,906 | 41,169 |
Total intangible assets | ||
Cost | 96,963 | 96,963 |
Net Value | 71,206 | 73,469 |
Trade name | ||
Indefinite-lived intangible assets | ||
Net Value | $ 32,300 | 32,300 |
Customer relationships | ||
Finite-lived intangible assets | ||
Weighted Average Amortization Period | 14 years | |
Cost | $ 60,431 | 60,431 |
Accumulated Amortization | 21,938 | 19,745 |
Net Value | $ 38,493 | 40,686 |
Driver network | ||
Finite-lived intangible assets | ||
Weighted Average Amortization Period | 3 years | |
Cost | $ 3,200 | 3,200 |
Accumulated Amortization | $ 3,200 | 3,200 |
Other intangible assets | ||
Finite-lived intangible assets | ||
Weighted Average Amortization Period | 9 years | |
Cost | $ 1,032 | 1,032 |
Accumulated Amortization | 619 | 549 |
Net Value | $ 413 | $ 483 |
GOODWILL AND INTANGIBLE ASSET40
GOODWILL AND INTANGIBLE ASSETS (Amortization) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Future amortization for intangible assets and acquired software | ||
2,018 | $ 3,318 | |
2,019 | 5,463 | |
2,020 | 4,471 | |
2,021 | 4,418 | |
2,022 | 4,385 | |
Thereafter | 18,916 | |
Total amortization | 40,971 | |
Future amortization for intangible assets | ||
2,018 | 2,257 | |
2,019 | 4,482 | |
2,020 | 4,454 | |
2,021 | 4,412 | |
2,022 | 4,385 | |
Thereafter | 18,916 | |
Net Value | 38,906 | $ 41,169 |
Future amortization for acquired software | ||
2,018 | 1,061 | |
2,019 | 981 | |
2,020 | 17 | |
2,021 | 6 | |
Total amortization, Acquired software | $ 2,065 |
INCOME TAXES (Tax Reform Act) (
INCOME TAXES (Tax Reform Act) (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | 12 Months Ended | ||
Feb. 28, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Impact of Tax Reform Act | |||||||
Statutory federal rate (as a percent) | 32.74% | 21.00% | 35.00% | ||||
Provisional reduction of deferred tax liabilities due to Tax Reform Act | $ 2.6 | $ 24.5 | |||||
State tax, low end of range of rate (as a percent) | 6.00% | ||||||
State tax, high end of range of rate (as a percent) | 6.50% | ||||||
Effective tax (benefit) expense rate (as a percent) | (68.00%) | 34.60% | (15.00%) | 27.10% | |||
Provisional reduction in current income tax expense due Tax Reform Act reflecting use of fiscal year rather than calendar year federal income tax filing | 1.3 | ||||||
Projected combined tax rate based on federal statutory rate and applicable state tax rates (as a percent) | 26.50% | ||||||
Alternative fuel tax credit | $ 1.2 | ||||||
Maximum | |||||||
Impact of Tax Reform Act | |||||||
Provisional reduction of deferred tax liabilities due to Tax Reform Act | $ 0.1 |
INCOME TAXES (Deferred taxes) (
INCOME TAXES (Deferred taxes) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Valuation allowance | $ 0.7 | $ 0.8 |
INCOME TAXES (Uncertain Tax Pos
INCOME TAXES (Uncertain Tax Positions) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2016 |
Income taxes | |||
Reserve for uncertain tax positions | $ 0.9 | $ 0.9 | |
Maximum | |||
Income taxes | |||
Reserve for uncertain tax positions | $ 0.1 |
INCOME TAXES (Taxes Paid) (Deta
INCOME TAXES (Taxes Paid) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
INCOME TAXES | ||
Income taxes paid (in dollars) | $ 2.5 | $ 0.4 |
Income tax refunds received (in dollars) | $ 1.1 | $ 0.1 |
LONG-TERM DEBT AND FINANCING 45
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Summary) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Long-term debt obligations | ||
Long-term debt | $ 249,632 | $ 268,919 |
Less current portion | 51,562 | 61,930 |
Long-term debt, less current portion | 198,070 | 206,989 |
Payments under long-term debt obligations | ||
Due in one year or less | 59,036 | |
Due after one year through two years | 80,391 | |
Due after two years through three years | 29,575 | |
Due after three years through four years | 25,258 | |
Due after four years through five years | 77,443 | |
Due after five years | 225 | |
Total payments | 271,928 | |
Less amounts representing interest | 22,296 | |
Long-term debt | 249,632 | 268,919 |
Credit Facility | ||
Long-term debt obligations | ||
Long-term debt | $ 70,000 | 70,000 |
Interest rate (as a percent) | 3.60% | |
Payments under long-term debt obligations | ||
Due in one year or less | $ 2,771 | |
Due after one year through two years | 3,069 | |
Due after two years through three years | 3,097 | |
Due after three years through four years | 3,076 | |
Due after four years through five years | 70,050 | |
Total payments | 82,063 | |
Less amounts representing interest | 12,063 | |
Long-term debt | 70,000 | 70,000 |
Credit Facility | Interest rate swap agreement | ||
Long-term debt obligations | ||
Amount of borrowings covered by the interest rate swap | $ 50,000 | |
Effective fixed interest rate on hedged borrowings (as a percent) | 3.35% | |
Accounts receivable securitization program | ||
Long-term debt obligations | ||
Long-term debt | $ 45,000 | 45,000 |
Interest rate (as a percent) | 2.90% | |
Payments under long-term debt obligations | ||
Due in one year or less | $ 1,507 | |
Due after one year through two years | 46,271 | |
Total payments | 47,778 | |
Less amounts representing interest | 2,778 | |
Long-term debt | 45,000 | 45,000 |
Notes payable | ||
Long-term debt obligations | ||
Long-term debt | $ 134,258 | 153,441 |
Weighted-average interest rate (as a percent) | 2.90% | |
Payments under long-term debt obligations | ||
Due in one year or less | $ 54,521 | |
Due after one year through two years | 30,908 | |
Due after two years through three years | 26,471 | |
Due after three years through four years | 22,177 | |
Due after four years through five years | 7,393 | |
Due after five years | 225 | |
Total payments | 141,695 | |
Less amounts representing interest | 7,437 | |
Long-term debt | 134,258 | 153,441 |
Capital lease obligations | ||
Long-term debt obligations | ||
Long-term debt | $ 374 | 478 |
Weighted-average interest rate (as a percent) | 5.60% | |
Payments under long-term debt obligations | ||
Due in one year or less | $ 237 | |
Due after one year through two years | 143 | |
Due after two years through three years | 7 | |
Due after three years through four years | 5 | |
Total payments | 392 | |
Less amounts representing interest | 18 | |
Long-term debt | $ 374 | $ 478 |
LONG-TERM DEBT AND FINANCING 46
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Assets Sec) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | $ 260,208 | $ 272,330 |
Less accumulated depreciation and amortization | 92,558 | 87,691 |
Net assets securing notes payable or held under capital leases | 167,650 | 184,639 |
Revenue equipment | ||
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | 257,827 | 269,950 |
Land and structures (service centers) | ||
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | 1,794 | 1,794 |
Software | ||
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | 486 | 486 |
Service, office, and other equipment | ||
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | $ 101 | $ 100 |
LONG-TERM DEBT AND FINANCING 47
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Financing arrangements - Credit Facility) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 31, 2017 |
Credit Facility | ||
Financing Arrangements | ||
Maximum borrowing capacity | $ 200 | |
Additional borrowing capacity that may be requested | 100 | |
Remaining borrowing capacity | $ 130 | |
Swing Line Facility | ||
Financing Arrangements | ||
Maximum borrowing capacity | 20 | |
Letters of Credit, Sub-Facility | ||
Financing Arrangements | ||
Maximum borrowing capacity | $ 20 |
LONG-TERM DEBT AND FINANCING 48
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Financing arrangements - Interest rate swaps) (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Nov. 30, 2014 | Jun. 30, 2018 | Dec. 31, 2017 | |
Interest rate swap agreement | |||
Financing Arrangements | |||
Term of swap agreement | 5 years | ||
Notional amount | $ 50 | ||
Fixed interest rate payments (as a percent) | 1.85% | ||
Interest rate swap agreement | Other long-term liabilities | |||
Financing Arrangements | |||
Fair value, liability | $ 0.5 | $ 0.1 | |
Interest rate swap agreement | Credit Facility | |||
Financing Arrangements | |||
Amount of borrowings covered by the interest rate swap | $ 50 | ||
Effective fixed interest rate on hedged borrowings (as a percent) | 3.35% | ||
Forward-starting interest rate swap agreement | |||
Financing Arrangements | |||
Notional amount | $ 50 | ||
Fixed interest rate payments (as a percent) | 1.99% | ||
Forward-starting interest rate swap agreement | Other long-term assets | |||
Financing Arrangements | |||
Fair value, asset | $ 1 | $ 0.4 | |
Forward-starting interest rate swap agreement | Credit Facility | |||
Financing Arrangements | |||
Amount of borrowings covered by the interest rate swap | $ 50 | ||
Effective fixed interest rate on hedged borrowings (as a percent) | 3.49% |
LONG-TERM DEBT AND FINANCING 49
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Financing arrangements - Securitization program) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2018 | |
Financing Arrangements | ||
Borrowings under accounts receivable securitization program | $ 10,000 | |
Accounts receivable securitization program | ||
Financing Arrangements | ||
Maximum borrowing capacity | $ 125,000 | |
Additional borrowing capacity that may be requested | 25,000 | |
Amount outstanding | 45,000 | |
Outstanding letters of credit | 17,700 | |
Remaining borrowing capacity | $ 62,300 |
LONG-TERM DEBT AND FINANCING 50
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Financing arrangements - Letters of credit & Surety bonds (Details) $ in Millions | Jun. 30, 2018USD ($) |
Accounts receivable securitization program | |
Financing Arrangements | |
Outstanding letters of credit | $ 17.7 |
Letter of Credit Agreements | |
Financing Arrangements | |
Outstanding letters of credit | 18.3 |
Surety bonds | |
Financing Arrangements | |
Outstanding surety bonds under uncollateralized bond programs | $ 53.1 |
LONG-TERM DEBT AND FINANCING 51
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Financing arrangements - Notes payable & Capital leases) (Details) - Notes payable - USD ($) $ in Millions | Aug. 01, 2018 | Jun. 30, 2018 | Jun. 30, 2018 |
Revenue equipment, other equipment and software | |||
Financing Arrangements | |||
Equipment financed during the period under notes payable | $ 14.3 | $ 14.4 | |
Subsequent Event | Revenue equipment | |||
Financing Arrangements | |||
Equipment financed during the period under notes payable | $ 19.9 |
PENSION AND OTHER POSTRETIREM52
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Components of cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Components of net periodic benefit cost | ||||
Pension settlement expense | $ 1,085 | $ 2,701 | ||
Nonunion Defined Benefit Pension Plan | ||||
Components of net periodic benefit cost | ||||
Interest cost | $ 1,108 | $ 1,149 | 2,123 | 2,389 |
Expected return on plan assets | (378) | (2,054) | (779) | (4,221) |
Pension settlement expense | 431 | 744 | 1,085 | 2,701 |
Amortization of net actuarial loss | 592 | 757 | 1,370 | 1,643 |
Net periodic benefit cost | 1,753 | 596 | 3,799 | 2,512 |
Supplemental Benefit Plan | ||||
Components of net periodic benefit cost | ||||
Interest cost | 27 | 25 | 54 | 51 |
Amortization of net actuarial loss | 20 | 21 | 40 | 41 |
Net periodic benefit cost | 47 | 46 | 94 | 92 |
Postretirement Health Benefit Plan | ||||
Components of net periodic benefit cost | ||||
Service cost | 91 | 122 | 183 | 244 |
Interest cost | 210 | 265 | 419 | 530 |
Amortization of prior service credit | (24) | (48) | (47) | (95) |
Amortization of net actuarial loss | 76 | 174 | 152 | 347 |
Net periodic benefit cost | $ 353 | $ 513 | $ 707 | $ 1,026 |
PENSION AND OTHER POSTRETIREM53
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Nonunion) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($)person | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | |
Pension and other postretirement benefit plans | |||||
Pension settlement expense, pre-tax | $ 1,085 | $ 2,701 | |||
Pension settlement expense, net of tax | $ 320 | $ 454 | 806 | 1,650 | |
Nonunion Defined Benefit Pension Plan | |||||
Pension and other postretirement benefit plans | |||||
Pension settlement expense, pre-tax | 431 | 744 | 1,085 | 2,701 | |
Pension settlement expense, net of tax | 300 | 500 | 800 | 1,700 | |
Lump-sum distributions | $ 3,700 | $ 4,900 | $ 8,500 | $ 9,700 | |
Premium paid to purchase nonparticipating annuity contract | $ 7,600 | ||||
Number of plan participants for which vested pension benefits were settled | person | 50 |
PENSION AND OTHER POSTRETIREM54
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Funded status) (Details) - Nonunion Defined Benefit Pension Plan - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | |
Change in benefit obligations | |||||
Benefit obligations at beginning of period | $ 137,417 | ||||
Interest cost | $ 1,108 | $ 1,149 | 2,123 | $ 2,389 | |
Actuarial gain | (4,924) | ||||
Benefits paid | (8,578) | ||||
Benefit obligations at end of period | 126,038 | 126,038 | |||
Change in plan assets | |||||
Fair value of plan assets at beginning of period | 124,831 | ||||
Actual return on plan assets | 1,093 | ||||
Benefits paid | (8,578) | ||||
Fair value of plan assets at end of period | 117,346 | 117,346 | |||
Funded status at period end | (8,692) | (8,692) | |||
Accumulated benefit obligation | $ 126,038 | $ 126,038 | |||
Adjusted funding target attainment percentage | 112.97% |
PENSION AND OTHER POSTRETIREM55
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Multiemployer Plans) (Details) $ in Thousands | Aug. 01, 2018 | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($)plan | Dec. 31, 2017 |
Multiemployer Plans | |||||
Multiemployer pension fund withdrawal liability charge (pre-tax) | $ 37,922 | $ 37,922 | |||
Multiemployer pension plans | Asset-Based | |||||
Multiemployer Plans | |||||
Number of multiemployer plans to which ABF Freight currently contributes | plan | 25 | ||||
Maximum projected time to insolvency for plans in "critical and declining" status | 14 years | ||||
Maximum projected time to insolvency for plans in "critical and declining" status if additional criteria apply | 19 years | ||||
Threshold ratio of inactive to active participants for greater insolvency period to determine "critical and declining" status | 2 | ||||
Threshold funded percentage for greater insolvency period to determine "critical and declining" status | 80.00% | ||||
Multiemployer pension plans | Central States Pension Plan | Asset-Based | |||||
Multiemployer Plans | |||||
Approximate proportion of multiemployer pension plan contributions (as a percent) | 50.00% | ||||
Multiemployer pension plans | New England Pension Fund | Asset-Based | |||||
Multiemployer Plans | |||||
Approximate proportion of multiemployer pension plan contributions (as a percent) | 3.00% | ||||
Multiemployer pension fund withdrawal liability charge (pre-tax) | $ 37,900 | ||||
Discount rate (as a percent) | 4.50% | 4.50% | 4.50% | ||
Initial lump sum cash payment liability | $ 15,100 | $ 15,100 | $ 15,100 | ||
Withdrawal liability monthly payments period (in years) | 23 years | ||||
Aggregate present value of monthly payments | $ 22,800 | $ 22,800 | $ 22,800 | ||
Multiemployer pension plans | New England Pension Fund | Asset-Based | Subsequent Event | |||||
Multiemployer Plans | |||||
Contribution rate frozen period (in years) | 10 years |
STOCKHOLDERS' EQUITY (AOCI) (De
STOCKHOLDERS' EQUITY (AOCI) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Accumulated Other Comprehensive Loss | ||||
Total after-tax amount | $ 668,515 | $ 651,462 | ||
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Loss | ||||
Total pre-tax amount | (18,683) | (27,181) | ||
Total after-tax amount | (17,842) | (20,574) | $ (22,026) | $ (23,417) |
Unrecognized Net Periodic Benefit Costs | ||||
Accumulated Other Comprehensive Loss | ||||
Total pre-tax amount | (17,929) | (25,768) | ||
Total after-tax amount | (17,285) | (19,715) | (20,622) | (21,886) |
Interest Rate Swap | ||||
Accumulated Other Comprehensive Loss | ||||
Total pre-tax amount | 1,535 | 481 | ||
Total after-tax amount | 1,134 | 292 | (113) | (329) |
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Loss | ||||
Total pre-tax amount | (2,289) | (1,894) | ||
Total after-tax amount | $ (1,691) | $ (1,151) | $ (1,291) | $ (1,202) |
STOCKHOLDERS' EQUITY (AOCI comp
STOCKHOLDERS' EQUITY (AOCI comp) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Balances | $ 651,462 | ||||
Adjusted Balances | $ 651,878 | ||||
OTHER COMPREHENSIVE INCOME, net of tax | $ 2,236 | $ 781 | 6,308 | $ 1,391 | |
Balances | 668,515 | 668,515 | |||
Accumulated Other Comprehensive Loss | |||||
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Balances | (20,574) | (23,417) | |||
Adjusted Balances | (24,150) | ||||
Other comprehensive income (loss) before reclassifications | 4,377 | (1,442) | |||
Amounts reclassified from accumulated other comprehensive loss | 1,931 | 2,833 | |||
OTHER COMPREHENSIVE INCOME, net of tax | 6,308 | 1,391 | |||
Balances | (17,842) | (22,026) | (17,842) | (22,026) | |
Unrecognized Net Periodic Benefit Costs | |||||
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Balances | (19,715) | (21,886) | |||
Adjusted Balances | (23,106) | ||||
Other comprehensive income (loss) before reclassifications | 3,890 | (1,569) | |||
Amounts reclassified from accumulated other comprehensive loss | 1,931 | 2,833 | |||
OTHER COMPREHENSIVE INCOME, net of tax | 5,821 | 1,264 | |||
Balances | (17,285) | (20,622) | (17,285) | (20,622) | |
Interest Rate Swap | |||||
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Balances | 292 | (329) | |||
Adjusted Balances | 355 | ||||
Other comprehensive income (loss) before reclassifications | 779 | 216 | |||
OTHER COMPREHENSIVE INCOME, net of tax | 779 | 216 | |||
Balances | 1,134 | (113) | 1,134 | (113) | |
Foreign Currency Translation | |||||
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Balances | (1,151) | (1,202) | |||
Adjusted Balances | (1,399) | ||||
Other comprehensive income (loss) before reclassifications | (292) | (89) | |||
OTHER COMPREHENSIVE INCOME, net of tax | (292) | (89) | |||
Balances | $ (1,691) | $ (1,291) | $ (1,691) | $ (1,291) | |
ASC Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Loss | |||||
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Adjustment to beginning balance of accumulated other comprehensive loss for adoption of accounting standard( | (3,576) | ||||
ASC Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | Unrecognized Net Periodic Benefit Costs | |||||
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Adjustment to beginning balance of accumulated other comprehensive loss for adoption of accounting standard( | (3,391) | ||||
ASC Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | Interest Rate Swap | |||||
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Adjustment to beginning balance of accumulated other comprehensive loss for adoption of accounting standard( | 63 | ||||
ASC Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | Foreign Currency Translation | |||||
Changes in accumulated other comprehensive loss, net of tax, by component | |||||
Adjustment to beginning balance of accumulated other comprehensive loss for adoption of accounting standard( | $ (248) |
STOCKHOLDERS' EQUITY (Reclass)
STOCKHOLDERS' EQUITY (Reclass) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Unrecognized Net Periodic Benefit Costs | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | $ (2,600) | $ (4,637) |
Tax benefit | 669 | 1,804 |
Total, net of tax | (1,931) | (2,833) |
Amortization of net actuarial loss | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | (1,562) | (2,031) |
Amortization of prior service credit | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | 47 | 95 |
Pension settlement expense | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | $ (1,085) | $ (2,701) |
STOCKHOLDERS' EQUITY (Dividends
STOCKHOLDERS' EQUITY (Dividends) (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 27, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Dividends on Common Stock | |||||||
Dividends declared (in dollars per share) | $ 0.08 | $ 0.08 | $ 0.08 | $ 0.08 | $ 0.16 | $ 0.16 | |
Dividend Amount | $ 2,058 | $ 2,058 | $ 2,078 | $ 2,066 | $ 4,116 | ||
Subsequent Event | |||||||
Dividends on Common Stock | |||||||
Dividends declared (in dollars per share) | $ 0.08 |
STOCKHOLDERS' EQUITY (Treasury
STOCKHOLDERS' EQUITY (Treasury Stock) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Treasury Stock | |||
Aggregate cost of shares repurchased during the period | $ 201 | $ 3,611 | |
Stock Repurchase Program | |||
Treasury Stock | |||
Amount available for repurchase | $ 31,500 | $ 31,700 | |
Number of shares repurchased during the period | 5,882 | ||
Aggregate cost of shares repurchased during the period | $ 200 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Share-based compensation | |
Number of shares authorized | 3,100,000 |
Restricted Stock Units | |
Award activity | |
Outstanding at the beginning of the period (in shares) | 1,459,260 |
Granted (in shares) | 2,400 |
Vested (in shares) | (48,039) |
Forfeited (in shares) | (5,611) |
Outstanding at the end of the period (in shares) | 1,408,010 |
Weighted-Average Grant Date Fair Value | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 22.98 |
Granted (in dollars per share) | $ / shares | 33.85 |
Vested (in dollars per share) | $ / shares | 22.76 |
Forfeited (in dollars per share) | $ / shares | 24.27 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 23 |
EARNINGS PER SHARE (Basic and D
EARNINGS PER SHARE (Basic and Diluted) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Basic, numerator: | ||||
Net income | $ 1,233 | $ 15,777 | $ 11,187 | $ 8,370 |
Effect of unvested restricted stock unit awards | (4) | (65) | (31) | (50) |
Adjusted net income | $ 1,229 | $ 15,712 | $ 11,156 | $ 8,320 |
Basic, denominator: | ||||
Weighted-average shares | 25,670,325 | 25,767,791 | 25,656,674 | 25,726,363 |
Earnings per common share (in dollars per share) | $ 0.05 | $ 0.61 | $ 0.43 | $ 0.32 |
Diluted, numerator: | ||||
Net income | $ 1,233 | $ 15,777 | $ 11,187 | $ 8,370 |
Effect of unvested restricted stock unit awards | (4) | (64) | (30) | (50) |
Adjusted net income | $ 1,229 | $ 15,713 | $ 11,157 | $ 8,320 |
Diluted, denominator: | ||||
Weighted-average shares | 25,670,325 | 25,767,791 | 25,656,674 | 25,726,363 |
Effect of dilutive securities | 1,029,224 | 523,850 | 996,608 | 652,073 |
Adjusted weighted-average shares and assumed conversions | 26,699,549 | 26,291,641 | 26,653,282 | 26,378,436 |
Earnings per common share (in dollars per share) | $ 0.05 | $ 0.60 | $ 0.42 | $ 0.32 |
EARNINGS PER SHARE (AntiDil) (D
EARNINGS PER SHARE (AntiDil) (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock awards | ||||
Antidilutive securities | ||||
Outstanding stock awards not included in calculation of diluted earnings (loss) per share (in shares) | 0.1 | 0.1 | 0.1 | 0.1 |
OPERATING SEGMENT DATA - (Rev a
OPERATING SEGMENT DATA - (Rev and Expenses) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
REVENUES | |||||
Revenues | $ 793,350 | $ 720,368 | $ 1,493,351 | $ 1,371,456 | |
OPERATING EXPENSES | |||||
Salaries, wages, and benefits | 355,913 | 349,200 | 684,670 | 681,790 | |
Fuel, supplies, and expenses | 84,884 | 68,451 | 163,530 | 141,113 | |
Depreciation and amortization | 27,187 | 25,209 | 53,673 | 50,603 | |
Multiemployer pension fund withdrawal liability charge | 37,922 | 37,922 | |||
(Gain) loss on sale of property and equipment | (166) | (412) | |||
Other | 30,408 | 35,141 | 59,663 | 63,981 | |
Restructuring costs | 340 | 363 | 716 | 1,994 | |
Total consolidated operating expenses | 790,194 | 694,601 | 1,477,470 | 1,355,589 | |
OPERATING INCOME | |||||
OPERATING INCOME | 3,156 | 25,767 | 15,881 | 15,867 | |
OTHER INCOME (COSTS) | |||||
Interest and dividend income | 714 | 285 | 1,240 | 559 | |
Interest and other related financing costs | (2,013) | (1,389) | (4,072) | (2,704) | |
Other, net | (1,123) | (528) | (3,324) | (2,234) | |
TOTAL OTHER INCOME (COSTS) | (2,422) | (1,632) | (6,156) | (4,379) | |
INCOME BEFORE INCOME TAXES | 734 | 24,135 | 9,725 | 11,488 | |
Asset-Based | Multiemployer pension plans | New England Pension Fund | |||||
OPERATING EXPENSES | |||||
Multiemployer pension fund withdrawal liability charge | $ 37,900 | ||||
Operating Segments | Asset-Based | |||||
REVENUES | |||||
Revenues | 559,239 | 1,041,354 | |||
OPERATING EXPENSES | |||||
Salaries, wages, and benefits | 286,750 | 286,904 | 556,529 | 566,284 | |
Fuel, supplies, and expenses | 65,040 | 58,541 | 127,233 | 116,931 | |
Operating taxes and licenses | 11,910 | 12,191 | 23,666 | 24,014 | |
Insurance | 7,979 | 7,602 | 14,607 | 14,720 | |
Communications and utilities | 4,135 | 4,168 | 8,656 | 8,685 | |
Depreciation and amortization | 21,362 | 20,716 | 42,292 | 41,234 | |
Rents and purchased transportation | 63,253 | 53,189 | 109,386 | 99,615 | |
Shared services | 56,825 | 46,600 | 102,432 | 90,104 | |
Multiemployer pension fund withdrawal liability charge | 37,922 | 37,922 | |||
(Gain) loss on sale of property and equipment | (266) | 25 | (399) | (592) | |
Other | 948 | 1,673 | 2,247 | 3,178 | |
Restructuring costs | 33 | 173 | |||
Total consolidated operating expenses | 555,858 | 491,642 | 1,024,571 | 964,346 | |
OPERATING INCOME | |||||
OPERATING INCOME | 3,381 | 22,895 | 16,783 | 14,547 | |
Operating Segments | ArcBest | |||||
REVENUES | |||||
Revenues | 199,987 | 381,920 | |||
OPERATING EXPENSES | |||||
Purchased transportation | 162,920 | 139,432 | 311,292 | 261,419 | |
Supplies and expenses | 3,538 | 3,742 | 6,768 | 7,412 | |
Depreciation and amortization | 3,597 | 3,230 | 7,005 | 6,496 | |
Shared services | 23,536 | 20,658 | 45,404 | 40,244 | |
Other | 2,546 | 2,873 | 4,427 | 5,338 | |
Restructuring costs | 143 | 65 | 152 | 875 | |
Total consolidated operating expenses | 196,280 | 170,000 | 375,048 | 321,784 | |
OPERATING INCOME | |||||
OPERATING INCOME | 3,707 | 5,929 | 6,872 | 7,021 | |
Operating Segments | FleetNet | |||||
REVENUES | |||||
Revenues | 46,792 | 94,551 | |||
OPERATING EXPENSES | |||||
Total consolidated operating expenses | 45,763 | 35,754 | 92,001 | 74,971 | |
OPERATING INCOME | |||||
OPERATING INCOME | 1,029 | 747 | 2,550 | 1,768 | |
Other and eliminations | |||||
REVENUES | |||||
Revenues | (12,668) | (24,474) | |||
OPERATING EXPENSES | |||||
Total consolidated operating expenses | (7,707) | (2,795) | (14,150) | (5,512) | |
OPERATING INCOME | |||||
OPERATING INCOME | $ (4,961) | (3,804) | $ (10,324) | (7,469) | |
Calculated under Revenue Guidance in Effect before Topic 606 | |||||
REVENUES | |||||
Revenues | 720,368 | 1,371,456 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | Asset-Based | |||||
REVENUES | |||||
Revenues | 514,537 | 978,893 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | ArcBest | |||||
REVENUES | |||||
Revenues | 175,929 | 328,805 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Operating Segments | FleetNet | |||||
REVENUES | |||||
Revenues | 36,501 | 76,739 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Other and eliminations | |||||
REVENUES | |||||
Revenues | $ (6,599) | $ (12,981) |
OPERATING SEGMENT DATA - (Opera
OPERATING SEGMENT DATA - (Operating Expenses) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
OPERATING EXPENSES | |||||
Salaries, wages, and benefits | $ 355,913 | $ 349,200 | $ 684,670 | $ 681,790 | |
Rents, purchased transportation, and other costs of services | 253,540 | 216,237 | 477,296 | 416,108 | |
Fuel, supplies, and expenses | 84,884 | 68,451 | 163,530 | 141,113 | |
Depreciation and amortization | 27,187 | 25,209 | 53,673 | 50,603 | |
Other | 30,408 | 35,141 | 59,663 | 63,981 | |
Multiemployer pension fund withdrawal liability charge | 37,922 | 37,922 | |||
Restructuring costs | 340 | 363 | 716 | 1,994 | |
Total consolidated operating expenses | $ 790,194 | $ 694,601 | $ 1,477,470 | $ 1,355,589 | |
Asset-Based | Multiemployer pension plans | New England Pension Fund | |||||
OPERATING EXPENSES | |||||
Multiemployer pension fund withdrawal liability charge | $ 37,900 |
RESTRUCTURING CHARGES (Details)
RESTRUCTURING CHARGES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | |
Restructuring Charges and Impairment | |||||
Restructuring charges | $ 340 | $ 363 | $ 716 | $ 1,994 | |
Severance and other | |||||
Restructuring Charges and Impairment | |||||
Restructuring charges | $ 300 | $ 400 | $ 700 | $ 2,000 | |
Forecast | |||||
Restructuring Charges and Impairment | |||||
Restructuring charges | $ 1,000 |
LEGAL PROCEEDINGS, ENVIRONMEN67
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS (Environmental Matters) (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2018USD ($)tankstate | Dec. 31, 2017USD ($) | |
Underground fuel storage tanks | ||
Environmental Matters | ||
Number of underground tanks where the company's subsidiaries store fuel for use in tractors and trucks | tank | 62 | |
Number of states in which underground tanks are located | state | 18 | |
Environmental cleanup costs | Accrued expenses | ||
Environmental Matters | ||
Reserve for environmental contingencies | $ | $ 0.6 | $ 0.4 |