Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 31, 2015 | |
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, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 25,943,595 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 192,016 | $ 157,042 |
Short-term investments | 53,836 | 45,909 |
Restricted cash | 1,387 | 1,386 |
Accounts receivable, less allowances (2015 - $5,983; 2014 - $5,731) | 245,039 | 228,056 |
Other accounts receivable, less allowances (2015 - $962; 2014 - $1,701) | 7,083 | 6,582 |
Prepaid expenses | 19,219 | 20,906 |
Deferred income taxes | 35,661 | 40,220 |
Prepaid and refundable income taxes | 2,592 | 9,920 |
Other | 5,072 | 4,968 |
TOTAL CURRENT ASSETS | 561,905 | 514,989 |
PROPERTY, PLANT AND EQUIPMENT | ||
Land and structures | 267,046 | 251,836 |
Revenue equipment | 655,013 | 633,455 |
Service, office, and other equipment | 137,296 | 136,145 |
Software | 120,256 | 116,112 |
Leasehold improvements | 24,649 | 24,377 |
TOTAL PROPERTY, PLANT AND EQUIPMENT, GROSS | 1,204,260 | 1,161,925 |
Less allowances for depreciation and amortization | 779,813 | 752,075 |
PROPERTY, PLANT AND EQUIPMENT, net | 424,447 | 409,850 |
GOODWILL | 81,258 | 77,078 |
INTANGIBLE ASSETS, net | 71,270 | 72,809 |
OTHER ASSETS | 53,168 | 52,896 |
TOTAL ASSETS | 1,192,048 | 1,127,622 |
CURRENT LIABILITIES | ||
Accounts payable | 147,781 | 120,325 |
Income taxes payable | 4,869 | 527 |
Accrued expenses | 187,821 | 194,674 |
Current portion of long-term debt | 24,024 | 25,256 |
TOTAL CURRENT LIABILITIES | 364,495 | 340,782 |
LONG-TERM DEBT, less current portion | 136,821 | 102,474 |
PENSION AND POSTRETIREMENT LIABILITIES | 39,620 | 42,418 |
OTHER LIABILITIES | 12,295 | 16,667 |
DEFERRED INCOME TAXES | 59,613 | 64,398 |
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2015: 27,784,760 shares; 2014: 27,722,010 shares | 278 | 277 |
Additional paid-in capital | 307,268 | 303,045 |
Retained earnings | 356,360 | 338,810 |
Treasury stock, at cost, 2015: 1,841,165 shares; 2014: 1,677,932 shares | (63,752) | (57,770) |
Accumulated other comprehensive loss | (20,950) | (23,479) |
TOTAL STOCKHOLDERS' EQUITY | 579,204 | 560,883 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,192,048 | $ 1,127,622 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowances (in dollars) | $ 5,983 | $ 5,731 |
Other accounts receivable, allowances (in dollars) | $ 962 | $ 1,701 |
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 | 27,784,760 | 27,722,010 |
Treasury stock, at cost, shares | 1,841,165 | 1,677,932 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
REVENUES | $ 696,115 | $ 658,646 | $ 1,309,391 | $ 1,236,550 |
OPERATING EXPENSES | 662,649 | 631,694 | 1,274,645 | 1,218,300 |
OPERATING INCOME | 33,466 | 26,952 | 34,746 | 18,250 |
OTHER INCOME (COSTS) | ||||
Interest and dividend income | 271 | 194 | 505 | 384 |
Interest and other related financing costs | (1,025) | (725) | (2,027) | (1,533) |
Other, net | 197 | 950 | 597 | 1,315 |
TOTAL OTHER INCOME (COSTS) | (557) | 419 | (925) | 166 |
INCOME BEFORE INCOME TAXES | 32,909 | 27,371 | 33,821 | 18,416 |
INCOME TAX PROVISION | 12,942 | 10,163 | 13,109 | 6,401 |
NET INCOME | $ 19,967 | $ 17,208 | $ 20,712 | $ 12,015 |
EARNINGS PER COMMON SHARE | ||||
Basic (in dollars per share) | $ 0.76 | $ 0.63 | $ 0.79 | $ 0.44 |
Diluted (in dollars per share) | $ 0.74 | $ 0.63 | $ 0.77 | $ 0.44 |
AVERAGE COMMON SHARES OUTSTANDING | ||||
Basic (in shares) | 26,021,874 | 26,005,105 | 26,036,375 | 25,941,370 |
Diluted (in shares) | 26,593,451 | 26,005,105 | 26,592,615 | 25,942,046 |
CASH DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share) | $ 0.06 | $ 0.03 | $ 0.12 | $ 0.06 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
NET INCOME | $ 19,967 | $ 17,208 | $ 20,712 | $ 12,015 |
Pension and other postretirement benefit plans: | ||||
Net actuarial gain (loss), net of tax of: (2015 - Three-month period $1,515, Six-month period $349; 2014 - Three-month period $116, Six-month $3,488) | 2,379 | (181) | 548 | (5,477) |
Pension settlement expense, net of tax of: (2015 - Three-month period $233, Six-month period $668; 2014 - Three-month period $353, Six-month period $1,789) | 364 | 556 | 1,048 | 2,811 |
Amortization of unrecognized net periodic benefit costs, net of tax of: (2015 - Three-month period $396, Six-month $796; 2014 - Three-month period $261, Six-month period $467): | ||||
Net actuarial loss | 653 | 436 | 1,309 | 789 |
Prior service credit | (29) | (29) | (58) | (58) |
Interest rate swap and foreign currency translation: | ||||
Change in unrealized income (loss) on interest rate swap, net of tax of: (2015 - Three-month period $158; Six-month period $77) | 244 | (120) | ||
Change in foreign currency translation, net of tax of: (2015 - Three-month period $61, Six-month period $126; 2014 - Three-month period $65, Six-month period $41) | 97 | 101 | (198) | 64 |
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | 3,708 | 883 | 2,529 | (1,871) |
TOTAL COMPREHENSIVE INCOME | $ 23,675 | $ 18,091 | $ 23,241 | $ 10,144 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net actuarial gain (loss), tax | $ 1,515 | $ (116) | $ 349 | $ (3,488) |
Pension settlement expense, tax | 233 | 353 | 668 | 1,789 |
Amortization of unrecognized net periodic benefit costs, tax | 396 | 261 | 796 | 467 |
Change in unrealized income (loss) on interest rate swap, tax | 158 | (77) | ||
Change in foreign currency translation, tax | $ 61 | $ 65 | $ (126) | $ 41 |
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, 2013 | $ (14,912) | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | $ 12,015 | |||||
Other comprehensive income, net of tax | (1,871) | (1,871) | ||||
Balances at Jun. 30, 2014 | (16,783) | |||||
Balances at Dec. 31, 2014 | $ 277 | $ 303,045 | $ 338,810 | $ (57,770) | (23,479) | 560,883 |
Balances (in shares) at Dec. 31, 2014 | 27,722 | 1,678 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 20,712 | 20,712 | ||||
Other comprehensive income, net of tax | 2,529 | 2,529 | ||||
Issuance of common stock under share-based compensation plans | $ 1 | (1) | ||||
Issuance of common stock under share-based compensation plans (in shares) | 63 | |||||
Tax effect of share-based compensation plans | (9) | (9) | ||||
Share-based compensation expense | 4,233 | 4,233 | ||||
Purchase of treasury stock | $ (5,982) | (5,982) | ||||
Purchase of treasury stock (in shares) | 163 | |||||
Dividends declared on common stock | (3,162) | (3,162) | ||||
Balances at Jun. 30, 2015 | $ 278 | $ 307,268 | $ 356,360 | $ (63,752) | $ (20,950) | $ 579,204 |
Balances (in shares) at Jun. 30, 2015 | 27,785 | 1,841 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
OPERATING ACTIVITIES | ||
NET INCOME | $ 20,712 | $ 12,015 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 42,630 | 39,540 |
Amortization of intangibles | 2,218 | 2,137 |
Pension settlement expense | 1,716 | 4,600 |
Share-based compensation expense | 4,233 | 3,668 |
Provision for losses on accounts receivable | 627 | 1,032 |
Deferred income tax benefit | (2,559) | (2,358) |
Gain on sale of property and equipment | (1,049) | (249) |
Changes in operating assets and liabilities: | ||
Receivables | (16,560) | (34,888) |
Prepaid expenses | 1,691 | 1,383 |
Other assets | 385 | (1,482) |
Income taxes | 12,306 | 2,226 |
Accounts payable, accrued expenses, and other liabilities | 8,316 | 30,019 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 74,666 | 57,643 |
INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment, net of financings | (34,205) | (15,570) |
Proceeds from sale of property and equipment | 2,690 | 1,241 |
Purchases of short-term investments | (10,780) | (2,967) |
Proceeds from sale of short-term investments | 2,967 | 2,940 |
Business acquisitions, net of cash acquired | (5,219) | (2,663) |
Capitalization of internally developed software | (4,099) | (3,859) |
NET CASH USED IN INVESTING ACTIVITIES | (48,646) | (20,878) |
FINANCING ACTIVITIES | ||
Borrowings under credit facilities | 70,000 | |
Borrowings under accounts receivable securitization program | 35,000 | |
Payments on long-term debt | (84,555) | (16,528) |
Net change in book overdrafts | (1,522) | 3,602 |
Net change in restricted cash | (1) | 517 |
Deferred financing costs | (824) | (61) |
Payment of common stock dividends | (3,162) | (1,635) |
Purchase of treasury stock | (5,982) | |
Proceeds from the exercise of stock options | 1,136 | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 8,954 | (12,969) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 34,974 | 23,796 |
Cash and cash equivalents at beginning of period | 157,042 | 105,354 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 192,016 | 129,150 |
NONCASH INVESTING ACTIVITIES | ||
Accruals for equipment received | 8,972 | 6,869 |
Equipment financed | $ 12,670 | $ 22,842 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | 6 Months Ended |
Jun. 30, 2015 | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | NOTE A — ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION ArcBest Corporation SM (the “Company”) is the parent holding company of businesses providing freight transportation services and logistics solutions. The Company’s principal operations are conducted through its Freight Transportation (ABF Freight SM ) segment, which consists of ABF Freight System, Inc. and certain other subsidiaries. The Company’s other reportable operating segments are the following asset-light logistics businesses: Premium Logistics (Panther), Emergency & Preventative Maintenance (FleetNet), Transportation Management (ABF Logistics SM ), and Household Goods Moving Services (ABF Moving SM ). References to the Company in this Quarterly Report on Form 10-Q are primarily to the Company and its subsidiaries on a consolidated basis. ABF Freight represented approximately 71% of the Company’s total revenues before other revenues and intercompany eliminations for the six months ended June 30, 2015. As of June 2015, approximately 79% of ABF Freight’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 extends through March 31, 2018. The ABF NMFA included a 7% wage rate reduction upon the November 3, 2013 implementation date, followed by wage rate increases of 2% on July 1 in each of the next three years, which began in 2014, and a 2.5% increase on July 1, 2017; a one-week reduction in annual compensated vacation effective for employee anniversary dates on or after April 1, 2013; the option to expand the use of purchased transportation; and increased flexibility in labor work rules. The ABF NMFA and the related supplemental agreements provide for continued contributions to various multiemployer health, welfare, and pension plans maintained for the benefit of ABF Freight’s employees who are members of the IBT. Applicable contribution rate increases for these plans were applied retroactively to August 1, 2013. The estimated net effect of the November 3, 2013 wage rate reduction and the August 1, 2013 benefit rate increase was an initial reduction of approximately 4% to the combined total contractual wage and benefit rate under the ABF NMFA. The combined contractual wage and benefit contribution rate under the ABF NMFA is estimated to increase approximately 2.5% to 3.0% on a compounded annual basis through the end of the agreement in 2018. On January 2, 2015, the Company acquired Smart Lines Transportation Group, LLC, a privately-owned truckload brokerage firm, for net cash consideration of $5.2 million. The acquired business is primarily reported in the ABF Logistics operating segment. On April 30, 2014, the Company acquired a privately-owned business which is reported within the FleetNet reporting segment for net cash consideration of $2.6 million. As these acquired businesses are not significant to the Company’s consolidated operating results and financial position, pro forma financial information and the purchase price allocations of acquired assets and liabilities have not been presented. The results of the acquired operations subsequent to the acquisition dates have been included in the accompanying consolidated financial statements. 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 “Commission”) 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 2014 Annual Report on Form 10-K and other current filings with the Commission. In the opinion of management, all adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included. Certain reclassifications have been made to the prior year’s consolidated balance sheet to conform to the current year presentation. Book overdrafts (which represent checks issued that are later funded when cleared through banks) previously reported in a separate line on the consolidated balance sheets titled “Bank overdraft and drafts payable” have been reclassified to “Accounts payable.” There was no impact on total current liabilities as a result of the reclassification. 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 reported amounts of assets and liabilities, the disclosed amounts of contingent liabilities, and the reported amounts of revenues and expenses. If the underlying estimates and assumptions, upon which the financial statements and accompanying notes are based, change in future periods, actual amounts may differ from those included in the accompanying consolidated financial statements. In May 2014, the Financial Accounting Standards Board (the “FASB”) issued an accounting pronouncement related to revenue recognition (FASB ASC Topic 606), which amends the guidance in former ASC Topic 605, Revenue Recognition . The new standard provides a single comprehensive revenue recognition model for all contracts with customers and contains principles to apply to determine the measurement of revenue and timing of when it is recognized. In July 2015, the FASB announced its decision to defer the effective date of the new standard for one year, making the standard effective for the Company on January 1, 2018. The Company is evaluating the impact of the new standard on the consolidated financial statements. In August 2014, the Financial Accounting Standards Board issued an accounting pronouncement to amend ASC Topic 205 with the addition of Presentation of Financial Statements — Going Concern (Subtopic 205-40). The Subtopic requires an entity’s management to assess conditions and events to determine the entity’s ability to continue as a going concern for each annual and interim reporting period for which financial statements are issued or available to be issued. The Subtopic is effective for the annual period ending December 31, 2016 and is not expected to have a significant impact on the Company’s financial statement disclosures. In April 2015, the Financial Accounting Standards Board issued an accounting pronouncement to amend ASC Topic 835 with Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30). The amendment adds the requirement for an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset and to report amortization of the debt issuance costs as interest expense. The Subtopic is effective for the Company beginning January 1, 2016 and is not expected to have a significant impact on the Company’s financial statement disclosures. In April 2015, the Financial Accounting Standards Board also issued an accounting pronouncement to amend ASC Topic 350 with the addition of Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (Subtopic 350-40). The amendment adds guidance on determining whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software. If the cloud computing arrangement does not contain a software license, the agreement should be accounted for as a service contract. The Subtopic is effective for the Company beginning January 1, 2016, and is not expected to have a significant impact on the Company’s financial statement disclosures. Management believes that there is no other new accounting guidance issued but not yet effective that is relevant to the Company’s current financial statements. However, there are new proposals under development by the standard setting bodies which, if and when enacted, may have a significant impact on the Company’s financial statements, including accounting for leases. As previously proposed, the lease accounting standard would require many operating leases to be reflected as liabilities with associated right-of-use assets. |
FINANCIAL INSTRUMENTS AND FAIR
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2015 | |
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, short-term investments, and restricted funds: June 30 December 31 2015 2014 (in thousands) Cash and cash equivalents Cash deposits (1) $ $ Variable rate demand notes (1)(2) Money market funds (3) $ $ Short-term investments Certificates of deposit (1) $ $ Restricted cash (4) Cash deposits (1) $ $ (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). (4) Amounts restricted for use are subject to change based on the requirements of the Company’s collateralized facilities (see Note E). The Company’s financial instruments in other long-term assets are presented in the table of financial assets and liabilities measured at fair value within this N ote. 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 unrestricted short-term investments primarily in FDIC-insured certificates of deposit with varying original maturities of ninety-one days to one year. However, certain cash deposits and certificates of deposit may exceed federally insured limits. Cash and cash equivalents totaling $75.9 million and $77.3 million were not FDIC insured at June 30, 2015 and December 31, 2014, respectively. 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 2015 2014 (in thousands) Carrying Fair Carrying Fair Value Value Value Value Credit Facility (1) $ $ $ — $ — Term Loan (2) — — Accounts receivable securitization borrowings (3) — — Notes payable (4) $ $ $ $ (1) The revolving credit facility under the Company’s Amended and Restated Credit Agreement (the “Credit Facility”), which was entered into in January 2015, 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) The Term Loan, which was entered into on June 15, 2012 and converted to borrowings under the Credit Facility on January 2, 2015, carried a variable interest rate based on LIBOR, plus a margin, that was considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). (3) Borrowings under the Company’s accounts receivable securitization program, which was entered into in February 2015, 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). (4) 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 Recurring Basis The following table presents the assets and liabilities that are measured at fair value on a recurring basis. June 30 December 31 2015 2014 (in thousands) Assets: Money market funds (1)(3) $ $ Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2)(3) $ $ Liabilities: Interest rate swap (4) $ $ (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. Quoted market prices are used to determine fair values of the investments which are included in other long-term assets, with a corresponding liability reported within other long-term liabilities. (3) Fair value measured using quoted prices of identical assets in active markets (Level 1 of the fair value hierarchy). (4) Included in other long-term liabilities. The interest rate swap fair value was determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves (Level 2 of the fair value hierarchy) adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty (Level 3 of the fair value hierarchy). The Company assessed Level 3 inputs as insignificant to the valuation at June 30, 2015 and December 31, 2014 and considers the interest rate swap valuation in Level 2 of the fair value hierarchy. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2015 | |
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 the following: ABF ABF Total Panther Moving Logistics FleetNet Other (in thousands) Balances at December 31, 2014 $ $ $ $ — $ $ — Goodwill acquired (1) — — — Balances at June 30, 2015 $ $ $ $ $ $ (1) Goodwill related to the acquisition of Smart Lines Transportation Group, LLC is expected to be fully deductible for tax purposes. The fair value assessment of assets and liabilities acquired with this business was based on preliminary information as of June 30, 2015. Intangible assets consisted of the following as of June 30, 2015 and December 31, 2014: Weighted Average June 30, 2015 December 31, 2014 Amortization Accumulated Net Accumulated Net Period Cost Amortization Value Cost Amortization Value (in years) (in thousands) (in thousands) Finite-lived intangible assets Customer relationships 14 $ $ $ $ $ $ Driver network 3 — Other 8 13 Indefinite-lived intangible assets Trade name N/A N/A N/A Other N/A N/A N/A Total intangible assets N/A $ $ $ $ $ $ Amortization expense on intangible assets totaled $1.1 million and $2.2 million for the three and six months ended June 30, 2015, respectively, and $1.1 million and $2.1 million for the three and six months ended June 30, 2014, respectively. As of June 30, 2015, amortization expense on intangible assets (excluding acquired software which is reported within property, plant and equipment) is anticipated to range between $3.0 million and $4.0 million per year for the years ended December 31, 2015 through 2019. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2015 | |
INCOME TAXES | |
INCOME TAXES | NOTE D — INCOME TAXES The Company’s statutory federal tax rate is 35%. 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 rate for the three and six months ended June 30, 2015 was 39.3% and 38.8%, respectively. The effective tax rate for the three and six months ended June 30, 2014 was 37.1% and 34.8%, respectively. The tax rates for the first six months of 2015 and 2014 reflect a benefit of 0.6% and 0.8%, respectively, from reduced state deferred tax liabilities to reflect enactment of lower tax rates in some states. The tax rates for the three- and six-month periods ended June 30, 2014 also reflect a 2.4% and 3.8% benefit, respectively, from the reversal of the valuation allowance on foreign tax credit carryovers. In addition to the adjustment to deferred tax liabilities for state tax rate changes, in the first six months of 2015 and 2014, the difference between the Company’s effective tax rate and the federal statutory rate primarily results from state income taxes, nondeductible expenses, and changes in the cash surrender value of life insurance. For the first six months of 2014, the effective tax rate was also affected by changes in valuation allowances for deferred tax assets. As of June 30, 2015, 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, 2015 and concluded that, other than for certain deferred tax assets related to foreign net operating loss 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, taxable income in carryback years, future taxable income, and tax planning strategies. During the six months ended June 30, 2015, the Company paid state and foreign income taxes of $2.9 million. During the six months ended June 30, 2014, the Company paid federal, state, and foreign taxes of $6.0 million. During the six months ended June 30, 2015 and 2014, the Company received refunds of $0.1 million and $2.0 million, respectively, of federal and state income taxes that were paid in prior years, primarily from loss carryovers. |
LONG-TERM DEBT AND FINANCING AR
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | 6 Months Ended |
Jun. 30, 2015 | |
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 ABF Freight’s operations), real estate, and certain other equipment as follows: June 30 December 31 2015 2014 (in thousands) Credit Facility (interest rate of 1.4% at June 30, 2015) $ $ — Term Loan (1) — Accounts receivable securitization borrowings (interest rate of 1.0% at June 30, 2015) — Notes payable (weighted average interest rate of 1.9% at June 30, 2015) Capital lease obligations (weighted average interest rate of 5.8% at June 30, 2015) Less current portion Long-term debt, less current portion $ $ (1) The Term Loan was converted to the Credit Facility on January 2, 2015. Scheduled maturities of long-term debt obligations as of June 30, 2015 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 $ $ $ $ $ Due after one year through two years Due after two years through three years Due after three years through four years — Due after four years through five years — — Total payments Less amounts representing interest Long-term debt $ $ $ $ $ (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 2015 2014 (in thousands) Revenue equipment $ $ Land and structures (terminals) Service, office, and other equipment Total assets securing notes payable or held under capital leases Less accumulated depreciation and amortization (1) Net assets securing notes payable or held under capital leases $ $ (1) Amortization of assets under capital leases and depreciation of assets securing notes payable are included in depreciation expense. Financing Arrangements Credit Facility On January 2, 2015, the Company and its lenders entered into an agreement to amend and restate the Company’s credit agreement (the “Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement refinanced the $70.0 million Term Loan, which was outstanding under the credit agreement at December 31, 2014, with a revolving credit facility (the “Credit Facility”). The Credit Facility has an initial maximum credit amount of $150.0 million, including a swing line facility 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 Credit Facility allows the Company to request additional revolving commitments or incremental term loans thereunder up to an aggregate additional amount of $75.0 million, subject to certain additional conditions as provided in the Amended and Restated Credit Agreement. Principal payments under the Credit Facility are due upon maturity on January 2, 2020; 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 Amended and Restated Credit Agreement can either be, at the Company’s election: (i) at an alternate base rate (as defined in the Amended and Restated Credit Agreement) plus a spread; or (ii) at a Eurodollar rate (as defined in the Amended and Restated Credit Agreement) plus a spread. The applicable spread is dependent upon the Company’s adjusted leverage ratio (as defined in the Amended and Restated Credit Agreement). The Amended and Restated 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, and purchases and sales of assets. The Company was in compliance with the covenants under the Amended and Restated Credit Agreement at June 30, 2015. Interest Rate Swap In November 2014, in contemplation of the Credit Facility, the Company entered into a five-year forward-starting interest rate swap agreement with a $50.0 million notional amount maturing on January 2, 2020. Effective January 2, 2015, the Company began receiving floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 1.85% over the life of the interest rate swap 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 3.10% based on the margin of the Credit Facility as of June 30, 2015. The fair value of the interest rate swap of $0.8 million and $0.6 million was recorded in other long-term liabilities in the consolidated balance sheet at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015, the unrealized loss on the interest rate swap instrument was reported as a component of accumulated other comprehensive income, net of tax, in stockholders’ equity, and the change in the unrealized loss on the interest rate swap for the three and six months ended June 30, 2015 was reported in other comprehensive loss, net of tax, in the consolidated statement of comprehensive income. The interest rate swap is 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 agreement at June 30, 2015. Accounts Receivable Securitization Program On January 2, 2015, the Company entered into an amendment to extend the maturity date of its accounts receivable securitization program with PNC Bank until January 2, 2018. On February 1, 2015, the Company amended and restated the accounts receivable securitization program to increase the amount of cash proceeds provided under the facility from $75.0 million to $100.0 million, with 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, 2015, $35.0 million was borrowed under the accounts receivable securitization program. The Company was in compliance with the covenants under the accounts receivable securitization program as of June 30, 2015. 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, 2015, standby letters of credit of $20.4 million have been issued under the program, which reduced the available borrowing capacity to $44.6 million. Letter of Credit Agreements and Surety Bond Programs As of June 30, 2015, the Company had letters of credit outstanding of $22.3 million (including $20.4 million issued under the accounts receivable securitization program), of which $1.4 million were collateralized by restricted cash. 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, 2015, surety bonds outstanding related to the self-insurance program totaled $45.0 million. Notes Payable and Capital Leases ABF Freight has financed the purchase of certain revenue equipment through promissory note arrangements , including $12.7 million of revenue equipment during the three and six months ended June 30, 2015. The Company has financed revenue equipment , real estate, and certain other equipment through capital lease agreements , but did not enter into such agreements in the six months ended June 30, 2015 . ABF Freight financed the purchase of an additional $17.2 million of revenue equipment through promissory note arrangements during July 2015. |
PENSION AND OTHER POSTRETIREMEN
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2015 | |
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 2015 2014 2015 2014 2015 2014 (in thousands) Service cost $ — $ — $ — $ — $ $ Interest cost Expected return on plan assets ) ) — — — — Amortization of prior service credit — — — — ) ) Pension settlement expense — — — — Amortization of net actuarial loss Net periodic benefit cost $ $ $ $ $ $ Six Months Ended June 30 Nonunion Defined Supplemental Postretirement Benefit Pension Plan Benefit Plan Health Benefit Plan 2015 2014 2015 2014 2015 2014 (in thousands) Service cost $ — $ — $ — $ — $ $ Interest cost Expected return on plan assets ) ) — — — — Amortization of prior service credit — — — — ) ) Pension settlement expense — — — — Amortization of net actuarial loss Net periodic benefit cost $ $ $ $ $ $ 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 defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate. In consideration of the freeze of the accrual of benefits, the investment strategy has become more focused on reducing investment, interest rate, and longevity risks in the plan. As part of this strategy, in January 2014, the plan purchased a nonparticipating annuity contract from an insurance company to settle the pension obligation related to the vested benefits of 375 plan participants and beneficiaries receiving monthly benefit payments at the time of the contract purchase. The Company recognized pension settlement expense as a component of net periodic benefit cost for the three and six months ended June 30, 2014 of $0.9 million (pre-tax), or $0.6 million (after-tax), and $4.6 million (pre-tax), or $2.8 million (after-tax), respectively, related to the $25.4 million nonparticipating annuity contract purchased in first quarter 2014 and to lump-sum distributions which amounted to $8.4 million and $22.5 million for the three and six months ended June 30, 2014, respectively. The Company recognized total settlement expense as a component of net periodic benefit cost for the three and six months ended June 30, 2015 of $0.6 million (pre-tax), or $0.4 million (after-tax), and $1.7 million (pre-tax), or $1.0 million (after-tax), respectively, related to lump-sum distributions which amounted to $4.8 million and $12.4 million for the three and six months ended June 30, 2015, respectively. 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 plan participants, which is approximately eight years. The Company will incur additional quarterly settlement expense related to lump-sum distributions from the nonunion defined benefit pension plan during the remainder of 2015. The following table discloses the changes in the projected benefit obligation (the “PBO”) and plan assets of the nonunion defined benefit pension plan for the six months ended June 30, 2015: Nonunion Defined Benefit Pension Plan (in thousands) Change in projected benefit obligation Projected benefit obligation at December 31, 2014 $ Interest cost Actuarial gain (1) ) Benefits paid ) Projected benefit obligation at June 30, 2015 Change in plan assets Fair value of plan assets at December 31, 2014 Actual return on plan assets Employer contributions Benefits paid ) Fair value of plan assets at June 30, 2015 Funded status at June 30, 2015 (2) $ ) Accumulated benefit obligation $ (1) Actuarial (gain)/loss from remeasurement upon settlements was primarily impacted by changes in the discount rate since the previous remeasurement date. The discount rates used to remeasure the PBO upon settlement were 3.5%, 3.0%, and 3.2% at the June 30, 2015, March 31, 2015, and December 31, 2014 measurement dates, respectively. (2) Noncurrent liability recognized within pension and postretirement liabilities in the accompanying consolidated balance sheet at June 30, 2015. Based upon currently available actuarial information, the Company does not have a required minimum contribution to its nonunion defined benefit pension plan for 2015. The plan has a revised adjusted funding target attainment percentage (“AFTAP”) of 108.5% as of the January 1, 2015 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 contributes 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 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. ABF Freight’s contribution obligations to these plans are specified in the ABF NMFA, which was implemented on November 3, 2013 and will remain in effect through March 31, 2018. The funding obligations to the pension plans are intended to satisfy the requirements imposed by the Pension Protection Act of 2006 (the “PPA”), which was permanently extended by the Multiemployer Pension Reform Act of 2014 (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 Pension Benefit Guaranty Corporation for the suspension of certain benefits. Any actions taken by trustees of multiemployer pension plans under the Reform Act to improve funding will not reduce benefit rates ABF Freight is obligated to pay under the ABF NMFA. 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 its contractual employees. 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”). The funded percentage of the Central States Pension Plan, as set forth in information provided by the Central States Plan, was 48.4% as of January 1, 2014. ABF Freight received an Actuarial Status Certification for the Central States Pension Plan dated March 31, 2015, in which the plan’s actuary certified that, as of January 1, 2015, the plan was 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 in the current plan year or during 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%. 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 2014 Annual Report on Form 10-K. ABF Freight has not received notification of any plan reorganization or plan insolvency. If ABF Freight was to completely withdraw from certain multiemployer pension plans, under current law, the Company would have material liabilities for its share of the unfunded vested liabilities of each such plan. However, ABF Freight currently has no intention to withdraw from any such plan, which withdrawal generally would have to be effected through collective bargaining. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2015 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE G — STOCKHOLDERS’ EQUITY Accumulated Other Comprehensive Loss June 30 December 31 2015 2014 (in thousands) Pre-tax amounts: Unrecognized net periodic benefit costs $ ) $ ) Interest rate swap ) ) Foreign currency translation ) ) $ ) $ ) After-tax amounts: Unrecognized net periodic benefit costs $ ) $ ) Interest rate swap ) ) Foreign currency translation ) ) $ ) $ ) The following is a summary of the c hanges in a ccumulated o ther c omprehensive loss, net of tax, by component for the six months ended June 30, 2015 and 2014 : Unrecognized Interest Foreign Net Periodic Rate Currency Total Benefit Costs Swap Translation (in thousands) Balances at December 31, 2014 $ ) $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) ) Amounts reclassified from accumulated other comprehensive loss — — Net current-period other comprehensive income (loss) ) ) Balances at June 30, 2015 $ ) $ ) $ ) $ ) Balances at December 31, 2013 $ ) $ ) $ — $ ) Other comprehensive income (loss) before reclassifications ) ) — Amounts reclassified from accumulated other comprehensive loss — — Net current-period other comprehensive income (loss) ) ) — Balances at June 30, 2014 $ ) $ ) $ — $ ) The following is a summary of the significant reclassifications out of a ccumulated o ther c omprehensive loss by component for the six months ended June 30 : Six Months Ended June 30 2015 2014 (in thousands) Unrecognized Net Periodic Benefit Costs (1)(2) Amortization of net actuarial loss $ ) $ ) Amortization of prior service credit Pension settlement expense ) ) Total, pre-tax ) ) Tax benefit Total, net of tax $ ) $ ) (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 pension cost (see Note F). Dividends on Common Stock The following table is a summary of dividends declared during the applicable quarter: 2015 2014 Per Share Amount Per Share Amount (in thousands, except per share data) First quarter $ $ $ $ Second quarter $ $ $ $ On July 28, 2015, the Company’s Board of Directors declared a dividend of $0.06 per share payable to stockholders of record as of August 11, 2015. 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, 2014, the Company had purchased 1,618,150 shares for an aggregate cost of $56.8 million. During the six months ended June 30, 2015, the Company purchased 163,233 shares of its common stock for an aggregate cost of $6.0 million, leaving $12.2 million available for repurchase under the current buyback program. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2015 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | NOTE H — SHARE-BASED COMPENSATION Stock Awards As of June 30, 2015, 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: Units Outstanding — January 1, 2015 Granted Vested ) Forfeited ) Outstanding — June 30, 2015 The RSUs granted during the period had a weighted-average grant date fair value of $35.65 per share. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2015 | |
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 2015 2014 2015 2014 (in thousands, except share and per share data) Basic Numerator: Net income $ $ $ $ Effect of unvested restricted stock unit awards ) ) ) ) Adjusted net income $ $ $ $ Denominator: Weighted-average shares Earnings per common share $ $ $ $ Diluted Numerator: Net income $ $ $ $ Effect of unvested restricted stock unit awards ) ) ) ) Adjusted net income $ $ $ $ Denominator: Weighted-average shares Effect of dilutive securities — Adjusted weighted-average shares and assumed conversions Earnings per common share $ $ $ $ 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 and, therefore, the RSUs granted in 2015 are not participating securities. For the three and six months ended June 30, 2015, outstanding stock awards of 0.2 million were not included in the diluted earnings per share calculation because their inclusion would have the effect of increasing the earnings per share. For the three and six months ended June 30, 2014, outstanding stock awards of 0.7 million and 0.8 million, respectively, 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, 2015 | |
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. The Company’s reportable operating segments are impacted by seasonal fluctuations, 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: · Freight Transportation (ABF Freight), the Company’s principal operating segment, includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries. The operations of ABF Freight include national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. Revenue and expense for freight transportation related to consumer household goods self-move services provided by ABF Freight are reported in the ABF Freight operating segment and certain support costs related to these services are allocated to ABF Freight from the ABF Moving operating segment. ABF Freight is impacted by seasonal fluctuations which affect tonnage and shipment levels and, consequently, revenues and operating results. Earnings of the ABF Freight segment are adversely affected by the impact of inclement weather conditions on freight shipments and operating costs. 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 tonnage levels. · Premium Logistics (Panther) provides expedited freight transportation services to commercial and government customers and offers premium logistics services that include the rapid deployment of highly specialized equipment to meet extremely specific linehaul requirements, such as temperature control, hazardous materials, geofencing (routing a shipment across a mandatory, defined route with satellite monitoring and automated alerts concerning any deviation from the route), specialized government cargo, security services, and life sciences. Through its premium logistics and global freight forwarding businesses, Panther offers domestic and international freight transportation with air, ocean, and ground service offerings. The segment provides services to the ABF Freight and ABF Logistics operating segments. Panther’s operations are influenced by seasonal fluctuations that impact customers’ supply chains and the resulting demand for expedited services. Expedited shipments may decline during winter months because of post-holiday slowdowns but 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, but severe weather events can result in higher demand for expedited services. · Emergency & Preventative Maintenance (FleetNet) includes the results of operations of FleetNet America, Inc., the subsidiary of the Company that provides roadside assistance and equipment services for commercial vehicles through a network of third-party service providers. FleetNet provides services to the ABF Freight and Panther segments. Emergency roadside services events of the FleetNet segment are favorably impacted by adverse weather conditions that affect commercial vehicle operations and the segment’s results of operations will be influenced by seasonal variations in service event volume. · Transportation Management (ABF Logistics) includes the results of operations of the Company’s businesses which provide freight brokerage and intermodal transportation services, worldwide ocean shipping solutions, and transportation and warehouse management services. The industries and markets served by ABF Logistics are impacted by seasonal fluctuations which affect tonnage and shipment levels and, consequently, revenues and operating results of the segment. 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 business levels. However, seasonal fluctuations are less apparent in the operating results of ABF Logistics than in the industry as a whole because of business growth in the segment. · Household Goods Moving Services (ABF Moving) includes the results of operations of the Company’s subsidiaries that provide transportation, warehousing, and delivery services to the consumer, corporate, and military household goods moving markets. Certain costs incurred by ABF Moving in support of consumer self-move services provided by ABF Freight are allocated to the ABF Freight operating segment. Operating results for ABF Moving are impacted by the state of the national economy, including housing, unemployment, and U.S. mobility, as well as decisions made by the U.S. military which affect personnel moves. Operations of the segment are also impacted by seasonal fluctuations, resulting in higher business levels in the second and third quarters as the demand for moving services is typically higher in the summer months. 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 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 for the three and six months ended June 30: Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (in thousands) REVENUES Freight Transportation (ABF Freight) $ $ $ $ Premium Logistics (Panther) Emergency & Preventative Maintenance (FleetNet) Transportation Management (ABF Logistics) Household Goods Moving Services (ABF Moving) Other and eliminations ) ) ) ) Total consolidated revenues $ $ $ $ OPERATING EXPENSES Freight Transportation (ABF Freight) Salaries, wages, and benefits $ $ $ $ Fuel, supplies, and expenses Operating taxes and licenses Insurance Communications and utilities Depreciation and amortization Rents and purchased transportation Gain on sale of property and equipment ) ) ) ) Pension settlement expense (1) Other Total Freight Transportation (ABF Freight) Premium Logistics (Panther) Purchased transportation Depreciation and amortization (2) Salaries, benefits, insurance, and other Total Premium Logistics (Panther) Emergency & Preventative Maintenance (FleetNet) Transportation Management (ABF Logistics) Household Goods Moving Services (ABF Moving) Other and eliminations (1) ) ) ) ) Total consolidated operating expenses $ $ $ $ (1) Pension settlement expense totaled $0.6 million (pre-tax) and $0.9 million (pre-tax) on a consolidated basis for the three months ended June 30, 2015 and 2014, respectively, of which $0.4 million and $0.7 million was reported by ABF Freight, $0.1 million and $0.2 million was reported in Other and eliminations, and less than $0.1 million was reported by the asset-light logistics operating segments, for the respective periods. Pension settlement expense totaled $1.7 million (pre-tax) and $4.6 million (pre-tax) on a consolidated basis for the six months ended June 30, 2015 and 2014, respectively, of which $1.3 million and $3.6 million was reported by ABF Freight, $0.3 million and $0.9 million was reported in Other and eliminations, and $0.1 million was reported by the asset-light logistics operating segments, for the respective periods. (2) Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software associated with the June 15, 2012 acquisition of Panther. Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (in thousands) OPERATING INCOME Freight Transportation (ABF Freight) $ $ $ $ Premium Logistics (Panther) Emergency & Preventative Maintenance (FleetNet) Transportation Management (ABF Logistics) Household Goods Moving Services (ABF Moving) ) Other and eliminations ) ) ) ) Total consolidated operating income $ $ $ $ OTHER INCOME (COSTS) Interest and dividend income $ $ $ $ Interest and other related financing costs ) ) ) ) Other, net Total other income (costs) ) ) INCOME BEFORE INCOME TAXES $ $ $ $ The following table presents operating expenses by category on a consolidated basis for the three and six months ended June 30: Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (in thousands) OPERATING EXPENSES Salaries, wages, and benefits $ $ $ $ Rents, purchased transportation, and other costs of services Fuel, supplies, and expenses Depreciation and amortization Other $ $ $ $ |
LEGAL PROCEEDINGS, ENVIRONMENTA
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | |
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS | NOTE K — 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; however, the Company is currently involved in certain environmental compliance matters and legal proceedings, as further described below, for which the outcome and related financial impact cannot be determined at this time. Environmental Matters The Company’s subsidiaries store fuel for use in tractors and trucks in 63 underground tanks located in 19 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. Certain ABF Freight branch facilities operate with storm water permits under the federal Clean Water Act (the “CWA”). The storm water permits require periodic monitoring and reporting of storm water sampling results and establish maximum levels of certain contaminants that may be contained in such samples. ABF Freight received, in late March 2014, a sixty-day Notice of Intent to Sue under the provisions of the CWA from a citizens group alleging multiple violations since 2009 by ABF Freight of the requirements of a storm water permit in force at the ABF Freight branch located in Kent, Washington. On July 6, 2014, the citizens group filed suit against ABF Freight in the United States District Court in Seattle, Washington seeking to collect fines and obtain injunctive relief for the alleged violations. ABF Freight intends to vigorously defend against the claims in this matter. Due to the nature of the materials in the runoff samples taken at the site by Company representatives, it is unlikely that this matter will result in any requirement for remediation of contaminants. The litigation is in the early stages and it is not possible to determine the likelihood of loss or the amount of any penalties which might be assessed against ABF Freight. Therefore, no liability has been established at June 30, 2015 in connection with this matter. ABF Freight received a similar Notice of Intent to Sue from another citizens group in December 2014 alleging CWA violations at its Brooklyn, New York branch. During the investigation of the allegations contained in the Notice of Intent to Sue, it was determined that the operations at the Brooklyn site were being conducted in a manner protected from storm water and, as a result, the site qualified for exemption from the permitting requirements of the Clean Water Act under a procedure known as “no exposure certification” (“NEC”). In December 2014, ABF Freight made an NEC filing with the New York State Department of Environmental Conservation covering the Brooklyn facility. During first quarter 2015, the citizens group filed suit against ABF Freight in the United States District Court for the Eastern District of New York asserting the violations of the CWA that were identified in the Notice of Intent to Sue and contesting the validity of the NEC filing. The lawsuit is in the early stages and it is not possible to assess potential damages or make an assessment of the probability of future losses at this time. Therefore, no liability has been established at June 30, 2015 in connection with this matter. At June 30, 2015 and December 31, 2014, 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 $0.8 million. 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. Legal Proceedings Trademark Infringement On December 23, 2014, Jaguar Land Rover Limited filed suit against Panther in the Northern District of Ohio under various causes of action, collectively falling under a trademark infringement claim. Panther believes the claim is without merit and will vigorously defend itself against this claim. The litigation process is in the early stages; therefore, it is not possible to determine the likelihood of loss or the amount of any damages that could be assessed against Panther in this matter. Therefore, no liability has been established in connection with this matter as of June 30, 2015. |
ORGANIZATION AND DESCRIPTION 20
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION | |
New accounting pronouncements | In May 2014, the Financial Accounting Standards Board (the “FASB”) issued an accounting pronouncement related to revenue recognition (FASB ASC Topic 606), which amends the guidance in former ASC Topic 605, Revenue Recognition . The new standard provides a single comprehensive revenue recognition model for all contracts with customers and contains principles to apply to determine the measurement of revenue and timing of when it is recognized. In July 2015, the FASB announced its decision to defer the effective date of the new standard for one year, making the standard effective for the Company on January 1, 2018. The Company is evaluating the impact of the new standard on the consolidated financial statements. In August 2014, the Financial Accounting Standards Board issued an accounting pronouncement to amend ASC Topic 205 with the addition of Presentation of Financial Statements — Going Concern (Subtopic 205-40). The Subtopic requires an entity’s management to assess conditions and events to determine the entity’s ability to continue as a going concern for each annual and interim reporting period for which financial statements are issued or available to be issued. The Subtopic is effective for the annual period ending December 31, 2016 and is not expected to have a significant impact on the Company’s financial statement disclosures. In April 2015, the Financial Accounting Standards Board issued an accounting pronouncement to amend ASC Topic 835 with Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30). The amendment adds the requirement for an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset and to report amortization of the debt issuance costs as interest expense. The Subtopic is effective for the Company beginning January 1, 2016 and is not expected to have a significant impact on the Company’s financial statement disclosures. In April 2015, the Financial Accounting Standards Board also issued an accounting pronouncement to amend ASC Topic 350 with the addition of Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (Subtopic 350-40). The amendment adds guidance on determining whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software. If the cloud computing arrangement does not contain a software license, the agreement should be accounted for as a service contract. The Subtopic is effective for the Company beginning January 1, 2016, and is not expected to have a significant impact on the Company’s financial statement disclosures. Management believes that there is no other new accounting guidance issued but not yet effective that is relevant to the Company’s current financial statements. However, there are new proposals under development by the standard setting bodies which, if and when enacted, may have a significant impact on the Company’s financial statements, including accounting for leases. As previously proposed, the lease accounting standard would require many operating leases to be reflected as liabilities with associated right-of-use assets. |
FINANCIAL INSTRUMENTS AND FAI21
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
Schedule of financial instruments and the methods and assumptions used in estimating fair value disclosures | June 30 December 31 2015 2014 (in thousands) Cash and cash equivalents Cash deposits (1) $ $ Variable rate demand notes (1)(2) Money market funds (3) $ $ Short-term investments Certificates of deposit (1) $ $ Restricted cash (4) Cash deposits (1) $ $ (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). (4) Amounts restricted for use are subject to change based on the requirements of the Company’s collateralized facilities (see Note E). |
Schedule of fair value and carrying value disclosures of financial instruments | June 30 December 31 2015 2014 (in thousands) Carrying Fair Carrying Fair Value Value Value Value Credit Facility (1) $ $ $ — $ — Term Loan (2) — — Accounts receivable securitization borrowings (3) — — Notes payable (4) $ $ $ $ (1) The revolving credit facility under the Company’s Amended and Restated Credit Agreement (the “Credit Facility”), which was entered into in January 2015, 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) The Term Loan, which was entered into on June 15, 2012 and converted to borrowings under the Credit Facility on January 2, 2015, carried a variable interest rate based on LIBOR, plus a margin, that was considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy). (3) Borrowings under the Company’s accounts receivable securitization program, which was entered into in February 2015, 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). (4) 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 December 31 2015 2014 (in thousands) Assets: Money market funds (1)(3) $ $ Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan (2)(3) $ $ Liabilities: Interest rate swap (4) $ $ (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. Quoted market prices are used to determine fair values of the investments which are included in other long-term assets, with a corresponding liability reported within other long-term liabilities. (3) Fair value measured using quoted prices of identical assets in active markets (Level 1 of the fair value hierarchy). (4) Included in other long-term liabilities. The interest rate swap fair value was determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves (Level 2 of the fair value hierarchy) adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty (Level 3 of the fair value hierarchy). The Company assessed Level 3 inputs as insignificant to the valuation at June 30, 2015 and December 31, 2014 and considers the interest rate swap valuation in Level 2 of the fair value hierarchy. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of goodwill by reportable operating segment | ABF ABF Total Panther Moving Logistics FleetNet Other (in thousands) Balances at December 31, 2014 $ $ $ $ — $ $ — Goodwill acquired (1) — — — Balances at June 30, 2015 $ $ $ $ $ $ (1) Goodwill related to the acquisition of Smart Lines Transportation Group, LLC is expected to be fully deductible for tax purposes. The fair value assessment of assets and liabilities acquired with this business was based on preliminary information as of June 30, 2015. |
Schedule of intangible assets | Weighted Average June 30, 2015 December 31, 2014 Amortization Accumulated Net Accumulated Net Period Cost Amortization Value Cost Amortization Value (in years) (in thousands) (in thousands) Finite-lived intangible assets Customer relationships 14 $ $ $ $ $ $ Driver network 3 — Other 8 13 Indefinite-lived intangible assets Trade name N/A N/A N/A Other N/A N/A N/A Total intangible assets N/A $ $ $ $ $ $ |
LONG-TERM DEBT AND FINANCING 23
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
LONG-TERM DEBT AND FINANCING ARRANGEMENTS | |
Schedule of long-term debt | June 30 December 31 2015 2014 (in thousands) Credit Facility (interest rate of 1.4% at June 30, 2015) $ $ — Term Loan (1) — Accounts receivable securitization borrowings (interest rate of 1.0% at June 30, 2015) — Notes payable (weighted average interest rate of 1.9% at June 30, 2015) Capital lease obligations (weighted average interest rate of 5.8% at June 30, 2015) Less current portion Long-term debt, less current portion $ $ (1) The Term Loan was converted to the Credit Facility on January 2, 2015. |
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 $ $ $ $ $ Due after one year through two years Due after two years through three years Due after three years through four years — Due after four years through five years — — Total payments Less amounts representing interest Long-term debt $ $ $ $ $ (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 2015 2014 (in thousands) Revenue equipment $ $ Land and structures (terminals) Service, office, and other equipment Total assets securing notes payable or held under capital leases Less accumulated depreciation and amortization (1) Net assets securing notes payable or held under capital leases $ $ (1) Amortization of assets under capital leases and depreciation of assets securing notes payable are included in depreciation expense. |
PENSION AND OTHER POSTRETIREM24
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 2015 2014 2015 2014 2015 2014 (in thousands) Service cost $ — $ — $ — $ — $ $ Interest cost Expected return on plan assets ) ) — — — — Amortization of prior service credit — — — — ) ) Pension settlement expense — — — — Amortization of net actuarial loss Net periodic benefit cost $ $ $ $ $ $ Six Months Ended June 30 Nonunion Defined Supplemental Postretirement Benefit Pension Plan Benefit Plan Health Benefit Plan 2015 2014 2015 2014 2015 2014 (in thousands) Service cost $ — $ — $ — $ — $ $ Interest cost Expected return on plan assets ) ) — — — — Amortization of prior service credit — — — — ) ) Pension settlement expense — — — — Amortization of net actuarial loss Net periodic benefit cost $ $ $ $ $ $ |
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 projected benefit obligation Projected benefit obligation at December 31, 2014 $ Interest cost Actuarial gain (1) ) Benefits paid ) Projected benefit obligation at June 30, 2015 Change in plan assets Fair value of plan assets at December 31, 2014 Actual return on plan assets Employer contributions Benefits paid ) Fair value of plan assets at June 30, 2015 Funded status at June 30, 2015 (2) $ ) Accumulated benefit obligation $ (1) Actuarial (gain)/loss from remeasurement upon settlements was primarily impacted by changes in the discount rate since the previous remeasurement date. The discount rates used to remeasure the PBO upon settlement were 3.5%, 3.0%, and 3.2% at the June 30, 2015, March 31, 2015, and December 31, 2014 measurement dates, respectively. (2) Noncurrent liability recognized within pension and postretirement liabilities in the accompanying consolidated balance sheet at June 30, 2015. |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
STOCKHOLDERS' EQUITY | |
Components of accumulated other comprehensive loss | June 30 December 31 2015 2014 (in thousands) Pre-tax amounts: Unrecognized net periodic benefit costs $ ) $ ) Interest rate swap ) ) Foreign currency translation ) ) $ ) $ ) After-tax amounts: Unrecognized net periodic benefit costs $ ) $ ) Interest rate swap ) ) Foreign currency translation ) ) $ ) $ ) |
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, 2014 $ ) $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) ) Amounts reclassified from accumulated other comprehensive loss — — Net current-period other comprehensive income (loss) ) ) Balances at June 30, 2015 $ ) $ ) $ ) $ ) Balances at December 31, 2013 $ ) $ ) $ — $ ) Other comprehensive income (loss) before reclassifications ) ) — Amounts reclassified from accumulated other comprehensive loss — — Net current-period other comprehensive income (loss) ) ) — Balances at June 30, 2014 $ ) $ ) $ — $ ) |
Summary of the significant reclassifications out of accumulated other comprehensive loss by component | Six Months Ended June 30 2015 2014 (in thousands) Unrecognized Net Periodic Benefit Costs (1)(2) Amortization of net actuarial loss $ ) $ ) Amortization of prior service credit Pension settlement expense ) ) Total, pre-tax ) ) Tax benefit Total, net of tax $ ) $ ) (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 pension cost (see Note F). |
Summary of dividends declared | 2015 2014 Per Share Amount Per Share Amount (in thousands, except per share data) First quarter $ $ $ $ Second quarter $ $ $ $ |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
SHARE-BASED COMPENSATION | |
Summary of the Company's restricted stock unit award program | Units Outstanding — January 1, 2015 Granted Vested ) Forfeited ) Outstanding — June 30, 2015 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (in thousands, except share and per share data) Basic Numerator: Net income $ $ $ $ Effect of unvested restricted stock unit awards ) ) ) ) Adjusted net income $ $ $ $ Denominator: Weighted-average shares Earnings per common share $ $ $ $ Diluted Numerator: Net income $ $ $ $ Effect of unvested restricted stock unit awards ) ) ) ) Adjusted net income $ $ $ $ Denominator: Weighted-average shares Effect of dilutive securities — Adjusted weighted-average shares and assumed conversions Earnings per common share $ $ $ $ |
OPERATING SEGMENT DATA (Tables)
OPERATING SEGMENT DATA (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
OPERATING SEGMENT DATA | |
Schedule of reportable operating segment information | Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (in thousands) REVENUES Freight Transportation (ABF Freight) $ $ $ $ Premium Logistics (Panther) Emergency & Preventative Maintenance (FleetNet) Transportation Management (ABF Logistics) Household Goods Moving Services (ABF Moving) Other and eliminations ) ) ) ) Total consolidated revenues $ $ $ $ OPERATING EXPENSES Freight Transportation (ABF Freight) Salaries, wages, and benefits $ $ $ $ Fuel, supplies, and expenses Operating taxes and licenses Insurance Communications and utilities Depreciation and amortization Rents and purchased transportation Gain on sale of property and equipment ) ) ) ) Pension settlement expense (1) Other Total Freight Transportation (ABF Freight) Premium Logistics (Panther) Purchased transportation Depreciation and amortization (2) Salaries, benefits, insurance, and other Total Premium Logistics (Panther) Emergency & Preventative Maintenance (FleetNet) Transportation Management (ABF Logistics) Household Goods Moving Services (ABF Moving) Other and eliminations (1) ) ) ) ) Total consolidated operating expenses $ $ $ $ (1) Pension settlement expense totaled $0.6 million (pre-tax) and $0.9 million (pre-tax) on a consolidated basis for the three months ended June 30, 2015 and 2014, respectively, of which $0.4 million and $0.7 million was reported by ABF Freight, $0.1 million and $0.2 million was reported in Other and eliminations, and less than $0.1 million was reported by the asset-light logistics operating segments, for the respective periods. Pension settlement expense totaled $1.7 million (pre-tax) and $4.6 million (pre-tax) on a consolidated basis for the six months ended June 30, 2015 and 2014, respectively, of which $1.3 million and $3.6 million was reported by ABF Freight, $0.3 million and $0.9 million was reported in Other and eliminations, and $0.1 million was reported by the asset-light logistics operating segments, for the respective periods. (2) Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software associated with the June 15, 2012 acquisition of Panther. Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (in thousands) OPERATING INCOME Freight Transportation (ABF Freight) $ $ $ $ Premium Logistics (Panther) Emergency & Preventative Maintenance (FleetNet) Transportation Management (ABF Logistics) Household Goods Moving Services (ABF Moving) ) Other and eliminations ) ) ) ) Total consolidated operating income $ $ $ $ OTHER INCOME (COSTS) Interest and dividend income $ $ $ $ Interest and other related financing costs ) ) ) ) Other, net Total other income (costs) ) ) INCOME BEFORE INCOME TAXES $ $ $ $ Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (in thousands) OPERATING EXPENSES Salaries, wages, and benefits $ $ $ $ Rents, purchased transportation, and other costs of services Fuel, supplies, and expenses Depreciation and amortization Other $ $ $ $ |
ORGANIZATION AND DESCRIPTION 29
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Details) - Freight Transportation (ABF Freight) | Jun. 30, 2015 | Nov. 03, 2013 | Jun. 30, 2015 |
Organization and description of business | |||
Percentage of the Company's revenues, before other revenues and intercompany eliminations, represented by ABF Freight | 71.00% | ||
Wage rate reduction under collective bargaining agreement upon implementation date (as a percent) | 7.00% | ||
Wage rate increase for next three years of collective bargaining agreement (as a percent) | 2.00% | ||
Wage rate increase in fifth year of collective bargaining agreement (as a percent) | 2.50% | ||
Reduction in compensated vacation under collective bargaining agreement | 5 days | ||
Approximate initial reduction in combined total contractual wage and benefit rate under collective bargaining agreement (as a percent) | 4.00% | ||
Minimum | |||
Organization and description of business | |||
Estimated increase in compounded annual contractual wage and benefit contribution rates in second through fifth years (as a percent) | 2.50% | ||
Maximum | |||
Organization and description of business | |||
Estimated increase in compounded annual contractual wage and benefit contribution rates in second through fifth years (as a percent) | 3.00% | ||
Unionized employees concentration risk | Number of employees | |||
Organization and description of business | |||
Percentage of ABF Freight's employees covered under collective bargaining agreement with the IBT | 79.00% |
ORGANIZATION AND DESCRIPTION 30
ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Details 2) - USD ($) $ in Thousands | Jan. 02, 2015 | Apr. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 |
Acquisitions | ||||
Net cash consideration | $ 5,219 | $ 2,663 | ||
Smart Lines Transportation Group | Transportation Management (ABF Logistics) | ||||
Acquisitions | ||||
Net cash consideration | $ 5,200 | |||
Acquired privately-owned businesses | Emergency & Preventative Maintenance (FleetNet) | ||||
Acquisitions | ||||
Net cash consideration | $ 2,600 |
FINANCIAL INSTRUMENTS AND FAI31
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Fair value disclosure | ||||
Cash and cash equivalents | $ 192,016 | $ 157,042 | $ 129,150 | $ 105,354 |
Short-term investments | 53,836 | 45,909 | ||
Restricted cash | 1,387 | 1,386 | ||
Concentrations of Credit Risk of Financial Instruments | ||||
Cash and cash equivalents which are not FDIC-insured | 75,900 | 77,300 | ||
Fair Value | ||||
Fair value disclosure | ||||
Cash and cash equivalents | 192,016 | 157,042 | ||
Fair Value | Cash deposits | ||||
Fair value disclosure | ||||
Cash and cash equivalents | 138,441 | 99,615 | ||
Restricted cash | 1,387 | 1,386 | ||
Fair Value | Variable rate demand notes | ||||
Fair value disclosure | ||||
Cash and cash equivalents | 14,972 | 16,326 | ||
Fair Value | Money market funds | ||||
Fair value disclosure | ||||
Cash and cash equivalents | 38,603 | 41,101 | ||
Fair Value | Certificates of deposit | ||||
Fair value disclosure | ||||
Short-term investments | $ 53,836 | $ 45,909 |
FINANCIAL INSTRUMENTS AND FAI32
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Fair value disclosure | ||
Debt obligations | $ 160,845 | $ 127,730 |
Carrying Value | ||
Fair value disclosure | ||
Debt obligations | 159,959 | 126,759 |
Fair Value | ||
Fair value disclosure | ||
Debt obligations | 159,894 | 126,743 |
Credit Facility | ||
Fair value disclosure | ||
Debt obligations | 70,000 | |
Credit Facility | Carrying Value | ||
Fair value disclosure | ||
Debt obligations | 70,000 | |
Credit Facility | Fair Value | ||
Fair value disclosure | ||
Debt obligations | 70,000 | |
Term Loan | ||
Fair value disclosure | ||
Debt obligations | 70,000 | |
Term Loan | Carrying Value | ||
Fair value disclosure | ||
Debt obligations | 70,000 | |
Term Loan | Fair Value | ||
Fair value disclosure | ||
Debt obligations | 70,000 | |
Accounts receivable securitization program | ||
Fair value disclosure | ||
Debt obligations | 35,000 | |
Accounts receivable securitization program | Carrying Value | ||
Fair value disclosure | ||
Debt obligations | 35,000 | |
Accounts receivable securitization program | Fair Value | ||
Fair value disclosure | ||
Debt obligations | 35,000 | |
Notes payable | ||
Fair value disclosure | ||
Debt obligations | 54,959 | 56,759 |
Notes payable | Carrying Value | ||
Fair value disclosure | ||
Debt obligations | 54,959 | 56,759 |
Notes payable | Fair Value | ||
Fair value disclosure | ||
Debt obligations | $ 54,894 | $ 56,743 |
FINANCIAL INSTRUMENTS AND FAI33
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Details 3) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Interest rate swap agreement | Other long-term liabilities | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Liabilities | $ 800 | $ 600 |
Recurring basis | Level 1 | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Assets | 40,694 | 44,069 |
Recurring basis | Level 1 | Money market funds | Cash and cash equivalents | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Assets | 38,603 | 41,101 |
Recurring basis | Level 1 | Voluntary Savings Plan - mutual funds held in trust | Other long-term assets | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Assets | 2,091 | 2,968 |
Recurring basis | Level 2 | Interest rate swap agreement | Other long-term liabilities | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Liabilities | $ 773 | $ 576 |
GOODWILL AND INTANGIBLE ASSET34
GOODWILL AND INTANGIBLE ASSETS (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Goodwill by reportable operating segment | |
Balance at the beginning of the period | $ 77,078 |
Goodwill acquired | 4,180 |
Balance at the end of the period | 81,258 |
Premium Logistics (Panther) | |
Goodwill by reportable operating segment | |
Balance at the beginning of the period | 71,096 |
Balance at the end of the period | 71,096 |
Household Goods Moving Services (ABF Moving) | |
Goodwill by reportable operating segment | |
Balance at the beginning of the period | 5,352 |
Balance at the end of the period | 5,352 |
Transportation Management (ABF Logistics) | |
Goodwill by reportable operating segment | |
Goodwill acquired | 3,476 |
Balance at the end of the period | 3,476 |
Emergency & Preventative Maintenance (FleetNet) | |
Goodwill by reportable operating segment | |
Balance at the beginning of the period | 630 |
Balance at the end of the period | 630 |
Other | |
Goodwill by reportable operating segment | |
Goodwill acquired | 704 |
Balance at the end of the period | $ 704 |
GOODWILL AND INTANGIBLE ASSET35
GOODWILL AND INTANGIBLE ASSETS (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Finite-lived intangible assets | |||||
Weighted Average Amortization Period | 13 years | ||||
Cost | $ 49,153 | $ 49,153 | $ 48,474 | ||
Accumulated Amortization | 13,005 | 13,005 | 10,787 | ||
Net Value | 36,148 | 36,148 | 37,687 | ||
Indefinite-lived intangible assets | |||||
Net Value | 35,122 | 35,122 | 35,122 | ||
Total intangible assets | |||||
Cost | 84,275 | 84,275 | 83,596 | ||
Net Value | 71,270 | 71,270 | 72,809 | ||
Amortization expense on intangible assets | |||||
Intangible amortization expense | 1,100 | $ 1,100 | 2,218 | $ 2,137 | |
Minimum | |||||
Amortization expense on intangible assets | |||||
Annual amortization expense on intangible assets expected for the full years 2015 through 2019 | 3,000 | ||||
Maximum | |||||
Amortization expense on intangible assets | |||||
Annual amortization expense on intangible assets expected for the full years 2015 through 2019 | 4,000 | ||||
Trade name | |||||
Indefinite-lived intangible assets | |||||
Net Value | 32,300 | 32,300 | 32,300 | ||
Other | |||||
Indefinite-lived intangible assets | |||||
Net Value | 2,822 | $ 2,822 | 2,822 | ||
Customer relationships | |||||
Finite-lived intangible assets | |||||
Weighted Average Amortization Period | 14 years | ||||
Cost | 44,921 | $ 44,921 | 44,242 | ||
Accumulated Amortization | 9,622 | 9,622 | 7,971 | ||
Net Value | 35,299 | $ 35,299 | 36,271 | ||
Driver network | |||||
Finite-lived intangible assets | |||||
Weighted Average Amortization Period | 3 years | ||||
Cost | 3,200 | $ 3,200 | 3,200 | ||
Accumulated Amortization | 3,200 | $ 3,200 | 2,711 | ||
Net Value | 489 | ||||
Other | |||||
Finite-lived intangible assets | |||||
Weighted Average Amortization Period | 8 years | ||||
Cost | 1,032 | $ 1,032 | 1,032 | ||
Accumulated Amortization | 183 | 183 | 105 | ||
Net Value | $ 849 | $ 849 | $ 927 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
INCOME TAXES | ||||
Statutory federal tax rate (as a percent) | 35.00% | |||
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) rate (as a percent) | 39.30% | 37.10% | 38.80% | 34.80% |
Benefit from reduced state deferred tax liabilities reflecting enactment of lower tax rates in some states (as a percent) | 0.60% | 0.80% | ||
Tax benefit from reversal of valuation allowance on foreign tax credit carryovers (as a percent) | 2.40% | 3.80% | ||
Income taxes paid (in dollars) | $ 2.9 | $ 6 | ||
Income tax refunds received (in dollars) | $ 0.1 | $ 2 |
LONG-TERM DEBT AND FINANCING 37
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Long-term debt obligations | ||
Long-term debt | $ 160,845 | $ 127,730 |
Less current portion | 24,024 | 25,256 |
Long-term debt, less current portion | 136,821 | 102,474 |
Payments under long-term debt obligations | ||
Due in one year or less | 26,506 | |
Due after one year through two years | 25,901 | |
Due after two years through three years | 45,853 | |
Due after three years through four years | 2,896 | |
Due after four years through five years | 71,483 | |
Total payments | 172,639 | |
Less amounts representing interest | 11,794 | |
Long-term debt | 160,845 | 127,730 |
Credit Facility | ||
Long-term debt obligations | ||
Long-term debt | $ 70,000 | |
Interest rate (as a percent) | 1.40% | |
Payments under long-term debt obligations | ||
Due in one year or less | $ 1,175 | |
Due after one year through two years | 1,685 | |
Due after two years through three years | 2,136 | |
Due after three years through four years | 2,469 | |
Due after four years through five years | 71,347 | |
Total payments | 78,812 | |
Less amounts representing interest | 8,812 | |
Long-term debt | 70,000 | |
Term Loan | ||
Long-term debt obligations | ||
Long-term debt | 70,000 | |
Payments under long-term debt obligations | ||
Long-term debt | 70,000 | |
Accounts receivable securitization program | ||
Long-term debt obligations | ||
Long-term debt | $ 35,000 | |
Interest rate (as a percent) | 1.00% | |
Payments under long-term debt obligations | ||
Due in one year or less | $ 436 | |
Due after one year through two years | 692 | |
Due after two years through three years | 35,444 | |
Total payments | 36,572 | |
Less amounts representing interest | 1,572 | |
Long-term debt | 35,000 | |
Notes payable | ||
Long-term debt obligations | ||
Long-term debt | $ 54,959 | 56,759 |
Weighted-average interest rate (as a percent) | 1.90% | |
Payments under long-term debt obligations | ||
Due in one year or less | $ 24,684 | |
Due after one year through two years | 23,308 | |
Due after two years through three years | 8,051 | |
Due after three years through four years | 198 | |
Total payments | 56,241 | |
Less amounts representing interest | 1,282 | |
Long-term debt | 54,959 | 56,759 |
Capital lease obligations | ||
Long-term debt obligations | ||
Long-term debt | $ 886 | 971 |
Weighted-average interest rate (as a percent) | 5.80% | |
Payments under long-term debt obligations | ||
Due in one year or less | $ 211 | |
Due after one year through two years | 216 | |
Due after two years through three years | 222 | |
Due after three years through four years | 229 | |
Due after four years through five years | 136 | |
Total payments | 1,014 | |
Less amounts representing interest | 128 | |
Long-term debt | $ 886 | $ 971 |
LONG-TERM DEBT AND FINANCING 38
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Details 2) - Secured notes payable and capital leases - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | $ 100,890 | $ 90,640 |
Less accumulated depreciation and amortization | 33,533 | 26,305 |
Net assets securing notes payable or held under capital leases | 67,357 | 64,335 |
Revenue equipment | ||
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | 98,841 | 88,591 |
Land and structures (terminals) | ||
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | 1,794 | 1,794 |
Service, office, and other equipment | ||
Financing Arrangements | ||
Total assets securing notes payable or held under capital leases | $ 255 | $ 255 |
LONG-TERM DEBT AND FINANCING 39
LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Details 3) - USD ($) $ in Thousands | Jan. 02, 2015 | Jul. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2015 | Feb. 01, 2015 | Jan. 31, 2015 | Dec. 31, 2014 |
Financing Arrangements | |||||||
Amounts collateralized by restricted funds | $ 1,387 | $ 1,387 | $ 1,386 | ||||
Interest rate swap agreement | |||||||
Financing Arrangements | |||||||
Term of swap agreement | 5 years | ||||||
Notional amount | $ 50,000 | $ 50,000 | |||||
Fixed interest rate payments (as a percent) | 1.85% | 1.85% | |||||
Interest rate swap agreement | Other long-term liabilities | |||||||
Financing Arrangements | |||||||
Fair value | $ 800 | $ 800 | $ 600 | ||||
Interest rate swap agreement | LIBOR | |||||||
Financing Arrangements | |||||||
Period of reference rate for variable rate receivable | 1 month | ||||||
Letter of Credit Agreements | |||||||
Financing Arrangements | |||||||
Outstanding letters of credit | 22,300 | $ 22,300 | |||||
Amounts collateralized by restricted funds | 1,400 | 1,400 | |||||
Accounts receivable securitization program | |||||||
Financing Arrangements | |||||||
Maximum borrowing capacity | 100,000 | 100,000 | $ 75,000 | ||||
Additional borrowing capacity that may be requested | $ 25,000 | ||||||
Remaining borrowing capacity | 44,600 | 44,600 | |||||
Accounts receivable securitization program | Letter of Credit Agreements | |||||||
Financing Arrangements | |||||||
Outstanding letters of credit | 20,400 | 20,400 | |||||
Surety bonds | |||||||
Financing Arrangements | |||||||
Outstanding surety bonds under uncollateralized bond programs | 45,000 | 45,000 | |||||
Revenue equipment | Freight Transportation (ABF Freight) | Notes payable | |||||||
Financing Arrangements | |||||||
Equipment financed during the period under notes payable | 12,700 | 12,700 | |||||
Revenue equipment | Freight Transportation (ABF Freight) | Notes payable | Subsequent Event | |||||||
Financing Arrangements | |||||||
Equipment financed during the period under notes payable | $ 17,200 | ||||||
Amended and Restated Credit Agreement | |||||||
Financing Arrangements | |||||||
Term loan balance refinanced with revolving credit facility | $ 70,000 | ||||||
Additional borrowing capacity that may be requested | 75,000 | 75,000 | |||||
Amended and Restated Credit Agreement | Credit Facility | |||||||
Financing Arrangements | |||||||
Maximum borrowing capacity | 150,000 | 150,000 | |||||
Amended and Restated Credit Agreement | Credit Facility | Interest rate swap agreement | |||||||
Financing Arrangements | |||||||
Amount of borrowings covered by the interest rate swap | $ 50,000 | $ 50,000 | |||||
Effective fixed interest rate on hedged borrowings (as a percent) | 3.10% | 3.10% | |||||
Amended and Restated Credit Agreement | Credit Facility | Letter of Credit Agreements | |||||||
Financing Arrangements | |||||||
Maximum borrowing capacity | $ 20,000 | $ 20,000 |
PENSION AND OTHER POSTRETIREM40
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Jan. 31, 2014person | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Jun. 30, 2015USD ($)plan | Jun. 30, 2014USD ($) | Mar. 31, 2015 | Jan. 01, 2015 | Dec. 31, 2014 | Jan. 01, 2014 | |
Components of net periodic benefit cost | ||||||||||
Pension settlement expense | $ 600 | $ 900 | $ 1,716 | $ 4,600 | ||||||
Pension settlement expense, net of tax | 364 | 556 | $ 1,048 | 2,811 | ||||||
Multiemployer pension plans | Freight Transportation (ABF Freight) | ||||||||||
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 | Freight Transportation (ABF Freight) | ||||||||||
Multiemployer Plans | ||||||||||
Approximate proportion of multiemployer pension plan contributions made to Central States Pension Fund (as a percent) | 50.00% | |||||||||
Actuarially certified funded percentage of multiemployer pension plan | 48.40% | |||||||||
Nonunion Defined Benefit Pension Plan | ||||||||||
Components of net periodic benefit cost | ||||||||||
Interest cost | 1,223 | 1,522 | $ 2,543 | 3,242 | ||||||
Expected return on plan assets | (2,359) | (2,605) | (4,761) | (5,436) | ||||||
Pension settlement expense | 597 | 909 | 1,716 | 4,600 | ||||||
Amortization of net actuarial loss | 815 | 636 | 1,636 | 1,134 | ||||||
Net periodic benefit cost | 276 | 462 | 1,134 | 3,540 | ||||||
Number of plan participants for which vested pension benefits were settled | person | 375 | |||||||||
Pension settlement expense, net of tax | 400 | 600 | 1,000 | 2,800 | ||||||
Premium paid to purchase nonparticipating annuity contract | $ 25,400 | |||||||||
Lump-sum distributions | 4,800 | 8,400 | $ 12,400 | 22,500 | ||||||
Amortization period for unrecognized net actuarial loss | 8 years | |||||||||
Change in projected benefit obligation | ||||||||||
Projected benefit obligation at the beginning of the period | $ 174,410 | |||||||||
Interest cost | 1,223 | 1,522 | 2,543 | 3,242 | ||||||
Actuarial gain | (1,971) | |||||||||
Benefits paid | (12,562) | |||||||||
Projected benefit obligation at the end of the period | 162,420 | 162,420 | ||||||||
Change in plan assets | ||||||||||
Fair value of plan assets at beginning of period | 158,265 | |||||||||
Actual return on plan assets | 3,687 | |||||||||
Employer contributions | 50 | |||||||||
Benefits paid | (12,562) | |||||||||
Fair value of plan assets at end of period | 149,440 | 149,440 | ||||||||
Funded status | (12,980) | (12,980) | ||||||||
Accumulated benefit obligation | $ 162,420 | $ 162,420 | ||||||||
Discount rate (as a percent) | 3.50% | 3.50% | 3.00% | 3.20% | ||||||
Adjusted funding target attainment percentage | 108.50% | |||||||||
Supplemental Benefit Plan | ||||||||||
Components of net periodic benefit cost | ||||||||||
Interest cost | $ 30 | 49 | $ 61 | 98 | ||||||
Amortization of net actuarial loss | 40 | 57 | 80 | 113 | ||||||
Net periodic benefit cost | 70 | 106 | 141 | 211 | ||||||
Change in projected benefit obligation | ||||||||||
Interest cost | 30 | 49 | 61 | 98 | ||||||
Postretirement Health Benefit Plan | ||||||||||
Components of net periodic benefit cost | ||||||||||
Service cost | 102 | 70 | 203 | 140 | ||||||
Interest cost | 229 | 197 | 457 | 394 | ||||||
Amortization of prior service credit | (48) | (48) | (95) | (95) | ||||||
Amortization of net actuarial loss | 213 | 23 | 426 | 46 | ||||||
Net periodic benefit cost | 496 | 242 | 991 | 485 | ||||||
Change in projected benefit obligation | ||||||||||
Interest cost | $ 229 | $ 197 | $ 457 | $ 394 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Accumulated Other Comprehensive Loss | ||||
Total after-tax amount | $ 579,204 | $ 560,883 | ||
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Loss | ||||
Total pre-tax amount | (27,793) | (31,932) | ||
Total after-tax amount | (20,950) | (23,479) | $ (16,783) | $ (14,912) |
Unrecognized Net Periodic Benefit Costs | ||||
Accumulated Other Comprehensive Loss | ||||
Total pre-tax amount | (25,480) | (30,140) | ||
Total after-tax amount | (19,540) | (22,387) | (16,321) | (14,386) |
Interest Rate Swap | ||||
Accumulated Other Comprehensive Loss | ||||
Total pre-tax amount | (773) | (576) | ||
Total after-tax amount | (470) | (350) | ||
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Loss | ||||
Total pre-tax amount | (1,540) | (1,216) | ||
Total after-tax amount | $ (940) | $ (742) | $ (462) | $ (526) |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Changes in accumulated other comprehensive loss, net of tax, by component | ||||
Balances | $ 560,883 | |||
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | $ 3,708 | $ 883 | 2,529 | $ (1,871) |
Balances | 579,204 | 579,204 | ||
Accumulated Other Comprehensive Loss | ||||
Changes in accumulated other comprehensive loss, net of tax, by component | ||||
Balances | (23,479) | (14,912) | ||
Other comprehensive income (loss) before reclassifications | 230 | (5,413) | ||
Amounts reclassified from accumulated other comprehensive loss | 2,299 | 3,542 | ||
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | 2,529 | (1,871) | ||
Balances | (20,950) | (16,783) | (20,950) | (16,783) |
Unrecognized Net Periodic Benefit Costs | ||||
Changes in accumulated other comprehensive loss, net of tax, by component | ||||
Balances | (22,387) | (14,386) | ||
Other comprehensive income (loss) before reclassifications | 548 | (5,477) | ||
Amounts reclassified from accumulated other comprehensive loss | 2,299 | 3,542 | ||
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | 2,847 | (1,935) | ||
Balances | (19,540) | (16,321) | (19,540) | (16,321) |
Interest Rate Swap | ||||
Changes in accumulated other comprehensive loss, net of tax, by component | ||||
Balances | (350) | |||
Other comprehensive income (loss) before reclassifications | (120) | |||
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | (120) | |||
Balances | (470) | (470) | ||
Foreign Currency Translation | ||||
Changes in accumulated other comprehensive loss, net of tax, by component | ||||
Balances | (742) | (526) | ||
Other comprehensive income (loss) before reclassifications | (198) | 64 | ||
OTHER COMPREHENSIVE INCOME (LOSS), net of tax | (198) | 64 | ||
Balances | $ (940) | $ (462) | $ (940) | $ (462) |
STOCKHOLDERS' EQUITY (Details 3
STOCKHOLDERS' EQUITY (Details 3) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Unrecognized Net Periodic Benefit Costs | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | $ (3,763) | $ (5,798) |
Tax benefit | 1,464 | 2,256 |
Total, net of tax | (2,299) | (3,542) |
Amortization of net actuarial loss | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | (2,142) | (1,293) |
Amortization of prior service credit | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | 95 | 95 |
Pension settlement expense | ||
Significant reclassifications out of accumulated other comprehensive loss by component | ||
Total, pre-tax | $ (1,716) | $ (4,600) |
STOCKHOLDERS' EQUITY (Details 4
STOCKHOLDERS' EQUITY (Details 4) - USD ($) $ / shares in Units, $ in Thousands | Jul. 28, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 |
Dividends on Common Stock | ||||||||
Dividends declared (in dollars per share) | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.03 | $ 0.03 | $ 0.12 | $ 0.06 | |
Dividend Amount | $ 1,578 | $ 1,584 | $ 816 | $ 819 | $ 3,162 | |||
Treasury Stock | ||||||||
Aggregate cost of shares repurchased during the period | $ 5,982 | |||||||
Stock Repurchase Program | ||||||||
Treasury Stock | ||||||||
Number of shares repurchased to date | 1,618,150 | |||||||
Aggregate cost of shares repurchased to date | $ 56,800 | |||||||
Number of shares repurchased during the period | 163,233 | |||||||
Aggregate cost of shares repurchased during the period | $ 6,000 | |||||||
Amount available for repurchase under the current buyback program | $ 12,200 | $ 12,200 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - Jun. 30, 2015 - $ / shares | Total |
Share-based compensation | |
Number of shares authorized | 3,100,000 |
Restricted Stock Units | |
Award activity | |
Outstanding at the beginning of the period (in shares) | 1,368,880 |
Granted (in shares) | 261,460 |
Vested (in shares) | (78,750) |
Forfeited (in shares) | (8,560) |
Outstanding at the end of the period (in shares) | 1,543,030 |
Weighted-Average Grant Date Fair Value | |
Granted (in dollars per share) | $ 35.65 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Basic, numerator: | ||||
NET INCOME | $ 19,967 | $ 17,208 | $ 20,712 | $ 12,015 |
Effect of unvested restricted stock unit awards | (207) | (848) | (231) | (602) |
Adjusted net income | $ 19,760 | $ 16,360 | $ 20,481 | $ 11,413 |
Basic, denominator: | ||||
Weighted-average shares | 26,021,874 | 26,005,105 | 26,036,375 | 25,941,370 |
Earnings per common share (in dollars per share) | $ 0.76 | $ 0.63 | $ 0.79 | $ 0.44 |
Diluted, numerator: | ||||
NET INCOME | $ 19,967 | $ 17,208 | $ 20,712 | $ 12,015 |
Effect of unvested restricted stock unit awards | (203) | (848) | (227) | (602) |
Adjusted net income | $ 19,764 | $ 16,360 | $ 20,485 | $ 11,413 |
Diluted, denominator: | ||||
Weighted-average shares | 26,021,874 | 26,005,105 | 26,036,375 | 25,941,370 |
Effect of dilutive securities | 571,577 | 556,240 | 676 | |
Adjusted weighted-average shares and assumed conversions | 26,593,451 | 26,005,105 | 26,592,615 | 25,942,046 |
Earnings per common share (in dollars per share) | $ 0.74 | $ 0.63 | $ 0.77 | $ 0.44 |
EARNINGS PER SHARE (Details 2)
EARNINGS PER SHARE (Details 2) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Stock awards | ||||
Antidilutive securities | ||||
Outstanding stock awards not included in calculation of diluted earnings per share (in shares) | 0.2 | 0.7 | 0.2 | 0.8 |
OPERATING SEGMENT DATA (Details
OPERATING SEGMENT DATA (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
REVENUES | ||||
Revenues | $ 696,115 | $ 658,646 | $ 1,309,391 | $ 1,236,550 |
OPERATING EXPENSES | ||||
Salaries, wages, and benefits | 332,510 | 305,977 | 639,426 | 592,778 |
Rents, purchased transportation, and other costs of services | 200,619 | 184,179 | 378,585 | 348,305 |
Fuel, supplies, and expenses | 78,127 | 91,291 | 154,029 | 180,064 |
Depreciation and amortization | 22,616 | 21,224 | 44,848 | 41,677 |
Other | 28,777 | 29,023 | 57,757 | 55,476 |
Gain on sale of property and equipment | (1,049) | (249) | ||
Pension settlement expense | 600 | 900 | 1,716 | 4,600 |
Total operating expenses | 662,649 | 631,694 | 1,274,645 | 1,218,300 |
OPERATING INCOME | ||||
OPERATING INCOME | 33,466 | 26,952 | 34,746 | 18,250 |
OTHER INCOME (COSTS) | ||||
Interest and dividend income | 271 | 194 | 505 | 384 |
Interest and other related financing costs | (1,025) | (725) | (2,027) | (1,533) |
Other, net | 197 | 950 | 597 | 1,315 |
TOTAL OTHER INCOME (COSTS) | (557) | 419 | (925) | 166 |
INCOME BEFORE INCOME TAXES | 32,909 | 27,371 | 33,821 | 18,416 |
Operating Segments | Freight Transportation (ABF Freight) | ||||
REVENUES | ||||
Revenues | 504,371 | 492,857 | 945,578 | 921,728 |
OPERATING EXPENSES | ||||
Salaries, wages, and benefits | 301,639 | 279,372 | 580,010 | 540,527 |
Fuel, supplies, and expenses | 79,647 | 93,277 | 158,673 | 184,067 |
Operating taxes and licenses | 12,322 | 11,770 | 24,318 | 23,263 |
Insurance | 6,267 | 5,966 | 12,052 | 11,361 |
Communications and utilities | 3,766 | 3,731 | 7,751 | 7,973 |
Depreciation and amortization | 18,286 | 16,841 | 35,686 | 33,178 |
Rents and purchased transportation | 52,380 | 55,549 | 94,224 | 102,969 |
Gain on sale of property and equipment | (594) | (40) | (838) | (243) |
Pension settlement expense | 448 | 708 | 1,288 | 3,598 |
Other | 2,118 | 2,848 | 4,279 | 4,382 |
Total operating expenses | 476,279 | 470,022 | 917,443 | 911,075 |
OPERATING INCOME | ||||
OPERATING INCOME | 28,092 | 22,835 | 28,135 | 10,653 |
Operating Segments | Premium Logistics (Panther) | ||||
REVENUES | ||||
Revenues | 80,271 | 81,425 | 155,563 | 153,651 |
OPERATING EXPENSES | ||||
Purchased transportation | 58,510 | 60,185 | 114,554 | 114,759 |
Depreciation and amortization | 2,939 | 2,838 | 5,863 | 5,574 |
Salaries, benefits, insurance, and other | 13,984 | 14,044 | 29,113 | 25,596 |
Total operating expenses | 75,433 | 77,067 | 149,530 | 145,929 |
OPERATING INCOME | ||||
OPERATING INCOME | 4,838 | 4,358 | 6,033 | 7,722 |
Operating Segments | Emergency & Preventative Maintenance (FleetNet) | ||||
REVENUES | ||||
Revenues | 42,015 | 38,307 | 84,504 | 80,006 |
OPERATING EXPENSES | ||||
Total operating expenses | 40,998 | 37,607 | 82,317 | 77,905 |
OPERATING INCOME | ||||
OPERATING INCOME | 1,017 | 700 | 2,187 | 2,101 |
Operating Segments | Transportation Management (ABF Logistics) | ||||
REVENUES | ||||
Revenues | 50,419 | 35,493 | 97,791 | 65,210 |
OPERATING EXPENSES | ||||
Total operating expenses | 48,611 | 34,639 | 95,208 | 63,821 |
OPERATING INCOME | ||||
OPERATING INCOME | 1,808 | 854 | 2,583 | 1,389 |
Operating Segments | Household Goods Moving Services (ABF Moving) | ||||
REVENUES | ||||
Revenues | 32,225 | 22,855 | 50,793 | 37,605 |
OPERATING EXPENSES | ||||
Total operating expenses | 30,228 | 22,232 | 49,159 | 37,823 |
OPERATING INCOME | ||||
OPERATING INCOME | 1,997 | 623 | 1,634 | (218) |
Operating Segments | Asset-Light Logistics Segments | ||||
OPERATING EXPENSES | ||||
Pension settlement expense | 100 | 100 | ||
Other and eliminations | ||||
REVENUES | ||||
Revenues | (13,186) | (12,291) | (24,838) | (21,650) |
OPERATING EXPENSES | ||||
Pension settlement expense | 100 | 200 | 300 | 900 |
Total operating expenses | (8,900) | (9,873) | (19,012) | (18,253) |
OPERATING INCOME | ||||
OPERATING INCOME | $ (4,286) | $ (2,418) | $ (5,826) | $ (3,397) |
LEGAL PROCEEDINGS, ENVIRONMEN49
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2015USD ($)tankstate | Dec. 31, 2014USD ($) | |
Underground fuel storage tanks | ||
Environmental Matters | ||
Number of underground tanks where the company's subsidiaries store fuel for use in tractors and trucks | tank | 63 | |
Number of states in which underground tanks are located | state | 19 | |
Clean Water Act | Kent, Washington branch | Freight Transportation (ABF Freight) | ||
Environmental Matters | ||
Reserve for environmental contingencies | $ 0 | |
Clean Water Act | Brooklyn, New York branch | Freight Transportation (ABF Freight) | ||
Environmental Matters | ||
Reserve for environmental contingencies | 0 | |
Environmental cleanup costs | ||
Environmental Matters | ||
Reserve for environmental contingencies | $ 0.8 | $ 0.8 |
LEGAL PROCEEDINGS, ENVIRONMEN50
LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS (Details 2) $ in Millions | Jun. 30, 2015USD ($) |
Trademark Infringement | Early stages of litigation | Premium Logistics (Panther) | |
Legal Proceedings | |
Liability for loss due to litigation | $ 0 |