UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
OR
o TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-19969
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
ArcBest 401(k) and DC Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
ArcBest Corporation
3801 Old Greenwood Road
Fort Smith, Arkansas 72903
ArcBest 401(k) and DC Retirement Plan
EIN 71-0673405 PN 002
Report of Independent Registered Public Accounting Firm
and Financial Statements
December 31, 2015 and 2014
ArcBest 401(k) and DC Retirement Plan
December 31, 2015 and 2014
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Financial Statements |
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Schedule H, Line 4i — Schedule of Assets (Held at End of Year) | 15 |
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Report of Independent Registered Public Accounting Firm
Investment Committee and Plan Administrator
ArcBest 401(k) and DC Retirement Plan
Fort Smith, Arkansas
We have audited the accompanying statements of net assets available for benefits of ArcBest 401(k) and DC Retirement Plan as of December 31, 2015 and 2014, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of ArcBest 401(k) and DC Retirement Plan as of December 31, 2015 and 2014, and the changes in its net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The supplemental information in the Schedule of Assets (Held at End of Year) has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but includes supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the Schedule of Assets (Held at End of Year) is fairly stated, in all material respects, in relation to the financial statements as a whole.
/s/ BKD, LLP
Fort Smith, Arkansas
June 28, 2016
Federal Employer Identification Number: 44-0160260
ArcBest 401(k) and DC Retirement Plan
Statements of Net Assets Available for Benefits
December 31, 2015 and 2014
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| 2015 |
| 2014 |
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Cash |
| $ | 461,932 |
| $ | 340,302 |
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Investments, At Fair Value |
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Mutual funds |
| 270,629,176 |
| 262,637,640 |
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Collective trust fund |
| 31,178,375 |
| 30,639,159 |
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ArcBest Corporation stock fund |
| 3,602,124 |
| 8,436,579 |
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Self-directed brokerage accounts |
| 6,952,666 |
| 7,250,858 |
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Variable annuity funds |
| 609,370 |
| 553,486 |
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| 312,971,711 |
| 309,517,722 |
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Receivables |
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Employer contributions |
| 10,287,732 |
| 9,394,305 |
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Participant contributions |
| 7,331 |
| 859,610 |
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Notes receivable from participants |
| 6,940,447 |
| 6,862,794 |
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| 17,235,510 |
| 17,116,709 |
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Net Assets Available for Benefits, At Fair Value |
| $ | 330,669,153 |
| $ | 326,974,733 |
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See Notes to Financial Statements
ArcBest 401(k) and DC Retirement Plan
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2015 and 2014
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| 2015 |
| 2014 |
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Contributions |
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Participants |
| $ | 16,744,267 |
| $ | 14,777,037 |
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Employer |
| 15,204,134 |
| 13,803,849 |
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Rollovers |
| 3,684,138 |
| 5,357,714 |
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Total contributions |
| 35,632,539 |
| 33,938,600 |
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Deductions |
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Benefits paid to participants |
| 28,631,350 |
| 32,860,091 |
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Administrative expenses |
| 242,262 |
| 137,975 |
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Total deductions |
| 28,873,612 |
| 32,998,066 |
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Net Investment Income (Loss) |
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Net appreciation (depreciation) in fair value of investments |
| (8,764,910 | ) | 15,366,439 |
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Interest and dividends |
| 4,184,818 |
| 4,596,100 |
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Net investment income (loss) |
| (4,580,092 | ) | 19,962,539 |
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Other Income |
| — |
| 2,926 |
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Interest Income on Notes Receivable from Participants |
| 350,866 |
| 318,103 |
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Net Increase Prior to Transfers |
| 2,529,701 |
| 21,224,102 |
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Transfer of Assets from Other Plan |
| 1,164,719 |
| 11,576,339 |
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Net Increase |
| 3,694,420 |
| 32,800,441 |
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Net Assets Available for Benefits, Beginning of Year |
| 326,974,733 |
| 294,174,292 |
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Net Assets Available for Benefits, End of Year |
| $ | 330,669,153 |
| $ | 326,974,733 |
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See Notes to Financial Statements
ArcBest 401(k) and DC Retirement Plan
December 31, 2015 and 2014
Note 1: Description of the Plan
Effective May 1, 2014, the name of the Plan changed from the Arkansas Best 401(k) and DC Retirement Plan to the ArcBest 401(k) and DC Retirement Plan. The following description of the ArcBest 401(k) and DC Retirement Plan (the “Plan”) provides only general information. For a more complete description of the Plan’s provisions, participants should refer to the Plan document and Summary Plan Description, which are available from the Plan Administrator, ArcBest Corporation.
General
The Plan is a defined contribution plan sponsored by ArcBest Corporation which covers eligible employees of ArcBest Corporation and substantially all of its subsidiaries including: ABF Freight System, Inc.; ABF Cartage, Inc.; ABF Logistics, Inc.; Albert Companies, Inc.; ArcBest Enterprise Solutions, Inc.; ArcBest Technologies, Inc.; FleetNet America, Inc.; FTI Groups, Inc.; ABF Global Supply Chain, Inc.; Moving Solutions, Inc.; Panther II Transportation Inc.; and Expedited Solutions, Inc. (“Participating Companies” or collectively, the “Company”), except for employees of collective bargaining units, casual employees (defined as part-time employees who work less than thirty hours per week) who have not completed certain periods of service and leased employees.
In addition to the right to participate in the Plan, eligible employees hired before January 1, 2006 also participate in a nonunion defined benefit pension plan sponsored by the Company. Employees hired after December 31, 2005 do not participate in the nonunion defined benefit pension plan. Since January 1, 2006, the Plan has provided a DC Retirement feature (the “DC feature”) for eligible employees who do not participate in the nonunion defined benefit pension plan. Effective July 1, 2013, the Plan was amended to include as participants those employees who were eligible to accrue benefits under the nonunion defined benefit pension plan prior to the freeze of such plan effective July 1, 2013. The DC feature of the Plan covers substantially all regular full-time employees of the Company hired after December 31, 2005, except for employees of collective bargaining units, casual employees who have not completed certain periods of service and leased employees. Employees participating in the DC feature are eligible to receive a discretionary annual contribution from the Company, which is subject to the provisions of the Plan.
The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). For 2015 and 2014, Transamerica Retirement Solutions Corporation was the Plan recordkeeper and State Street Bank and Trust Company was the trustee and custodian of the Plan.
For the year ended December 31, 2015, participant account balances totaling $1,164,719 were transferred to the Plan from the Smart Lines, LLC 401(k) Plan. For the year ended December 31, 2014, participant account balances totaling $11,576,339 were transferred to the Plan from the Panther II Transportation, Inc. 401(k) Profit Sharing Plan and from the Andrews Van Lines, Inc. 401(k) Profit Sharing Plan and Trust.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Contributions
For 2015 and 2014, the Plan allowed participants to contribute up to 69% of their annual compensation, as defined by the Plan, through salary deferral subject to certain limitations. In addition to regular pre-tax 401(k) contributions, the Plan allows for after-tax Roth 401(k) contributions. Employees are able to designate all or part of their elective contributions as after-tax Roth 401(k) contributions. Employee rollover contributions are also permitted. Under the Plan, certain Participating Companies provide Company 401(k) matching contributions to each participant’s account. Company 401(k) matching contributions may be made in the form of cash or ArcBest Corporation stock. The Company 401(k) matching contributions for the 2015 and 2014 plan years were made in the form of cash. For the years ended December 31, 2015 and 2014, the Company 401(k) matching contributions as a percentage of each participant’s annual compensation deferral are presented in the following table:
Participating Company |
| Company 401(k) Matching |
ArcBest Corporation |
| 50% of the first 6% |
ABF Freight System, Inc. |
| 50% of the first 6% |
ABF Cartage, Inc. |
| 50% of the first 6% |
ABF Logistics, Inc. |
| 50% of the first 6% |
Albert Companies, Inc. |
| 50% of the first 6% |
ArcBest Technologies, Inc. |
| 50% of the first 6% |
FleetNet America, Inc. |
| No Match |
ABF Global Supply Chain, Inc. |
| 50% of the first 6% |
Moving Solutions, Inc. |
| 50% of the first 6% |
Panther II Transportation, Inc. |
| 50% of the first 6% |
Expedited Solutions, Inc. |
| 50% of the first 6% |
ArcBest Enterprise Solutions, Inc. |
| 50% of the first 6% |
FTI Groups, Inc. |
| 50% of the first 6% |
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Contributions - continued
An additional annual 401(k) Company contribution may be made at the discretion of each Participating Company’s Board of Directors. For the years ended December 31, 2015 and 2014, no additional 401(k) Company contributions were made. The Company made discretionary contributions related to the DC feature of the Plan of $9,668,346 and $8,875,455 for the 2015 and 2014 plan years, respectively. Discretionary Company contributions under the DC feature are made to a participant’s account based on a percentage of the participant’s eligible compensation.
Participant Investment Account Options
Participants direct the investment of their contributions as well as the Company’s DC and matching contributions into various investment options offered by the Plan including mutual funds, a collective trust, variable annuity funds, and, for 401(k) employee and Company matching contributions, the ArcBest Corporation stock fund and the self-directed Schwab Personal Choice Retirement Account® (the “PCRA”). A participant’s investment in the ArcBest Corporation stock fund is generally limited to 10% of the participant’s 401(k) account balance. A participant’s investment in the PCRA is generally limited to 25% of the participant’s 401(k) account balance. Participants may change the allocation of their investments daily.
Plan participants may also elect to invest in PortfolioXpress. PortfolioXpress is a service offered by Transamerica. Participants may choose the PortfolioXpress service and designate their retirement year. FiduciaryVest, the Plan’s investment advisor, has customized allocations based on the retirement year utilizing the investment holdings of the Plan. The portfolio is rebalanced quarterly and as the participant gets closer to normal retirement age. PortfolioXpress is also the Plan’s Qualified Default Investment Alternative (QDIA) for participants who do not make their own investment election. The PortfolioXpress allocation is held in the individual funds of the Plan rather than in a separate segregated fund.
The Plan’s investment committee may change the available investment options from time-to-time.
Participant Accounts
Separate sources are maintained within a participant’s 401(k) account for 401(k) contributions, Roth 401(k) contributions, the Company’s matching contributions, and the Company’s discretionary contributions including contributions made pursuant to the DC feature. Each participant’s account is credited with related investment returns. Each participant’s account is also charged with an allocation of transaction processing and account administration fees, which are reflected in the accompanying statements of changes in net assets available for benefits as administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Vesting
Participants in the Plan are immediately vested in their 401(k) contributions plus earnings thereon. Participants are fully vested in the Company’s contributions and related earnings after three years of continuous service. Upon death, disability, or normal retirement, as defined by the Plan, participants become fully vested in the Company’s contributions and related earnings. Any unvested Company contributions and related earnings are generally forfeited upon termination.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Vesting - continued
Under the DC feature, participants are fully vested in the Company’s discretionary contributions and related earnings after three years of continuous service. Upon death, disability or normal retirement, as defined by the Plan, participants become fully vested in the Company’s discretionary contributions and related earnings.
Payment of Benefits
Upon termination of service, a participant is entitled to receive a lump-sum amount equal to the vested balance of the participant’s account, which will be paid either as a direct rollover or directly to the participant. A participant who selects a SecurePath for Life investment option of the Plan may also elect any distribution method permitted by the variable annuity fund investment option. See Note 2 for discussion of the SecurePath for Life investment options.
Effective January 1, 2013, the Plan was amended to allow participants to elect payment of benefits in monthly, quarterly, semiannual, or annual installments upon termination of service in lieu of a lump-sum payment. The installments shall continue pursuant to such participant’s election until the earlier of full payment of the vested amounts in the participant’s accounts or the participant’s death. Amounts remaining after the participant’s death shall be paid in a lump-sum payment to the appropriate parties under the terms of the Plan.
Forfeited Accounts
Forfeited nonvested accounts reported as cash and cash equivalents in the accompanying statement of net assets available for benefits totaled $422,898 and $281,171 at December 31, 2015 and 2014, respectively. These accounts will be used to reduce future employer contributions. Forfeitures of $-0- and $172,288 were used to reduce the Company’s 401(k) matching contributions for the 2015 and 2014 plan years, respectively.
Notes Receivable from Participants
Notes receivable from participants consist of participant loans. The Plan document includes provisions authorizing loans from the Plan to active eligible participants. Participants may borrow from their 401(k) account a minimum of $1,000 up to a maximum calculated as the lesser of 50% of their vested 401(k) account balance or $50,000 reduced by the participant’s highest loan balance in the preceding twelve-month period. The loans are secured by the balance in the participant’s account and are repayable generally over a period not to exceed five years (except for loans for the purchase of a principal residence). Interest on the loans is determined by the Plan Administrator based on reasonable rates of interest at prevailing rates for loans of a similar nature.
No loans are allowed under the DC feature.
Plan Termination
Although it has not expressed an intention to do so, any Participating Company, through action of its Board of Directors, has the right under the Plan to discontinue its contributions at any time and the Board of Directors of ArcBest Corporation, at its discretion, may terminate the Plan, subject to the provisions of ERISA. In the event of Plan termination, participants will become fully vested in their account.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Reclassifications
Certain prior year amounts in the statements of net assets available for benefits have been reclassified to conform to the current year presentation. In accordance with the early adoption of Accounting Standards Update 2015-07 (See Note 2), self-directed brokerage accounts are presented in the aggregate as of December 31, 2015. $2,359,465 of mutual funds, $4,433,429 of other common stock and $457,964 of other investments have been reclassified and included in a new investment category, self-directed brokerage accounts, for investments reported as of December 31, 2014.
Note 2: Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets and changes in net assets and disclosure of contingent liabilities at the date of the financial statements. Actual results could differ from those estimates.
Valuation of Investments and Income Recognition
Quoted market prices, if available, are used to value investments. Quoted prices for mutual funds are the net asset value (“NAV”) of shares held by the Plan at the financial statement date. Common Stocks are valued at the closing price reported on the active market on which the securities are traded. See Note 4 for discussion of fair value measurements.
The Diversified Stable Pooled Fund, an investment option of the Plan, is an investment of the Diversified Investment Advisors Collective Trust. The Plan’s interest in the collective trust investment is valued at estimated fair value as provided by the Plan recordkeeper, which is based on information reported in the audited financial statements of the collective trust at year-end. The collective trust investment in the Diversified Stable Pooled Fund is directly invested in the Wells Fargo Stable Return Fund W and indirectly invested in the Wells Fargo Stable Fund G, whose principal objective is to protect principal while providing a higher rate of return than shorter maturity investments, such as money market funds or certificates of deposit.
The ArcBest Corporation stock fund is a unitized stock fund, which invests in the common stock of ArcBest Corporation with a percentage of the fund allocated to a cash equivalent holding in the State Street Institutional Liquid Reserves Fund. The NAV of the ArcBest Corporation stock fund at the financial statement date provided by the Plan recordkeeper is based on the value of the shares of ArcBest Corporation common stock held in the fund, which are valued at the closing price reported on the NASDAQ Global Select Market, and the value of the cash equivalent investment holding of the fund.
The Plan’s SecurePath for Life investment options are registered variable annuity funds issued by Transamerica Life Insurance Company. The variable annuity funds are subaccounts of Separate Account VA FF, a pooled separate account established by Transamerica Life Insurance Company.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Valuation of Investments and Income Recognition - continued
The NAV of the variable annuity funds is a daily-calculated unit value based on the underlying investments of the pooled separate account, which are Vanguard Target Retirement mutual funds.
The Plan’s Charles Schwab Personal Choice Retirement Account (“PCRA”) investment option is a self-directed brokerage account that allows participants to invest in investments of their choosing.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividend income is recorded on the date paid by the issuer. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. The accrual of interest on notes is discontinued at the end of the quarter during which the note becomes 90 days past due, unless the credit is well secured and in process of collection. Past due status is based on contractual terms of the note. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2015 and 2014.
All interest accrued but not collected remains as part of the balance due at the date the loan becomes a deemed distribution. Interest accrues until a loan is treated as a deemed distribution. Notes are returned to active status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Delinquent notes that reach default status are treated as distributions based upon the terms of the Plan document.
Plan Tax Status
The Plan’s most recent determination letter is dated November 21, 2011. In the letter, the U.S. Internal Revenue Service stated that the Plan and related trust, as then designed, were in compliance with the applicable requirements of the U.S. Internal Revenue Code and, therefore, not subject to income tax. The Plan has been amended since receiving the determination letter. However, the Plan Administrator believes that the Plan and related trust were designed and operated in compliance with the applicable requirements of the U.S. Internal Revenue Code as of and for the years ended December 31, 2015 and 2014. The Plan is generally no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before 2012.
Administrative Expenses
All investment-related administrative charges are paid by the Plan as provided in the Plan document and are included in net appreciation (depreciation) in fair value of investments. All other expenses of maintaining the Plan may be paid by the Company or the Plan, at the Company’s discretion. Certain expenses of maintaining the Plan are paid directly by the Company and are excluded from these financial statements. Fees related to the administration of notes receivable from participants are charged directly to the participant’s account and are included in administrative expenses.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Payment of Benefits
Benefit payments to participants are recorded upon distribution.
Recent Accounting Pronouncements
In May 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update 2015-07, Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share (or its Equivalent). The amendment eliminates the requirement to categorize within the fair value hierarchy all investments which fair value is measured using the net asset value per share practical expedient. The amendment is effective for fiscal years beginning after December 15, 2015, with retrospective application to all periods presented. Early application is permitted. Management elected to early adopt the amendment, which was retrospectively applied to all periods presented. Accordingly, the fair value hierarchy tables in Note 3 have been modified to exclude the collective trust and variable annuity funds, which are measured using the NAV practical expedient. The excluded funds are added to the investments in the hierarchy table to reconcile to total investments at fair value per the Statements of Net Assets Available for Benefits.
In July 2015, the FASB issued Accounting Standard Update 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient. (“ASU 2015-12). The amendments in Part I eliminated the requirement to measure the fair value of fully benefit responsive investment contracts and provide the related fair value disclosures; rather, these contracts will be measured and disclosed only at contract value. The amendments in Part II simplify the level of disaggregation of investments that are measured using fair value. Plans will continue to disaggregate investments that are measured using fair value by general type; however, plans are no longer required to disaggregate investments by nature, characteristics and risks. Further, the disclosure of information about fair value measurements shall be provided by general type either on the face of the financial statements or in the notes. Part II also eliminated the requirement to disclose the net appreciation/depreciation in fair value of investments by general type and the requirement to disclose individual investments that represent 5% or more of net assets available for benefits. The amendments in Part III provide a practical expedient to permit plans to measure investments and investment related accounts as of a month-end date closest to its fiscal year end for a plan with a fiscal year end that does not coincide with the end of a calendar month. The amendments in ASU 2015-12 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Parts I and II are to be applied retrospectively. Part III is to be applied prospectively. Management elected to early adopt Part II of ASU 2015-12 for the 2015 plan year. Parts I and III are not applicable to the Plan. As a result of Part II of the amendment, investment disclosures which disaggregate the investments by risk, disclose the net appreciation/depreciation by general type and disclose individual investments greater than 5% of net assets available for benefits are no longer included in the notes to the financial statements. In addition, self-directed brokerage accounts are presented in the aggregate (See reclassification section of Note 1). These disclosure changes have been applied retrospectively to all periods presented.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Note 3: Fair Value of Plan Assets
Financial Accounting Standards Board Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 specifies a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels described as follows:
Level 1 Quoted prices in active markets for identical assets or liabilities.
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or 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 for substantially the full term of the assets or liabilities.
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying statements of net assets available for benefits, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended December 31, 2015. The Plan had no liabilities measured at fair value on a recurring basis. In addition, the Plan had no assets or liabilities measured at fair value on a nonrecurring basis.
Investments
Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. The Plan’s investments classified as Level 1 include mutual funds and self-directed brokerage accounts, whose underlying assets are primarily Level 1.
If quoted market prices are not available, fair values are estimated by using pricing models or discounted cash flows with inputs derived from observable market data, quoted prices of securities with similar characteristics, or audited financial statements. The Plan’s collective trust investment and variable annuity funds are valued at NAV based on the unit value of the underlying investments, which are an observable input and are included in investments measured at net asset value in accordance with ASU 2015-07. The fair value of the Plan’s Level 2 investment in the ArcBest Corporation stock fund is calculated based on the quoted market price of the common stock, which is traded in an active market, and the money market mutual fund investment held in the fund. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Plan has no investments classified as Level 3.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Recurring Measurements
The following table presents, for each of the fair value hierarchy levels, the fair value measurements of assets recognized in the accompanying statements of net assets available for benefits measured at fair value on a recurring basis at December 31, 2015 and 2014:
|
| 2015 |
| ||||||||||
|
| Fair Value Measurements Using |
| ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| ||||
|
|
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|
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|
| ||||
Mutual funds |
| $ | 270,629,176 |
| $ | — |
| $ | — |
| $ | 270,629,176 |
|
Self-directed brokerage accounts |
| 6,952,666 |
|
|
|
|
| 6,952,666 |
| ||||
ArcBest Corporation stock fund |
| — |
| 3,602,124 |
| — |
| 3,602,124 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total assets in fair value hierarchy |
| $ | 277,581,842 |
| $ | 3,602,124 |
| $ | — |
| $ | 281,183,966 |
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Investments measured at net asset value(a) |
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Collective trust fund (b) |
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|
|
|
| 31,178,375 |
| ||||
Variable annuity funds (c) |
|
|
|
|
|
|
| 609,370 |
| ||||
Total investments at fair value |
|
|
|
|
|
|
| $ | 312,971,711 |
| |||
|
| 2014 |
| ||||||||||
|
| Fair Value Measurements Using |
| ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Mutual funds |
| $ | 262,637,640 |
| $ | — |
| $ | — |
| $ | 262,637,640 |
|
Self-directed brokerage accounts |
| 7,250,858 |
|
|
|
|
| 7,250,858 |
| ||||
ArcBest Corporation stock fund |
| — |
| 8,436,579 |
| — |
| 8,436,579 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total assets in fair value hierarchy |
| $ | 269,888,498 |
| $ | 8,436,579 |
| $ | — |
| $ | 278,325,077 |
|
|
|
|
|
|
|
|
|
|
| ||||
Investments measured at net asset value(a) |
|
|
|
|
|
|
|
|
| ||||
Collective trust fund (b) |
|
|
|
|
|
|
| 30,639,159 |
| ||||
Variable annuity funds (c) |
|
|
|
|
|
|
| 553,486 |
| ||||
Total investments at fair value |
|
|
|
|
|
|
| $ | 309,517,722 |
| |||
(a) Investments are measured using the NAV practical expedient, and therefore have not been classified in the fair value hierarchy.
(b) Fund files U.S. Department of Labor Form 5500 as a direct filing entity. Therefore, fair value disclosures are not required.
(c) The Plan invests in variable annuity funds, held in a pooled separate account and is designed to provide investors with an annual income amount for life. The use of net asset value as fair value is deemed appropriate, as the variable annuity funds do not have a finite life, unfunded commitments or significant restrictions on redemptions.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Note 4: Party-in-Interest Transactions
Party-in-interest transactions include those with fiduciaries or employees of the Plan, any person who provides services to the Plan, an employer whose employees are covered by the Plan, and an employee organization whose members are covered by the Plan, a person who owns 50 percent or more of such an employer or employee association, or relatives of such persons.
Investments in the ArcBest Corporation stock fund, which holds investments in the common stock of the Company, qualify as party-in-interest transactions. The ArcBest Corporation stock fund also holds cash equivalent investments in the State Street Institutional Liquid Reserves Fund administered by State Street Global Markets, LLC, and an affiliate of State Street Corporation. The Plan’s trustee and custodian, State Street Bank and Trust Company, is also an affiliate of State Street Corporation.
FiduciaryVest provides investment consulting and investment management services for the plan. FiduciaryVest customizes the age based target retirement allocation utilizing the investment holdings of the Plan for participants that choose the PortfolioXpress service. During 2015 and 2014, the Plan paid FiduciaryVest a total of $80,170 and $40,000, respectively, for these services.
The Plan invests in certain funds managed by the Plan recordkeeper, Transamerica Retirement Solutions Corporation, or issued by Transamerica Life Insurance Company, which are affiliated companies owned by AEGON N.V. The Diversified Stable Pooled Fund is managed by Transamerica Retirement Solutions Corporation and the SecurePath for Life investment options are variable annuity funds issued by Transamerica Life Insurance Company; therefore, transactions with these funds qualify as party-in-interest. National Financial Services and Mid Atlantic Capital Corporation provide securities brokerage services to the Plan. Fees paid by the Plan for securities brokerage and investment management services are included in net appreciation in fair value of investment, as they are paid through revenue sharing, rather than a direct payment. The Plan paid $127,090 and $63,307 of transaction processing and account administration fees, not covered by revenue sharing, to Transamerica Retirement Solutions Corporation during 2015 and 2014, respectively, which are included in administrative expenses.
Individually immaterial expenses paid by the Plan to parties-in-interest aggregating to $34,424 and $31,876 were recorded in administrative expenses for 2015 and 2014, respectively. The Company provides certain administrative services at no cost to the Plan.
Note 5: Significant Estimates and Concentrations
Economic Conditions
The recessionary economic environment in recent years has presented and may continue to present employee benefit plans with difficult circumstances and challenges, which in some cases have resulted and may continue to result in large and unanticipated declines in the fair value of investments. Volatility in economic conditions may cause the values of assets recorded in the financial statements to change rapidly, resulting in material future changes in investment values that could impact the Plan.
ArcBest 401(k) and DC Retirement Plan
Notes to Financial Statements
December 31, 2015 and 2014
Note 6: Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the participants’ account balances and the amounts reported in the statements of net assets available for benefits.
Note 7: Subsequent Events
Subsequent events have been evaluated through the date of the Independent Auditor’s Report, which is the date the financial statements were available to be issued.
ArcBest 401(k) and DC Retirement Plan
EIN 71-0673405 PN 002
Schedule H, Line 4i - Schedule of Assets (Held At End of Year)
December 31, 2015
|
| Identity of Issuer |
| Description of Investment |
| Current Value |
| |
|
| Cash |
|
|
|
|
| |
* |
| State Street Bank & Trust Co. |
| Cash Reserve Account |
| $ | 461,932 |
|
|
|
|
|
|
|
|
| |
|
| Investments |
|
|
|
|
| |
|
| Mutual Funds |
|
|
|
|
| |
|
| Fidelity Management Trust Company |
| Spartan 500 Index Fund, 578,478 shares |
| $ | 41,534,750 |
|
|
|
|
|
|
|
|
| |
|
| Dodge & Cox Funds |
| Dodge & Cox Stock Fund, 240,740 shares |
| 39,185,324 |
| |
|
|
|
|
|
|
|
| |
|
| T. Rowe Price Associates, Inc. |
| T. Rowe Price Blue Chip Growth Fund, 464,436 shares |
| 33,258,272 |
| |
|
|
|
|
|
|
|
| |
|
| Delaware Investments |
| Delaware Small Cap Core, 1,063,214 shares |
| 20,201,069 |
| |
|
|
|
|
|
|
|
| |
|
| Metropolitan West |
| Metropolitan West Total Return Bond, 1,828,491 shares |
| 19,418,577 |
| |
|
|
|
|
|
|
|
| |
|
| Fidelity Management Trust Company |
| Fidelity Low-Priced Stock Fund, 399,354 shares |
| 19,069,149 |
| |
|
|
|
|
|
|
|
| |
|
| Harbor Funds |
| Harbor International Fund Instl, 306,221 shares |
| 18,198,704 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2025 Fund, 803,222 shares |
| 12,546,327 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2015 Fund, 807,641 shares |
| 11,492,727 |
| |
|
|
|
|
|
|
|
| |
|
| Fidelity Management Trust Company |
| Spartan Extended Market Index Fund, 149,717 shares |
| 7,515,786 |
| |
|
|
|
|
|
|
|
| |
|
| Franklin Templeton Investments |
| Templeton Global Bond Adv, 604,975 shares |
| 6,975,362 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2035 Fund, 382,298 shares |
| 6,437,907 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Total Bond Market Index Fund, 568,445 shares |
| 6,048,258 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2020 Fund, 219,054 shares |
| 5,947,315 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2045 Fund, 317,748 shares |
| 5,649,568 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Inflation-Protected Securities Adm, 202,459 shares |
| 5,103,999 |
| |
|
|
|
|
|
|
|
| |
|
| Fidelity Management Trust Company |
| Spartan International Index Fund, 139,592 shares |
| 5,015,551 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2030 Fund, 94,125 shares |
| 2,609,134 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2040 Fund, 53,885 shares |
| 1,533,020 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2050 Fund, 40,243 shares |
| 1,146,525 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement Income Fund, 91,151 shares |
| 1,134,826 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2055 Fund, 7,456 shares |
| 229,861 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2060 Fund, 7,163 shares |
| 194,907 |
| |
|
|
|
|
|
|
|
| |
|
| Vanguard Trust Company |
| Vanguard Target Retirement 2010 Fund, 7,325 shares |
| 182,258 |
| |
|
|
|
|
|
|
|
| |
|
| Collective Trust Investment |
|
|
|
|
| |
* |
| Diversified Retirement Corporation |
| Diversified Stable Pooled Fund, 2,865,370 shares |
| 31,178,375 |
| |
|
|
|
|
|
|
|
| |
|
| Personal Choice Retirement Accounts |
|
|
|
|
| |
|
| Charles Schwab & Co., Inc. |
| Personal Choice Retirement Accounts |
| 6,952,666 |
| |
|
|
|
|
|
|
|
| |
|
| Common Stock |
|
|
|
|
| |
* |
| ArcBest Corporation |
| ArcBest Corporation Stock Fund |
| 3,602,124 |
| |
|
|
|
|
|
|
|
| |
|
| Variable Annuity Funds |
|
|
|
|
| |
* |
| Transamerica Life Insurance Company |
| SecurePath for Life 2025 Fund, 22,493 shares |
| 311,173 |
| |
|
|
|
|
|
|
|
| |
* |
| Transamerica Life Insurance Company |
| SecurePath for Life 2015 Fund, 18,215 shares |
| 238,483 |
| |
|
|
|
|
|
|
|
| |
* |
| Transamerica Life Insurance Company |
| SecurePath for Life 2020 Fund, 4,420 shares |
| 59,714 |
| |
|
|
|
|
|
|
|
| |
|
| Total Investments |
|
|
| $ | 312,971,711 |
|
|
|
|
|
|
|
|
| |
* |
| Participant Loans |
| Various loans with interest rates of 3.25% to 10.25% with original maturities generally not exceeding 5 years |
| $ | 6,940,447 |
|
* Indicates party-in-interest to the Plan.
Pursuant to the requirements of the Securities Exchange Act of 1934, the persons who administer the employee benefit plan have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
|
| ArcBest 401(k) and DC Retirement Plan |
|
|
|
|
|
|
June 28, 2016 |
| /s/ Traci Sowersby |
|
| Traci Sowersby |
|
| Vice President — Controller |
|
| and Principal Accounting Officer |
|
| ArcBest Corporation |