Fair Value Measurements

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The following tables present our assets and liabilities that are measured at fair value on a recurring basis and the levels of inputs used to measure fair value:

	Balance Sheet Location	Fair Value Measurements At September 30, 2013 Using				Total
		Level 1		Level 2	Level 3
		(In thousands)
Assets:
Interest rate swaps	DFL and other assets	$	—	10,402	—	10,402
Investments held in Rabbi Trusts:
Cash and cash equivalents		4,816		—	—	4,816
U.S. equity mutual funds		14,003		—	—	14,003
Foreign equity mutual funds		3,882		—	—	3,882
Fixed income mutual funds		4,285		—	—	4,285
Investments held in Rabbi Trusts	DFL and other assets	26,986		—	—	26,986
Total assets at fair value		$	26,986	10,402	—	37,388
Liabilities:
Contingent consideration	Accrued expenses and other current liabilities	$	—	—	498	498
Total liabilities at fair value		$	—	—	498	498

	Balance Sheet Location	Fair Value Measurements At December 31, 2012 Using				Total
		Level 1		Level 2	Level 3
		(In thousands)
Assets:
Interest rate swaps	Prepaid expenses and other current assets	$	—	1,313	—	1,313
Interest rate swaps	DFL and other assets	—		15,412	—	15,412
Investments held in Rabbi Trusts:
Cash and cash equivalents		4,055		—	—	4,055
U.S. equity mutual funds		10,871		—	—	10,871
Foreign equity mutual funds		2,974		—	—	2,974
Fixed income mutual funds		4,526		—	—	4,526
Investments held in Rabbi Trusts	DFL and other assets	22,426		—	—	22,426
Total assets at fair value		$	22,426	16,725	—	39,151
Liabilities:
Contingent consideration	Other non-current liabilities	$	—	—	478	478
Total liabilities at fair value		$	—	—	478	478

The following is a description of the valuation methodologies used for these items, as well as the level of inputs used to measure fair value:

Interest rate swaps — The derivatives are pay-variable, receive-fixed interest rate swaps based on the LIBOR rate and are designated as fair value hedges. Fair value was based on a model-driven income approach using the LIBOR rate at each interest payment date, which was observable at commonly quoted intervals for the full term of the swaps. Therefore, our interest rate swaps were classified within Level 2 of the fair value hierarchy.

Investments held in Rabbi Trusts — The investments primarily include mutual funds that invest in equity and fixed income securities. Shares of mutual funds were valued based on quoted market prices, which represent the net asset value of the shares and were therefore classified within Level 1 of the fair value hierarchy.

Contingent consideration — Fair value was based on the income approach and uses significant inputs that are not observable in the market. These inputs are based on our expectations as to what amount we will pay based on contractual provisions. Therefore, the liability was classified within Level 3 of the fair value hierarchy.

The following tables present our assets and liabilities that are measured at fair value on a nonrecurring basis and the levels of inputs used to measure fair value:

	Fair Value Measurements At September 30, 2013 Using				Total Losses (2)
	Level 1		Level 2	Level 3	Three months  ended		Nine months ended
	(In thousands)
Assets held for sale:
Revenue earning equipment: (1)
Trucks	$	—	—	10,546	$	2,042	$	7,518
Tractors	—		—	15,332	1,677		4,185
Trailers	—		—	671	275		1,242
Total assets at fair value	$	—	—	26,549	$	3,994	$	12,945

	Fair Value Measurements At September 30, 2012 Using				Total Losses (2)
	Level 1		Level 2	Level 3	Three months  ended		Nine months ended
	(In thousands)
Assets held for sale:
Revenue earning equipment (1)
Trucks	$	—	—	11,994	$	3,664	$	9,153
Tractors	—		—	8,616	1,097		2,639
Trailers	—		—	407	400		1,183
Total assets at fair value	$	—	—	21,017	$	5,161	$	12,975

 ————————————

(1) Represents the portion of all revenue earning equipment held for sale that is recorded at fair value, less costs to sell.

(2) Total losses represent fair value adjustments for all vehicles held for sale throughout the period for which fair value was less than carrying value.

Revenue earning equipment held for sale is stated at the lower of carrying amount or fair value less costs to sell. Losses to reflect changes in fair value are presented within “Other operating expenses” in the Consolidated Condensed Statements of Earnings. For revenue earning equipment held for sale, we stratify our fleet by vehicle type (tractors, trucks and trailers), weight class, age and other relevant characteristics and create classes of similar assets for analysis purposes. Fair value was determined based upon recent market prices obtained from our own sales experience for sales of each class of similar assets and vehicle condition. Therefore, our revenue earning equipment held for sale was classified within Level 3 of the fair value hierarchy.

Fair value of total debt (excluding capital lease obligations) at September 30, 2013 and December 31, 2012 was approximately $4.14 billion and $3.99 billion, respectively. For publicly-traded debt, estimates of fair value were based on market prices. Since our publicly-traded debt is not actively traded, the fair value measurement was classified within Level 2 of the fair value hierarchy. For other debt, fair value was estimated based on a model-driven approach using rates currently available to us for debt with similar terms and remaining maturities. Therefore, the fair value measurement of our other debt was classified within Level 2 of the fair value hierarchy. The carrying amounts reported in the Consolidated Condensed Balance Sheets for “Cash and cash equivalents,” “Receivables, net” and “Accounts payable” approximate fair value because of the immediate or short-term maturities of these financial instruments.