UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2019

☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from   to  

Commission file number 000-19969

ARCBEST CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of
incorporation or organization) 71-0673405 (I.R.S. Employer Identification No.)

8401 McClure Drive

Fort Smith, Arkansas 72916

(479) 785-6000

(Address, including zip code, and telephone number, including

area code, of the registrant’s principal executive offices)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.01 Par Value	ARCB	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   ☒ Yes  ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ☐ Yes  ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 3, 2019
Common Stock, $0.01 par value	25,513,294 shares

ARCBEST CORPORATION

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets — March 31, 2019 and December 31, 2018	3
	Consolidated Statements of Operations — For the Three Months Ended March 31, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income — For the Three Months Ended March 31, 2019 and 2018	5
	Consolidated Statement of Stockholders’ Equity — For the Three Months Ended March 31, 2019 and 2018	6
	Consolidated Statements of Cash Flows — For the Three Months Ended March 31, 2019 and 2018	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	47
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 1B.	Unresolved Staff Comments	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
SIGNATURES		50

PART I.

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31		December 31
	2019		2018
	(Unaudited)
	(in thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	138,399	$	190,186
Short-term investments		116,225		106,806
Accounts receivable, less allowances (2019 – $6,655; 2018 – $7,380)		294,853		297,051
Other accounts receivable, less allowances (2019 – $456; 2018 – $806)		16,925		19,146
Prepaid expenses		31,064		25,304
Prepaid and refundable income taxes		4,610		1,726
Other		4,466		9,007
TOTAL CURRENT ASSETS		606,542		649,226
PROPERTY, PLANT AND EQUIPMENT
Land and structures		340,764		339,640
Revenue equipment		856,370		858,251
Service, office, and other equipment		206,959		199,230
Software		142,062		138,517
Leasehold improvements		9,766		9,365
		1,555,921		1,545,003
Less allowances for depreciation and amortization		932,945		913,815
PROPERTY, PLANT AND EQUIPMENT, net		622,976		631,188
GOODWILL		108,320		108,320
INTANGIBLE ASSETS, net		67,820		68,949
OPERATING RIGHT-OF-USE ASSETS		68,737		—
DEFERRED INCOME TAXES		6,905		7,468
OTHER LONG-TERM ASSETS		78,357		74,080
TOTAL ASSETS	$	1,559,657	$	1,539,231
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	145,590	$	143,785
Income taxes payable		241		1,688
Accrued expenses		211,533		243,111
Current portion of long-term debt		48,809		54,075
Current portion of operating lease liabilities		17,678		—
Current portion of pension and postretirement liabilities		7,984		8,659
TOTAL CURRENT LIABILITIES		431,835		451,318
LONG-TERM DEBT, less current portion		227,649		237,600
OPERATING LEASE LIABILITIES, less current portion		54,444		—
PENSION AND POSTRETIREMENT LIABILITIES, less current portion		31,695		31,504
OTHER LONG-TERM LIABILITIES		36,406		44,686
DEFERRED INCOME TAXES		55,873		56,441
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2019: 28,685,313 shares, 2018: 28,684,779 shares		287		287
Additional paid-in capital		327,762		325,712
Retained earnings		504,225		501,389
Treasury stock, at cost, 2019: 3,172,019 shares; 2018: 3,097,634 shares		(98,131)		(95,468)
Accumulated other comprehensive loss		(12,388)		(14,238)
TOTAL STOCKHOLDERS’ EQUITY		721,755		717,682
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,559,657	$	1,539,231

See notes to consolidated financial statements.

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ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March 31
	2019		2018
	(Unaudited)
	(in thousands, except share and per share data)
REVENUES	$	711,839	$	700,001
OPERATING EXPENSES		703,248		687,276
OPERATING INCOME		8,591		12,725
OTHER INCOME (COSTS)
Interest and dividend income		1,478		526
Interest and other related financing costs		(2,882)		(2,059)
Other, net		(591)		(2,201)
		(1,995)		(3,734)
INCOME BEFORE INCOME TAXES		6,596		8,991
INCOME TAX PROVISION (BENEFIT)		1,708		(963)
NET INCOME	$	4,888	$	9,954
EARNINGS PER COMMON SHARE
Basic	$	0.19	$	0.39
Diluted	$	0.18	$	0.37
AVERAGE COMMON SHARES OUTSTANDING
Basic		25,570,415		25,642,871
Diluted		26,512,349		26,596,376
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.08	$	0.08

See notes to consolidated financial statements.

4

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended
	March 31
	2019		2018
	(Unaudited)
	(in thousands)
NET INCOME	$	4,888	$	9,954
OTHER COMPREHENSIVE INCOME, net of tax
Pension and other postretirement benefit plans:
Net actuarial loss, net of tax of: (2019 – $230; 2018 – $899)		661		2,590
Pension settlement expense, net of tax of: (2019 – $349; 2018 – $168)		1,007		486
Amortization of unrecognized net periodic benefit costs, net of tax of: (2019 – $100; 2018 – $219)
Net actuarial loss		295		649
Prior service credit		(6)		(17)
Interest rate swap and foreign currency translation:
Change in unrealized income (loss) on interest rate swap, net of tax of: (2019 – $118; 2018 – $219)		(332)		436
Change in foreign currency translation, net of tax of: (2019 – $79; 2018 – $223)		225		(72)
OTHER COMPREHENSIVE INCOME, net of tax		1,850		4,072
TOTAL COMPREHENSIVE INCOME	$	6,738	$	14,026

See notes to consolidated financial statements.

5

ARCBEST CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

	Three Months Ended March 31, 2019
											Accumulated
				Additional							Other
	Common Stock			Paid-In		Retained		Treasury Stock			Comprehensive		Total
	Shares	Amount		Capital		Earnings		Shares	Amount		Loss		Equity
	(Unaudited)
	(in thousands)
Balance at December 31, 2018	28,685	$	287	$	325,712	$	501,389	3,098	$	(95,468)	$	(14,238)	$	717,682
Net income							4,888							4,888
Other comprehensive income, net of tax												1,850		1,850
Tax effect of share-based compensation plans					(8)									(8)
Share-based compensation expense					2,058									2,058
Purchase of treasury stock								74		(2,663)				(2,663)
Dividends declared on common stock							(2,052)							(2,052)
Balance at March 31, 2019	28,685	$	287	$	327,762	$	504,225	3,172	$	(98,131)	$	(12,388)	$	721,755
	Three Months Ended March 31, 2018
											Accumulated
				Additional							Other
	Common Stock			Paid-In		Retained		Treasury Stock			Comprehensive		Total
	Shares	Amount		Capital		Earnings		Shares	Amount		Loss		Equity
	(Unaudited)
	(in thousands)
Balance at December 31, 2017	28,496	$	285	$	319,436	$	438,379	2,852	$	(86,064)	$	(20,574)	$	651,462
Adjustments to beginning retained earnings for adoption of accounting standards							3,992					(3,576)		416
Balance at January 1, 2018	28,496		285		319,436		442,371	2,852		(86,064)		(24,150)		651,878
Net income							9,954							9,954
Other comprehensive income, net of tax												4,072		4,072
Issuance of common stock under share-based compensation plans	3		—		—									—
Tax effect of share-based compensation plans					(41)									(41)
Share-based compensation expense					1,870									1,870
Purchase of treasury stock								5		(201)				(201)
Dividends declared on common stock							(2,058)							(2,058)
Balance at March 31, 2018	28,499	$	285	$	321,265	$	450,267	2,857	$	(86,265)	$	(20,078)	$	665,474

See notes to consolidated financial statements.

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ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31
	2019		2018
	(in thousands)
OPERATING ACTIVITIES
Net income	$	4,888	$	9,954
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		25,409		25,352
Amortization of intangibles		1,128		1,134
Pension settlement expense		1,356		654
Share-based compensation expense		2,058		1,870
Provision for losses on accounts receivable		112		445
Deferred income tax benefit		(584)		(2,749)
Gain on sale of property and equipment		(43)		(221)
Changes in operating assets and liabilities:
Receivables		3,931		(10,260)
Prepaid expenses		(5,760)		(2,587)
Other assets		4,589		2,732
Income taxes		(4,313)		1,938
Multiemployer pension fund withdrawal liability		(143)		—
Accounts payable, accrued expenses, and other liabilities		(35,999)		3,513
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(3,371)		31,775
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of financings		(15,543)		(7,177)
Proceeds from sale of property and equipment		1,039		1,050
Purchases of short-term investments		(13,790)		(4,410)
Proceeds from sale of short-term investments		4,998		6,245
Capitalization of internally developed software		(2,656)		(2,164)
NET CASH USED IN INVESTING ACTIVITIES		(25,952)		(6,456)
FINANCING ACTIVITIES
Payments on long-term debt		(15,217)		(16,558)
Net change in book overdrafts		(2,524)		(2,572)
Payment of common stock dividends		(2,052)		(2,058)
Purchases of treasury stock		(2,663)		(201)
Payments for tax withheld on share-based compensation		(8)		(50)
NET CASH USED IN FINANCING ACTIVITIES		(22,464)		(21,439)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(51,787)		3,880
Cash and cash equivalents at beginning of period		190,186		120,772
CASH AND CASH EQUIVALENTS CASH AT END OF PERIOD	$	138,399	$	124,652
NONCASH INVESTING ACTIVITIES
Equipment financed	$	—	$	121
Accruals for equipment received	$	2,878	$	883
Lease liabilities arising from obtaining right-of-use assets	$	18,144	$	—

See notes to consolidated financial statements.

7

ARCBEST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE A – ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION

ArcBest CorporationTM (the “Company”) is the parent holding company of businesses providing integrated logistics solutions. The Company’s operations are conducted through its three reportable operating segments: Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries; ArcBest®, the Company’s asset-light logistics operation; and FleetNet®. References to the Company in this Quarterly Report on Form 10-Q are primarily to the Company and its subsidiaries on a consolidated basis.

The Asset-Based segment represented approximately 69% of the Company’s total revenues before other revenues and intercompany eliminations for the three months ended March 31, 2019. As of March 2019, approximately 82% of the Asset‑Based segment’s employees were covered under a collective bargaining agreement, the ABF National Master Freight Agreement (the “2018 ABF NMFA”), with the International Brotherhood of Teamsters (the “IBT”), which will remain in effect through June 30, 2023.

Financial Statement Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2018 Annual Report on Form 10-K and other current filings with the SEC. In the opinion of management, all adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts may differ from those estimates.

Accounting Policies

The Company’s accounting policies are described in Note B to the consolidated financial statements included in Part II, Item 8 of the Company’s 2018 Annual Report on Form 10-K. The following policies have been updated during the three months ended March 31, 2019 for the adoption of accounting standard updated disclosed within this Note.

Interest Rate SwapDerivative Instruments: The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. The Company has interest rate swap agreements designated as a cash flow hedges. The effective portion of the gain or loss on the interest rate swap instruments is reported as unrealized gain or loss as a component of accumulated other comprehensive income or loss, net of tax, in stockholders’ equity and the change in the unrealized gain or loss on the interest rate swaps is reported in other comprehensive income or loss, net of tax, in the consolidated statements of comprehensive income. The unrealized gain or loss is reclassified out of accumulated other comprehensive loss into income in the same period or periods during which the hedged transaction affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions.

Leases: The Company leases, under finance and operating lease arrangements, certain facilities used primarily in the Asset-Based segment service center operations, certain revenue equipment used in the ArcBest segment operations, and certain other office equipment. The Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases, (“ASC Topic 842”) effective January 1, 2019. In accordance with ASC Topic 842, right-of-use assets and lease liabilities for operating leases are recorded on the balance sheet and the related lease expense is recorded on a straight-line basis over

8

the lease term in operating expenses. Included in lease expense are any variable lease payments incurred in the period that were not included in the initial lease liability. For financial reporting purposes, right-of-use assets held under finance leases are amortized over their estimated useful lives on the same basis as owned assets, and leasehold improvements associated with assets utilized under finance or operating leases are amortized by the straight-line method over the shorter of the remaining lease term or the asset’s useful life. Amortization of assets under finance leases is included in depreciation expense. Obligations under the finance lease arrangements are included in long-term debt.

The short-term lease exemption was elected under ASC Topic 842 for all classes of assets to include real property, revenue equipment, and service, office, and other equipment. The Company adopted the policy election as a lessee for all classes of assets to account for each lease component and its related non-lease component(s) as a single lease component. In determining the discount rate, the Company uses the rate implicit in the lease if that rate is readily determinable when entering into a lease as a lessee. If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate, determined by the price of a fully collateralized loan with similar terms based on current market rates.

For contracts entered into on or after the effective date, an assessment is made as to whether the contract is, or contains, a lease at the inception of a contract. The assessment is based on: (1) whether the contract involves the use of a distinct identified asset; (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period; and (3) whether the Company has the right to direct the use of the asset. For all operating leases that meet the scope of ASC Topic 842, a right-of-use asset and a lease liability are recognized. The right-of-use asset is measured as the initial amount of the lease liability, plus any initial direct costs incurred, less any prepayments prior to commencement or lease incentives received. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s secured incremental borrowing rate for the same term as the underlying lease. Lease payments included in the measurement of the lease liability are comprised of the following: (1) the fixed noncancelable lease payments, (2) payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and (3) payments for early termination options unless it is reasonably certain the lease will not be terminated early. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement and included in the measurement of the initial lease liability. Additional payments based on the change in an index or rate are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability.

Adopted Accounting Pronouncements

ASC Topic 842, which was adopted by the Company effective January 1, 2019, requires lessees to recognize right-of-use assets and lease liabilities for operating leases with terms greater than 12 months on the balance sheet. The standard also requires additional qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company elected the modified retrospective method of applying the transition provisions at the beginning of the period of adoption and, as a result, has not adjusted comparative period financial information and has not included the new lease disclosures for periods before the effective date. Prior period amounts continue to be reported under the Company’s historical accounting in accordance with the previous lease guidance included in ASC Topic 840.

The Company has excluded short-term leases from accounting under ASC Topic 842 and has elected the package of practical expedients as permitted under the transition guidance, which allowed the Company to not reassess: (1) whether contracts are, or contain, leases; (2) lease classification; and (3) capitalization of initial direct costs. For contracts entered into on or after the effective date, an assessment is made as to whether the contract is, or contains, a lease at the inception of a contract. Consistent with the package of practical expedients elected, leases entered into prior to January 1, 2019, are accounted for under ASC Topic 840 and were not reassessed. For all classes of assets, the policy election was made to account for each lease component and its related non-lease component(s) as a single lease component. The election to not recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less did not have a material effect on the right-of-use assets and lease liabilities.

The majority of the Company’s lease portfolio consists of real property operating leases related to facilities used in the Asset-Based segment service center operations. The lease portfolio also includes operating leases related to certain revenue equipment used in the ArcBest segment operations as well as a small number of office equipment finance leases.

9

Management has recorded the right-of-use assets and associated lease liabilities for operating leases on the consolidated balance sheet as of March 31, 2019 in accordance with ASC Topic 842. Finance leases are not material to the consolidated financial statements.

The most significant impact of adopting ASC Topic 842 was the recognition of right-of-use assets and lease liabilities on the balance sheet for operating leases of $58.7 million as of January 1, 2019. The accounting for finance leases (formerly referred to as capital leases prior to the adoption of ASC Topic 842) remained substantially unchanged. The expense recognition for operating leases and finance leases under ASC Topic 842 is substantially consistent with ASC Topic 840 and the impact of the new standard is non-cash in nature. As a result, there is no significant impact on the Company’s results of operations or cash flows presented in the Company’s consolidated financial statements.

ASC Topic 815, Derivatives and Hedging, which was adopted by the Company on January 1, 2019, was amended to change the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results to simplify hedge accounting treatment and better align an entity’s risk management activities and financial reporting for hedging relationships. The amendment did not have an impact on the consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

The U.S. Securities and Exchange Commission (the “SEC”) issued Final Rule 33-10618, FAST Act Modernization and Simplification of Regulation S-K, in March 2019 to modernize and simplify certain disclosure requirements in Regulation S-K and the related rules and forms. Effective April 2, 2019, the final rule allows registrants to redact confidential information from most exhibits filed with the SEC without filing a confidential treatment request. Effective May 2, 2019, the final rule requires registrants to include the trading symbol for each class of registered securities on the cover page of certain SEC forms. The final rule also includes certain requirements for eXtensible Business Reporting Language (“XBRL”) reporting and provisions to simplify certain annual disclosure requirements within the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), Risk Factors, and Properties sections of Form 10-K. The XBRL requirements of the final rule for tagging data on the cover page of certain SEC filings and the use of hyperlinks for information that is incorporated by reference and available on EDGAR will become effective for the Company’s second quarter 2019 Quarterly Report on Form 10-Q. The Company will adopt the provisions of the final rule simplifying certain annual disclosure requirements for its 2019 Annual Report on Form 10-K. The final rule is not expected to have a significant impact on the Company’s consolidated financial statement disclosures or filings with the SEC.

ASC Subtopic 350-40, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, (“ASC Subtopic 350-40”) was amended by the FASB in August 2018 and is effective for the Company beginning January 1, 2020. The amendments to ASC Subtopic 350-40 clarify the accounting treatment for implementation costs incurred by the customer in a cloud computing software arrangement. The amendments allow implementation costs of cloud computing arrangements to be capitalized using the same method prescribed by ASC Subtopic 350-40, Internal-Use Software. The amendments to ASC Subtopic 350-40 will be adopted on a prospective basis and are not expected to have an impact on the Company’s consolidated financial statements.

ASC Topic 820, Fair Value Measurement, was amended to modify the disclosure requirements of fair value measurements, primarily impacting the disclosures for Level 3 fair value measurements. The amendment is effective for the Company beginning January 1, 2020 and is not expected to have a significant impact on the Company’s financial statement disclosures.

ASC Topic 326, Financial Instruments – Credit Losses, (“ASC Topic 326”), was amended to improve the measurement of credit losses on financial instruments, including trade accounts receivable. The amendment is effective for the Company beginning January 1, 2020 and is not expected to have a significant impact on the Company’s consolidated financial statements.

Management believes there is no other new accounting guidance issued but not yet effective that is relevant to the Company’s current financial statements.

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NOTE B – FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial Instruments

The following table presents the components of cash and cash equivalents and short-term investments:

	March 31		December 31
	2019		2018
	(in thousands)
Cash and cash equivalents
Cash deposits(1)	$	104,896	$	124,938
Variable rate demand notes(1)(2)		14,973		19,786
Money market funds(3)		18,530		42,470
U.S. Treasury securities(4)		—		2,992
Total cash and cash equivalents	$	138,399	$	190,186
Short-term investments
Certificates of deposit(1)	$	83,425	$	82,949
U.S. Treasury securities(4)		32,800		23,857
Total short-term investments	$	116,225	$	106,806

⁽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⁾ Recorded at amortized cost plus accrued interest, which approximates fair value. U.S. Treasury securities with a maturity date within 90 days of the purchase date are classified as cash equivalents. U.S. Treasury securities included in short-term investments are held-to-maturity investments with maturity dates of less than one year.

The Company’s long-term financial instruments are presented in the table of financial assets and liabilities measured at fair value within this Note.

Concentrations of Credit Risk of Financial Instruments

The Company is potentially subject to concentrations of credit risk related to its cash, cash equivalents, and short-term investments. The Company reduces credit risk by maintaining its cash deposits primarily in FDIC-insured accounts and placing its short-term investments primarily in FDIC-insured certificates of deposit. However, certain cash deposits and certificates of deposit may exceed federally insured limits. At March 31, 2019 and December 31, 2018, cash and cash equivalents totaling $65.0 million and $94.7 million, respectively, were neither FDIC insured nor direct obligations of the U.S. government.

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.

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Fair value and carrying value disclosures of financial instruments are presented in the following table:

	March 31				December 31
	2019				2018
	(in thousands)
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Credit Facility(1)	$	70,000	$	70,000	$	70,000	$	70,000
Accounts receivable securitization borrowings(2)		40,000		40,000		40,000		40,000
Notes payable(3)		166,248		167,568		181,409		181,560
	$	276,248	$	277,568	$	291,409	$	291,560

⁽¹⁾ The revolving credit facility (the “Credit Facility”) carries a variable interest rate based on LIBOR, plus a margin, that is considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy).

⁽²⁾ Borrowings under the Company’s accounts receivable securitization program carry a variable interest rate based on LIBOR, plus a margin. The borrowings are considered to be priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy).

⁽³⁾ Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy).

12

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the assets and liabilities that are measured at fair value on a recurring basis:

	March 31, 2019
			Fair Value Measurements Using
			Quoted Prices		Significant		Significant
			In Active		Observable		Unobservable
			Markets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Assets:
Money market funds(1)	$	18,530	$	18,530	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		2,864