10-Q

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, 2020

☐ 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 1, 2020
Common Stock, $0.01 par value	25,262,470 shares

ARCBEST CORPORATION

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets — March 31, 2020 and December 31, 2019	3
	Consolidated Statements of Operations — For the Three Months Ended March 31, 2020 and 2019	4
	Consolidated Statements of Comprehensive Income — For the Three Months Ended March 31, 2020 and 2019	5
	Consolidated Statement of Stockholders’ Equity — For the Three Months Ended March 31, 2020 and 2019	6
	Consolidated Statements of Cash Flows — For the Three Months Ended March 31, 2020 and 2019	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
SIGNATURES		53

PART I.

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31		December 31
	2020		2019
	(Unaudited)
	(in thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	352,165	$	201,909
Short-term investments		178,810		116,579
Accounts receivable, less allowances (2020 – $6,111; 2019 – $5,448)		278,783		282,579
Other accounts receivable, less allowances (2020 – $646; 2019 – $476)		15,276		18,774
Prepaid expenses		33,806		30,377
Prepaid and refundable income taxes		6,231		9,439
Other		4,460		4,745
TOTAL CURRENT ASSETS		869,531		664,402
PROPERTY, PLANT AND EQUIPMENT
Land and structures		343,527		342,122
Revenue equipment		885,949		896,020
Service, office, and other equipment		230,163		233,354
Software		154,749		151,068
Leasehold improvements		11,022		10,383
		1,625,410		1,632,947
Less allowances for depreciation and amortization		961,950		949,355
PROPERTY, PLANT AND EQUIPMENT, net		663,460		683,592
GOODWILL		88,320		88,320
INTANGIBLE ASSETS, net		57,873		58,832
OPERATING RIGHT-OF-USE ASSETS		73,324		68,470
DEFERRED INCOME TAXES		8,145		7,725
OTHER LONG-TERM ASSETS		73,703		79,866
TOTAL ASSETS	$	1,834,356	$	1,651,207
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	127,625	$	134,374
Income taxes payable		31		12
Accrued expenses		217,678		232,321
Current portion of long-term debt		56,977		57,305
Current portion of operating lease liabilities		20,542		20,265
TOTAL CURRENT LIABILITIES		422,853		444,277
LONG-TERM DEBT, less current portion		476,945		266,214
OPERATING LEASE LIABILITIES, less current portion		56,716		52,277
POSTRETIREMENT LIABILITIES, less current portion		20,411		20,294
OTHER LONG-TERM LIABILITIES		35,058		38,892
DEFERRED INCOME TAXES		63,167		66,210
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2020: 28,817,109 shares, 2019: 28,810,902 shares		288		288
Additional paid-in capital		336,064		333,943
Retained earnings		532,858		533,187
Treasury stock, at cost, 2020: 3,554,639 shares; 2019: 3,404,639 shares		(107,740)		(104,578)
Accumulated other comprehensive income (loss)		(2,264)		203
TOTAL STOCKHOLDERS’ EQUITY		759,206		763,043
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,834,356	$	1,651,207

See notes to consolidated financial statements.

3

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March 31
	2020		2019
	(Unaudited)
	(in thousands, except share and per share data)
REVENUES	$	701,399	$	711,839
OPERATING EXPENSES		693,580		703,248
OPERATING INCOME		7,819		8,591
OTHER INCOME (COSTS)
Interest and dividend income		1,375		1,478
Interest and other related financing costs		(2,947)		(2,882)
Other, net		(3,862)		(591)
		(5,434)		(1,995)
INCOME BEFORE INCOME TAXES		2,385		6,596
INCOME TAX PROVISION		483		1,708
NET INCOME	$	1,902	$	4,888
EARNINGS PER COMMON SHARE
Basic	$	0.07	$	0.19
Diluted	$	0.07	$	0.18
AVERAGE COMMON SHARES OUTSTANDING
Basic		25,390,377		25,570,415
Diluted		26,246,800		26,512,349
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
	2020		2019
	(Unaudited)
	(in thousands)
NET INCOME	$	1,902	$	4,888
OTHER COMPREHENSIVE INCOME (LOSS), net of tax
Pension and other postretirement benefit plans:
Net actuarial gain (loss), net of tax of: (2020 – $3; 2019 – $230)		(8)		661
Pension settlement expense, net of tax of: (2020 – $23; 2019 – $349)		66		1,007
Amortization of unrecognized net periodic benefit costs (credit), net of tax of: (2020 – $37; 2019 – $100)
Net actuarial (gain) loss		(108)		295
Prior service credit		—		(6)
Interest rate swap and foreign currency translation:
Change in unrealized loss on interest rate swap, net of tax of: (2020 – $352; 2019 – $118)		(997)		(332)
Change in foreign currency translation, net of tax of: (2020 – $502; 2019 – $79)		(1,420)		225
OTHER COMPREHENSIVE INCOME (LOSS), net of tax		(2,467)		1,850
TOTAL COMPREHENSIVE INCOME (LOSS)	$	(565)	$	6,738

See notes to consolidated financial statements.

5

ARCBEST CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

	Three Months Ended March 31, 2020
											Accumulated
				Additional							Other
	Common Stock			Paid-In		Retained		Treasury Stock			Comprehensive		Total
	Shares	Amount		Capital		Earnings		Shares	Amount		Income (Loss)		Equity
	(Unaudited)
	(in thousands)
Balance at December 31, 2019	28,811	$	288	$	333,943	$	533,187	3,405	$	(104,578)	$	203	$	763,043
Adjustments to beginning retained earnings for adoption of accounting standard (see Note A)							(198)							(198)
Balance at January 1, 2020	28,811		288		333,943		532,989	3,405		(104,578)		203		762,845
Net income							1,902							1,902
Other comprehensive income, net of tax												(2,467)		(2,467)
Issuance of common stock under share-based compensation plans	6
Tax effect of share-based compensation plans					(60)									(60)
Share-based compensation expense					2,181									2,181
Purchase of treasury stock								150		(3,162)				(3,162)
Dividends declared on common stock							(2,033)							(2,033)
Balance at March 31, 2020	28,817	$	288	$	336,064	$	532,858	3,555	$	(107,740)	$	(2,264)	$	759,206

	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

See notes to consolidated financial statements.

6

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
OPERATING ACTIVITIES
Net income	$	1,902	$	4,888
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		28,032		25,409
Amortization of intangibles		981		1,128
Pension settlement expense		89		1,356
Share-based compensation expense		2,181		2,058
Provision for losses on accounts receivable		1,383		112
Change in deferred income taxes		(2,815)		(584)
Gain on sale of property and equipment		(2,130)		(43)
Changes in operating assets and liabilities:
Receivables		3,874		3,931
Prepaid expenses		(3,429)		(5,760)
Other assets		5,800		(141)
Income taxes		2,949		(4,313)
Operating right-of-use assets and lease liabilities, net		(138)		40
Multiemployer pension fund withdrawal liability		(150)		(143)
Accounts payable, accrued expenses, and other liabilities		(15,400)		(31,309)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		23,129		(3,371)
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of financings		(6,738)		(15,543)
Proceeds from sale of property and equipment		4,692		1,039
Purchases of short-term investments		(73,973)		(13,790)
Proceeds from sale of short-term investments		12,210		4,998
Capitalization of internally developed software		(3,342)		(2,656)
NET CASH USED IN INVESTING ACTIVITIES		(67,151)		(25,952)
FINANCING ACTIVITIES
Borrowings under credit facilities		180,000		—
Borrowings under accounts receivable securitization program		45,000		—
Payments on long-term debt		(14,598)		(15,217)
Net change in book overdrafts		(10,869)		(2,524)
Payment of common stock dividends		(2,033)		(2,052)
Purchases of treasury stock		(3,162)		(2,663)
Payments for tax withheld on share-based compensation		(60)		(8)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		194,278		(22,464)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		150,256		(51,787)
Cash and cash equivalents at beginning of period		201,909		190,186
CASH AND CASH EQUIVALENTS CASH AT END OF PERIOD	$	352,165	$	138,399
NONCASH INVESTING ACTIVITIES
Accruals for equipment received	$	39	$	2,878
Lease liabilities arising from obtaining right-of-use assets	$	10,370	$	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 Corporation^™ (the “Company”) is the parent holding company of freight transportation and integrated logistics businesses providing innovative 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 70% of the Company’s total revenues before other revenues and intercompany eliminations for the three months ended March 31, 2020. As of March 2020, 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 2019 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. The Company considered the impact of the novel coronavirus (“COVID-19”) pandemic on the estimates and assumptions used and determined that there were no material adverse impacts on the Company’s results of operations or financial position as of and for the three months ended March 31, 2020. Given the uncertainties regarding the economic environment and the impact of the COVID-19 pandemic on our business, it is possible that these estimates and assumptions may materially change in future periods.

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 2019 Annual Report on Form 10-K. The following policies have been updated during the three months ended March 31, 2020 for the adoption of accounting standard updates disclosed within this Note.

Allowances: On January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments – Credit Losses, (“ASC Topic 326”), which replaces the incurred loss methodology model with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade receivables and other receivables.

The Company maintains allowances for credit losses (formerly known as the allowance for doubtful accounts) and revenue adjustments on its trade receivables. The Company estimates the allowance for credit losses based on historical write-offs, factors surrounding the credit risk of specific customers, and forecasts of future economic conditions. In order to gather information regarding these trends and factors, the Company performs ongoing credit evaluations of customers, an analysis of accounts receivable aging by business segment, and an analysis of future economic conditions at period end. The allowance for revenue adjustments is an estimate based on historical revenue adjustments and current information

8

regarding trends and business changes. Actual write-offs or adjustments could differ from the allowance estimates due to a number of factors, including future changes in the forecasted economic environment or new factors and risks surrounding a particular customer. Accounts receivable are written off when the accounts are turned over to a collection agency or when the accounts are determined to be uncollectible. Actual write-offs and adjustments are charged against the allowances for doubtful accounts and revenue adjustments. The allowance for credit losses on the Company’s trade accounts receivable totaled $2.6 million at March 31, 2020  and $1.8  million at December 31, 2019. There were no material write-offs charged against or increases to the allowance for credit losses during the three months ended March 31, 2020.  

Adopted Accounting Pronouncements

As previously discussed within Accounting Policies in this Note, effective January 1, 2020, the Company adopted ASC Topic 326, which replaces the incurred loss methodology model with an expected loss methodology referred to as the CECL methodology for the Company’s trade receivables and other receivables. The Company adopted ASC Topic 326 with the modified retrospective approach. Under this approach, results for reporting periods after January 1, 2020 are presented under ASC Topic 326 while prior period amounts continue to be reported in accordance with previously applicable accounting guidance. The Company recorded a decrease to retained earnings of $0.2 million as of January 1, 2020 for the cumulative effect of adopting ASC Topic 326.

On January 1, 2020 the Company adopted 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”) which was amended by the Financial Accounting Standards Board in August 2018. 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 were adopted on a prospective basis and did not have an impact on the Company’s consolidated financial statements.

On January 1, 2020 the Company adopted ASC Topic 820, Fair Value Measurement, which was amended to modify the disclosure requirements of fair value measurements, primarily impacting the disclosures for Level 3 fair value measurements. The amendment did not have an impact on the Company’s financial statement disclosures as of March 31, 2020.

The amendments to ASC Topic 848, Reference Rate Reform, (“ASC Topic 848”) are effective as of March 12, 2020 through December 31, 2022 and provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Company did not elect the optional expedients or apply the exceptions allowed by ASC Topic 848 during the three months ended March 31, 2020 and does not expect that the amendments, if elected, will have a significant impact on the Company’s consolidated financial statements. The Company’s revolving credit facility (“Credit Facility”) under its Third Amended and Restated Credit Agreement (“Credit Agreement”), accounts receivable securitization program, and interest rate swap agreements utilize interest rates based on LIBOR, which is expected to be phased out by the end of 2021. The Company’s Credit Facility and current interest rate swap agreement, which was amended on May 4, 2020 (see Note F), mature on October 1, 2024. The Credit Agreement provides for the use of an alternate rate of interest in accordance with the provisions of the agreement and the interest rate on the swap agreement will change to the rate in the Credit Agreement. Any changes to the terms of our borrowing arrangements which would allow for the use of an alternative to LIBOR in calculating the interest rate under such arrangements are anticipated to be effective in 2022 upon the Company’s agreement with the lenders as to the replacement reference rate.

Accounting Pronouncements Not Yet Adopted

ASC Topic 740, Income Taxes, was amended to simplify the accounting for income taxes to improve consistency of accounting methods and remove certain exceptions. The amendment is effective for the Company beginning January 1, 2021. The Company is currently assessing the impact this amendment will have on the consolidated financial statements and disclosures.

9

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

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
	2020		2019
	(in thousands)
Cash and cash equivalents
Cash deposits(1)	$	224,193	$	166,619
Variable rate demand notes(1)(2)		14,846		14,750
Money market funds(3)		113,126		20,540
Total cash and cash equivalents	$	352,165	$	201,909
Short-term investments
Certificates of deposit(1)	$	131,477	$	69,314
U.S. Treasury securities(4)		47,333		47,265
Total short-term investments	$	178,810	$	116,579

(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 increase in cash and cash equivalents and short-term investments from December 31, 2019 was due to borrowings  under the Company’s Credit Facility and accounts receivable securitization program, as further disclosed in Note F.

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, 2020 and December 31, 2019, cash, cash equivalents, and short-term investments totaling $245.9 million and $66.2 million, respectively, were neither FDIC insured nor direct obligations of the U.S. government.

10

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:

	March 31				December 31
	2020				2019
	(in thousands)
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Credit Facility(1)	$	250,000	$	250,000	$	70,000	$	70,000
Accounts receivable securitization borrowings(2)		85,000		85,000		40,000		40,000
Notes payable(3)		198,908		206,437		213,504		216,432
	$	533,908	$	541,437	$	323,504	$	326,432

(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).

11

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, 2020
			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)	$	113,126	$	113,126	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		2,539		2,539		—		—
	$	115,665	$	115,665	$	—	$	—
Liabilities:
Interest rate swaps(3)	$	1,912	$	—	$	1,912	$	—

	December 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)	$	20,540	$	20,540	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		2,427		2,427		—		—
	$	22,967	$	22,967	$	—	$	—
Liabilities:
Interest rate swaps(3)	$	563	$	—	$	563	$	—

(1) Included in cash and cash equivalents.

(2) Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities.

(3) Included in other long-term liabilities. The fair values of the interest rate swaps were determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are considered to be in Level 3 of the fair value hierarchy. The Company assessed Level 3 inputs as insignificant to the valuation at March 31, 2020 and December 31, 2019 and considers the interest rate swap valuations in Level 2 of the fair value hierarchy.

12

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 $87.7 million and $0.6 million reported in the ArcBest and FleetNet segments, respectively, for both March 31, 2020 and December 31, 2019.

Intangible assets consisted of the following:

		March 31, 2020						December 31, 2019
	Weighted-Average			Accumulated		Net				Accumulated		Net
	Amortization Period	Cost		Amortization		Value			Cost	Amortization		Value
	(in years)	(in thousands)						(in thousands)
Finite-lived intangible assets
Customer relationships	14	$	52,721	$	27,621	$	25,100	$	52,721	$	26,667	$	26,054
Other	11		1,315		842		473		1,294		816		478
	14		54,036		28,463		25,573		54,015		27,483		26,532
Indefinite-lived intangible assets
Trade name	N/A		32,300		N/A		32,300		32,300		N/A		32,300
Total intangible assets	N/A	$	86,336	$	28,463	$	57,873	$	86,315	$	27,483	$	58,832

The future amortization for intangible assets acquired through business acquisitions as of March 31, 2020 was as follows:

	Amortization of
	Intangible Assets
	(in thousands)
Remainder of 2020	$	2,930
2021		3,869
2022		3,842
2023		3,744
2024		3,695
Thereafter		7,493
Total amortization	$	25,573

Goodwill and indefinite-lived intangible assets are not amortized, but rather are evaluated for impairment annually or more frequently if indicators of impairment exist. Due to the impact of COVID-19 on business and freight levels, the Company considered several factors to consider if it was more likely than not that impairment of these assets existed as of March 31, 2020. In making this analysis, management considered current and forecasted business levels and estimated future cash flows over several years. Management’s assumptions include an expected economic recovery beginning in late 2020 with a more robust recovery in 2021. Based on our analysis, management determined it was more likely than not that goodwill and indefinite-lived intangible assets were not impaired as of March 31, 2020.

The evaluation of goodwill impairment requires management’s judgment and the use of estimates and assumptions to determine if indicators of impairment exist at an interim date. Assumptions require considerable judgment because changes in broad economic factors and industry factors can result in variable and volatile fair values. Changes in key estimates and assumptions that impact the fair value of the operations, including the impact of COVID-19 on the reporting units, could materially affect future analyses and result in material impairments of goodwill and indefinite-lived intangible assets.

NOTE D – INCOME TAXES

The effective tax rate was 20.3% and 25.9% for the three months ended March 31, 2020 and March 31, 2019, respectively. 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. Due to the uncertainty surrounding the impact of the COVID-19 pandemic, for the three months ended March 31, 2020, the Company calculated the tax provision based on the actual statutory tax rate as opposed to using an annual effective tax rate, because of the inability to provide a reliable estimate of ordinary income within a reasonable range or the tax effect of nondeductible expenses.

13

For the three months ended March 31, 2020, the difference between the Company’s effective tax rate and the federal statutory rate primarily resulted from state income taxes, nondeductible expenses, changes in the cash surrender value of life insurance, federal alternative fuel and research and development tax credits, changes in tax valuation allowances, and the reversal of an uncertain tax position. For the three months ended March 31, 2019, the difference between the Company’s effective tax rate and the federal statutory rate primarily resulted from state income taxes, nondeductible expenses, and changes in the cash surrender value of life insurance.

As of March 31, 2020, 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 March 31, 2020 and concluded that, other than for certain deferred tax assets related to foreign tax credit carryforwards, the assets did not exceed the amount for which realization is more likely than not. In making this determination, the Company considered the future reversal of existing taxable temporary differences, future taxable income, and tax planning strategies. Additionally, as a result of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted on March 27, 2020, net operating losses originating in the tax year including December 31, 2020 may be carried back five years to a period in which the Company had substantial taxable income. Valuation allowances for deferred tax assets totaled $0.9 million and $0.7 million at March 31, 2020 and December 31, 2019, respectively.

The Company had a reserve for uncertain tax positions of $0.9 million at December 31, 2019. The reserve was reversed in the first quarter of 2020 due to the expiration of the statute of limitations.

The Company paid foreign and state income taxes of $0.3 million during the three months ended March 31, 2020 and paid $6.6 million of federal, state, and foreign income taxes during the three months ended March 31, 2019. The Company received refunds of $0.4 million of federal income taxes and refunds of less than $0.1 million of state income taxes that were paid in prior years during the three months ended March 31, 2020 and 2019, respectively.

NOTE E – 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 components of operating lease expense were as follows:

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Operating lease expense	$	5,796	$	5,339
Variable lease expense		1,040		839
Sublease income		(92)		(67)
Total operating lease expense	$	6,744	$	6,111

The operating cash flows from operating lease activity were as follows:

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Noncash change in operating right-of-use assets	$	5,815	$	4,730
Change in operating lease liabilities		(5,953)		(4,690)
Operating right-use-of-assets and lease liabilities, net	$	(138)	$	40
Cash paid for amounts included in the measurement of operating lease liabilities	$	(5,925)	$	(5,290)

14

Maturities of operating lease liabilities at March 31, 2020 were as follows:

					Equipment
			Land and		and
	Total		Structures(1)		Other
	(in thousands)
Remainder of 2020	$	17,679	$	16,935	$	744
2021		18,426		18,145		281
2022		13,922		13,911		11
2023		10,459		10,459		—
2024		7,817		7,817		—
Thereafter		16,891		16,891		—
Total lease payments		85,194		84,158		1,036
Less imputed interest		(7,936)		(7,917)		(19)
Total	$	77,258	$	76,241	$	1,017

(1) Excludes future minimum payments for leases which were executed but had not yet commenced as of March 31, 2020 of $34.7 million and $5.7 million which will be paid over 12 and 9 years, respectively. The Company plans to take possession of these leased spaces in mid-2020.

NOTE F – 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 finance lease obligations related to the financing of revenue equipment (tractors and trailers used primarily in Asset-Based segment operations), certain other equipment, and software as follows:

	March 31		December 31
	2020		2019
	(in thousands)
Credit Facility (interest rate of 2.1%(1) at March 31, 2020)	$	250,000	$	70,000
Accounts receivable securitization borrowings (interest rate of 2.1% at March 31, 2020)		85,000		40,000
Notes payable (weighted-average interest rate of 3.3% at March 31, 2020)		198,908		213,504
Finance lease obligations (weighted-average interest rate of 3.3% at March 31, 2020)		14		15
		533,922		323,519
Less current portion		56,977		57,305
Long-term debt, less current portion	$	476,945	$	266,214

(1) The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.12% and 2.98% based on the margin of the Credit Facility as of March 31, 2020 and December 31, 2019, respectively.

15

Scheduled maturities of long-term debt obligations as of March 31, 2020 were as follows:

					Accounts
					Receivable
			Credit		Securitization		Notes		Finance Lease
	Total		Facility(1)		Program(1)		Payable		Obligations
	(in thousands)
Due in one year or less	$	68,124	$	4,233	$	1,245	$	62,639	$	7
Due after one year through two years		147,955		4,087		85,583		58,278		7
Due after two years through three years		51,217		4,414		—		46,803		—
Due after three years through four years		34,303		4,678		—		29,625		—
Due after four years through five years		266,658		252,430		—		14,228		—
Due after five years		—		—		—		—		—
Total payments		568,257		269,842		86,828		211,573		14
Less amounts representing interest		34,335		19,842		1,828		12,665		—
Long-term debt	$	533,922	$	250,000	$	85,000	$	198,908	$	14

(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.

Assets securing notes payable or held under finance leases were included in property, plant and equipment as follows:

	March 31		December 31
	2020		2019
	(in thousands)
Revenue equipment	$	264,884	$	265,315
Software		2,140		2,140
Service, office, and other equipment		26,344		26,344
Total assets securing notes payable or held under finance leases		293,368		293,799
Less accumulated depreciation and amortization(1)		81,672		71,405
Net assets securing notes payable or held under finance leases	$	211,696	$	222,394

(1) Amortization of assets held under finance leases and depreciation of assets securing notes payable are included in depreciation expense.

Financing Arrangements

Credit Facility

The Company has a revolving credit facility (the “Credit Facility”) under its Third Amended and Restated Credit Agreement (the “Credit Agreement”) with an initial maximum credit amount of $250.0 million, including a swing line facility in an aggregate amount of up to $25.0 million and a letter of credit sub-facility providing for the issuance of letters of credit up to an aggregate amount of $20.0 million. The Company may request additional revolving commitments or incremental term loans thereunder up to an aggregate amount of $125.0 million, subject to certain additional conditions as provided in the Credit Agreement. In March 2020, the Company borrowed an additional $180.0 million under the Credit Facility as a precautionary measure to preserve financial flexibility during the COVID-19 pandemic. As of March 31, 2020, the Company does not have any available borrowing capacity under the initial maximum credit amount of the Credit Facility.

Principal payments under the Credit Facility are due upon maturity of the facility on October 1, 2024; however, borrowings may be repaid, at the Company’s discretion, in whole or in part at any time, without penalty, subject to required notice periods and compliance with minimum prepayment amounts. Borrowings under the Credit Agreement can either be, at the Company’s election: (i) at an alternate base rate (as defined in the Credit Agreement) plus a spread; or (ii) at a Eurodollar rate (as defined in the Credit Agreement) plus a spread. The applicable spread is dependent upon the Company’s Adjusted Leverage Ratio (as defined in the Credit Agreement). The Credit Agreement contains conditions, representations and warranties, events of default, and indemnification provisions that are customary for financings of this type, including, but not limited to, a minimum interest coverage ratio, a maximum adjusted leverage ratio, and limitations on incurrence of debt, investments, liens on assets, certain sale and leaseback transactions, transactions with affiliates, mergers,

16

consolidations, purchases and sales of assets, and certain restricted payments. The leverage covenant under the Company’s Credit Agreement is based on a net debt calculation and consequently was not immediately impacted by the draw against the Credit Facility in March 2020. The Company was in compliance with the covenants under the Credit Agreement at March 31, 2020.

Interest Rate Swaps

The Company has an interest rate swap agreement with a $50.0 million notional amount which started on January 2, 2020 and will mature on June 30, 2022. The Company will receive floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 1.99% over the life of the agreement. The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.12% based on the margin of the Credit Facility as of March 31, 2020. The fair value of the interest rate swap of $1.9 million and $0.6 million was recorded in other long-term liabilities in the consolidated balance sheet at March 31, 2020 and December 31, 2019, respectively. The Company had a five-year interest rate swap agreement with a $50.0 million notional amount that matured on January 2, 2020 for which less than $0.1 million was recorded in other long-term liabilities in the consolidated balance sheet at December 31, 2019.

The unrealized gain or loss on the interest rate swap instruments was reported as a component of accumulated other comprehensive loss, net of tax, in stockholders’ equity at March 31, 2020 and December 31, 2019, and the change in the unrealized income or loss on the interest rate swaps for the three months ended March 31, 2020 and 2019 was reported in other comprehensive income (loss), net of tax, in the consolidated statements of comprehensive income. The interest rate swaps are subject to certain customary provisions that could allow the counterparty to request immediate settlement of the fair value liability or asset upon violation of any or all of the provisions. The Company was in compliance with all provisions of the interest rate swap agreements at March 31, 2020.

On May 4, 2020, the Company extended the term of its $50.0 million notional amount interest rate swap agreement from June 30, 2022 to October 1, 2024. The Company will receive floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 0.43% beginning on June 30, 2022 throughout the remaining term of the agreement. From June 30, 2022 to October 1, 2024, the extended interest rate swap agreement will effectively convert $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.56% based on the margin of the Credit Facility as of March 31, 2020.

Accounts Receivable Securitization Program

The Company’s accounts receivable securitization program, which matures on October 1, 2021, allows for cash proceeds of $125.0 million to be provided under the program and has an accordion feature allowing the Company to request additional borrowings up to $25.0 million, subject to certain conditions. Under this program, certain subsidiaries of the Company continuously sell a designated pool of trade accounts receivables to a wholly owned subsidiary which, in turn, may borrow funds on a revolving basis. This wholly owned consolidated subsidiary is a separate bankruptcy-remote entity, and its assets would be available only to satisfy the claims related to the lender’s interest in the trade accounts receivables. Borrowings under the accounts receivable securitization program bear interest based upon LIBOR, plus a margin, and an annual facility fee. The securitization agreement contains representations and warranties, affirmative and negative covenants, and events of default that are customary for financings of this type, including a maximum adjusted leverage ratio covenant. In March 2020, the Company borrowed an additional $45.0 million for a total of $85.0 million outstanding at March 31, 2020 under the program as a precautionary measure to preserve financial flexibility during the COVID-19 pandemic. The Company was in compliance with the covenants under the accounts receivable securitization program at March 31, 2020.

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 March 31, 2020, standby letters of credit of $12.0 million have been issued under the program, which reduced the available borrowing capacity to $28.0 million.

17

Letter of Credit Agreements and Surety Bond Programs

As of March 31, 2020, the Company had letters of credit outstanding of $12.6 million (including $12.0 million issued under the accounts receivable securitization program). The Company has programs in place with multiple surety companies for the issuance of surety bonds in support of its self-insurance program. As of March 31, 2020, surety bonds outstanding related to the self-insurance program totaled $62.3 million.

NOTE G – 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 March 31
	Nonunion Defined				Supplemental				Postretirement
	Benefit Pension Plan				Benefit Plan				Health Benefit Plan
	2020(1)		2019		2020		2019		2020(2)		2019
	(in thousands)
Service cost	$	—	$	—	$	—	$	—	$	47	$	80
Interest cost		—		318		3		10		144		303
Expected return on plan assets		—		(90)		—		—		—		—
Amortization of prior service credit		—		—		—		—		—		(9)
Pension settlement expense(3)		—		1,356		89		—		—		—
Amortization of net actuarial (gain) loss(4)		—		149		4		24		(149)		225
Net periodic benefit cost	$	—	$	1,733	$	96	$	34	$	42	$	599

(1) Termination of the nonunion defined benefit pension plan was completed in 2019 and the plan was liquidated as of December 31, 2019.

(2) Expense for the postretirement health benefit plan is lower for the three months ended March 31, 2020, compared to the same period of 2019, due to the impact of a lower cost prescription drug plan effective January 1, 2020.

(3) For the three months ended March 31, 2020, pension settlement expense for the supplemental benefit plan of $0.1 million (pre-tax), or $0.1 million (after-tax), was due to a $0.7 million benefit related to an officer retirement. For the three months ended March 31, 2019, pension settlement expense for the nonunion defined benefit pension plan of $1.4 million (pre-tax), or $1.0 million (after-tax), was related to $14.9 million of lump-sum distributions from the plan.

(4) The Company amortizes actuarial gains and losses over the average remaining active service period of the plan participants and does not use a corridor approach.

Multiemployer Plans

ABF Freight System, Inc. and certain other subsidiaries reported in the Company’s Asset-Based operating segment (“ABF Freight”) contribute to multiemployer pension and health and welfare plans, which have been established pursuant to the Taft-Hartley Act, to provide benefits for its contractual employees. ABF Freight’s contributions generally are based on the time worked by its contractual employees, in accordance with the 2018 ABF NMFA and other related supplemental agreements. ABF Freight recognizes as expense the contractually required contributions for each period and recognizes as a liability any contributions due and unpaid.

The 25 multiemployer pension plans to which ABF Freight contributes vary greatly in size and in funded status. Contribution obligations to these plans are generally specified in the 2018 ABF NMFA, which will remain in effect through June 30, 2023. The funding obligations to the pension plans are intended to satisfy the requirements imposed by the Pension Protection Act of 2006, which was permanently extended by the Multiemployer Pension Reform Act (the “Reform Act”) included in the Consolidated and Further Continuing Appropriations Act of 2015. Provisions of the Reform Act include, among others, providing qualifying plans the ability to self-correct funding issues, subject to various requirements and restrictions, including applying to the U.S. Department of the Treasury for the reduction of certain accrued benefits. Through the term of its current collective bargaining agreement, ABF Freight’s contribution obligations generally will be satisfied by making the specified contributions when due. However, the Company cannot determine with any certainty the contributions that will be required under future collective bargaining agreements for ABF Freight’s contractual employees.

18

If ABF Freight was to completely withdraw from certain multiemployer pension plans, under current law, ABF Freight would have material liabilities for its share of the unfunded vested liabilities of each such plan.

Approximately one half of ABF Freight’s total contributions to multiemployer pension plans are made to the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”). As set forth in the 2018 Annual Funding Notice for the Central States Pension Plan, the funded percentage of the plan was 27.2% as of January 1, 2018. ABF Freight received a Notice of Critical and Declining Status for the Central States Pension Plan dated March 29, 2019, in which the plan’s actuary certified that, as of January 1, 2019, the plan is in critical and declining status, as defined by the Reform Act. Critical and declining status is applicable to critical status plans that are projected to become insolvent anytime within the next 14 plan years, or if the plan is projected to become insolvent within the next 19 plan years and either the plan’s ratio of inactive participants to active participants exceeds two to one or the plan’s funded percentage is less than 80%.

As more fully described in Note I to the consolidated financial statements in Item 8 of the Company’s 2019 Annual Report on Form 10-K, ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018, which resulted in a related withdrawal liability for which ABF Freight recognized a one-time charge of $37.9 million (pre-tax) as of June 30, 2018. In accordance with the transition agreement, ABF Freight made an initial lump sum cash payment of $15.1 million in third quarter 2018 and the remainder of the withdrawal liability, which had an initial aggregate present value of $22.8 million, will be settled with monthly payments to the New England Pension Fund over a period of 23 years. In accordance with current tax law, these payments are deductible for income taxes when paid.

As of March 31, 2020, the outstanding withdrawal liability to the New England Pension Fund totaled $21.9 million, of which $0.6 million and $21.3 million was recorded in accrued expenses and other long-term liabilities, respectively. The fair value of the obligation was $27.0 million at March 31, 2020, which is equal to the present value of the future withdrawal liability payments, discounted at a 2.3% interest rate determined using the 20-year U.S. Treasury rate plus a spread (Level 2 of the fair value hierarchy).

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 2019 Annual Report on Form 10-K.

NOTE H – STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss) were as follows:

	March 31		December 31
	2020		2019
	(in thousands)
Pre-tax amounts:
Unrecognized net periodic benefit credit	$	2,831	$	2,898
Interest rate swap		(1,912)		(563)
Foreign currency translation		(3,997)		(2,075)
Total	$	(3,078)	$	260
After-tax amounts:
Unrecognized net periodic benefit credit	$	2,102	$	2,152
Interest rate swap		(1,413)		(416)
Foreign currency translation		(2,953)		(1,533)
Total	$	(2,264)	$	203

19

The following is a summary of the changes in accumulated other comprehensive income (loss), net of tax, by component for the three months ended March 31, 2020 and 2019:

			Unrecognized			Interest	Foreign
			Net Periodic			Rate	Currency
	Total		Benefit Costs			Swap	Translation
	(in thousands)
Balances at December 31, 2019	$	203	$	2,152	$	(416)	$	(1,533)
Other comprehensive loss before reclassifications		(2,425)		(8)		(997)		(1,420)
Amounts reclassified from accumulated other comprehensive income		(42)		(42)		—		—
Net current-period other comprehensive loss		(2,467)		(50)		(997)		(1,420)
Balances at March 31, 2020	$	(2,264)	$	2,102	$	(1,413)	$	(2,953)
Balances at December 31, 2018	$	(14,238)	$	(12,749)	$	591	$	(2,080)
Other comprehensive income (loss) before reclassifications		554		661		(332)		225
Amounts reclassified from accumulated other comprehensive loss		1,296		1,296		—		—
Net current-period other comprehensive income (loss)		1,850		1,957		(332)		225
Balances at March 31, 2019	$	(12,388)	$	(10,792)	$	259	$	(1,855)

The following is a summary of the significant reclassifications out of accumulated other comprehensive income (loss) by component:

	Unrecognized Net Periodic
	Benefit Credit (Costs)(1)(2)
	Three Months Ended March 31
	2020		2019
	(in thousands)
Amortization of net actuarial gain (loss)	$	145	$	(398)
Amortization of prior service credit		—		9
Pension settlement expense(3)		(89)		(1,356)
Total, pre-tax		56		(1,745)
Tax benefit (expense)		(14)		449
Total, net of tax	$	42	$	(1,296)

(1) Amounts in parentheses indicate increases in expense or loss.

(2) These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost as disclosed in Note G.

(3) For the three months ended March 31, 2020, pension settlement expense is related to the supplemental benefit plan (see Note G).

Dividends on Common Stock

The following table is a summary of dividends declared during the applicable quarter:

	2020				2019
	Per Share		Amount		Per Share		Amount
	(in thousands, except per share data)
First quarter	$	0.08	$	2,033	$	0.08	$	2,052

On May 1, 2020, the Company’s Board of Directors declared a dividend of $0.08 per share to stockholders of record as of May 15, 2020.

20

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, 2019, the Company had $13.2 million remaining under the program for repurchases of its common stock. During the three months ended March 31, 2020, the Company purchased 150,000 shares for an aggregate cost of $3.2 million, leaving $10.0 million available for repurchase of common stock under the program.

NOTE I – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended
	March 31
	2020		2019
	(in thousands, except share and per share data)
Basic
Numerator:
Net income	$	1,902	$	4,888
Effect of unvested restricted stock awards		(1)		(9)
Adjusted net income	$	1,901	$	4,879
Denominator:
Weighted-average shares		25,390,377		25,570,415
Earnings per common share	$	0.07	$	0.19
Diluted
Numerator:
Net income	$	1,902	$	4,888
Effect of unvested restricted stock awards		(1)		(9)
Adjusted net income	$	1,901	$	4,879
Denominator:
Weighted-average shares		25,390,377		25,570,415
Effect of dilutive securities		856,423		941,934
Adjusted weighted-average shares and assumed conversions		26,246,800		26,512,349
Earnings per common share	$	0.07	$	0.18

Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested RSUs that receive dividends, which are considered participating securities. Beginning with 2015 grants, the RSU agreements were modified to remove dividend rights; therefore, the RSUs granted subsequent to 2015 are not participating securities. For each of the three-month periods ended March 31, 2020 and 2019, 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.

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 began a pilot test program in early 2019 to improve freight handling at ABF Freight. The pilot utilizes patented handling equipment, software, and a patented process to load and unload trailers more rapidly and safely. During

21

the third quarter of 2019, the presentation of operating expenses was modified to present innovative technology costs associated with the pilot test program as a separate operating expense line item for the Asset-Based segment and for the summary of consolidated expenses by category. Previously, innovative technology costs incurred directly by the segment or allocated through shared services were categorized in individual segment expense line items. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on total consolidated expenses or total segment expenses as a result of the reclassifications.

Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, legal, and other company-wide services. Certain overhead costs are not attributable to any segment and remain unallocated in “Other and eliminations.” Included in unallocated costs are expenses related to investor relations, legal, the ArcBest Board of Directors, and certain technology investments. Shared services costs attributable to the operating segments are predominantly allocated based upon estimated and planned resource utilization-related metrics such as estimated shipment levels, number of pricing proposals, or number of personnel supported. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the operating segments. Management believes the methods used to allocate expenses are reasonable.

The Company’s reportable operating segments are impacted by seasonal fluctuations which affect tonnage, shipment or service event levels, and demand for services, as described below; therefore, operating results for the interim periods presented may not necessarily be indicative of the results for the fiscal year.

The Company’s reportable operating segments are as follows:

● The Asset-Based segment includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries. The segment operations include national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. In addition, the segment operations include freight transportation related to certain consumer household goods self-move services.

Freight shipments and operating costs of the Asset-Based segment can be adversely affected by inclement weather conditions. The second and third calendar quarters of each year usually have the highest tonnage levels while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, available capacity in the market, and the impact of other adverse external events or conditions, including the COVID-19 pandemic, may influence quarterly freight tonnage levels.

● The ArcBest segment includes the results of operations of the Company’s service offerings in ground expedite, truckload, truckload-dedicated, intermodal, household goods moving, managed transportation, warehousing and distribution, and international freight transportation for air, ocean, and ground.

ArcBest segment operations are influenced by seasonal fluctuations that impact customers’ supply chains. The second and third calendar quarters of each year usually have the highest shipment levels while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, available capacity in the market, and the impact of other adverse external events or conditions, including the COVID-19 pandemic, may impact quarterly business levels. Shipments of the ArcBest segment may decline during winter months because of post-holiday slowdowns, but expedite shipments can be subject to short-term increases depending on the impact of weather disruptions to customers’ supply chains. Plant shutdowns during summer months may affect shipments for automotive and manufacturing customers of the ArcBest segment, but severe weather events can result in higher demand for expedite services. Moving services of the ArcBest segment are impacted by seasonal fluctuations, generally resulting in higher business levels in the second and third quarters as the demand for moving services is typically stronger in the summer months.

● FleetNet includes the results of operations of FleetNet America, Inc. and certain other subsidiaries that provide roadside assistance and maintenance management services for commercial vehicles through a network of third-party service providers. FleetNet provides services to the Asset-Based and ArcBest segments. Approximately 20% and 14% of FleetNet’s revenues for the three months ended March 31, 2020 and 2019, respectively, are for services provided to the Asset-Based and ArcBest segments.

22

Emergency roadside service events of the FleetNet segment are favorably impacted by extreme weather conditions that affect commercial vehicle operations, and the segment’s results of operations will be influenced by seasonal variations in service event volume.

The Company’s other business activities and operating segments that are not reportable include ArcBest Corporation and certain other subsidiaries. Certain costs incurred by the parent holding company and the Company’s shared services subsidiary are allocated to the reporting segments. The Company eliminates intercompany transactions in consolidation. However, the information used by the Company’s management with respect to its reportable segments is before intersegment eliminations of revenues and expenses.

Further classifications of operations or revenues by geographic location are impracticable and, therefore, are not provided. The Company’s foreign operations are not significant.

The following tables reflect reportable operating segment information:

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
REVENUES
Asset-Based	$	515,713	$	506,079
ArcBest		164,775		173,204
FleetNet		52,439		53,259
Other and eliminations		(31,528)		(20,703)
Total consolidated revenues	$	701,399	$	711,839
OPERATING EXPENSES
Asset-Based
Salaries, wages, and benefits	$	283,838	$	280,276
Fuel, supplies, and expenses(1)		61,225		63,972
Operating taxes and licenses		12,794		12,398
Insurance		7,824		7,991
Communications and utilities(1)		4,711		4,616
Depreciation and amortization(1)		23,270		20,961
Rents and purchased transportation(1)		55,770		49,306
Shared services(1)		48,885		50,295
Gain on sale of property and equipment		(2,164)		(34)
Innovative technology costs(1)(2)		4,533		1,802
Other(1)		1,787		881
Total Asset-Based		502,473		492,464
ArcBest
Purchased transportation		137,182		140,105
Supplies and expenses		2,280		2,774
Depreciation and amortization		2,470		3,151
Shared services		21,727		23,031
Other		2,525		2,413
Total ArcBest		166,184		171,474
FleetNet		51,399		51,771
Other and eliminations		(26,476)		(12,461)
Total consolidated operating expenses	$	693,580	$	703,248

(1) As previously discussed in this Note, the presentation of Asset-Based segment expenses was modified in third quarter 2019 to present innovative technology costs as a separate operating expense line item. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation.

(2) Represents costs associated with the freight handling pilot test program at ABF Freight previously discussed in this Note.

23

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
OPERATING INCOME
Asset-Based	$	13,240	$	13,615
ArcBest		(1,409)		1,730
FleetNet		1,040		1,488
Other and eliminations		(5,052)		(8,242)
Total consolidated operating income	$	7,819	$	8,591
OTHER INCOME (COSTS)
Interest and dividend income	$	1,375	$	1,478
Interest and other related financing costs		(2,947)		(2,882)
Other, net(1)		(3,862)		(591)
Total other income (costs)		(5,434)		(1,995)
INCOME BEFORE INCOME TAXES	$	2,385	$	6,596

(1) Includes the components of net periodic benefit cost other than service cost related to the Company’s nonunion pension, SBP, and postretirement plans (see Note G) and proceeds and changes in cash surrender value of life insurance policies.

The following table presents operating expenses by category on a consolidated basis:

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
OPERATING EXPENSES
Salaries, wages, and benefits	$	344,946	$	343,668
Rents, purchased transportation, and other costs of services		217,028		221,025
Fuel, supplies, and expenses		71,773		79,336
Depreciation and amortization(1)		29,013		26,537
Other		30,820		32,682
	$	693,580	$	703,248

(1) Includes amortization of intangible assets.

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.

Environmental Matters

The Company’s subsidiaries store fuel for use in tractors and trucks in 56 underground tanks located in 16 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.

24

The Company has received notices from the Environmental Protection Agency and others that it has been identified as a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act, or other federal or state environmental statutes, at several hazardous waste sites. After investigating the Company’s involvement in waste disposal or waste generation at such sites, the Company has either agreed to de minimis settlements or determined that its obligations, other than those specifically accrued with respect to such sites, would involve immaterial monetary liability, although there can be no assurances in this regard.

At March 31, 2020 and December 31, 2019, 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 $0.7 million and $0.4 million, respectively. Amounts accrued reflect management’s best estimate of the future undiscounted exposure related to identified properties based on current environmental regulations, management’s experience with similar environmental matters, and testing performed at certain sites.

25

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

ArcBest Corporation^TM (together with its subsidiaries, the “Company,” “we,” “us,” and “our”) provides a comprehensive suite of freight transportation and integrated logistics services to deliver innovative solutions. Our operations are conducted through our three reportable operating segments: Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”); ArcBest, our asset-light logistics operation; and FleetNet^®. The ArcBest and the FleetNet reportable segments combined represent our Asset-Light operations. References to the Company, including “we,” “us,” and “our,” in this Quarterly Report on Form 10-Q are primarily to the Company and its subsidiaries on a consolidated basis.

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 results could differ from those estimates.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes the principal factors affecting our results of operations, liquidity and capital resources, and critical accounting policies. This discussion should be read in conjunction with the accompanying quarterly unaudited consolidated financial statements and the related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2019. Our 2019 Annual Report on Form 10-K includes additional information about significant accounting policies, practices, and the transactions that underlie our financial results, as well as a detailed discussion of the most significant risks and uncertainties to which our financial and operating results are subject.

COVID-19

Since the beginning of 2020, the worldwide spread of the novel coronavirus (“COVID-19”) has been rapid and unprecedented. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. Efforts to control the spread of COVID-19 have led governments and other authorities to impose restrictions which have resulted in business closures and disrupted global supply chains.

Business Impact

The impact of the COVID-19 pandemic and measures taken to prevent its spread began to impact our business during late March 2020. Our Asset-Based business was impacted by lower revenue and shipment levels in late March 2020 due to the COVID-19 pandemic. In late March 2020, the ArcBest segment began experiencing the impact of measures taken to slow the spread of COVID-19, including plant shutdowns of its automotive and manufacturing customers; however, the impact to the segment’s overall business was not significant for the first quarter of 2020.

Subsequent to March 31, 2020, the negative impact on demand for our services, including declines in shipment and tonnage levels, accelerated as the COVID-19 pandemic continued to disrupt businesses and the economy during April 2020. Asset-Based billed revenues decreased approximately 21% on a per-day basis and revenues of our ArcBest segment (ArcBest Asset-Light operations, excluding FleetNet) decreased approximately 17% on a per-day basis in April 2020, compared to April 2019, primarily due to the negative impact of the COVID-19 pandemic on demand for our services. Our April 2020 results are further discussed in the April business updates within the Asset-Based Segment Results and Asset-Light Results sections.

In addition to reductions in business levels, the altered marketplace environment has negatively impacted our freight mix and shipment profile. This negative impact is occurring during our typically stronger seasonal period of the year, which is the second and third quarters. The extent of the adverse effect of the COVID-19 pandemic on our business results is unknown and depends on future developments, including the severity and duration of the pandemic.

26

Business Response

Business Continuity & Our Employees and Customers

In March 2020, we began implementing certain business continuity processes focused on maintaining customer service levels while emphasizing the health, welfare, and safety of our employees and our customers. These processes include employee communication on proper hand washing, social distancing, mask wearing, and glove removal; increased cleaning and disinfecting measures; providing masks to certain employees throughout the Company; reduced nonessential travel and in-person meetings, including meetings with customers; remote work arrangements for many personnel; health screening questionnaires for personnel working onsite; health screening procedures for critical customer visitors; and promotion of social distancing to every extent possible, including between employees and with customers, as recommended by the Centers for Disease Control and Prevention.

Financial Position and Cash Preservation

On March 26, 2020, we drew down the $180.0 million remaining available borrowing capacity under the initial maximum credit amount of our revolving credit facility and borrowed $45.0 million under our accounts receivable securitization program. These borrowings were a proactive measure to increase our cash position and preserve financial flexibility in consideration of general economic and financial market uncertainty resulting from the COVID-19 outbreak. These funds supplement our already strong cash and short-term investments position, which totaled $531.0 million at March 31, 2020.

We lowered our planned capital expenditures for the current year by 30%, including a reduction in revenue equipment purchases of $18.0 million. Total net capital expenditures for 2020 are now expected to be in a range of $95.0 million to $105.0 million. Considering the changes in projected capital expenditures for 2020, depreciation and amortization for the year is now estimated to be approximately $110.0 million.

In April 2020, we began taking various actions to preserve cash and lower costs to mitigate the operating and financial impact of the COVID-19 pandemic including a 15% reduction in the salaries of officers and nonunion employees and similar compensation adjustments for hourly nonunion employees; a 15% reduction in fees paid to members and committee chairpersons of ArcBest’s Board of Directors; implementation of a hiring freeze; suspension of the employer match on our nonunion 401(k) plan; and reduction of advertising, training, travel, and other costs to better align with current business levels. We anticipate that the expense reduction associated with these compensation and other cost reductions will be in a range of $15 million to $20 million in second quarter 2020, versus second quarter 2019, provided the measures are maintained throughout second quarter 2020.

In addition, we made operational changes in the ABF Freight^® network designed to reduce costs, including workforce reductions to better align resources with business levels. Our cost reductions may not directly correspond to significant changes in business levels and there can be no assurance that the impact of the COVID-19 pandemic will not have a material adverse effect on our operating results.

Risk Factors

As previously announced in our Current Report on Form 8-K filed on April 7, 2020, in light of the COVID-19 pandemic, we supplemented our risk factors with the following risk factor:

The widespread outbreak of an illness or any other communicable disease, including the effects of pandemics, or any other public health crisis, as well as regulatory measures implemented in response to such events, could adversely affect our business, results of operations, financial condition, and cash flows.

In this Quarterly Report on Form 10-Q, we are also supplementing our risk factors with the new risk factor set forth below:

We, or the third parties upon which we depend to provide services for us, may be adversely affected by external events from which our business continuity plans may not adequately protect us.

27

Our new risk factors are fully described in Part II, Item 1A of this Quarterly Report on Form 10-Q. These risk factors should be read in conjunction with the risk factors within “Item 1A. Risk Factors” in our 2019 Annual Report on Form 10-K, including our description of risks related to economic conditions and uncertainties, within the risk factor titled “Our business is cyclical in nature, and we are subject to general economic factors and instability in financial and credit markets that are largely beyond our control, any of which could adversely affect our business, financial condition, and results of operations.”

Accounting Estimates

In accordance with generally accepted accounting principles, we use projected financial information to determine certain accounting estimates and the values of certain assets included in our consolidated financial statements. As of March 31, 2020, we evaluated our goodwill, intangible assets, operating assets, and deferred tax assets for indicators of impairment and challenged our accounting estimates considering the current economic conditions and lower expected business levels. Certain of these assessments are discussed in the paragraphs below. Given the uncertainties regarding the economic environment and the impact of the COVID-19 pandemic on our business, there can be no assurance that our estimates and assumptions made for purposes of impairment evaluations and accounting estimates will prove to be accurate.

Goodwill and Intangible Asset Impairment Consideration

We have assessed impairment indicators to determine if our asset balances, including goodwill and intangible assets which totaled $146.2 million at March 31, 2020, should be written down based on currently available information. While future impacts of COVID-19 are difficult to forecast, we expect to generate cash flows subsequent to March 31, 2020 which would continue to support the fair value in excess of carrying value for our reporting units and indefinite-life intangible assets. We have determined there have not been any indicators of impairment that would, more likely than not, reduce the fair value of our reporting units or trade name intangible asset below their carrying values and that would require interim tests of impairment. Due to the impact of COVID-19 on business and freight levels, the Company considered several factors to consider if it was more likely than not that impairment of these assets existed as of March 31, 2020. In making this analysis, management considered current and forecasted business levels and estimated future cash flows over several years. Management’s assumptions include an expected economic recovery beginning in late 2020 with a more robust recovery in 2021. Based on our analysis, we determined it was more likely than not that goodwill and indefinite-lived intangible assets were not impaired as of March 31, 2020.

As of March 31, 2020, we believe the values of the intangible assets and goodwill as reported in our consolidated financial statements are appropriate; however, we will continually monitor performance measures and events for any significant changes in impairment indicators. Significant declines in business levels or other changes in cash flow assumptions, including the impact of the COVID-19 pandemic, or other factors that negatively impact the fair value of the operations of our reporting units could result in future impairment and a resulting non-cash write-off of a significant portion of the goodwill and indefinite-lived intangible assets of our ArcBest segment, which would have an adverse effect on our financial condition and operating results.

Allowances on Accounts Receivable

As further described in the Critical Accounting Policies section, we estimate our allowance for credit losses on accounts receivable based on historical trends, factors surrounding the credit risk of specific customers, and forecasts of future economic conditions. We continually update the data we use to make these estimates so as to reflect the most recent trends, factors, forecasts, and other information available; however, actual write-offs or adjustments could differ from our allowance estimates due to a number of factors, including changes in the overall economic environment or factors and risks surrounding a particular customer, both of which have a higher degree of uncertainty at this time due to the impact of the COVID-19 pandemic.

28

Results of Operations

Consolidated Results

	Three Months Ended
	March 31
	2020		2019
	(in thousands, except per share data)
REVENUES
Asset-Based	$	515,713	$	506,079
ArcBest		164,775		173,204
FleetNet		52,439		53,259
Total Asset-Light		217,214		226,463
Other and eliminations		(31,528)		(20,703)
Total consolidated revenues	$	701,399	$	711,839
OPERATING INCOME
Asset-Based	$	13,240	$	13,615
ArcBest		(1,409)		1,730
FleetNet		1,040		1,488
Total Asset-Light		(369)		3,218
Other and eliminations		(5,052)		(8,242)
Total consolidated operating income	$	7,819	$	8,591
NET INCOME	$	1,902	$	4,888
DILUTED EARNINGS PER SHARE	$	0.07	$	0.18

Our consolidated revenues, which totaled $701.4 million for the three months ended March 31, 2020, decreased 1.5% compared to the same prior-year period. The year-over-year decrease in consolidated revenues reflects a 4.1% decrease in revenues of our Asset-Light operations (representing the combined operations of our ArcBest and FleetNet segments), partially offset by an 1.9% increase in our Asset-Based revenues, compared to the same prior-year period. The higher elimination of revenues reported in the “Other and eliminations” line of consolidated revenues for the three months ended March 31, 2020, compared to the same period of 2019, includes the impact of increased intersegment business levels among our operating segments, reflecting continued integration of our logistics services.

Our Asset-Based revenue growth reflects a 4.6% increase in tonnage per day with one additional business day in the current year quarter, partially offset by a 4.3% decline in billed revenue per hundredweight, including fuel surcharges, for the three-month period ended March 31, 2020, versus the same period of 2019. Asset-Based revenues were impacted by lower revenue and business levels in late March 2020 due to the COVID-19 pandemic. The decline in revenues of our Asset-Light operations for the three months ended March 31, 2020, compared to the same period of 2019, is primarily due to a 9.8% decline in shipments per day and a 3.3% decrease in revenue per shipment for the ArcBest segment, associated with excess available capacity in the truckload market and reduced demand for expedite services, and a decline in total service event volume for the FleetNet segment. On a combined basis, the Asset-Light operating segments generated approximately 30% of our total revenues before other revenues and intercompany eliminations for the three months ended March 31, 2020.

29

For the three months ended March 31, 2020, consolidated operating income totaled $7.8 million, compared to $8.6 million for the same period of 2019. In addition to the results of our operating segments (further described within the Asset-Based Segment Results and the Asset-Light Results sections of MD&A), the year-over-year comparisons of consolidated operating results were impacted by investments in innovative technology, as described in the following paragraphs, and lower costs for certain nonunion fringe benefits. For the three months ended March 31, 2020, compared to the same prior-year period, expenses for certain nonunion performance-based incentive plans, including long-term incentive plans impacted by shareholder returns relative to peers, decreased $2.6 million, and costs related to our defined contribution plan decreased $1.1 million.

Innovative technology costs related to the freight handling pilot test program at ABF Freight impacted consolidated results by $4.6 million (pre-tax), or $3.6 million (after-tax) and $0.14 per diluted share, for the three months ended March 31, 2020, compared to $2.8 million (pre-tax), or $2.1 million (after-tax) and $0.08 per diluted share, for the same period of 2019. The freight handling pilot test program at ABF Freight is discussed in the Asset-Based Operating Income section of Asset-Based Segment Results within Asset-Based Operations.

The loss reported in the “Other and eliminations” line, which totaled $5.1 million for the three months ended March 31, 2020, compared to $8.2 million for the same period of 2019, includes expenses related to investments to develop and design various ArcBest technology and innovations as well as expenses related to shared services for the delivery of comprehensive transportation and logistics services to ArcBest’s customers. The $3.1 million decrease in the loss reported in “Other and eliminations” in first quarter 2020, compared to first quarter 2019, reflects lower technology costs and reduced personnel and benefit expenses. As a result of our ongoing investments in technology, including the design and development of digital business platforms, and other corporate costs, we expect the loss reported in “Other and eliminations” for second quarter 2020 to approximate $4.0 million and to be approximately $20.0 million for full year 2020.

In addition to the above items, consolidated net income and earnings per share was impacted by changes in the cash surrender value of variable life insurance policies and nonunion defined benefit pension expense, including settlement charges, both of which are reported below the operating income line in the consolidated statements of operations. A portion of our variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. Changes in the cash surrender value of life insurance policies decreased net income by $3.8 million, or $0.14 per diluted share, for the three-month period ended March 31, 2020, compared to an increase to net income of $1.6 million, or $0.06 to diluted earnings per share, for the same prior-year period. Consolidated after-tax pension expense, including settlement charges, recognized for the nonunion defined benefit pension plan totaled $1.3 million, or $0.05 per diluted share, for the three months ended March 31, 2019, with no comparable expense for the three months ended March 31, 2020 as termination of the nonunion defined benefit pension plan was completed as of December 31, 2019.

Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”)

We report our financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures and ratios, such as Adjusted EBITDA, utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. Accordingly, using these measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management's opinion, do not reflect our core operating performance. Management uses Adjusted EBITDA as a key measure of performance and for business planning. The measure is particularly meaningful for analysis of our operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light businesses, which are significant expenses resulting from strategic decisions rather than core daily operations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our Third Amended and Restated Credit Agreement (see Note F to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q). Other companies may calculate Adjusted EBITDA differently; therefore, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Adjusted EBITDA should not be construed as a better measurement than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP.

30

Consolidated Adjusted EBITDA

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
Net income	$	1,902	$	4,888
Interest and other related financing costs		2,947		2,882
Income tax provision		483		1,708
Depreciation and amortization		29,013		26,537
Amortization of share-based compensation		2,181		2,058
Amortization of net actuarial losses of benefit plans and pension settlement expense(1)		(56)		1,754
Consolidated Adjusted EBITDA	$	36,470	$	39,827

(1) The three months ended March 31, 2020 includes pre-tax pension settlement expense of $0.1 million related to the Company’s supplemental benefit plan. The three months ended March 31, 2019 includes pre-tax pension settlement expense of $1.4 million related to the Company’s nonunion defined benefit pension plan for which plan termination was completed as of December 31, 2019.

Asset-Based Operations

Asset-Based Segment Overview

The Asset-Based segment consists of ABF Freight System, Inc., a wholly owned subsidiary of ArcBest Corporation, and certain other subsidiaries (“ABF Freight”). Our Asset-Based operations are affected by general economic conditions, as well as a number of other competitive factors that are more fully described in Item 1 (Business) and in Item 1A (Risk Factors) of Part I of our 2019 Annual Report on Form 10-K. The key indicators necessary to understand the operating results of our Asset-Based segment, which are more fully described in the Asset-Based Segment Overview within the Asset-Based Operations section of Results of Operations in Item 7 (MD&A) of Part II of our 2019 Annual Report on Form 10-K, are outlined below. These key indicators are used by management to evaluate segment operating performance and measure the effectiveness of strategic initiatives in the results of our Asset-Based segment. We quantify certain key indictors using key operating statistics which are important measures in analyzing segment operating results from period to period. These statistics are defined within the key indicators below and referred to throughout the discussion of results of our Asset-Based segment:

● Overall customer demand for Asset-Based transportation services, including the impact of economic factors.

● Volume of transportation services provided and processed through our network which influences operating leverage as the level of tonnage and number of shipments vary, primarily measured by:

Pounds or Tonnage – total weight of shipments processed during the period in U.S. pounds or U.S. tons.

Pounds per day or Tonnage per day (average daily shipment weight) – pounds or tonnage divided by the number of workdays in the period.

Shipments per day – total number of shipments moving through the Asset-Based freight network during the period divided by the number of workdays in the period.

Pounds per shipment (weight per shipment) – total pounds divided by the number of shipments during the period.

Average length of haul (miles) – total miles driven divided by the total number of shipments during the period.

31

● Prices obtained for services, including fuel surcharges, primarily measured by:

Billed revenue per hundredweight, including fuel surcharges (yield) – revenue per every 100 pounds of shipment weight, including surcharges related to fuel, systematically calculated as shipments are processed in the Asset-Based freight network. Revenue for undelivered freight is deferred for financial statement purposes in accordance with the Company’s revenue recognition policy. Billed revenue used for calculating revenue per hundredweight measurements is not adjusted for the portion of revenue deferred for financial statement purposes.

● Ability to manage cost structure, primarily in the area of salaries, wages, and benefits (“labor”), with the total cost structure primarily measured by:

Operating ratio – the percent of operating expenses to revenue levels.

We also quantify certain key operating statistics which are used by management to evaluate productivity of operations within the Asset-Based freight network and to measure the effectiveness of strategic initiatives to manage the segment’s cost structure from period to period. These measures are defined below and further discussed in the Asset-Based Operating Expenses section within Asset-Based Segment Results:

● Shipments per DSY hour – total shipments divided by dock, street, and yard (“DSY”) hour to measure labor efficiency in the segment’s local operations.

● Pounds per mile – total pounds divided by total miles driven during the period used to measure labor efficiency of linehaul operations, although this metric is influenced by other factors including freight density, loading efficiency, average length of haul, and the degree to which purchased transportation (including rail service) is used.

Other companies within our industry may present different key performance indicators or operating statistics, or they may calculate their measures differently; therefore, our key performance indicators or operating statistics may not be comparable to similarly titled measures of other companies. Key performance indicators or operating statistics should be viewed in addition to, and not as an alternative for, our reported results. Our key performance indicators or operating statistics should not be construed as better measurements of our results than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP.

As of March 2020, approximately 82% of our Asset-Based segment’s employees were covered under the ABF National Master Freight Agreement (the “2018 ABF NMFA”), the collective bargaining agreement with the International Brotherhood of Teamsters (the “IBT”), which will remain in effect through June 30, 2023. Under the 2018 ABF NMFA, the contractual wage and benefits costs, including the ratification bonuses and vacation restoration, are estimated to increase approximately 2.0% on a compounded annual basis through the end of the agreement. Profit-sharing bonuses based on the Asset-Based segment’s annual operating ratios for any full calendar year under the contract represent an additional increase in costs under the 2018 ABF NMFA.

32

Asset-Based Segment Results

The following table sets forth a summary of operating expenses and operating income as a percentage of revenue for the Asset-Based segment:

	Three Months Ended
	March 31
	2020		2019
Asset-Based Operating Expenses (Operating Ratio)
Salaries, wages, and benefits	55.0	%	55.4	%
Fuel, supplies, and expenses(1)	11.9		12.7
Operating taxes and licenses	2.5		2.4
Insurance	1.5		1.6
Communications and utilities(1)	0.9		0.9
Depreciation and amortization(1)	4.5		4.1
Rents and purchased transportation(1)	10.8		9.7
Shared services(1)	9.5		9.9
Gain on sale of property and equipment	(0.4)		—
Innovative technology costs(1)(2)	0.9		0.4
Other(1)	0.3		0.2
	97.4	%	97.3	%
Asset-Based Operating Income	2.6	%	2.7	%

(1) Beginning in third quarter 2019, the presentation of Asset-Based segment operating expenses was modified to present innovative technology costs as a separate operating expense line item. Previously, innovative technology costs incurred directly by the segment or allocated through shared services were categorized in individual segment expense line items. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on the segment’s total expenses as a result of the reclassifications. See Note J to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for disclosure of the expense category reclassifications.

(2) Represents costs associated with the freight handling pilot test program at ABF Freight.

The following table provides a comparison of key operating statistics for the Asset-Based segment, as previously defined in the Asset-Based Overview:

	Three Months Ended
	March 31
	2020		2019		% Change
Workdays(1)		64.0		63.0
Billed revenue per hundredweight, including fuel surcharges	$	33.16	$	34.66	(4.3)	%
Pounds		1,552,936,297		1,460,818,989	6.3	%
Pounds per day		24,264,630		23,187,603	4.6	%
Shipments per day		18,803		19,219	(2.2)	%
Shipments per DSY hour		0.439		0.434	1.2	%
Pounds per shipment		1,290		1,207	6.9	%
Pounds per mile		19.87		19.33	2.8	%
Average length of haul (miles)		1,042		1,023	1.9	%

(1) Workdays represent the number of operating days during the period after adjusting for holidays and weekends.

Asset-Based Revenues

Asset-Based segment revenues for the three months ended March 31, 2020 totaled $515.7 million, compared to $506.1 million for the same period of 2019. Billed revenue (as described in the Asset-Based Segment Overview) was relatively flat on a per-day basis for the three months ended March 31, 2020, compared to the same prior-year period, primarily reflecting a 4.6% increase in tonnage per day, offset by a 4.3% decrease in total billed revenue per hundredweight, including fuel surcharges. The number of workdays was greater by one day in first quarter 2020, versus first quarter 2019.

33

The 4.6% increase in tonnage per day for the three months ended March 31, 2020, compared to the same period of 2019, reflects a low-single-digit percentage increase in LTL-rated tonnage and a double-digit percentage increase in truckload-rated spot shipments moving in the Asset-Based network. Tonnage comparisons with the previous year have been positively impacted by initiatives to fill available Asset-Based equipment capacity with spot truckload-rated shipments and LTL-rated transactional shipments. These larger-sized shipments contributed to the 6.9% increase in total weight per shipment, including a 3.6% increase in weight per shipment on LTL-rated tonnage for the three months ended March 31, 2020, compared to the same period of 2019. The increase in tonnage per day for the three months ended March 31, 2020 was partially offset by a 2.2% decrease in total shipments per day, primarily reflecting the impact of softer economic conditions in the industrial and manufacturing sectors. In late March 2020, the Asset-Based segment also began to experience reductions in shipments related to the impact of COVID-19; however, the effect of the pandemic on the segment’s business was not significant for the overall first quarter of 2020.

The 4.3% decrease in total billed revenue per hundredweight reflects lower fuel surcharge revenues and a decrease in billed revenue per hundredweight on truckload-rated spot shipments moving in the Asset-Based network for the three months ended March 31, 2020, compared to the same period of 2019. Excluding fuel surcharges, billed revenue per hundredweight on LTL-rated freight increased slightly for the three months ended March 31, 2020, compared to the same prior-year period. Changes in freight mix negatively impacted total billed revenue per hundredweight for the three months ended March 31, 2020, compared to the same period of 2019, due to the effect of a higher number of heavier transactional LTL-rated shipments. The year-over-year decrease in total billed revenue per hundredweight, including fuel surcharges, was also impacted by comparison to solid pricing results for the three months ended March 31, 2019, when total billed revenue per hundredweight increased 8.0% over the same period of 2018. However, pricing on ABF Freight’s traditional published and contractual business reflected solid increases in the midst of a rational pricing environment in the marketplace. The Asset-Based segment implemented nominal general rate increases on its LTL base rate tariffs of 5.9% effective February 24, 2020 and February 4, 2019, although the rate changes vary by lane and shipment characteristics. Prices on accounts subject to deferred pricing agreements and annually negotiated contracts which were renewed during the three months ended March 31, 2020 increased approximately 4.3%, compared to the same period of 2019.

The Asset-Based segment’s average nominal fuel surcharge rate for the three months ended March 31, 2020 decreased approximately 60 basis points from the same period in 2019. Fuel prices have declined significantly subsequent to March 31, 2020, as described in the discussion of the segment’s April 2020 results below. During periods of changing diesel fuel prices, the fuel surcharge and associated direct diesel fuel costs also vary by different degrees. Depending upon the rates of these changes and the impact on costs in other fuel- and energy-related areas, operating margins could be impacted. Whether fuel prices fluctuate or remain constant, operating results may be adversely affected if competitive pressures limit our ability to recover fuel surcharges. In periods of declining fuel prices, fuel surcharge percentages also decrease, which negatively impacts the total billed revenue per hundredweight measure and, consequently, revenues, and the revenue decline may be disproportionate to our fuel costs. The segment’s operating results will continue to be impacted by further changes in fuel prices and the related fuel surcharges.

Asset-Based Segment — April 2020

Asset-Based billed revenues for the month of April 2020 decreased approximately 21% on a per-day basis in April 2020, compared to April 2019, primarily due to the negative impact of the COVID-19 pandemic on demand for our services. The revenue decline reflects a 14% decrease in average daily total tonnage and a 7.5% decline in total billed revenue per hundredweight, including fuel surcharges, in April 2020, compared to April 2019.

In April 2020, LTL-rated tonnage and truckload-rated spot shipments moving in the Asset-Based network both decreased by double-digit percentages, compared to the same prior-year period. Total shipments per day decreased 16% in April 2020, compared to April 2019. Total weight per shipment increased 2% in April 2020, with the weight per shipment on LTL-rated shipments up approximately 4%, versus the same prior-year period, reflecting the impact of a higher number of heavier transactional LTL-rated shipments.

34

The decrease in total billed revenue per hundredweight reflects lower fuel surcharge revenues, a decrease in billed revenue per hundredweight on truckload-rated spot shipments moving in the Asset-Based network, and a mid-single-digit decline in revenue per hundredweight, excluding fuel surcharges, on LTL-rated shipments, compared to the same period of 2019. Although the pricing environment in April 2020 was comparable with previous quarters, a higher number of heavier transactional LTL-rated shipments has continued to impact yield metrics. These transactional shipments utilize available trailer space, that would otherwise be moving empty, while improving operational metrics in the Asset-Based network. The year-over-year decrease in total billed revenue per hundredweight in April 2020 is also impacted by comparison to solid pricing results in the same period of 2019, when total billed revenue per hundredweight increased 5.6% over the same period of 2018. Asset-Based revenues for April 2020, compared to 2019, were negatively impacted by lower fuel surcharge revenue due to an approximate 350 basis point decline in the nominal fuel surcharge rate, while total fuel costs were also lower. Pricing on traditional LTL published business, excluding fuel surcharges, improved compared to April 2019 and sequentially compared to March 2020. In addition, the average increases on deferred pricing agreements and annually negotiated contracts which were renewed during April 2020 were comparable with the those obtained in first quarter 2020.

Current economic conditions, including the effects of the COVID-19 pandemic will continue to impact the Asset-Based segment’s tonnage levels and the prices it receives for its services and, as such, there can be no assurance that the Asset-Based segment will maintain or achieve improvements in its current operating results. The severity and duration of the decline in demand for our services due to the impact of the COVID-19 pandemic and the resulting effects on the economy is unknown. Our tonnage levels and the pricing we receive for our Asset-Based services may remain at significantly reduced levels. Furthermore, the competitive environment could limit the Asset-Based segment from securing adequate increases in base LTL freight rates and could limit the amount of fuel surcharge revenue recovered in future periods.

Historically, the second quarter operating ratio seasonally improves versus the first quarter. However, due to the impact of the COVID-19 pandemic, the 2020 sequential operating ratio comparison for second quarter versus first quarter is not currently expected to be comparable to historic trends and may deteriorate on a sequential basis, depending on business levels through June 2020.

During April 2020, we have taken cost reduction actions to mitigate the operating and financial impact of the COVID-19 pandemic. These actions are discussed within the COVID-19 Business Response of the General section at the beginning of MD&A.

Asset-Based Operating Income

The Asset-Based segment generated operating income of $13.2 million for the three months ended March 31, 2020, compared to $13.6 million for the same period of 2019. The Asset-Based segment operating ratio increased by 0.1 percentage points for the three months ended March 31, 2020, over the same prior-year period.

As previously announced in our Current Report on Form 8-K dated October 22, 2019 and disclosed in our 2019 Annual Report on Form 10-K, ArcBest Technologies, our wholly owned subsidiary which is focused on the advancement of supply chain execution technologies, began a pilot test program (the “pilot”) in early 2019 to improve freight handling at ABF Freight. The pilot is in the early stages in a limited number of locations. ABF Freight has leased new facilities in the test pilot regions in Indiana and also at a new Kansas City distribution center location expected to open in late-summer 2020. While ArcBest believes the pilot has potential to provide safer and improved freight handling, a number of factors will be involved in determining proof of concept and there can be no assurances that pilot testing will be successful or expand beyond current testing locations.

Innovative technology costs related to the freight handling pilot test program at ABF Freight impacted operating results of the Asset-Based segment by $4.5 million and $1.8 million for the three months ended March 31, 2020 and 2019, respectively. We anticipate innovative technology costs associated with the pilot to impact our Asset-Based operating expenses by approximately $2 million more in second quarter 2020 than in second quarter 2019.

The segment’s operating ratio was also impacted by changes in operating expenses as discussed in the following paragraphs.

35

Asset-Based Operating Expenses

Labor costs, which are reported in operating expenses as salaries, wages, and benefits, amounted to 55.0% and 55.4% of Asset-Based segment revenues for the three-month period ended March 31, 2020 and 2019, respectively. The decrease in salaries, wages, and benefits as a percentage of revenue was influenced by the effect of higher revenues, as a portion of operating costs are fixed in nature and decrease as a percent of revenue with increases in revenue levels. Salaries, wages, and benefits increased $3.6 million for the three months ended March 31, 2020, compared to the same period of 2019, primarily reflecting year-over-year increases in contractual wage and benefit contribution rates under the 2018 ABF NMFA, partially offset by the impact on labor costs of managing labor hours to the lower shipment levels during the first quarter of 2020, and increased utilization of rail service and purchased transportation. The contractual wage rate under the 2018 ABF NMFA increased 1.4% effective July 1, 2019, and the average health, welfare, and pension benefit contribution rate increased approximately 2.2% effective primarily on August 1, 2019. Salaries, wages, and benefits costs for the three months ended March 31, 2020, compared to the same period of 2019, were also impacted by an increase in workers’ compensation expense of $1.1 million, which primarily reflects unfavorable claims experience compared to the prior-year period.

Although the Asset-Based segment manages costs with shipment levels, portions of salaries, wages, and benefits are fixed in nature and the adjustments which would otherwise be necessary to align the labor cost structure throughout the system to corresponding tonnage and shipment levels are limited as the segment strives to maintain customer service. A higher number of heavier transactional LTL-rated shipments in the first quarter of 2020 contributed to improved operational metrics in the Asset-Based network, compared to the same period of 2019, as these transactional shipments utilize available trailer space that would otherwise be moving empty. The first quarter 2020 improvement in shipments per DSY hour of 1.2%, compared to first quarter 2019, reflects efforts to manage costs with shipment levels. Pounds per mile increased 2.8% for the three months ended March 31, 2020, compared to the same period of 2019, reflecting freight profile effects, including increased weight per shipment and longer length of haul. In March 2020, productivity measures also benefited from less congested roadways as a result of many states issuing “shelter-in-place” orders for non-essential workers.

Fuel, supplies, and expenses as a percentage of revenue decreased 0.8 percentage points for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to lower fuel costs as the Asset-Based segment’s average fuel price per gallon (excluding taxes) decreased approximately 14% during the three months ended March 31, 2020, compared to the same period of 2019. The decrease in the fuel, supplies, and expenses line for the three months ended March 31, 2020, compared to the same prior-year period, was partially offset by increases in expense for maintenance and repairs of revenue equipment.

Rents and purchased transportation as a percentage of revenue increased 1.1 percentage points for the three months ended March 31, 2020, compared to the same period of 2019, primarily due to higher utilization of rail transportation, as rail miles increased approximately 17% for the three months ended March 31, 2020, compared to the same prior-year period. Along with increased rail costs, higher utilization of linehaul purchased transportation and local delivery agents contributed to the increase in rents and purchased transportation costs as the Asset-Based segment used purchased transportation agents when necessary for service requirements while remaining focused on optimizing owned assets.

Shared services as a percentage of revenue decreased 0.4 percentage points for the three months ended March 31, 2020, compared to the same period of 2019, primarily due to reduced costs with the lower business levels and the effect of lower expenses for certain nonunion performance-based incentive plans, including long-term incentive plans impacted by shareholder returns relative to peers.

Gain on sale of property and equipment for the three months ended March 31, 2020 reflects a $2.4 million gain on the sale of unused real estate property.

Innovative technology costs as a percentage of revenue increased 0.5 percentage points for the three months ended March 31, 2020, compared to the same period of 2019, primarily due to increased activity for the freight handling pilot test program at ABF Freight, as previously disclosed in the Asset-Based Operating Income section.

36

Asset-Light Operations

Asset-Light Overview

The ArcBest and FleetNet reportable segments, combined, represent our Asset-Light operations. Our Asset-Light operations are a key component of our strategy to offer customers a single source of integrated logistics solutions, designed to satisfy the complex supply chain and unique shipping requirements customers encounter.

Our Asset-Light operations are affected by general economic conditions, as well as a number of other competitive factors that are more fully described in Item 1 (Business) and in Item 1A (Risk Factors) of Part I of our 2019 Annual Report on Form 10-K. The key indicators necessary to understand our Asset-Light operating results are outlined below. These key indicators are used by management to evaluate segment operating performance and measure the effectiveness of strategic initiatives in the results of our Asset-Light segments. We quantify certain key indictors using key operating statistics which are important measures in analyzing segment operating results from period to period. These statistics are defined within the key indicators below and referred to throughout the discussion of results of our Asset-Light operations:

● Customer demand for logistics and premium transportation services combined with economic factors which influence the number of shipments or service events used to measure changes in business levels, primarily measured by:

Shipments per day – total shipments (excluding managed transportation solutions as discussed below) divided by the number of working days during the period, compared to the same prior-year period, for the ArcBest segment.

Service events – roadside, preventative maintenance, or total service events during the period, compared to the same prior-year period, for the FleetNet segment.

● Prices obtained for services, primarily measured by:

Revenue per shipment or event – total segment revenue divided by total segment shipments or events during the period (excluding managed transportation solutions for the ArcBest segment as discussed below), compared to the same prior-year period.

● Availability of market capacity and cost of purchased transportation to fulfill customer shipments of the ArcBest segment, with a measure of purchased transportation cost expressed as:

Purchased transportation costs as a percentage of revenue – the expense incurred for third-party transportation providers to haul or deliver freight during the period, divided by segment revenues for the period, expressed as a percentage.

● Management of operating costs, primarily in the area of purchased transportation, with the total cost structure primarily measured by:

Operating ratio – the percent of operating expenses to revenue levels.

Presentation and discussion of the key operating statistics of revenue per shipment and shipments per day for the ArcBest segment exclude statistical data of the managed transportation solutions transactions. Growth in managed transportation solutions has increased the number of shipments for these services to nearly one half of the ArcBest segment’s total shipments, while the business represents less than 20% of segment revenues for the three months ended March 31, 2020. Due to the nature of our managed transportation solutions which typically involve a larger number of shipments at a significantly lower revenue per shipment level than the segment’s other service offerings, inclusion of the managed transportation solutions data would result in key operating statistics which are not representative of the operating results of the segment as a whole. As such, the key operating statistics management uses to evaluate performance of the ArcBest segment exclude managed transportation services transactions.

37

Other companies within our industry may present different key performance indicators or they may calculate their key performance indicators differently; therefore, our key performance indicators may not be comparable to similarly titled measures of other companies. Key performance indicators should be viewed in addition to, and not as an alternative for, our reported results. Our key performance indicators should not be construed as better measurements of our results than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP.

Asset-Light Results

For the three months ended March 31, 2020, the combined revenues of our Asset-Light operations totaled $217.2 million, compared to $226.5 million, for the same period of 2019. The combined revenues of our Asset-Light operating segments generated approximately 30% of our total revenues before other revenues and intercompany eliminations for the three months ended March 31, 2020, compared to 31% for the three months ended March 31, 2019.

ArcBest Segment

The following table sets forth a summary of operating expenses and operating income (loss) as a percentage of revenue for the ArcBest segment:

	Three Months Ended
	March 31
	2020		2019
ArcBest Segment Operating Expenses (Operating Ratio)
Purchased transportation	83.3	%	80.9	%
Supplies and expenses	1.4		1.6
Depreciation and amortization	1.5		1.8
Shared services	13.2		13.3
Other	1.5		1.4
	100.9	%	99.0	%
ArcBest Segment Operating Income (Loss)	(0.9)	%	1.0	%

A comparison of key operating statistics for the ArcBest segment, as previously defined in the Asset-Light Overview section, is presented in the following table:

	Year Over Year % Change
	Three Months Ended
	March 31, 2020
Revenue per shipment		(3.3%)
Shipments per day		(9.8%)

ArcBest segment revenues totaled $164.8 million for the three months ended March 31, 2020, compared to $173.2 million for the same period of 2019. The 4.9% decrease in revenues for the three months ended March 31, 2020, compared to the same prior-year period, primarily reflects reductions in revenue per shipment and fewer shipments. Excess available truckload market capacity, combined with a softer economic environment, which was experienced during 2019 continued into the first quarter of 2020, resulting in lower revenue per shipment for our truckload and expedite services and reduced demand for expedite services, compared to the same period of 2019. Continued weakness in the automotive and manufacturing sectors also contributed to lower demand for expedite services for the three months ended March 31, 2020, versus the same prior-year period. The segment’s revenue decline was partially offset by higher demand for managed transportation services for three months ended March 31, 2020, compared to the same period of 2019. In late March 2020, the ArcBest segment began experiencing the impact of measures taken to slow the spread of COVID-19, including plant shutdowns of its automotive and manufacturing customers; however, the impact to the segment’s business was not significant for the first quarter of 2020.

38

Operating loss totaled $1.4 million for the three months ended March 31, 2020, compared to operating income of $1.7 million in the same period of 2019, primarily reflecting the previously discussed declines in revenue. Due to changes in market conditions and freight mix, the prices our ArcBest segment secured from customers decreased while the prices paid for purchased transportation decreased by a smaller percentage, resulting in margin compression in first quarter 2020, compared to the same period of 2019, continuing the trend we have experienced since the second half of 2019. Purchased transportation costs increased by 2.4 percentage points as a percentage of revenue, for the three months ended March 31, 2020, compared to the same period of 2019. Although the ArcBest segment manages costs with shipment levels, which contributed to lower operating expenses for the three months ended March 31, 2020 versus the same prior-year period, portions of operating expenses are fixed in nature and cost reductions can be limited as the segment strives to maintain customer service.

ArcBest Segment – April 2020

Revenues of our ArcBest segment (ArcBest Asset-Light operations, excluding FleetNet) on a per-day basis in April 2020 decreased approximately 17%, compared to April 2019, reflecting lower shipment volumes primarily due to the negative impact of the COVID-19 pandemic on demand for our services. Purchased transportation expense on a per-day basis for April 2020 decreased approximately 18%, compared to April 2019. Purchased transportation expense represented approximately 80% of revenues in April 2020, compared to approximately 82% of revenues in April 2019. As a result of the decrease in purchased transportation costs outpacing the revenue decline, the segment experienced overall margin improvement in April 2020, compared to April 2019, primarily due to additional expedite project business related to the pandemic.

During April 2020, we have taken cost reduction actions to mitigate the operating and financial impact of the COVID-19 pandemic. These actions are discussed within the COVID-19 Business Response of the General section at the beginning of MD&A.

FleetNet Segment

FleetNet’s revenues totaled $52.4 million for the three months ended March 31, 2020, compared to $53.3 million for the same period of 2019. The 1.5% decrease in revenues was driven by lower roadside service event volume resulting primarily from a softer freight environment and milder weather conditions experienced during the three months ended March 31, 2020, compared to the same period of 2019, partially offset by an increase in preventative maintenance service events provided to our Asset-Based segment.

FleetNet’s operating income totaled $1.0 million and $1.5 million for the three-month periods ended March 31, 2020 and 2019, respectively, on lower revenue in first quarter 2020. FleetNet’s operating income margins in first quarter 2020 were impacted by lower revenue per event on maintenance services and by the effect of lower revenues as a portion of operating costs are fixed in nature and increase as a percent of revenue with decreases in revenue.

39

Asset-Light Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”)

We report our financial results in accordance with GAAP. However, management believes that certain non-GAAP performance measures and ratios, such as Adjusted EBITDA, utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management's opinion, do not reflect our core operating performance. Management uses Adjusted EBITDA as a key measure of performance and for business planning. The measure is particularly meaningful for analysis of our Asset-Light businesses, because it excludes amortization of acquired intangibles and software, which are significant expenses resulting from strategic decisions rather than core daily operations. Management also believes Adjusted EBITDA to be relevant and useful information, as EBITDA is a standard measure commonly reported and widely used by analysts, investors, and others to measure financial performance of asset-light businesses and the ability to service debt obligations. Other companies may calculate Adjusted EBITDA differently; therefore, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Adjusted EBITDA should not be construed as a better measurement than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP.

Asset-Light Adjusted EBITDA

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
ArcBest Segment
Operating Income (Loss)(1)	$	(1,409)	$	1,730
Depreciation and amortization(2)		2,470		3,151
Adjusted EBITDA	$	1,061	$	4,881
FleetNet Segment
Operating Income(1)	$	1,040	$	1,488
Depreciation and amortization		391		317
Adjusted EBITDA	$	1,431	$	1,805
Total Asset-Light
Operating Income (Loss)(1)	$	(369)	$	3,218
Depreciation and amortization(2)		2,861		3,468
Adjusted EBITDA	$	2,492	$	6,686

(1) The calculation of Adjusted EBITDA as presented in this table begins with operating income, as other income (costs), income taxes, and net income are reported at the consolidated level and not included in the operating segment financial information evaluated by management to make operating decisions. Consolidated Adjusted EBITDA is reconciled to consolidated net income in the Consolidated Results section of Results of Operations.

(2) For the ArcBest segment, includes amortization of acquired intangibles of $0.9 million and $1.1 million for the three months ended March 31, 2020 and 2019, respectively.

40

Current Economic Conditions

Given the current economic conditions and the uncertainties regarding the impact of the COVID-19 pandemic on our business, there can be no assurance that our estimates and assumptions regarding the pricing environment and economic conditions, which are made for purposes of impairment tests related to operating assets and deferred tax assets, will prove to be accurate. Significant declines in business levels or other changes in cash flow assumptions or other factors that negatively impact the fair value of the operations of our reporting units could result in impairment and a resulting non-cash write-off of a significant portion of the goodwill and intangible assets of our ArcBest segment, which would have an adverse effect on our financial condition and operating results.

Effects of Inflation

We cannot be certain of the future economic environment and there can be no assurances of the potential impact of inflationary conditions on our business. Generally, inflationary increases in labor and fuel costs as they relate to our Asset-Based operations have historically been mostly offset through price increases and fuel surcharges. In periods of increasing fuel prices, the effect of higher associated fuel surcharges on the overall price to the customer influences our ability to obtain increases in base freight rates. In addition, certain nonstandard arrangements with some of our customers have limited the amount of fuel surcharge recovered. The timing and extent of base price increases on our Asset-Based revenues may not correspond with contractual increases in wage rates and other inflationary increases in cost elements and, as a result, could adversely impact our operating results.

Generally, inflationary increases in labor and operating costs regarding our Asset-Light operations have historically been offset through price increases. The pricing environment, however, generally becomes more competitive during economic downturns, which may, as it has in the past, affect the ability to obtain price increases from customers both during and following such periods.

In addition, partly as a result of inflationary pressures, our revenue equipment (tractors and trailers) have been and will very likely continue to be replaced at higher per unit costs, which could result in higher depreciation charges on a per-unit basis. We consider these costs in setting our pricing policies, although the overall freight rate structure is governed by market forces based on value provided to the customer. The Asset-Based segment’s ability to fully offset inflationary and contractual cost increases can be challenging during periods of recessionary and uncertain economic conditions.

Environmental and Legal Matters

We are subject to federal, state, and local environmental laws and regulations relating to, among other things: emissions control, transportation or handling of hazardous materials, underground and aboveground storage tanks, stormwater pollution prevention, contingency planning for spills of petroleum products, and disposal of waste oil. We may transport or arrange for the transportation of hazardous materials and explosives, and we operate in industrial areas where truck service centers and other industrial activities are located and where groundwater or other forms of environmental contamination could occur. See Note K to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion of the environmental matters to which we are subject and the reserves we currently have recorded in our consolidated financial statements for amounts related to such matters.

We are involved in various legal actions, the majority of which arise in the ordinary course of business. We maintain liability insurance against certain risks arising out of the normal course of our business, subject to certain self-insured retention limits. We routinely establish and review 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 our financial condition, results of operations, or cash flows.

41

Information Technology and Cybersecurity

We depend on the proper functioning, availability, and security of our information systems, including communications, data processing, financial, and operating systems, as well as proprietary software programs that are integral to the efficient operation of our business. Cybersecurity attacks and other cyber incidents that impact the availability, reliability, speed, accuracy, or other proper functioning of these systems or that result in proprietary information or sensitive or confidential data being compromised could have a significant impact on our operations. Any new or enhanced technology that we may develop and implement may also be subject to cybersecurity attacks and may be more prone to related incidents. We also utilize certain software applications provided by third parties; provide underlying data to third parties; grant access to certain of our systems to third parties who provide certain outsourced administrative functions or other services; and increasingly store and transmit data with our customers and third parties by means of connected information technology systems, any of which may increase the risk of a cybersecurity incident. Although we strive to carefully select our third-party vendors, we do not control their actions and any problems caused by or impacting these third parties, including cyber attacks and security breaches at a vendor, could result in claims, litigation, losses, and/or liabilities and adversely affect our ability to provide service to our customers and otherwise conduct our business. Our information systems are protected through physical and software safeguards as well as backup systems considered appropriate by management. However, it is not practicable to protect against the possibility of power loss, telecommunications failures, cybersecurity attacks, and other cyber events in every potential circumstance that may arise. To mitigate the potential for such occurrences at our primary data center, we have implemented various systems, including redundant telecommunication facilities; replication of critical data to an offsite location; a fire suppression system to protect our on-site data center; and electrical power protection and generation facilities. We also have a catastrophic disaster recovery plan and alternate processing capability available for our critical data processes in the event of a catastrophe that renders one of our data centers unusable. In efforts to protect the health of our employees and comply with social distancing guidelines implemented due to the COVID-19 pandemic, many of our employees are working remotely, which may create increased vulnerability to cybersecurity incidents. We continue to implement strong physical and cybersecurity measures in an attempt to safeguard our systems in order to serve our operational needs in a remote working environment and to provide uninterrupted service to our customers.

Our property and cyber insurance would offset losses up to certain coverage limits in the event of a catastrophe or certain cyber incidents, including certain business interruption events related to these incidents; however, losses arising from a catastrophe or significant cyber incident would likely exceed our insurance coverage and could have a material adverse impact on our results of operations and financial condition. We do not have insurance coverage specific to losses resulting from a pandemic. A significant disruption in our information technology systems or a significant cybersecurity incident, including denial of service, system failure, security breach, intentional or inadvertent acts by employees or vendors with access to our systems or data, disruption by malware, or other damage, could interrupt or delay our operations, damage our reputation, cause a loss of customers, cause errors or delays in financial reporting, expose us to a risk of loss or litigation, and/or cause us to incur significant time and expense to remedy such an event. We have experienced incidents involving attempted denial of service attacks, malware attacks, and other events intended to disrupt information systems, wrongfully obtain valuable information, or cause other types of malicious events that could have resulted in harm to our business. To our knowledge, the various protections we have employed have been effective to date in identifying these types of events at a point when the impact on our business could be minimized. We must continuously monitor and develop our information technology networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and other events that could have a security impact. We have made and continue to make significant financial investments in technologies and processes to mitigate these risks. We also provide employee awareness training around phishing, malware, and other cyber risks. Management is not aware of any cybersecurity incident that has had a material effect on our operations, although there can be no assurances that a cyber incident that could have a material impact to our operations could not occur.

42

Liquidity and Capital Resources

Our primary sources of liquidity are cash, cash equivalents, and short-term investments, cash generated by operations, and borrowing capacity under our revolving credit facility or accounts receivable securitization program.

Cash Flow and Short-Term Investments

Components of cash and cash equivalents and short-term investments were as follows:

	March 31		December 31
	2020		2019
	(in thousands)
Cash and cash equivalents(1)	$	352,165	$	201,909
Short-term investments(2)		178,810		116,579
Total(3)	$	530,975	$	318,488

(1) Cash equivalents consist of money market funds and variable rate demand notes.

(2) Short-term investments consist of certificates of deposit and U.S. Treasury securities.

(3) Cash, variable rate demand notes, and certificates of deposit are recorded at cost plus accrued interest, which approximates fair value. Money market funds are recorded at fair value based on quoted prices. U.S. Treasury securities are recorded at amortized cost plus accrued interest. At March 31, 2020 and December 31, 2019, cash, cash equivalents, and short-term investments totaling $245.9 million and $66.2 million, respectively, were neither FDIC insured nor direct obligations of the U.S. government.

Cash, cash equivalents, and short-term investments increased $212.5 million from December 31, 2019 to March 31, 2020, primarily due to borrowings under our revolving credit facility and accounts receivable securitization facility totaling $225.0 million. During the three-month period ended March 31, 2020, cash on hand and cash provided by operations was used to repay $14.6 million of long-term debt; fund $2.0 million of capital expenditures, net of proceeds from asset sales; fund $3.3 million of internally developed software; purchase $3.2 million of treasury stock; and pay dividends of $2.0 million on common stock.

Cash provided by operating activities during the three months ended March 31, 2020 was $23.1 million compared to $3.4 million of cash used in operating activities in the same prior-year period. The $26.5 million increase in cash provided by operating activities is primarily related to reduced cash outflow for operating assets and liabilities for the three months ended March 31, 2020, compared to the same period of 2019. The primary items that reduced cash outflow were lower payouts in first quarter 2020 for certain nonunion performance-based incentive plans and higher accruals related to the timing of payroll disbursements at March 31, 2020 versus March 31, 2019. Cash provided by operating activities included federal, state, and foreign income tax payments, net of refunds, of less than $0.1 million and $6.6 million for the three months ended March 31, 2020 and 2019, respectively.

Financing Arrangements

We have a revolving credit facility (the “Credit Facility”) under our Third Amended and Restated Credit Agreement (the “Credit Agreement”) that has an initial maximum credit amount of $250.0 million. We have the option to request additional revolving commitments or incremental term loans thereunder of up to $125.0 million, subject to certain additional conditions as provided in the Credit Agreement. Our accounts receivable securitization program allows for cash proceeds of $125.0 million to be provided under the program and has an accordion feature allowing us to request additional borrowings up to $25.0 million, subject to certain conditions. In March 2020, we drew down the $180.0 million remaining available borrowing capacity under the initial maximum credit amount of our Credit Facility and borrowed $45.0 million under our accounts receivable securitization program, which reduced the initial committed funding capacity available under the facility to $28.0 million. These borrowings were a proactive measure to increase our cash position and preserve financial flexibility in consideration of general economic and financial market uncertainty resulting from the COVID-19 outbreak. These funds supplement our already strong cash and short-term investments position, which totaled $531.0 million at March 31, 2020.

43

On May 4, 2020, we extended the term of our $50.0 million notional amount interest rate swap agreement from June 30, 2022 to October 1, 2024. We will receive floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 0.43% beginning on June 30, 2022 throughout the remaining term of the agreement. From June 30, 2022 to October 1, 2024, the extended interest rate swap agreement will effectively convert $50.0 million of borrowings under our Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.56% based on the margin of our Credit Facility as of March 31, 2020.

Our financing arrangements are discussed in Note F to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Contractual Obligations

We have purchase obligations, consisting of authorizations to purchase and binding agreements with vendors, relating to revenue equipment used in our Asset-Based operations, other equipment, facility improvements, software, certain service contracts, and other items for which amounts were not accrued in the consolidated balance sheet as of March 31, 2020. These purchase obligations totaled $106.2 million as of March 31, 2020, with $92.2 million estimated to be paid within the next year, $12.9 million estimated to be paid in the following two-year period, and $1.1 million to be paid within five years, provided that vendors complete their commitments to us. As of March 31, 2020, the amount of our purchase obligations has increased $72.5 million from December 31, 2019, primarily related to revenue equipment, real estate projects, and technology advancements which are included in our 2020 capital expenditure plan.

As of March 31, 2020, contractual obligations for operating lease liabilities, primarily related to our Asset-Based service centers, totaled $85.2 million, including imputed interest. As of March 31, 2020, the Company has undiscounted lease obligations of $40.4 million related to leases which were executed but not yet commenced. The Company plans to take possession of the leased space in mid-2020. The scheduled maturities of our operating lease liabilities as of March 31, 2020 are disclosed in Note E to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Our contractual obligations related to our notes payable, which provide financing for revenue equipment and software purchases, totaled $211.6 million, including interest, as of March 31, 2020, a decrease of $16.3 million from December 31, 2019. The scheduled maturities of our long-term debt obligations as of March 31, 2020 are disclosed in Note F to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no other material changes in the contractual obligations disclosed in our 2019 Annual Report on Form 10-K during the three months ended March 31, 2020.

As previously announced, our recent actions to preserve cash and lower costs to mitigate the financial impact of the COVID-19 pandemic on our business include a reduction of our 2020 capital expenditure plan by approximately 30%, including a reduction in revenue equipment purchases of $18.0 million.  Our total capital expenditures for 2020, including amounts financed, are now estimated to range from $95.0 million to $105.0 million, net of asset sales. These 2020 estimated net capital expenditures include revenue equipment purchases of $64.0 million, primarily for our Asset-Based operations. The remainder of 2020 expected capital expenditures include real estate projects, costs of other facility and handling equipment for our Asset-Based operations, including forklifts, and technology investments across the enterprise. We have the flexibility to adjust certain planned 2020 capital expenditures as business levels dictate. Depreciation and amortization expense, excluding amortization of intangibles, is estimated to be approximately $110.0 million in 2020.

ABF Freight System, Inc. and certain other subsidiaries reported in our Asset-Based operating segment contribute to multiemployer health, welfare, and pension plans based generally on the time worked by their contractual employees, as specified in the collective bargaining agreement and other supporting supplemental agreements (see Note G to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q).

Other Liquidity Information

The COVID-19 pandemic has been disruptive to businesses, the economy, and the financial markets, and there is much uncertainty about the severity and duration of its impact. The effects of COVID-19 on the health of our employees and the

44

economy, along with competitive market factors and the related impact on our business, primarily tonnage and shipment levels and the pricing that we receive for our services in future periods, could affect our ability to generate cash from operations and maintain cash, cash equivalents, and short-term investments on hand as operating costs increase. As previously mentioned, we proactively drew down the remaining borrowing capacity of our Credit Facility and borrowed additional amounts under our accounts receivable securitization program in March 2020 to further strengthen our cash position and preserve financial flexibility. We believe existing cash, cash equivalents, short-term investments, cash generated by operations, and borrowing capacity available under our accounts receivable securitization program, which totaled $28.0 million at March 31, 2020, will be sufficient to finance our operating expenses, fund our ongoing investments in technology, and repay amounts due under our financing arrangements. Notes payable, finance leases, and other secured financing may also be used to fund capital expenditures, provided that such arrangements are available and the terms are acceptable to us.

We have continued to take actions to enhance shareholder value with our quarterly dividend payments and treasury stock purchases. The capital allocated to these programs has been at reasonable levels; however, these programs will be monitored in consideration of cash requirements for our operations that might occur from further economic weakness and uncertainty that has resulted from the COVID-19 pandemic response.

On May 1, 2020, our Board of Directors declared a dividend of $0.08 per share to stockholders of record as of May 15, 2020. We expect to continue to pay quarterly dividends on our common stock in the foreseeable future, although there can be no assurances in this regard since future dividends will be at the discretion of the Board of Directors and are dependent upon our future earnings, capital requirements, and financial condition; contractual restrictions applying to the payment of dividends under our Credit Agreement; and other factors.

We have a program in place to repurchase our 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 cash reserves or other available sources. During the three months ended March 31, 2020, we purchased 150,000 shares of our common stock for an aggregate cost of $3.2 million, leaving $10.0 million available for repurchase under the current buyback program.

Financial Instruments

We have not historically entered into financial instruments for trading purposes, nor have we historically engaged in a program for fuel price hedging. No such instruments were outstanding as of March 31, 2020. We have an interest rate swap agreement in place which is discussed in Note F to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Balance Sheet Changes

Cash and Cash Equivalents and Short-term Investments

The increase in cash and cash equivalents of $150.3 million and the increase in short-term investments of $62.2 million from December 31, 2019 to March 31, 2020 are due to the March 2020 borrowings under our Credit Facility and our accounts receivable securitization program of $180.0 million and $45.0 million, respectively, as a precautionary measure to preserve financial flexibility during the COVID-19 pandemic.

Accrued Expenses

Accrued expenses decreased $14.6 million from December 31, 2019 to March 31, 2020, primarily due to payments during first quarter 2020 of amounts accrued at December 31, 2019 for certain incentive accruals related to our operating performance and long-term incentive plans and contributions to defined contribution plans.

Long-term Debt

The $210.4 million increase in long-term debt, including current portion, from December 31, 2019 to March 31, 2020 is due to the March 2020 borrowings under our Credit Facility and our accounts receivable securitization program of $180.0 million and $45.0 million, respectively, as a precautionary measure to preserve financial flexibility during the COVID-19 pandemic.

45

Off-Balance Sheet Arrangements

At March 31, 2020, our off-balance sheet arrangements for purchase obligations totaled $106.2 million, as previously discussed in the Contractual Obligations section of Liquidity and Capital Resources.

We have no investments, loans, or any other known contractual arrangements with unconsolidated special-purpose entities, variable interest entities, or financial partnerships and have no outstanding loans with executive officers or directors.

Income Taxes

Our effective tax rate was 20.3% and 25.9% of pre-tax income for the three months ended March 31, 2020 and March 31, 2019, respectively. The average state tax rate, net of the associated federal deduction, is approximately 5%. Due to the uncertainty surrounding the impact of the COVID-19 pandemic, for the three months ended March 31, 2020, we calculated the tax provision based on the actual statutory tax rate as opposed to using an annual effective tax rate, because of the inability to provide a reliable estimate of ordinary income within a reasonable range. Various factors, including the amount of pre-tax income, as well as significant changes in nondeductible expenses, such as cash surrender value of life insurance and the settlement of share-based payment awards primarily vesting in the second quarter, may cause the full-year 2020 tax rate to vary significantly from the statutory rate. Due to the impact of nondeductible expenses, we generally incur a higher tax rate when we generate lower levels of pre-tax income and a lower benefit rate when we generate lower levels of pre-tax losses. Conversely, as pre-tax income or loss increases, the impact of nondeductible expense on the overall rate declines.

Reconciliation between the effective income tax rate, as computed on income before income taxes, and the statutory federal income tax rate is presented in the following table:

	Three Months Ended
	March 31
	2020				2019
	(in thousands, except percentages)
Income tax provision at the statutory federal rate	$	501	21.0	%	$	1,385	21.0	%
Federal income tax effects of:
Alternative fuel credit		(451)	(18.9)	%		—	—	%
Nondeductible expenses and other		405	17.0	%		481	7.2	%
Increase in valuation allowances		193	8.1	%		—	—	%
Decrease in uncertain tax positions(1)		(933)	(39.1)	%		—	—	%
Tax expense (benefit) from vested RSUs		20	0.8	%		(2)	—	%
Federal research and development tax credits		(250)	(10.5)	%		—	—	%
Life insurance proceeds and changes in cash surrender value		799	33.5	%		(339)	(5.1)	%
Federal income tax provision	$	284	11.9	%	$	1,525	23.1	%
State income tax provision		199	8.4	%		183	2.8	%
Total provision for income taxes	$	483	20.3	%	$	1,708	25.9	%

(1) The statute of limitations expired in the first quarter of 2020 for the federal tax refund for which the reserve for uncertain tax positions was established in 2018.

At March 31, 2020, we had $55.0 million of net deferred tax liabilities after valuation allowances. We evaluated the need for a valuation allowance for deferred tax assets at March 31, 2020 by considering the future reversal of existing taxable temporary differences, future taxable income, and available tax planning strategies. Additionally, as a result of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted on March 27, 2020, net operating losses originating in the tax year including December 31, 2020 may be carried back five years to a period in which we had substantial taxable income.  Valuation allowances for deferred tax assets totaled $0.9 million and $0.7 million at March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020, deferred tax liabilities which will reverse in future years exceeded deferred tax assets.

46

Financial reporting income may differ significantly from taxable income because of items such as revenue recognition, accelerated depreciation for tax purposes, and a significant number of liabilities such as vacation pay, workers’ compensation, and other liabilities, which, for tax purposes, are generally deductible only when paid. For the three months ended March 31, 2020 and March 31, 2019, income determined under income tax law exceeded financial reporting income.

During the three months ended March 31, 2020, we made foreign and state tax payments of $0.3 million, and received refunds of $0.4 million of federal income taxes that were paid in prior years. Management does not expect the cash outlays for income taxes will materially exceed reported income tax expense for the foreseeable future.

Critical Accounting Policies

The accounting policies that are “critical,” or the most important, to understand our financial condition and results of operations and that require management to make the most difficult judgments are described in our 2019 Annual Report on Form 10-K. The following policy has been updated during the three months ended March 31, 2020 for the adoption of an accounting standard update.

Receivables Allowance

On January 1, 2020, we adopted ASC Topic 326, Financial Instruments – Credit Losses, (“ASC Topic 326”), which replaces the incurred loss methodology model with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade receivables and other receivables. We maintain allowances for credit losses (formerly known as the allowance for doubtful accounts) and revenue adjustments on our trade receivables.

We estimate our allowance for credit losses based on historical trends, factors surrounding the credit risk of specific customers, and forecasts of future economic conditions. In order to gather information regarding these trends and factors, we perform ongoing credit evaluations of our customers, an analysis of accounts receivable aging by business segment, and an analysis of future economic conditions at period end. The allowance for revenue adjustments represents an estimate of potential adjustments associated with recognized revenue based upon historical trends and current information regarding trends and business changes. Actual write-offs or adjustments could differ from the allowance estimates due to a number of factors, including future changes in the forecasted economic environment or new factors and risks surrounding a particular customer. We continually update the history we use to make these estimates so as to reflect the most recent trends, factors, forecasts, and other information available. Management believes this methodology to be reliable in estimating the allowances for credit losses and revenue adjustments (collectively our receivable allowance). Accounts receivable are written off against the allowance for credit losses and revenue adjustments when accounts are turned over to a collection agency or when the accounts are determined to be uncollectible.

Accounting Pronouncements Not Yet Adopted

New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of financial statements. Accounting pronouncements which have been issued but are not yet effective for our financial statements are disclosed in Note A to our consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. Management believes that there is no new accounting guidance issued but not yet effective that will impact our critical accounting policies.

47

Forward-Looking Statements

Certain statements and information in this report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “intend,” “may,” “plan,” “predict,” “project,” “scheduled,” “should,” “would,” and similar expressions and the negatives of such terms are intended to identify forward-looking statements. These statements are based on management’s beliefs, assumptions, and expectations based on currently available information, are not guarantees of future performance, and involve certain risks and uncertainties (some of which are beyond our control). Although we believe that the expectations reflected in these forward-looking statements are reasonable as and when made, we cannot provide assurance that our expectations will prove to be correct. Actual outcomes and results could materially differ from what is expressed, implied, or forecasted in these statements due to a number of factors, including, but not limited to: a failure of our information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data breach, and/or cybersecurity incidents; the ability to maintain third-party information technology systems or licenses; widespread outbreak of an illness or any other communicable disease and the effects of pandemics, including the COVID-19 pandemic, or any other public health crisis; regulatory measures that may be implemented in response to widespread illness, including the COVID-19 pandemic; ineffectiveness of our business continuity plans to meet our operational needs in the event of adverse external events or conditions; untimely or ineffective development and implementation of, or failure to realize potential benefits associated with, new or enhanced technology or processes, including the pilot test program at ABF Freight, and any write-offs associated therewith; the loss or reduction of business from large customers; competitive initiatives and pricing pressures; general economic conditions and related shifts in market demand, including the impact of and uncertainties related to the COVID-19 pandemic, that impact the performance and needs of industries we serve and/or limit our customers’ access to adequate financial resources; the ability to manage our cost structure, and the timing and performance of growth initiatives; relationships with employees, including unions, and our ability to attract, retain, and develop employees; unfavorable terms of, or the inability to reach agreement on, future collective bargaining agreements or a workforce stoppage by our employees covered under ABF Freight’s collective bargaining agreement; our ability to secure independent owner operators and/or operational or regulatory issues related to our use of their services; availability and cost of reliable third-party services; availability of fuel, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates, and the inability to collect fuel surcharges; governmental regulations; environmental laws and regulations, including emissions-control regulations; union employee wages and benefits, including changes in required contributions to multiemployer plans; litigation or claims asserted against us; the loss of key employees or the inability to execute succession planning strategies; maintaining our intellectual property rights, brand, and corporate reputation; default on covenants of financing arrangements and the availability and terms of future financing arrangements; timing and amount of capital expenditures; self-insurance claims and insurance premium costs; increased prices for and decreased availability of new revenue equipment, decreases in value of used revenue equipment, and higher costs of equipment-related operating expenses such as maintenance, fuel, and related taxes; potential impairment of goodwill and intangible assets; the cost, integration, and performance of any recent or future acquisitions; seasonal fluctuations and adverse weather conditions; regulatory, economic, and other risks arising from our international business; acts of terrorism or war, or the impact of antiterrorism and safety measures; and other financial, operational, and legal risks and uncertainties detailed from time to time in ArcBest’s public filings with the Securities and Exchange Commission (“SEC”).

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

48

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As disclosed in Part II, Item 7A of our 2019 Annual Report on Form 10-K, we are subject to interest rate risk due to variable interest rates on the borrowings under our credit agreements. We have a revolving credit facility (the “Credit Facility”) under our Third Amended and Restated Credit Agreement (the “Credit Agreement”) that has an initial maximum credit amount of $250.0 million, including a swing line facility in an aggregate amount of up to $25.0 million and a letter of credit sub-facility providing for the issuance of letters of credit up to an aggregate amount of $20.0 million. We have the option to request additional revolving commitments or incremental term loans thereunder of up to $125.0 million, subject to certain additional conditions as provided in the Credit Agreement. Our accounts receivable securitization program allows for cash proceeds of $125.0 million to be provided under the program and has an accordion feature allowing us to request additional borrowings up to $25.0 million, subject to certain conditions. In March 2020, we drew down the $180.0 million remaining available borrowing capacity under the initial maximum credit amount of our Credit Facility and borrowed an additional $45.0 million under our accounts receivable securitization program, which reduced the initial committed funding capacity available under the facility to $28.0 million. Borrowings are subject to variable interest rates as defined within our credit agreements. These borrowings were a proactive measure to increase our cash position and preserve financial flexibility in light of general economic and financial market uncertainty resulting from the COVID-19 outbreak. These funds supplement our already strong cash and short-term investments position, which totaled $531.0 million at March 31, 2020. Cash, cash equivalents, and short-term investments totaling $245.9 million and $66.2 million, respectively, were neither FDIC insured nor direct obligations of the U.S. government at March 31, 2020 and December 31, 2019. Our financing arrangements are discussed in Note F to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We did not modify our Credit Facility, accounts receivable securitization program, or interest rate swap agreement during the three months ended March 31, 2020 and, therefore, we are subject to the interest rate risk due to the variable interest rates on the borrowings under our credit agreements as of March 31, 2020 as disclosed in Part II, Item 7A of our 2019 Annual Report on Form 10-K. On May 4, 2020, we extended the term of our $50.0 million notional amount interest rate swap agreement from June 30, 2022 to October 1, 2024. We will receive floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 0.43% beginning on June 30, 2022 throughout the remaining term of the agreement. From June 30, 2022 to October 1, 2024, the extended interest rate swap agreement will effectively convert $50.0 million of borrowings under our Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.56% based on the margin of our Credit Facility as of March 31, 2020.

Risks associated with the economic impacts of COVID-19 remain difficult to ascertain in the immediate future, further discussion related to our response to COVID-19 can be found in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Quarterly Report on Form 10-Q. In addition to the risk factors disclosed in Part I, Item 2 of our 2019 Annual Report on Form 10-K, we have supplemented our risk factors as discussed in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Since December 31, 2019, there have been no other significant changes in the Company’s market risks as reported in the Company’s 2019 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation was performed with the participation of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2020.

There were no changes in the Company’s internal controls over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

49

PART II.

OTHER INFORMATION

ARCBEST CORPORATION

ITEM 1. LEGAL PROCEEDINGS

For information related to the Company’s legal proceedings, see Note K, Legal Proceedings, Environmental Matters, and Other Events under Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

The Company’s risk factors are fully described in the Company’s 2019 Annual Report on Form 10-K. In light of the COVID-19 pandemic, ArcBest is supplementing the risk factors set forth under “Item 1A. Risk Factors” in the Company’s 2019 Annual Report on Form 10-K with the new risk factors set forth below. These risk factors should be read in conjunction with the risk factors in the Company’s 2019 Annual Report on Form 10-K.

The widespread outbreak of an illness or any other communicable disease, including the effects of pandemics, or any other public health crisis, as well as regulatory measures implemented in response to such events, could adversely affect our business, results of operations, financial condition, and cash flows.

Our business could be negatively impacted by the widespread outbreak of an illness or any other communicable disease or other public health crisis, including the COVID-19 pandemic. Measures intended to prevent the spread of a health epidemic could also have an adverse effect on our business. The COVID-19 pandemic has adversely impacted economic activity and conditions worldwide and created significant volatility and disruption to financial markets. Efforts to control the spread of COVID-19 have led governments and other authorities to impose restrictions which have resulted in business closures and disrupted supply chains worldwide. The COVID-19 pandemic and measures taken to prevent its spread have negatively impacted demand for our services, and thus our shipment and tonnage levels, and could continue to further negatively impact our business. We are continuing to monitor developments involving our workforce, customers, and third-party service providers. The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and will depend on future developments, including the duration and severity of the pandemic and government restrictions imposed in response to the pandemic. An extended period of economic disruption and resulting declines in industrial production and manufacturing, consumer spending, and demand for our services, as well as the ability of our customers and other business partners to fulfill their obligations, could have a material adverse effect on our results of operations, financial condition, and cash flows.

We, or the third parties upon which we depend to provide services for us, may be adversely affected by external events from which our business continuity plans may not adequately protect us.

The occurrence of severe weather, natural disasters, health epidemics, acts of war or terrorism, and other adverse external events or conditions that impact us or the operations of third parties upon which we rely to provide services for us have the potential to significantly impact our ability to conduct business. Although we have business continuity plans in place, including an emergency succession plan, there is no guarantee that our plans can be successfully implemented. Additionally, even if we were to successfully implement our continuity plans, we may incur substantial expenses and there is no guarantee that our business, financial conditions, and results of operations will not be materially impacted.

50

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)Recent sales of unregistered securities.

None.

(b)Use of proceeds from registered securities.

None.

(c)Purchases of equity securities by the issuer and affiliated purchasers.

				Total Number of	Maximum
				Shares Purchased	Approximate Dollar
	Total Number	Average		as Part of Publicly	Value of Shares that
	of Shares	Price Paid		Announced	May Yet Be Purchased
	Purchased	Per Share(1)		Program	Under the Program (2)
	(in thousands, except share and per share data)
1/1/2020-1/31/2020	—	$	—	—	$	13,197
2/1/2020-2/29/2020	79,500		22.85	79,500	$	11,380
3/1/2020-3/31/2020	70,500		19.09	70,500	$	10,034
Total	150,000	$	21.08	150,000

(1) Represents the weighted-average price paid per common share including commission.

(2) In January 2003, the Company’s Board of Directors authorized a $25.0 million common stock repurchase program. The Board of Directors authorized an additional $50.0 million to the current program in July 2005. In October 2015, the Board of Directors extended the share repurchase program, making a total of $50.0 million available for purchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

51

ITEM 6. EXHIBITS

The following exhibits are filed or furnished with this report or are incorporated by reference to previously filed material:

Exhibit
No.
3.1	Restated Certificate of Incorporation of the Company (previously filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2019, File No. 000-19969, and incorporated herein by reference).
3.2	Certificate of Amendment to the Restated Certificate of Incorporation of the Company (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 24, 2009, File No. 000-19969, and incorporated herein by reference).
3.3	Fifth Amended and Restated Bylaws of the Company dated as of October 31, 2016 (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 4, 2016, File No. 000-19969, and incorporated herein by reference).
3.4	Certificate of Ownership and Merger, effective May 1, 2014, as filed on April 29, 2014 with the Secretary of State of the State of Delaware (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 30, 2014, File No. 000-19969, and incorporated herein by reference).
10.1#	First Amendment to the ArcBest Corporation Ownership Incentive Plan (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 7, 2020, File No. 000-19969, and incorporated herein by reference).
10.2#*	The ArcBest 16b Annual Incentive Compensation Plan and form of award.
10.3#*	The ArcBest Long-Term (3-Year) Incentive Compensation Plan and form of award.
10.4#*	Form of Restricted Stock Unit Award Agreement (Non-Employee Directors – with deferral feature).
10.5#*	Form of Restricted Stock Unit Award Agreement (Employees).
31.1*	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document – the instance document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	The Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document.

#     Designates a compensation plan or arrangement for directors or executive officers.

*     Filed herewith.

**   Furnished herewith.

52

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ARCBEST CORPORATION
	(Registrant)
Date: May 11, 2020	/s/ Judy R. McReynolds
	Judy R. McReynolds
	Chairman, President and Chief Executive Officer
	and Principal Executive Officer
Date: May 11, 2020	/s/ David R. Cobb
	David R. Cobb
	Vice President — Chief Financial Officer
	and Principal Financial Officer

53

EX-10.2

Exhibit 10.2

[       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan  

Page 1 of 10

[         ] Schedule 

ArcBest 16b Annual Incentive Compensation Plan

Pursuant to the Executive Officer Incentive Compensation Plan (the “Governing Plan”), the Compensation Committee of the ArcBest Corporation Board of Directors (the “Compensation Committee”) has adopted the following Individual Award Opportunities, Performance Measures, and Participants pool for ArcBest Corporation and its subsidiaries (the “Company”) for the [      ] – ArcBest 16b Annual Incentive Compensation Plan (the “[      ] Plan”). The Compensation Committee has determined that the [      ] Plan incentive will include the following components:

[      ] Operating Income (“Operating Income Component”)	50% weighting
ROCE Component	50% weighting

The weighting of the components is determined by the Compensation Committee for each Measurement Period.

I.  Defined Terms

A.  Act of Misconduct.  Act of Misconduct shall mean the Participant (i) has committed an act of (a) gross misconduct or fraud in the performance of Participant’s duties to the Company or any Subsidiary, (b) embezzlement, fraud, or dishonesty, (c) material theft or misappropriation of Company or Subsidiary property, (d) nonpayment of any obligation owed to the Company or any Subsidiary, (e) breach of fiduciary duty, (f) violation of Company ethics policy or code of conduct, or (g) deliberate disregard of Company or Subsidiary rules; (ii) is convicted of or enters a guilty plea or plea of nolo contendere with regard to any felony or act of moral turpitude; (iii) makes an unauthorized disclosure of any Company or Subsidiary trade secret or confidential information; (iv) solicits any employee or service provider to leave the employ or cease providing services to the Company or any Subsidiary; (v) breaches any intellectual property or assignment of inventions covenant; (vi) engages in any conduct constituting unfair competition or breaches any non-competition agreement; (vii) induces any Company or Subsidiary customer to breach a contract with the Company or any Subsidiary or to cease doing business with the Company or any Subsidiary; or (viii) induces any principal for whom the Company or any Subsidiary acts as agent to terminate such agency relationship.

B.Base Salary for Executive Officers.    Base Salary for Executive Officers is defined as an Executive Officer’s total base salary earned, while an eligible Participant in the [      ] Plan, for the designated Measurement Period, but in no event shall the Base Salary for an Executive Officer exceed the monthly base salary for the Executive Officer as most recently approved by the Compensation Committee as of the end of the day on which the Plan is approved for the Measurement Period or, if later, the day on which the Participant becomes an Executive Officer with a salary approved by the Compensation Committee, multiplied by twelve, multiplied by 150%.  Base Salary is not reduced by any voluntary salary reductions or any salary reduction contributions made to any salary reduction plan, defined contribution plan or other deferred compensation plans of the Company, but does not include any payments under the Governing Plan, any stock option or other type of equity plan, or any other bonuses, incentive pay or special awards.

C.   Base Salary. Base Salary for Participants other than Executive Officers is defined as a  Participant’s total base salary earned, while an eligible Participant in the [      ] Plan, for the designated Measurement Period.  Base Salary is not reduced by any voluntary salary reductions or any salary reduction contribution made to any salary reduction plan, defined contribution plan or other deferred compensation plans of the Company, but does not include any payments under the Governing Plan, any stock option or other type of equity plan, or any other bonuses, incentive pay or special awards.

 [       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan  

Page 2 of 10

D.  Disability. Disability means a physical or mental condition resulting from bodily injury, disease or mental disorder, which constitutes a disability under the terms of the Company’s Short Term Disability Policy.

E. Good Reason. Good Reason shall mean (i) any material adverse diminution in Participant’s title, duties, or responsibilities; (ii) any reduction in Participant’s base salary or employee benefits (including reducing Participant’s level of participation or bonus award opportunity in the Company’s or a Subsidiary’s incentive compensation plans) or (iii) a relocation of Participant’s principal place of employment by more than 50 miles without the prior consent of Participant.

F.   Material. Five percent (5%) of the aggregate annual incentive pool. 

G.   Measurement Period.  The Measurement Period is 1/1/[      ] to 12/31/[      ]. 

H.  Qualified Termination. Qualified Termination shall mean, within 24 full calendar months after a Change in Control, as defined in the Executive Officer Incentive Compensation Plan, a participant’s separation from service by the Company (or an Affiliate of the Company) not due to an Act of Misconduct (and not as a result of the Participant’s death or Disability), or by the Participant for Good Reason.

I.   Retirement. Retirement shall mean Participant’s retirement from active employment at or after age 65 or retirement from the Company or Subsidiary at or after age 55, so long as the Participant has, as of the date of such retirement, at least 10 years of service with the Company or any Subsidiary. Officers and/or Executive Officers must be a Participant in the Plan during the Plan Year for not less than ninety (90) days prior to his or her Retirement to be eligible for an incentive under the [      ] Plan.

II.  Participants

Eligible Participants in the [      ] Plan are listed in Appendix C  and certain employees or positions may be specifically included or excluded by the Compensation Committee.

If you are promoted to an eligible position after November 30, [      ], you will not be eligible to participate in the [      ] Plan.

If an Eligible Participant in the [      ] Plan also participates in the ArcBest Corporation 2012 Change in Control Plan, the terms of the ArcBest Corporation 2012 Change in Control Plan shall govern.

III. Corporate Performance Metrics

Operating Income Component: The Individual Award Opportunities provided by the Operating Income Component are based on (a) achieving certain levels of Operating Income in [      ], and (b) Your Target Payout Factor Earned. The formula below illustrates how your incentive is computed: 

Your Incentive Payment= [Performance Factor Earned x Your Target Payout Factor x Your Base Salary x the Operating Income Component Weighting]

A. Performance Factor Earned. Performance Factor Earned is shown in Appendix A and depends on the Operating Income achieved.

B. Target Payout Factor.  Your Target Payout Factor is a percentage of your Base Salary. The Target Payout Factors are listed in Appendix C.

2

 [       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan  

Page 3 of 10

ROCE Component: The Individual Award Opportunities provided by the ROCE Component are based on (a) achieving certain levels of performance for ArcBest’s Consolidated Return on Capital Employed (“ROCE”) and (b) your Target Payout Factor. The formula below illustrates how your incentive is computed: 

Your Incentive Payment = [Performance Factor Earned x Your Target Payout Factor x Your Base Salary x the ROCE Component Weighting]

A. Performance Factor Earned. Performance Factor Earned is shown in Appendix B and depends on the ROCE achieved by ArcBest for the year.

B. Target Payout Factor. Your Target Payout Factor is a percentage of your Base Salary. The Target Payout Factors are listed in Appendix C.

If the performance result falls between two rows on Appendix A or Appendix B, interpolation is used to determine the factor used in the computation of the incentive.

An example of the computation of an individual award opportunity for a Vice President is as follows:

Base Salary during the Measurement Period:  $200,000

Target Payout Factor: 40%  

[      ] ArcBest Operating Income: $93,200,000

[      ] ArcBest ROCE:  9.00%

	Operating Income	ROCE	Total
Base Salary	$ 200,000	$200,000
Your Target Payout Factor	40%	40%
Performance Factor Earned	200%	60%
Weighting	50%	50%
Your Incentive Payment	$ 80,000	$ 24,000	$ 104,000

The Compensation Committee has established maximum incentive amounts based on a maximum Performance Factor Earned of 200%  of your Target Payout Factor for the Operating Income Component and 300% of your Target Payout Factor for the ROCE Component subject to the applicable weighting for each component as provided in Appendix A and Appendix B.

IV. Effect of a Change in Control

Change in Control. Upon the occurrence of a Qualified Termination following a Change in Control, Participant shall be entitled to immediate payment of the greater of the following:

                   (a)   The amount computed under the Plan based on 100% of the Participant’s “Target Payout Factor” in Appendix C prorated using the date of the Change in Control as the end of the Measurement Period, or

           (b)   The amount computed under the Plan based on the actual percentage of Performance Factor Earned in Appendix A and Appendix B, calculated as if the Measurement Period ended on the date of the Change in Control.

V.  Payment of Award

3

 [       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan  

Page 4 of 10

Payment will be made as soon as practicable following the end of the Measurement Period, and in any event, no later than 2 ½ months after the end of the Measurement Period.

VI. Annual Incentive Compensation Plan

Defined terms in this [      ]  ArcBest 16b Annual Incentive Compensation Plan Schedule shall have the same meaning as in the Executive Officer Incentive Compensation Plan except where the context otherwise requires.

Schedule A

[      ] Plan – Operating Income Component

ArcBest 16b Annual Incentive Compensation Plan

Pursuant to the Executive Officer Incentive Compensation Plan (the “Governing Plan”), the Compensation Committee of the ArcBest Corporation Board of Directors (“Compensation Committee”) has adopted this Operating Income Component as a component of the [      ] Plan, including the following Individual Award Opportunities and Performance Measures for ArcBest Corporation and its subsidiaries. 

I. Performance Measure

[      ] Operating Income is defined as operating income as shown by the consolidated financial statements and consistent with the historical determination of operating income in ArcBest’s consolidated financial statements.

II. Required Adjustments

Adjustments to Operating Income shall be made by the Company in accordance with the Policy Regarding Required Adjustments under the ArcBest 16b Annual Incentive Compensation Plan and the ArcBest Long-Term (3-Year) Incentive Compensation Plan.

III. Discretionary Adjustments

Prior to a Change in  Control, the Compensation Committee may make any adjustment (to increase or reduce)  to any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make such adjustment appropriate and equitable.  Following a Change in Control, the Compensation Committee may make a positive adjustment only to any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make such adjustment appropriate and equitable.  In addition, the Executive Officers of the Company are permitted to make adjustments to performance metrics and awards under the [      ] Plan, provided that, such adjustment does not result in a Material increase or decrease of the aggregate annual incentive pool.

4

 [       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan  

Page 5 of 10

Schedule B

[      ] Plan – ROCE Plan Component

ArcBest 16b Annual Incentive Compensation Plan

Pursuant to the Executive Officer Incentive Compensation Plan (the “Governing Plan”), the Compensation Committee of the ArcBest Corporation Board of Directors (“Compensation Committee”) has adopted this ROCE Component as a component of the [      ] Plan, including the following Individual Award Opportunities and Performance Measures for ArcBest Corporation and its subsidiaries.  

I. Performance Measure

ROCE for ArcBest is calculated as the following ratio:

Net Income + After-tax Effect of Interest Expense

+ After-tax Effect of Imputed Interest Expense +  After-tax Effect of Amortization of intangibles

– After-tax Effect of Income from

Cash and Short-term Investments Attributable to the reduction in Average Debt

Average Equity + Average Debt + Average Imputed Debt

“Net Income” for the ROCE calculation is consolidated net income determined in accordance with Generally Accepted Accounting Principles. 

“Interest Expense” for the ROCE calculation is (i) interest on all long and short-term indebtedness, including capital leases, and other interest bearing obligations, and (ii) deferred financing cost amortization and other financing costs including letters of credit fees, reduced by the amount of interest expense on debt not included in Average Debt as defined below.

“Imputed Interest Expense” consists of the interest attributable to Average Imputed Debt assuming an interest rate of 7.5%.

“Average Debt” is the average of the beginning of the year and the end of the year current and long-term debt, with beginning of the year and end of the year current and long-term debt reduced by the respective amount of the beginning of the year and end of the year total of unrestricted cash, cash equivalents and short-term investments, and limited to a reduction of debt to zero. 

“Average Equity” is the average of the beginning of the Measurement Period and the end of the Measurement Period stockholder’s equity. 

“Average Imputed Debt” consists of the average of the beginning of the year and the end of the year present value of all payments determined using an interest rate of 7.5% on operating leases of revenue equipment with an initial term of more than two years.

“Amortization of intangibles” consists of amortization of intangibles and depreciation of software related to acquired businesses including any writedown or impairment charge related to those assets.

“Income from Cash and Short-term Investments Attributable to the reduction in Average Debt” consists of income earned on the amount by which Average Debt is reduced at the average interest rate earned in cash and short-term investments for the measurement period.

5

 [       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan  

Page 6 of 10

II.  Required Adjustments

Adjustments to ROCE shall be made by the Company in accordance with the Policy Regarding Required Adjustments under the ArcBest 16b Annual Incentive Compensation Plan and the ArcBest Long-Term (3-Year) Incentive Compensation Plan.

II. Discretionary Adjustments

Prior to a Change in  Control, the Compensation Committee may make any adjustment (to increase or reduce) to any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make such adjustment appropriate and equitable.    Following a Change in Control, the Compensation Committee may make a positive adjustment only to any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make such adjustment appropriate and equitable.  In addition, the Executive Officers of the Company are permitted to make adjustments to performance metrics and awards under the [      ] Plan, provided that, such adjustment does not result in a Material increase or decrease of the aggregate annual incentive pool.

6

[      ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

Page 7 of 10

Appendix A

Operating Income Component

	[      ] Operating Income	Performance Factor Earned
		0%
Threshold	As approved annually	25%
Target	by the Compensation	100%
Maximum	Committee	200%
		200%

Operating Income Component Weighting: 50%

7

[      ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

Page 8 of 10

Appendix B

[      ] ROCE Component

	Return on Capital Employed (“ROCE”)	Performance Factor Earned
	Less than 8%	0%
Threshold	8%	50%
Target	13%	100%
Maximum	18%	300%
	Greater than 18%	300%

ROCE Component Weighting: 50%

8

[      ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

Page 9 of 10

Appendix C

Target Payout Factors

Participants/Job Title	Target Payout Factor
ArcBest Chairman, President & CEO	[      ]%
ABF Freight President ArcBest Vice President – CFO	[      ]%
ArcBest, COO, Asset-Light Logistics AB Tech President and ArcBest SVP - CINO	[      ]%
ArcBest Vice President – General Counsel & Corporate Sec. ArcBest Vice President – Chief Human Resources Officer ArcBest Vice President – Chief Sales Officer ArcBest Vice President – Chief Yield Officer ArcBest Vice President – Chief Customer Experience Officer	[      ]%
ArcBest Vice President – Controller ArcBest Vice President – Customer Solutions	[      ]%

9

EX-10.3

Exhibit 10.3

ArcBest

Long-Term (3-Year) Incentive Compensation Plan 

Pursuant to the ArcBest Corporation (“ArcBest” or “Company”) Executive Officer Incentive Compensation Plan, the Compensation Committee of the ArcBest Corporation Board of Directors (the “Compensation Committee”) has adopted the “Long-Term Incentive Compensation Plan” (the “Plan”) and has determined that the Plan will include the following components for the three-year period beginning 1/1/[      ] and ending 12/31/[      ]:

ROCE Component	50% weighting
Total Shareholder Return (“TSR”) Component	50% weighting

The ROCE Component weighting and TSR Component weighting are determined by the Compensation Committee for each Measurement Period.

I. Defined Terms

Act of Misconduct.  Act of Misconduct shall mean the Participant (i) has committed an act of (a) gross misconduct or fraud in the performance of Participant’s duties to the Company or any Subsidiary, (b) embezzlement, fraud, or dishonesty, (c) material theft or misappropriation of Company or Subsidiary property, (d) nonpayment of any obligation owed to the Company or any Subsidiary, (e) breach of fiduciary duty, (f) violation of Company ethics policy or code of conduct, or (g) deliberate disregard of Company or Subsidiary rules; (ii) is convicted of or enters a guilty plea or plea of nolo contendere with regard to any felony or act of moral turpitude; (iii) makes an unauthorized disclosure of any Company or Subsidiary trade secret or confidential information; (iv) solicits any employee or service provider to leave the employ or cease providing services to the Company or any Subsidiary; (v) breaches any intellectual property or assignment of inventions covenant; (vi) engages in any conduct constituting unfair competition or breaches any non-competition agreement; (vii) induces any Company or Subsidiary customer to breach a contract with the Company or any Subsidiary or to cease doing business with the Company or any Subsidiary; or (viii) induces any principal for whom the Company or any Subsidiary acts as agent to terminate such agency relationship.

Disability.    Disability means a physical or mental condition resulting from bodily injury, disease or mental disorder, which constitutes a disability under the terms of the Company’s Short-Term Disability Policy.

Good Reason. Good Reason shall mean (i) any material adverse diminution in Participant’s title, duties, or responsibilities; (ii) any reduction in Participant’s base salary or employee benefits (including reducing Participant’s level of participation or bonus award opportunity in the Company’s or a Subsidiary’s incentive compensation plans) or (iii) a relocation of Participant’s principal place of employment by more than 50 miles without the prior consent of Participant.

Material.  Five percent (5%) of the aggregate Plan pool.

Measurement Period.  The Measurement Period is 1/1/[      ] to 12/31/[      ].

Qualified Termination.  Qualified Termination shall mean, within 24 full calendar months after a Change in Control, as defined in the Executive Officer Incentive Compensation Plan, a participant’s Separation from Service by the Company (or an Affiliate of the Company) not due to an Act of Misconduct (and not as a result of the Participant’s death or Disability), or by the Participant for Good Reason.

Retirement.  Retirement shall mean Participant’s retirement from active employment at or after age 65 or retirement from the Company or Subsidiary at or after age 55, so long as the Participant has, as of the date of such retirement, at least 10 years of service with the Company or any Subsidiary.

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

II. Participants

Participants in the Plan (who are not active participants in ArcBest or a Subsidiary’s Supplemental Benefit Plan or Deferred Salary Agreement program or who selected Option 1 for their 12/31/2009 SBP Freeze election)  are listed in Appendix C and certain employees may be specifically included or excluded by the Compensation Committee. For purposes of Appendix C, the term “ArcBest’ refers to both ArcBest Corporation and ArcBest II, Inc.

An employee may not become a Participant after the end of the 12th month of the Measurement Period.

If an Eligible Participant in the Plan also participates in the ArcBest Corporation 2012 Change in Control Plan, the terms of the ArcBest Corporation 2012 Change in Control Plan shall govern.

III.  Corporate Performance Metrics

ROCE Component:The Individual Award Opportunities provided by the ROCE Component are based on (a) achieving certain levels of performance for ArcBest’s consolidated Return on Capital Employed (“ROCE”) and (b) your Target Payout Value.  The formula below illustrates how your incentive is computed: 

Your Incentive Payment = [Performance Factor Earned x Your Target Payout Value x the ROCE Component Weighting].

If you become eligible to participate in the Plan during the first 12 months of the Measurement Period, your Incentive Payment will be prorated based on the number of whole months completed while you are in an eligible Job listed in the Plan, the applicable Performance Factor Earned and Your Target Payout Value. If you die, are Disabled or Retire as provided for under Section IV  of the ROCE Component, your Incentive Payment will be prorated based on the number of whole months completed from the beginning of the Measurement Period until the applicable date of death, Disability or retirement date. 

A. Performance Factor Earned. Performance Factor Earned is shown in Appendix A and depends on the ROCE achieved by ArcBest for the Measurement Period.

B. Target Payout Value.  Your Target Payout Value is the fixed dollar value you receive upon target performance as determined by the Compensation Committee.  The value varies by role within the Company. The Target Payout Values are listed in Appendix C.  

TSR Component:The Individual Award Opportunities provided by the TSR Component are based on (a) the percentile rank of the Company’s Compounded Annual Growth Rate (“CAGR”) of Total Shareholder Return relative to the Peer Companies over the Measurement Period and (b) your Target Payout Factor.  At the end of the Measurement Period, the percentile rank of the Company’s CAGR Total Shareholder Return will be calculated. Any Peer Company that is no longer publicly traded shall be excluded from this calculation. The formula below illustrates how this portion of your incentive is computed: 

Your Incentive Payment = [Performance Factor Earned x Your Target Payout Value x TSR Component Weighting].

If you become eligible to participate in the Plan during the first 12 months of the Measurement Period, your Incentive Payment will be prorated based on the number of whole months completed while you are in an eligible Job listed in the Plan, the applicable Performance Factor Earned and Your Fixed Dollar Value. If you die, are Disabled or Retire as provided for under Section IV of the TSR Component, your Incentive Payment will be prorated based on the number of whole months completed from the beginning of the Measurement Period until your date of death, Disability or retirement date.

2

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

A. Performance Factor Earned.   The Performance Factor Earned is shown in Appendix B and depends on the Company’s Compounded Annual Growth Rate of Total Shareholder Return over the Measurement Period as compared to the Peer Companies.

B. Target Payout Value.  Your Target Payout Value is a fixed dollar value you receive upon target performance as determined by the Compensation Committee. The value varies by role within the Company.  The Target Payout Values are listed in Appendix C. 

If the performance result falls between two rows on Appendix A or Appendix B, interpolation is used to determine the factor used in the computation of the incentive.

An example of the computation of an individual award opportunity for a Vice President is as follows:

Target Payout Value:  $100,000

ArcBest Consolidated 3-Year Average ROCE = 9.0%

Company’s TSR Ranking for Measurement Period: 60th percentile

		ROCE		TSR		Total
Performance Factor Earned		60%		140%
Your Target Payout Value	$	100,000	$	100,000
Weighting		50%		50%
Your Incentive Payment	$	30,000	$	70,000	$	100,000

The Compensation Committee has established maximum incentive amounts based on a maximum Performance Factor Earned of 200% for the TSR Component and 300% for the ROCE Component subject to the applicable weighting for each component as provided in Appendix A and Appendix B.

The terms of the Long-Term Incentive Compensation Plan – ROCE Component and the Long-Term Incentive Compensation Plan – TSR Component are incorporated into the Plan. 

IV. Payment of Award

Payment will be made as soon as practicable following the end of the Measurement Period, and in any event, no later than 2 ½ months after the end of the Measurement Period.

V.  Executive Officer Incentive Compensation Plan

Defined terms in this Plan shall have the same meaning as in the Executive Officer Incentive Compensation Plan, except where the context otherwise requires.

No term or provision in this Plan may conflict with any term or provision of the Executive Officer Incentive Compensation Plan. It is specifically intended that the Plan, ROCE Component and TSR Component be an “Award Agreement” and the incentives  paid hereunder be an “Award” under the terms of the Executive Officer Incentive Compensation Plan.

VI. Discretionary Adjustments

Prior to a Change in  Control, the Compensation Committee may make any adjustment (to increase or decrease) to any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make such adjustment appropriate and equitable.  Following a Change in Control, the Compensation Committee may make a positive adjustment only to any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make such adjustment appropriate and equitable.  In addition, the Executive Officers of the Company are permitted to make adjustments to performance metrics and awards under the [      ] Plan, provided that, such adjustment does not result in a Material increase or decrease of the Plan pool.

3

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

VI. Effect of Termination of Employment; Change in Control

(a) General. Except as provided in subparts (b) or (c), upon a termination of Participant’s employment with the Company or any Subsidiary for any reason prior to the completion of the Measurement Period, the Participant shall not be entitled to any Incentive Payment under the Plan.

(b) Death; Disability; Retirement.  Upon termination of Participant’s employment with the Company or any Subsidiary by reason of Participant’s death, Disability or Retirement (as defined in the Plan), Participant’s Incentive Payment shall be prorated based on the period of participation in the Plan, provided that Participant’s Incentive Payment shall be computed and paid in the normal course of business after the end of the Measurement Period. Provided, however, an employee must have completed at least 12 months of the Measurement Period to be entitled to an Incentive Payment under this Section IV(b).

(c) Change in Control. Upon the occurrence of a Qualified Termination following a Change in Control, Participant shall be entitled to immediate payment of the greater of the following:

                   (A)  The amount computed under the Plan based on 100% of the Participant’s “Target Payout Value” in Appendix C and prorated using the date of the Change in Control as the end of the Measurement Period, or

           (B)  The amount computed under the Plan based on the actual percentage of Performance Factor Earned in Appendix A and Appendix B, calculated as if the Measurement Period ended on the date of the Change in Control. And  specifically, for the TSR metric, using the Company share price as of the date of the Change in Control to calculate TSR rather than the 60-day average price for the ending of the Measurement Period.

4

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

 LTIP - ROCE Component

The Compensation Committee of the ArcBest Corporation Board of Directors has adopted this ROCE Component of the Plan (“ROCE Component”), including the following Individual Award Opportunities, Performance Measures and Participants for ArcBest Corporation and its subsidiaries for the three-year period beginning 1/1/[      ] and ending 12/31/[      ].

I. Performance Measure

ROCE for ArcBest is calculated as the following ratio for the Measurement Period:

Net Income + After-tax Effect of Interest Expense + After-tax Effect of Imputed Interest Expense + After-tax Effect of Amortization of intangibles – After-tax Effect of Income from Cash and Short-term Investments Attributable to the reduction in Avg.  Debt

Average Equity + Average Debt + Average Imputed Debt

Divided by 3

“Net Income” for the ROCE calculation is consolidated net income for the Measurement Period determined in accordance with Generally Accepted Accounting Principles

“Interest Expense” for the ROCE calculation is (i) interest on all long and short-term indebtedness and other interest bearing obligations and (ii) deferred financing cost amortization and other financing costs, including letters of credit fees for the Measurement Period, reduced by the amount of interest expense on debt not included in Average Debt as defined below.

“Imputed Interest Expense” consists of the interest attributable to Average Imputed Debt assuming an interest rate of 7.5% for the Measurement Period.

“Average Equity” is the average of the beginning of the Measurement Period and the end of the Measurement Period stockholder’s equity.    

“Average Debt” is the average of the beginning of the Measurement Period and the end of the Measurement Period current and long-term debt, with beginning of the Measurement Period and end of the Measurement Period current and long-term debt reduced by the respective amount of the beginning of the Measurement Period and end of the Measurement Period total of unrestricted cash, cash equivalents and short-term investments, and limited to a reduction of debt to zero.   

“Average Imputed Debt” consists of the average of the beginning of the Measurement Period and the end of the Measurement Period present value of all payments determined using an interest rate of 7.5% on operating leases of revenue equipment with an initial term of more than two years.

“Amortization of intangibles” consists of amortization of intangibles and depreciation of software related to acquired businesses including any writedown  or impairment charge related to those assets. 

“Income from Cash and Short-term Investments Attributable to the reduction in Average Debt” consists of income earned on the amount by which Average Debt is reduced at the average interest rate earned in cash and short-term investments for the measurement period.

5

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

II.Required Adjustments

Adjustments to ROCE shall be made by the Company in accordance with the Policy Regarding Required Adjustments under the ArcBest 16b Annual Incentive Compensation Plan and the ArcBest Long-Term (3-Year) Incentive Compensation Plan. 

6

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

LTIP - TSR Component

The Compensation Committee of the ArcBest Corporation Board of Directors has adopted this Total Shareholder Return Component of the Total Plan (“TSR Component”), including the following Individual Award Opportunities, Performance Measures, and Participants for ArcBest Corporation and its subsidiaries for the three-year period beginning 1/1/[      ] and ending 12/31/[      ].

I. Performance Measure

Total Shareholder Return. (“TSR”). Total Shareholder Return with respect to the Company and each Peer Company equals the annualized rate of return reflecting price appreciation between the beginning 60-day average share price (ending December 31 of the year immediately prior to the beginning of the Measurement Period) and the ending 60-day average share price (ending December 31 of the final year of the Measurement Period), adjusted for dividends paid and the compounding effect of dividends paid on reinvested dividends (the calculation assumes that all dividends paid are reinvested).Any Peer Company that is no longer publicly traded shall be excluded from this calculation.

Compounded Annual Growth Rate (“CAGR”). Compounded Annual Growth Rate converts the total return into a value that indicates what the return was on an annual basis for the 3-year period.

Peer Companies. The Peer Companies are the following publicly traded companies:  

Company Name	Ticker
Echo Global Logistics, Inc.	ECHO
Forward Air Corporation	FWRD
Hub Group, Inc.	HUBG
JB Hunt Transport Services, Inc.	JBHT
Knight-Swift Transportation Holdings, Inc.	KNX
Landstar System, Inc.	LSTR
Old Dominion Freight Line, Inc.	ODFL
Roadrunner Transportation Systems, Inc.	RRTS
Saia, Inc.	SAIA
Schneider National, Inc.	SNDR
Werner Enterprises, Inc.	WERN
XPO Logistics, Inc.	XPO
YRC Worldwide Inc.	YRCW

II. Adjustments

Adjustments to TSR shall be made by the Company in accordance with the Policy Regarding Required Adjustments under the ArcBest 16b Annual Incentive Compensation Plan and the ArcBest Long-Term (3-Year) Incentive Compensation Plan. 

7

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

Appendix A

[      ]-[      ] LTIP – ROCE Component

	Three-Year Average Return on Capital Employed (“ROCE”)	Performance Factor Earned
	Less than 8%	0%
Threshold	8%	50%
Target	13%	100%
Maximum	18%	300%
	Greater than 18%	300%

ROCE Component Weighting:  50%

8

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

Appendix B

[      ]-[      ] LTIP – TSR Component

	Percentile ranking of the Company’s Compounded Annual Growth Rate TSR relative to Peer Companies over the Measurement Period	Performance Factor Earned
	Below 25th Percentile	0%
Threshold	25th Percentile	25%
Target	50th Percentile	100%
Maximum	75th Percentile	200%
	Above 75th Percentile	200%

TSR Component Weighting:  50%

9

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

Appendix C

LTIP Target Payout Value

Participants/Job Title	Target Payout Value
Chairman, President, and Chief Executive Officer	$                   x
President, ABF Freight	$                  x
Chief Financial Officer	$                   x
Chf Oper Officer, Asset-Light Logistics	$                  x
Sr VP Chf Innov Off, ArcBest & Pres, ArcBest Tech	$                   x
Vice President, General Counsel and Corp Secretary	$                 x
Chief Customer Experience Officer	$                   x
Chief Yield Officer	$                   x
Chief Sales Officer	$                   x
Senior Vice President, Emp Rel, Safety and HR	$                  x
Chief Human Resources Officer	$                  x
VP, Digital Business Platforms and CEO, FleetNet	$                 x
Vice President, Customer Solutions	$                x
Vice President, Controller	$                   x
Vice President, Financial Services and Risk Mgmt	$                   x
Vice President, Yield Management	$                  x
Vice President, Technology Research & Development	$                   x
Vice President, Operations Science	$                   x
Vice President, Service Center Operations	$                  x
Vice President, Real Estate	$                   x
Vice President & Chief Information Officer	$                   x
Vice President, Linehaul Operations	$                   x
Vice President, Talent and Growth Initiatives	$                   x
Vice President, Chief Technology Officer	$                   x
Vice President, Change Management	$                   x
EVP, Asset Light Exp Svcs & Strategic Capacity	$                   x
Vice President, Internal Audit	$                   x
Vice President, Pricing, Treasurer & Controller	$                  x
Vice President Sales - West	$                   x
Vice President Sales - East	$                   x
Vice President, People Services	$                     x
Vice President, Data Science	$                   x
Vice President, Strategic Capacity & Carrier Exp	$                     x
Vice President, Tax	$                     x
Vice President, Treasurer	$                     x
Vice President, Managed Solutions	$                     x
Vice President, Investor Relations	$                     x

10

ArcBest Corporation [      ] Long-Term Incentive Compensation Plan

Vice President, Controller Asset-Light Logistics	$                    x
Vice President, Customer Experience	$                    x
Vice President International	$                     x
Vice President, Moving Services and Yield Strategy	$                     x
Project Executive	$                     x
Vice President, Expedite and Dedicated Operations	$                     x

11

EX-10.4

Exhibit 10.4

ARCBEST CORPORATION
RESTRICTED STOCK UNIT AWARD AGREEMENT
(Non-Employee Directors – with deferral feature)

Participant:XXXXXXXXXX

Grant Date:XXXXX XX,  XXXX

Award Number:XXXX.XXX

Restricted Stock Units Awarded:x,xxx

This Restricted Stock Unit Award Agreement (this “Agreement”) is dated as of this XXXX day of XXXXX XX, XXXX (the “Grant Date”), and is between ArcBest Corporation (the “Company”) and XXXXXXXXXXX (“Participant”).

WHEREAS, the Company, by action of the Board and approval of its shareholders established the ArcBest Corporation Ownership Incentive Plan (the “Plan”);

WHEREAS, Participant is a member of the Board and is not employed by the Company or a Subsidiary;

WHEREAS, the Company desires to encourage Participant to own Common Stock for the purposes stated in Section 1 of the Plan; and

WHEREAS, Participant and the Company have entered into this Agreement to govern the terms of the Restricted Stock Unit Award (as defined below) granted to Participant by the Company. 

NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:

1. Definitions

Defined terms in the Plan shall have the same meaning in this Agreement, except where the context otherwise requires. 

2. Grant of Restricted Stock Units

On the Grant Date, the Company hereby grants to Participant an Award of xxxxx Restricted Stock Units (the “Award”) in accordance with Section 9 of the Plan and subject to the conditions set forth in this Agreement and the Plan (as amended from time to time).  Each Restricted Stock Unit subject to the Award represents the right to receive one Share (as adjusted from time to time pursuant to Paragraph 13 hereof and/or Section 13 of the Plan) upon the terms and subject to the conditions (including the vesting conditions) set forth in this Agreement and the Plan.  By accepting the Award, Participant irrevocably agrees on behalf of Participant and Participant’s successors and permitted assigns to all of the terms and conditions of the Award as set forth in or pursuant to this Agreement and the Plan (as such Plan may be amended from time to time).

3. Vesting; Payment

(a) The Award shall not be vested as of the Grant Date and shall be forfeitable unless and until otherwise vested pursuant to the terms of this Agreement.  After the Grant Date, provided that Participant remains a member of the Board continuously through the first anniversary of the Grant Date (the “Normal Vesting Date”), the Award shall become vested with respect to 100% of the Restricted Stock Units on such Normal Vesting Date.  In addition, prior to the Normal Vesting Date:

(i)  the Award shall become vested with respect to 100% of the Restricted Stock Units on the first date on or after the Grant Date that the Participant satisfies the requirements for Normal Retirement, as defined below, whether or not actual retirement or separation from service has occurred on that date.

(ii) on the first date on or after the Grant Date on which Participant satisfies the requirements for Early Retirement, as defined below, whether or not actual retirement or separation from service has occurred on that date, the Award shall become vested with respect to the number of the Restricted Stock Units subject to the Award multiplied by a fraction, (A) the numerator of which is equal to the number of full months between such date and the Grant Date, and (B) the denominator of which is 12, and the Award shall continue to vest on the fifteenth day of each subsequent month with respect to an additional one-twelfth of the number of Restricted Stock Units subject to the Award until the first day of the month in which the Normal Vesting Date occurs.     In the month that the Normal Vesting Date occurs, all Units not previously vested shall become vested on the date of the month that corresponds to the Grant Date.

For purposes of this Agreement, the term "Normal Retirement" shall mean Participant's retirement from service as a member of the Board on or after age 65 so long as Participant has, as of the date of such retirement, at least 5 years of service with the Company. 

For purposes of this Agreement, the term "Early Retirement" shall mean Participant's retirement from service as a member of the Board with at least 3 years of Board member service with the Company.

Restricted Stock Units that have vested and are no longer subject to a substantial risk of forfeiture are referred to herein as "Vested Units."  Restricted Stock Units that are not vested and generally remain subject to forfeiture are referred to herein as "Unvested Units."

(b) Notwithstanding anything to the contrary in this Paragraph 3, the Award shall be subject to earlier acceleration of vesting and/or forfeiture and transfer as provided in this Agreement and the Plan.

(c) Subject to Paragraph 3(d) below, on the Normal Vesting Date, or, if earlier, the date Participant’s service as a member of the Board terminates on or after he satisfied the requirements for accelerated vesting by virtue of qualifying for Normal Retirement or Early Retirement, Participant shall be entitled to receive one Share (subject to adjustment under Paragraph 13 hereof and/or Section 13 of the Plan)  for each Vested Unit in accordance with the terms and provisions of this Agreement and the Plan.  The Company will transfer such Shares to

2

Participant or Participant’s designee subject to (i) Participant’s satisfaction of any required tax withholding obligations as set forth in Paragraph 6  and (ii) the restrictions, if any, imposed by the Company under Paragraph 14(f) or otherwise pursuant to the terms and conditions of the Plan and this Agreement. 

(d) Subject to the satisfaction of all of the tax withholding obligations described in Section 6 below, Participant may irrevocably elect to defer the receipt of any Shares issuable pursuant to Vested Units, other than Units distributable by reason of Sections 6(b) or (c), by submitting to the Company an election to defer receipt in the form attached hereto as Exhibit A (the “Deferral Election Form”).    In the event Participant intends to defer the receipt of any Shares, Participant must submit a proposed Deferral Election Form to the Company by December 31 of the year preceding the year of the Grant Date of the Award.Notwithstanding anything herein to the contrary, any Shares subject to Vested Units with respect to which a deferred payment date has been elected shall be immediately distributed to Participant or Participant’s estate, as applicable, upon Participant’s death or Disability (as defined below) or upon a “change in the ownership or effective control” of the Company or in the “ownership of a substantial portion of the assets” of the Company within the meanings ascribed to such terms in Treasury Department regulations or other guidance issued under Section 409A of the Code.  Participant hereby represents that he or she understands the effect of any such deferral of the receipt of shares under relevant federal, state and local tax laws.

(e) The date upon which Shares are to be issued under either Paragraph 3(c) or 3(d) is referred to as the “Settlement Date.”  The issuance of the Shares hereunder may be effected by the issuance of a stock certificate, recording shares on the stock records of the Company or by crediting shares in an account established on the Participant’s behalf with a brokerage firm or other custodian, in each case as determined by the Company.  Fractional shares will not be issued pursuant to the Award.

Notwithstanding the above, prior to a Change in Control, (i) for administrative or other reasons, the Company may from time to time temporarily suspend the issuance of Shares in respect of earned Vested Units (whether or not deferred), (ii) the Company shall not be obligated to deliver any Shares during any period when the Company determines that the delivery of Shares hereunder would violate any federal, state or other applicable laws, and (iii) the date on which shares are issued hereunder may include a delay in order to provide the Company such time as it determines appropriate to address tax withholding and other administrative matters.  Any delay pursuant to 3(e)(ii) shall only be until such time that the Company determines that the delivery of shares would no longer violate any Federal, state or other applicable law.  Notwithstanding the delay for administrative or other reasons provided for in clauses (i) and (iii) above, in no event will such issuance of shares be delayed beyond the later of the end of the calendar year in which the Settlement Date occurs, or the 15th day of the third month after the end of such year, or such other time as permitted under Section 409A of the Code and the regulations thereunder without the imposition of any additional taxes under Section 409A of the Code.

Notwithstanding any other provision of the Plan, this Agreement or the Deferral Election Form to the contrary, the Plan, this Agreement and the Deferral Election Form shall be construed or deemed to be amended as necessary to comply with the requirements of Section 409A of the Code to avoid the imposition of any additional or accelerated taxes or other penalties under

3

Section 409A of the Code.  The Committee, in its sole discretion, shall determine the requirements of Section 409A of the Code applicable to the Plan, this Agreement and the Deferral Election Form and shall interpret the terms of the Plan, this Agreement and the Deferral Election Form consistently therewith. Under no circumstances, however, shall the Company have any liability under the Plan, this Agreement or the Deferral Election Form for any taxes, penalties or interest due on amounts paid or payable pursuant to the Plan, this Agreement or the Deferral Election Form, including any taxes, penalties or interest imposed under Section 409A of the Code.

4. Status of Participant

Participant shall have no rights as a stockholder (including, without limitation, any voting rights with respect to the Shares subject to the Award and, except to the extent the Award is adjusted pursuant to Paragraph 13 hereof and/or Section 13 of the Plan, the right to receive any payments with respect to dividends or other distributions paid with respect to the Shares subject to this Award) with respect to either the Restricted Stock Units granted hereunder or the Shares underlying the Restricted Stock Units, unless and until such Shares are issued in respect of Vested Units, and then only to the extent of such issued Shares.

5. Effect of Termination of Board Service; Change in Control

(a) General.  Except as provided in Paragraphs 5(b) or (c), upon a termination of Participant’s service as a member of the Board for any reason, the Unvested Units shall be forfeited by Participant and cancelled and surrendered to the Company without payment of any consideration to Participant.

(b) Death; Disability.  Upon a termination of Participant’s service as a member of the Board by reason of Participant’s death or Disability, all Unvested Units shall vest as of the date of such termination of service and be issued as soon as administratively possible.  For the purposes of this Agreement, the term “Disability” shall mean a condition under which Participant either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under an accident and health plan. 

(c) Change in Control.  All Unvested Units shall vest as of the date a Change in Control occurs and be issued as soon as administratively possible so long as with respect to any amounts that the Company determines to be deferred compensation within the meaning of Section 409A of the Code, such Change in Control qualifies as a “change in the ownership or effective control” of the Company or in the “ownership of a substantial portion of the assets” of the Company within the meanings ascribed to such terms in Treasury Department regulations or other guidance issued under Section 409A of the Code.

4

6. Withholding and Disposition of Shares

Participant is liable and responsible for all taxes owed in connection with the Award, regardless of any action the Company takes with respect to any tax reporting or withholding obligations that arise in connection with the Award. The Company does not make any representation or undertaking regarding the tax treatment of the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate Participant’s tax liability.

7. Excess Parachute Payments

Notwithstanding anything in this Agreement to the contrary, if any of the payments in respect of this Award, together with any other payments to which Participant has the right to receive from the Company or any purchaser, successor, or assign, would constitute an “excess parachute payment” (as defined in Code Section 280G), the payments pursuant to the Award and/or such other plans or agreements shall be reduced to the largest amount as will result in no portion of such payments being subject to the excise tax imposed by Code Section 4999.

8. Plan Controls

The terms of this Agreement are governed by the terms of the Plan, as it exists on the Grant Date and as the Plan is amended from time to time.  In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the terms of the Plan shall control, except as expressly stated otherwise in this Agreement.  The term “Section” generally refers to provisions within the Plan; provided, however, the term “Paragraph” shall refer to a provision of this Agreement. 

9. Limitation on Rights; No Right to Future Grants; Extraordinary Item 

By entering into this Agreement and accepting the Award, Participant acknowledges that: (a) Participant’s participation in the Plan is voluntary and (b) the grant of the Award will not be interpreted to form an employment or Board member relationship with the Company or any Subsidiary. The Company shall be under no obligation whatsoever to advise Participant of the existence, maturity or termination of any of Participant’s rights hereunder and Participant shall be responsible for familiarizing himself or herself with all matters contained herein and in the Plan which may affect any of Participant’s rights or privileges hereunder.

10. Committee Authority

Any question concerning the interpretation of this Agreement or the Plan, any adjustments required to be made under the Plan, and any controversy that may arise under the Plan or this Agreement shall be determined by the Committee in its sole and absolute discretion.  Such decision by the Committee shall be final and binding.

5

11. Transfer Restrictions

(a) General Restrictions.  Any sale, transfer, assignment, encumbrance, pledge, hypothecation, conveyance in trust, gift, transfer by bequest, devise or descent, or other transfer or disposition of any kind, whether voluntary or by operation of law, directly or indirectly, of (i) Unvested Units, (ii) Vested Units prior to the Settlement Date, or (iii) Shares subject to such Unvested Units or Vested Units, shall be strictly prohibited and void; provided, however, Participant may assign or transfer the Award to the extent permitted under the Plan, provided that the Award shall be subject to all the terms and condition of the Plan, this Agreement and any other terms required by the Committee as a condition to such transfer.

(b)Transfers by Covered Persons. If Participant is a “Covered Person” as defined in the ArcBest Corporation Stock Ownership Policy for Directors and Executives (the “Policy”) as amended from time to time, Participant agrees that he or she shall not sell or otherwise dispose or transfer any shares from this Award or any other Award except to the extent permitted by the Policy. 

12. Suspension or Termination of Award

Pursuant to Section 16 of the Plan, if at any time prior to Participant’s receipt of Shares pursuant to the Award an Authorized Officer reasonably believes that Participant may have committed an Act of Misconduct (as defined below), the Authorized Officer, the Committee or the Board may suspend Participant’s rights to vest in any Restricted Stock Units, and/or to receive payment for or receive Shares in settlement of Vested Units pending a determination of whether an Act of Misconduct has been committed.  In addition, pursuant to Section 16 of the Plan, if the Committee or an Authorized Officer determines Participant has committed an act of embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company or any Subsidiary, breach of fiduciary duty, violation of Company ethics policy or code of conduct, deliberate disregard of Company or Subsidiary rules, or if Participant makes an unauthorized disclosure of any Company or Subsidiary trade secret or confidential information, solicits any employee or service provider to leave the employ or cease providing services to the Company or any Subsidiary, breaches any intellectual property or assignment of inventions covenant, engages in any conduct constituting unfair competition, breaches any non-competition agreement, induces any Company or Subsidiary customer to breach a contract with the Company or any Subsidiary or to cease doing business with the Company or any Subsidiary, or induces any principal for whom the Company or any Subsidiary acts as agent to terminate such agency relationship (any of the foregoing acts, an “Act of Misconduct”), then except as otherwise provided by the Committee, (i) neither Participant nor Participant’s estate nor transferee will be entitled to vest in or have the restrictions on Unvested Units lapse, or otherwise receive payment or Shares in respect of Vested Units and (ii) Participant will forfeit all undelivered (including deferred) Vested and Unvested Units.  In making such determination, the Committee or an Authorized Officer shall give Participant an opportunity to appear and present evidence on his or her behalf at a hearing before the Committee or an opportunity to submit written comments, documents, information and arguments to be considered by the Committee.  Any dispute by Participant or other person as to the determination of the Committee must be resolved pursuant to Paragraph 14(j).

6

13. Adjustment of and Changes in the Stock

In the event that the number of Shares increases or decreases through a reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend (other than regular, quarterly cash dividends), or otherwise, the Committee shall equitably adjust the number of Shares subject to this Award to reflect such increase or decrease. 

14. General Provisions

(a) Notices.  Whenever any notice is required or permitted hereunder, such notice must be in writing and delivered in person or by mail (to the address set forth below if notice is being delivered to the Company) or electronically.  Any notice delivered in person or by mail shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address that such person has theretofore specified by written notice delivered in accordance herewith.  Any notice given by the Company to Participant directed to Participant at Participant’s address on file with the Company shall be effective to bind Participant and any other person who shall have acquired rights under this Agreement.  The Company or Participant may change, by written notice to the other, the address previously specified for receiving notices.  Notices delivered to the Company in person or by mail shall be addressed as follows:

Company:ArcBest Corporation
Attn:Executive Benefits
P.O. Box 10048
Fort Smith, AR 72917-0048
Fax: (479) 494-6770

(b) No Waiver.  No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.

(c) Undertaking.  Participant hereby agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Participant or the Award pursuant to the express provisions of this Agreement.

(d) Entire Contract.  This Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof.  This Agreement is made pursuant to the provisions of the Plan and will in all respects be construed in conformity with the express terms and provisions of the Plan.

(e) Successors and Assigns.  The provisions of this Agreement will inure to the benefit of, and be binding on, the Company and its successors and assigns and Participant and Participant’s legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person will have become a party to this Agreement and agreed in writing to join herein and be bound by the terms and conditions hereof.

7

(f) Securities Law Compliance.  The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by Participant or other subsequent transfers by Participant of any Shares issued as a result of or under this Award, including without limitation (i) restrictions under an insider trading policy, (ii) restrictions that may be necessary in the absence of an effective registration statement under the Securities Act of 1933, as amended, covering the Award and/or the Shares underlying the Award and (iii) restrictions as to the use of a specified brokerage firm or other agent for such resales or other transfers.  Any sale of the Shares must also comply with other applicable laws and regulations governing the sale of such shares. 

(g) Information Confidential.  As partial consideration for the granting of the Award:

(i)  Participant agrees that he or she will keep confidential all information and knowledge that Participant has relating to the manner and amount of his or her participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to Participant’s spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan. 

(ii)Participant agrees that he or she will maintain the confidentiality of any Confidential Information to which he or she is entrusted by the Company, except when disclosure is authorized by the Company or required by laws or regulations.  Confidential Information includes “trade secrets” as defined by applicable law and all other non-public information that might be of use to competitors, or harmful to the Company or its customers if disclosed.  The obligation to preserve Confidential Information shall continue even after Participant’s service to the Company ends.  Participant agrees that, in addition to all other legal and equitable remedies, the Company shall be entitled to seek injunctive relief in the event of a violation of this provision by the Participant.

(iii)Nothing in this Agreement will prevent Participant from: (A) making a good faith report of possible violations of applicable law to any governmental agency or entity or (B) making disclosures that are protected under the whistleblower provisions of applicable law. For the avoidance of doubt, nothing herein shall prevent Participant from making a disclosure that: (1) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and  solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Further, an individual who files a lawsuit for retaliation by an employer of reporting a suspected violation of law may make disclosures without violating this Section 14(g) to the attorney of the individual and use such information in the court proceeding.

(h) Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to any awards granted under the Plan by electronic means or to request Participant’s consent to participate in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, and such consent shall remain in effect

8

throughout Participant’s term of service with the Company and thereafter until withdrawn in writing by Participant. 

(i) Governing Law.  Except as may otherwise be provided in the Plan, the provisions of this Agreement shall be governed by the laws of the State of Delaware, without giving effect to principles of conflicts of law.

(j) Arbitration of Disputes.  Pursuant to Section 23 of the Plan, Participant hereby agrees as follows:

(i) If Participant or Participant’s transferee wishes to challenge any action of the Committee or the Plan Administrator, the person may do so only by submitting to binding arbitration with respect to such decision.  The review by the arbitrator will be limited to determining whether Participant or Participant’s transferee has proven that the Committee’s decision was arbitrary or capricious.  This arbitration will be the sole and exclusive review permitted of the Committee’s decision.  Participant explicitly waives any right to judicial review. 

(ii) Notice of demand for arbitration will be made in writing to the Committee within thirty (30) days after written notice to Participant of the applicable decision by the Committee.  The arbitrator will be selected by mutual agreement of the Committee and Participant.  If the Committee and Participant are unable to agree on an arbitrator, the arbitrator will be selected by the American Arbitration Association.  The arbitrator, no matter how selected, must be neutral within the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration Association.  The arbitrator will administer and conduct the arbitration pursuant to the Commercial Rules of Dispute Resolution of the American Arbitration Association.  Each side will bear its own fees and expenses, including its own attorney’s fees, and each side will bear one half of the arbitrator’s fees and expenses; provided, however, that the arbitrator will have the discretion to award the prevailing party its fees and expenses.  The arbitrator will have no authority to award exemplary, punitive, special, indirect, consequential, or other extracontractual damages.  The decision of the arbitrator on the issue(s) presented for arbitration will be final and conclusive and any court of competent jurisdiction may enforce it.

(k) Section 409A of the Code.  This Award is intended to comply, to the extent applicable, with the election, distribution and any other requirements of Section 409A of the Code and, as such, shall be interpreted in a manner consistent therewith.  Notwithstanding anything herein or in the Plan to the contrary, the Company may, in its sole discretion, amend this Award (which amendment shall be effective upon its adoption or at such other time designated by the Company) as may be necessary to avoid the imposition of the additional tax under Section 409A of the Code or otherwise comply with Section 409A and the regulations thereunder; provided, however, that any such amendment shall be implemented in such a manner as to preserve, to the greatest extent possible, the terms and conditions of this Award as in existence immediately prior to any such amendment.

(l) Board Policies and Guidelines.  Participant acknowledges that this Award is subject to certain policies and guidelines as may be from time to time enacted by the Board of Directors of the Company including guidelines for the Recoupment of Incentive Compensation adopted by the Board of Directors of the Company effective October 18, 2007.

9

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

ARCBEST CORPORATION

By: _____________________________

      Judy R. McReynolds

      Chairman, President & CEO

PARTICIPANT

________________________________

 xxxxxxxxxxx

10

Return Deferral Form by xxx xx, xxxx

Exhibit A

ARCBEST CORPORATION
RESTRICTED STOCK UNIT
INITIAL DEFERRAL ELECTIONFORM FOR [      ] AWARDS

Effective as of ________________, the undersigned hereby irrevocably elects (the “Election”) to defer receipt of certain shares of common stock (the “Shares”) of ArcBest Corporation (the “Company”) related to the Restricted Stock Units (the “Award”) awarded under and pursuant to any Restricted Stock Unit Award Agreement dated between January 1, [   ] and December 31, [   ]  (the “Award Agreement”) and the ArcBest Corporation Ownership Incentive Plan, as amended from time to time (the “Plan”).  This deferral shall be made in accordance with the terms and provisions outlined in this Election in the manner and amount set forth below.    In making this Election, you may elect to defer the settlement of all or a portion of your Award.  Your deferral must be expressed as a percentage of the Restricted Stock Units subject to the Award.  In executing this Election form you acknowledge that, in order to be effective, either (i) if on the Grant Date set forth in your Award Agreement or within 12 months following such Grant Date you become wholly or partially vested in your Award by virtue of satisfying  the requirements (as defined in the Award Agreement) for either Normal Retirement or Early Retirement (other than actual separation from service), the Election must be returned no later than December 31 of the year preceding the year in which the Grant Date set forth in your Award Agreement occurs, or (ii) if the preceding clause (i) does not apply to you, (A) the Election must be returned no later than 30 days following the Grant Date set forth in your Award Agreement, and (B) the portion of your Award subject to this Election must not become vested until more than 12 months following the date of this Election (or, if later, 12 months following the Grant Date).

In general, all deferrals pursuant to this election will be paid out in Shares.  Subject to the terms and conditions of the Award Agreement and the Plan, all of the Shares you are entitled to receive on the Settlement Date specified in this Election will be transferred to you on the applicable Settlement Date.

Amount of the Deferral

I hereby irrevocably elect to defer settlement of _____% of the Shares subject to the Award.

Duration of the Deferral

Settlement of that portion of the Award specified above shall be deferred until [complete by checking the appropriate box below and, if applicable, filling in the distribution date.  Check only one box]:

_____________, 20_____ [Note: this date must be after the third anniversary of the [     ] Grant Date]; or

the termination of my service as a member of the Board; or

the earlier of _____________, 20_____ [Note: this date must be after the third anniversary of the [   ]  Grant Date] or the termination of my service as a member of the Board; or

the later of _____________, 20_____ [Note: this date must be after the third anniversary of the -  [   ]  Grant Date]or the termination of my service as a member of the Board.

Terms and Conditions

By signing this form, you acknowledge your understanding and acceptance of the following:

1. Submission of Election to the Company. You understand that (i) if on the Grant Date set forth in your Award Agreement or within 12 months following such Grant Date you satisfy or will satisfy the vesting requirements for either Normal Retirement or Early Retirement (each as defined in the Award Agreement), the Election must be submitted to the Company no later than December 31 of the year preceding the year in which the Award was granted or (ii) if the preceding clause (i) does not apply to you, the Election must be submitted to the Company no later than 30 days following the date the Award was granted.

2. Status of Participant.  You will have no rights as a stockholder (including, without limitation, any voting rights with respect to the Units subject to this Election) with respect to the Units subject to this Election, unless and until Shares with respect to such Units are issued to you hereunder. 

3. Payment Acceleration.    Notwithstanding anything herein to the contrary, any Shares subject to this Election shall be immediately distributed to you or your estate, as applicable, upon your death or Disability (as defined in the Award Agreement) or upon a “change in the ownership or effective control” of the Company or in the “ownership of a substantial portion of the assets” of the Company within the meanings ascribed to such terms in Treasury Department regulations or other guidance issued under Section 409A of the Code. 

4. Administration. This Election is administered and interpreted by the Committee (as such term is defined in the Plan). The Committee has full and exclusive discretion to interpret and administer this Election. All actions, interpretations and decisions of the Committee are conclusive and binding on all persons, and will be given the maximum possible deference allowed by law.

2

5. Arbitration of Disputes.  All disputes under this Election form shall be subject to arbitration pursuant to Paragraph 14(j) of the Award Agreement and Section 23 of the Plan.

Submitted by: [Participant] Accepted by: ARCBEST CORPORATION By: Name: Title: 

3

EX-10.5

Exhibit 10.5

ARCBEST CORPORATION

RESTRICTED STOCK UNIT AWARD AGREEMENT

(Employees)

Participant:	First Name MI Last Name
Grant Date:	[   ]
Award Number:	[   ]
Restricted Stock Units Awarded:	[   ]

This Restricted Stock Unit Award Agreement (this “Agreement”) is dated as of this [   ] day of [   ][   ] (the “Grant Date”), and is between ArcBest Corporation (the “Company”) and [First Name/MI//Last Name] (“Participant”).

WHEREAS, the Company, by action of the Board and approval of its shareholders established the ArcBest Corporation Ownership Incentive Plan (the “Plan”);

WHEREAS, Participant is employed by the Company or a Subsidiary and the Company desires to encourage Participant to own Common Stock for the purposes stated in Section 1 of the Plan;

WHEREAS, Participant and the Company have entered into this Agreement to govern the terms of the Restricted Stock Unit Award (as defined below) granted to Participant by the Company.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:

1. Definitions

Defined terms in the Plan shall have the same meaning in this Agreement, except where the context otherwise requires.

2. Grant of Restricted StockUnits

On the Grant Date, the Company hereby grants to Participant an Award of [      ] Restricted Stock Units (the “Award”) in accordance with Section 9 of the Plan and subject to the conditions set forth in this Agreement and the Plan (as amended from time to time). Each Restricted Stock Unit subject to the Award represents the right to receive one Share (as adjusted from time to time pursuant to Paragraph 13 hereof and/or Section 13 of the Plan) upon the terms and subject to the conditions (including the vesting conditions) set forth in this Agreement and the Plan. By accepting the Award, Participant irrevocably agrees on behalf of Participant and Participant’s successors and permitted assigns to all of the terms and conditions of the Award as set forth in or pursuant to this Agreement and the Plan (as such Plan may be amended from time to time).

In addition, Participant consents to receive documents from the Company and any plan administrator by means of electronic delivery, provided that such delivery complies with applicable law, including, without limitation, documents pursuant or relating to any equity award granted to you under the Plan or any other current or future equity or other benefit plan of the Company (the “Company’s Equity Plans”). This consent shall be effective for the entire time that you are a participant in a Company Equity Plan.

Exhibit 10.5

3. Vesting;Payment

(a)The Award shall not be vested as of the Grant Date and shall be forfeitable unless and until otherwise vested pursuant to the terms of this Agreement. After the Grant Date, provided that Participant remains continuously employed by the Company through the fourth anniversary of the Grant Date (the “Normal Vesting Date”), the Award shall become vested with respect to 100% of the Restricted Stock Units on such Normal Vesting Date. In addition, prior to the Normal Vesting Date:

(i)the Award shall become vested with respect to 100% of the Restricted Stock Units on the date Participant first satisfies the requirements for Normal Retirement, as defined below, whether or not his actual retirement or separation from service has occurred on that date, and

(ii)on the first date on or after the first anniversary of the Grant Date on which Participant satisfies the requirements for Early Retirement, as defined below, whether or not actual retirement or separation from service has occurred on that date, the Award shall become vested with respect to the number of the Restricted Stock Units subject to the Award multiplied by a fraction, (A) the numerator of which is equal to the number of full months between such date and the Grant Date, and (B) the denominator of which is 48, and the Award shall continue to vest on the fifteenth day of each subsequent month with respect to an additional one-forty-eighth of the number of the Restricted Stock Units subject to the Award until the first day of the month in which the Normal Vesting Date occurs. In the month that the Normal Vesting Date occurs, all Units not previously vested shall become vested on the date of the month that corresponds to the Grant Date.

For purposes of this Agreement, the term “Normal Retirement” shall mean Participant’s retirement from active employment by or service with the Company or any Subsidiary on or after age 65.

For purposes of this Agreement, the term “Early Retirement” shall mean Participant’s retirement from active employment by or service with the Company or any Subsidiary on or after age 55 or greater, so long as Participant has, as of the date of such retirement, at least 10 years of service with the Company or any Subsidiary.

Restricted Stock Units that have vested and are no longer subject to a substantial risk of forfeiture are referred to herein as “Vested Units.” Restricted Stock Units that are not vested and generally remain subject to forfeiture are referred to herein as “Unvested Units.”

(b)The vesting period of the Award set forth in Paragraph 3(a) may be adjusted by the Compensation Committee (“Committee”) to reflect the decreased level of employment during any period in which Participant is on an approved leave of absence or is employed on a less than full time basis. Notwithstanding anything to the contrary in this Paragraph 3, the Award shall be subject to earlier acceleration of vesting and/or forfeiture and transfer as provided in this Agreement and the Plan. In no event may any adjustment under this paragraph delay the Settlement Date for any Award beyond the Normal Vesting Date or Separation of Service if earlier.

(c)Subject to Paragraph 3(d) below, on the Normal Vesting Date, or, if earlier, the date Participant’s employment with the Company terminates on or after he satisfied the requirements for accelerated vesting by virtue of qualifying for Normal Retirement or Early Retirement, other than

Exhibit 10.5

any termination for Cause (as defined below), Participant shall be entitled to receive one Share (subject to adjustment under Paragraph 13 hereof and/or Section 13 of the Plan) for each Vested Unit in accordance with the terms and provisions of this Agreement and the Plan. The Company will transfer such Shares to Participant or Participant’s designee subject to (i) Participant’s satisfaction of any required tax withholding obligations as set forth in Paragraph 6 and (ii) the restrictions, if any, imposed by the Company pursuant to Paragraph 14(f) or otherwise pursuant to the terms and conditions of the Plan and this Agreement.

(d)The date upon which Shares are to be issued under Paragraph 3(c) is referred to as the “Settlement Date.” The issuance of the Shares hereunder may be effected by the issuance of a stock certificate, recording shares on the stock records of the Company or by crediting shares in an account established on the Participant’s behalf with a brokerage firm or other custodian, in each case as determined by the Company. Fractional shares will not be issued pursuant to the Award.

Notwithstanding the above, prior to a Change in Control (i) for administrative or other reasons, the Company may from time to time temporarily suspend the issuance of Shares in respect of earned Vested Units, (ii) the Company shall not be obligated to deliver any Shares during any period when the Company determines that the delivery of Shares hereunder would violate any federal, state or other applicable laws, and (iii) the date on which shares are issued hereunder may include a delay in order to provide the Company such time as it determines appropriate to address tax withholding and other administrative matters. Any delay pursuant to 3(d)(ii) shall only be until such time that the Company determines that the delivery of shares would no longer violate any federal, state or other applicable law. Notwithstanding the delay for administrative or other reasons provided for in clauses (i) and (iii) above, in no event will such issuance of shares be delayed beyond the later of the end of the calendar year or the 15th day of the third month after the month in which the Settlement Date occurs, or such other time as permitted under Section 409A of the Code and the regulations thereunder without the imposition of any additional taxes under Section 409A of the Code.

Notwithstanding any other provision of the Plan or this Agreement, the Plan and this Agreement shall be construed or deemed to be amended as necessary to comply with the requirements of Section 409A of the Code to avoid the imposition of any additional or accelerated taxes or other penalties under Section 409A of the Code. The Committee, in its sole discretion, shall determine the requirements of Section 409A of the Code applicable to the Plan, and this Agreement and shall interpret the terms of the Plan and this Agreement consistently therewith. Under no circumstances, however, shall the Company have any liability under the Plan or this Agreement for any taxes, penalties or interest due on amounts paid or payable pursuant to the Plan or this Agreement, including any taxes, penalties or interest imposed under Section 409A of the Code.

4. Status ofParticipant

Participant shall have no rights as a stockholder (including, without limitation, any voting rights with respect to the Shares subject to the Award and, except to the extent the Award is adjusted pursuant to Paragraph 13 hereof and/or Section 13 of the Plan, the right to receive any payments with respect to dividends or other distributions paid with respect to the Shares subject to this Award) with respect to either the Restricted Stock Units granted hereunder or the Shares underlying the Restricted Stock Units, unless and until such Shares are issued in respect of Vested Units, and then only to the extent of such issued Shares.

Exhibit 10.5

5. Effect of Termination of Employment; Change inControl

(a)General. Except as provided in Paragraphs 5(c) or (d), upon a termination of Participant’s employment with the Company or any Subsidiary for any reason, the Unvested Units shall be forfeited by Participant and cancelled and surrendered to the Company without payment of any consideration to Participant.

(b)Cause. Upon a termination of Participant’s employment with the Company or any Subsidiary for Cause (as defined below), all Vested Units and Unvested Units shall be forfeited by Participant and cancelled and surrendered to the Company without payment of any consideration to Participant.

(c)Death; Disability. Upon a termination of Participant’s employment with the Company or any Subsidiary by reason of Participant’s death or Disability all Unvested Units shall vest as of the date of such termination of service and be issued as soon as administratively possible. For the purposes of this Agreement, the term “Disability” shall mean a condition under which Participant either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

(d)Change in Control. Upon a termination of Participant’s employment with the Company or any Subsidiary by the Company or any Subsidiary without Cause (as defined below) or by Participant for Good Reason (as defined below), in either case, within the 24-month period immediately following a Change in Control, all Unvested Units shall vest as of the date of such termination of employment and be issued as soon as administratively possible. For purposes of this Agreement, the term “Cause” shall mean (i) Participant’s gross misconduct or fraud in the performance of Participant’s duties to the Company or any Subsidiary; (ii) Participant’s conviction or guilty plea or plea of nolo contendere with respect to any felony or act of moral turpitude; (iii) Participant’s engaging in any material act of theft or material misappropriation of Company property or (iv) Participant’s breach of the Company’s Code of Conduct as such code may be revised from time to time. For purposes of this Agreement, the term “Good Reason” shall mean (i) any material and adverse diminution in Participant’s title, duties, or responsibilities; (ii) a reduction in Participant’s base salary or employee benefits (including reducing Participant’s level of participation or target bonus award opportunity in the Company’s incentive compensation plans) or (iii) a relocation of Participant’s principal place of employment of more than 50 miles without the prior consent of Participant.

(e)Specified Employees. Notwithstanding anything in this Agreement to the contrary, with respect to any amounts that the Company determines to be deferred compensation within the meaning of Section 409A of the Code, if the Company determines that as of the Settlement Date

Participant is a “specified employee” (as such term is defined under Section 409A of the Code), any such Shares to be issued to Participant on a Settlement Date that occurs by reason of Participant’s

Exhibit 10.5

termination of employment with the Company other by reason of Participant’s death or Disability will not be issued to Participant until the date that is six months following the Settlement Date (or such earlier time permitted under Section 409A of the Code without the imposition of any accelerated or additional taxes under Section 409A of the Code).

6. Withholding and Disposition of Shares

(a)Generally. Participant is liable and responsible for all taxes owed in connection with the Award, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company does not make any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate Participant’s tax liability.

(b)Payment of Withholding Taxes. Prior to any event in connection with the Award that the Company determines may result in any domestic or foreign minimum statutory tax withholding obligation (i.e. federal, state, OASDI and HI and/or local) (the “Tax Withholding Obligation”), Participant is required to arrange for the satisfaction of the amount of such Tax Withholding Obligation in a manner acceptable to the Company. Participant and the Company agree that tax withholding required as a result of periodic vesting will be handled at the Company’s option by payroll deduction or such other means as the Company may establish or permit.

(i)By Withholding Shares. Unless Participant elects to satisfy the Tax Withholding Obligation by an alternative means in accordance with Paragraph 6(b)(ii), that occurs at the Settlement Date, Participant’s acceptance of this Award constitutes Participant’s instruction and authorization to the Company to withhold on Participant’s behalf the number of Shares from those Shares issuable to Participant as a result of the occurrence of a Settlement Date as the Company determines to be sufficient to satisfy the Tax Withholding Obligation.

(ii)By Other Payment. At any time not less than five (5) business days before any Tax Withholding Obligation arising as a result of the Settlement Date, Participant may notify the Company of Participant’s election to pay Participant’s Tax Withholding Obligation by wire transfer, cashier’s check or other means permitted by the Company. In such case, Participant shall satisfy his or her tax withholding obligation by paying to the Company on such date as it shall specify an amount that the Company determines is sufficient to satisfy the expected Tax Withholding Obligation by (i) wire transfer to such account as the Company may direct, (ii) delivery of a cashier’s check payable to the Company, Attn: Executive Benefits, at the address set forth in Paragraph 14(a), or such other address as the Company may from time to time direct, or (iii) such other means as the Company may establish or permit. Participant agrees and acknowledges that prior to the date the Tax Withholding Obligation arises, the Company will be required to estimate the amount of the Tax Withholding Obligation and accordingly may require the amount paid to the Company under this Paragraph 6(b)(ii) to be more than the minimum amount that may actually be due and that, if Participant has not delivered payment of a sufficient amount to the Company to satisfy the Tax Withholding Obligation (regardless of whether as a result of the Company underestimating the required payment or Participant failing to timely make the required payment), the additional Tax Withholding Obligation amounts shall be satisfied in the manner specified in Paragraph 6(b)(i).

Exhibit 10.5

7. Excess ParachutePayments

Notwithstanding anything in this Agreement to the contrary, if any of the payments in respect of this Award, together with any other payments to which Participant has the right to receive from the Company or any purchaser, successor, or assign, would constitute an “excess parachute payment” (as defined in Code Section 280G), a best-of-net calculation will be performed to determine whether change in control benefits due to the Participant should be reduced (so no excise tax will be imposed under 280G) or should be paid in full (with any excise tax to be paid in full by the Participant, with any such reduction first applied to payments pursuant to any Deferred Salary Agreement to which Participant is a party, then to payments pursuant to the 2012 Change in Control Plan, if applicable, and then to Awards of Restricted Stock Units under the Plan.

8. Plan Controls

The terms of this Agreement are governed by the terms of the Plan, as it exists on the Grant Date and as the Plan is amended from time to time. In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the terms of the Plan shall control, except as expressly stated otherwise in this Agreement. The term “Section” generally refers to provisions within the Plan; provided, however, the term “Paragraph” shall refer to a provision of this Agreement.

9. Limitation on Rights; No Right to Future Grants; ExtraordinaryItem

By entering into this Agreement and accepting the Award, Participant acknowledges that:

(a) Participant’s participation in the Plan is voluntary; (b) the value of the Award is an extraordinary item which is outside the scope of any employment contract with Participant; (c) the Award is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and Participant will not be entitled to compensation or damages as a consequence of Participant’s forfeiture as provided for in the Plan or this Agreement of any unvested portion of the Award for any reason; and (d) in the event that Participant is not a direct employee of Company, the grant of the Award will not be interpreted to form an employment relationship with the Company or any Subsidiary and the grant of the Award will not be interpreted to form an employment contract with Participant’s employer, the Company or any Subsidiary. The Company shall be under no obligation whatsoever to advise Participant of the existence, maturity or termination of any of Participant’s rights hereunder and Participant shall be responsible for familiarizing himself or herself with all matters contained herein and in the Plan which may affect any of Participant’s rights or privileges hereunder.

10. CommitteeAuthority

Any question concerning the interpretation of this Agreement or the Plan, any adjustments required to be made under the Plan, and any controversy that may arise under the Plan or this

Agreement shall be determined by the Committee in its sole and absolute discretion. Such decision by the Committee shall be final and binding.

11. TransferRestrictions

(a)General Restrictions. Any sale, transfer, assignment, encumbrance, pledge,

Exhibit 10.5

hypothecation, conveyance in trust, gift, transfer by bequest, devise or descent, or other transfer or disposition of any kind, whether voluntary or by operation of law, directly or indirectly, of (i) Unvested Units, (ii) Vested Units prior to the Settlement Date, or (iii) Shares subject to such Unvested Units or Vested Units shall be strictly prohibited and void; provided, however, Participant may assign or transfer the Award to the extent permitted under the Plan, provided that the Award shall be subject to all the terms and conditions of the Plan, this Agreement and any other terms required by the Committee as a condition to such transfer.

(b)Transfers by Covered Persons. If Participant is a “Covered Person” as defined in the ArcBest Corporation Stock Ownership Policy for Directors and Executives (the “Policy”) as amended from time to time, Participant agrees that he or she shall not sell or otherwise dispose or transfer any shares from this Award or any other Award except to the extent permitted by the Policy.

12. Recoupment, Suspension or Termination ofAward

Pursuant to Section 15 of the Plan, if at any time prior to Participant’s receipt of Shares pursuant to the Award an Authorized Officer reasonably believes that Participant may have committed an Act of Misconduct (as defined below), the Authorized Officer, the Committee or the Board may suspend Participant’s rights to vest in any Restricted Stock Units, and/or to receive payment for or receive Shares in settlement of Vested Units pending a determination of whether an Act of Misconduct has been committed. Further, in such event, except as otherwise provided by the Committee, (i) neither Participant nor Participant’s estate nor transferee will be entitled to vest in or have the restrictions on Unvested Units lapse, or otherwise receive payment or Shares in respect of Vested Units and (ii) Participant will forfeit all undelivered Vested and Unvested Units. In making such determination, the Committee or an Authorized Officer shall give Participant an opportunity to appear and present evidence on his or her behalf at a hearing before the Committee or an opportunity to submit written comments, documents, information and arguments to be considered by the Committee. Any dispute by Participant or other person as to the determination of the Committee must be resolved pursuant to Paragraph 14(j).

Further, except as otherwise provided by applicable law and in accordance with the ArcBest Recoupment of Incentive Compensation Policy adopted by the Board of Directors of the Company, Participant agrees that the Company may reduce or offset any payment due to Participant from the Company under this Agreement to recoup the repayment obligation set forth in this Section 12, and by accepting the grant of this Award, Participant consents to such reduction or offset. Such reduction or offset will be applicable to any Award granted, awarded, vested, made or earned during the three full fiscal years immediately prior to the fiscal year in which the Participant is found to have committed an Act of Misconduct.

For purposes of this Agreement, an “Act of Misconduct” means the Participant (i) has committed an act of (a) gross misconduct or fraud in the performance of Participant’s duties to the Company or any Subsidiary, (b) embezzlement, fraud, or dishonesty, (c) material theft or misappropriation of Company or Subsidiary property, (d) nonpayment of any obligation owed to the Company or any Subsidiary, (e) breach of fiduciary duty, (f) violation of Company ethics policy or code of conduct, or (g) deliberate disregard of Company or Subsidiary rules; (ii) is convicted of or enters a guilty plea or plea of nolo contendere with regard to any felony or act of moral turpitude; (iii) makes an unauthorized disclosure of any Company or Subsidiary trade secret or confidential information; (iv) solicits any employee or service provider to leave the employ or cease providing

Exhibit 10.5

services to the Company or any Subsidiary; (v) breaches any intellectual property or assignment of inventions covenant; (vi) engages in any conduct constituting unfair competition or breaches any noncompetition agreement; (vii) induces any Company or Subsidiary customer to breach a contract with the Company or any Subsidiary or to cease doing business with the Company or any Subsidiary; or (viii) induces any principal for whom the Company or any Subsidiary acts as agent to terminate such agency relationship.

13. Adjustment of and Changes in theStock

In the event that the number of Shares increases or decreases through a reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend (other than regular, quarterly cash dividends), or otherwise, the Committee shall equitably adjust the number of Shares subject to this Award to reflect such increase or decrease.

14. GeneralProvisions

(a)Notices. Whenever any notice is required or permitted hereunder, such notice must be in writing and delivered in person or by mail (to the address set forth below if notice is being delivered to the Company) or electronically. Any notice delivered in person or by mail shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address that such person has theretofore specified by written notice delivered in accordance herewith. Any notice given by the Company to Participant directed to Participant at Participant’s address on file with the Company shall be effective to bind Participant and any other person who shall have acquired rights under this Agreement. The Company or Participant may change, by written notice to the other, the address previously specified for receiving notices. Notices delivered to the Company in person or by mail shall be addressed as follows:

Company:	ArcBest Corporation
	Attn: Manager, Compensation and Executive Benefits
	P.O. Box 10048
	Fort Smith, AR 72917-0048
	Fax: (479) 494-6770

(b)No Waiver. No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.

(c)Undertaking. Participant hereby agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Participant or the Award pursuant to the express provisions of this Agreement.

(d)Entire Contract. This Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and will in all respects be construed in conformity with the express terms and

Exhibit 10.5

provisions of the Plan.

(e)Successors and Assigns. The provisions of this Agreement will inure to the benefit of, and be binding on, the Company and its successors and assigns and Participant and Participant’s legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person will have become a party to this Agreement and agreed in writing to join herein and be bound by the terms and conditions hereof.

(f)Securities Law Compliance. The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by Participant or other subsequent transfers by Participant of any Shares issued as a result of or under this Award, including without limitation (i) restrictions under an insider trading policy, (ii) restrictions that may be necessary in the absence of an effective registration statement under the Securities Act of 1933, as amended, covering the Award and/or the Shares underlying the Award and (iii) restrictions as to the use of a specified brokerage firm or other agent for such resales or other transfers. Any sale of the Shares must also comply with other applicable laws and regulations governing the sale of such shares.

(g)Information Confidential. As partial consideration for the granting of the Award, Participant agrees that he or she will keep confidential all information and knowledge that Participant has relating to the manner and amount of his or her participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to Participant’s spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan. Nothing in this Agreement will prevent Participant from: (A) making a good faith report of possible violations of applicable law to any governmental agency or entity or (B) making disclosures that are protected under the whistleblower provisions of applicable law. For the avoidance of doubt, nothing herein shall prevent Participant from making a disclosure that: (1) is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Further, an individual who files a lawsuit for retaliation by an employer of reporting a suspected violation of law may make disclosures without violating this Section 14(g) to the attorney of the individual and use such information in the court proceeding.

(h)Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to any awards granted under the Plan by electronic means or to request Participant’s consent to participate in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, and such consent shall remain in effect throughout Participant’s term of employment or service with the Company and thereafter until withdrawn in writing by Participant.

(i)Governing Law. Except as may otherwise be provided in the Plan, the provisions of this Agreement shall be governed by the laws of the State of Delaware, without giving effect to principles of conflicts of law.

Exhibit 10.5

(j)Arbitration of Disputes. Pursuant to Section 22 of the Plan, Participant hereby agrees as follows:

(i)If Participant or Participant’s transferee wishes to challenge any action of the Committee or the Plan Administrator, the person may do so only by submitting to binding arbitration with respect to such decision. The review by the arbitrator will be limited to determining whether Participant or Participant’s transferee has proven that the Committee’s decision was arbitrary or capricious. This arbitration will be the sole and exclusive review permitted of the Committee’s decision. Participant explicitly waives any right to judicial review.

(ii)Notice of demand for arbitration will be made in writing to the Committee within thirty (30) days after written notice to Participant of the applicable decision by the Committee. The arbitrator will be selected by mutual agreement of the Committee and Participant. If the Committee and Participant are unable to agree on an arbitrator, the arbitrator will be selected by the American Arbitration Association. The arbitrator, no matter how selected, must be neutral within the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration Association. The arbitrator will administer and conduct the arbitration pursuant to the Commercial Rules of Dispute Resolution of the American Arbitration Association. Each side will bear its own fees and expenses, including its own attorney’s fees, and each side will bear one half of the arbitrator’s fees and expenses; provided, however, that the arbitrator will have the discretion to award the prevailing party its fees and expenses. The arbitrator will have no authority to award exemplary, punitive, special, indirect, consequential, or other extra contractual damages. The decision of the arbitrator on the issue(s) presented for arbitration will be final and conclusive and any court of competent jurisdiction may enforce it.

(k)Section 409A of the Code. This Award is intended to comply, to the extent applicable, with the distribution and other requirements of Section 409A of the Code and, as such, shall be interpreted in a manner consistent therewith. Notwithstanding anything herein or in the Plan to the contrary, the Company may, in its sole discretion, amend this Award (which amendment shall be effective upon its adoption or at such other time designated by the Company) as may be necessary to avoid the imposition of the additional tax under Section 409A of the Code or otherwise comply with Section 409A and the regulations thereunder; provided, however, that any such amendment shall be implemented in such a manner as to preserve, to the greatest extent possible, the terms and conditions of this Award as in existence immediately prior to any such amendment.

(l)Board Policies and Guidelines. Participant acknowledges that this Award is subject to certain policies and guidelines as may be from time to time enacted by the Board of Directors of the Company including the ArcBest Recoupment of Incentive Compensation Policy adopted by the Board of Directors of the Company.

Exhibit 10.5

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

ARCBEST CORPORATION
By:
	Judy R. McReynolds
	Chairman, President and CEO
PARTICIPANT:
[First Name/MI/Last Name]

11

EX-31.1

EXHIBIT 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Judy R. McReynolds, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of ArcBest Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:      May 11, 2020	/s/ Judy R. McReynolds
	Judy R. McReynolds
	Chairman, President and Chief Executive Officer and Principal Executive Officer

EX-31.2

EXHIBIT 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David R. Cobb, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of ArcBest Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     May 11, 2020	/s/ David R. Cobb
	David R. Cobb
	Vice President — Chief Financial Officer
	and Principal Financial Officer

EX-32

EXHIBIT 32

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the filing of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, (the “Report”) by ArcBest Corporation (the “Registrant”), each of the undersigned hereby certifies that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	ARCBEST CORPORATION
	(Registrant)
Date: May 11, 2020	/s/ Judy R. McReynolds
	Judy R. McReynolds
	Chairman, President and Chief Executive Officer
	and Principal Executive Officer
	ARCBEST CORPORATION
	(Registrant)
Date: May 11, 2020	/s/ David R. Cobb
	David R. Cobb
	Vice President — Chief Financial Officer
	and Principal Financial Officer

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$ 352,165	$ 201,909
Short-term investments	178,810	116,579
Accounts receivable, less allowances (2020 - $6,111; 2019 - $5,448)	278,783	282,579
Other accounts receivable, less allowances (2020 - $646; 2019 - $476)	15,276	18,774
Prepaid expenses	33,806	30,377
Prepaid and refundable income taxes	6,231	9,439
Other	4,460	4,745
TOTAL CURRENT ASSETS	869,531	664,402
PROPERTY, PLANT AND EQUIPMENT
Land and structures	343,527	342,122
Revenue equipment	885,949	896,020
Service, office, and other equipment	230,163	233,354
Software	154,749	151,068
Leasehold improvements	11,022	10,383
TOTAL PROPERTY, PLANT AND EQUIPMENT, Gross	1,625,410	1,632,947
Less allowances for depreciation and amortization	961,950	949,355
PROPERTY, PLANT AND EQUIPMENT, net	663,460	683,592
GOODWILL	88,320	88,320
INTANGIBLE ASSETS, net	57,873	58,832
OPERATING RIGHT-OF-USE ASSETS	73,324	68,470
DEFERRED INCOME TAXES	8,145	7,725
OTHER LONG-TERM ASSETS	73,703	79,866
TOTAL ASSETS	1,834,356	1,651,207
CURRENT LIABILITIES
Accounts payable	127,625	134,374
Income taxes payable	31	12
Accrued expenses	217,678	232,321
Current portion of long-term debt	56,977	57,305
Current portion of operating lease liabilities	20,542	20,265
TOTAL CURRENT LIABILITIES	422,853	444,277
LONG-TERM DEBT, less current portion	476,945	266,214
OPERATING LEASE LIABILITIES, less current portion	56,716	52,277
POSTRETIREMENT LIABILITIES, less current portion	20,411	20,294
OTHER LONG-TERM LIABILITIES	35,058	38,892
DEFERRED INCOME TAXES	63,167	66,210
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2020: 28,817,109 shares, 2019: 28,810,902 shares	288	288
Additional paid-in capital	336,064	333,943
Retained earnings	532,858	533,187
Treasury stock, at cost, 2020: 3,554,639 shares; 2019: 3,404,639 shares	(107,740)	(104,578)
Accumulated other comprehensive income (loss)	(2,264)	203
TOTAL STOCKHOLDERS' EQUITY	759,206	763,043
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,834,356	$ 1,651,207

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net actuarial loss, tax expense (benefit)	$ 3	$ (230)
Pension settlement expense, tax	23	349
Amortization of unrecognized net periodic benefit costs (credit), tax	(37)	100
Change in unrealized loss on interest rate swap, tax (benefit)	(352)	(118)
Change in foreign currency translation, tax expense (benefit)	$ (502)	$ 79

XML

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE

Schedule of computation of basic and diluted earnings (loss) per share

	Three Months Ended
	March 31
	2020		2019
	(in thousands, except share and per share data)
Basic
Numerator:
Net income	$	1,902	$	4,888
Effect of unvested restricted stock awards		(1)		(9)
Adjusted net income	$	1,901	$	4,879
Denominator:
Weighted-average shares		25,390,377		25,570,415
Earnings per common share	$	0.07	$	0.19
Diluted
Numerator:
Net income	$	1,902	$	4,888
Effect of unvested restricted stock awards		(1)		(9)
Adjusted net income	$	1,901	$	4,879
Denominator:
Weighted-average shares		25,390,377		25,570,415
Effect of dilutive securities		856,423		941,934
Adjusted weighted-average shares and assumed conversions		26,246,800		26,512,349
Earnings per common share	$	0.07	$	0.18

XML

LEASES (Tables)

3 Months Ended

Mar. 31, 2020

Leases

Schedule of components of lease expense

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Operating lease expense	$	5,796	$	5,339
Variable lease expense		1,040		839
Sublease income		(92)		(67)
Total operating lease expense	$	6,744	$	6,111

Schedule of operating cash flows from operating lease activity

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Noncash change in operating right-of-use assets	$	5,815	$	4,730
Change in operating lease liabilities		(5,953)		(4,690)
Operating right-use-of-assets and lease liabilities, net	$	(138)	$	40
Cash paid for amounts included in the measurement of operating lease liabilities	$	(5,925)	$	(5,290)

Schedule of maturities of operating lease liabilities

					Equipment
			Land and		and
	Total		Structures(1)		Other
	(in thousands)
Remainder of 2020	$	17,679	$	16,935	$	744
2021		18,426		18,145		281
2022		13,922		13,911		11
2023		10,459		10,459		—
2024		7,817		7,817		—
Thereafter		16,891		16,891		—
Total lease payments		85,194		84,158		1,036
Less imputed interest		(7,936)		(7,917)		(19)
Total	$	77,258	$	76,241	$	1,017

(1) Excludes future minimum payments for leases which were executed but had not yet commenced as of March 31, 2020 of $34.7 million and $5.7 million which will be paid over 12 and 9 years, respectively. The Company plans to take possession of these leased spaces in mid-2020.

XML

LEASES (Cash flows) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating leases
Noncash change in operating right-of-use assets	$ 5,815	$ 4,730
Change in operating lease liabilities	(5,953)	(4,690)
Operating right-use-of-assets and lease liabilities, net	(138)	40
Cash paid for amounts included in the measurement of operating lease liabilities	$ (5,925)	$ (5,290)

XML

LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Credit Facility) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Sep. 30, 2019
Financing Arrangements
Borrowings under credit facilities	$ 180,000
Credit Facility
Financing Arrangements
Maximum borrowing capacity		$ 250,000
Additional borrowing capacity that may be requested		125,000
Borrowings under credit facilities	180,000
Remaining borrowing capacity	$ 0
Swing Line Facility
Financing Arrangements
Maximum borrowing capacity		25,000
Letters of Credit, Sub-Facility
Financing Arrangements
Maximum borrowing capacity		$ 20,000

XML

OPERATING SEGMENT DATA - (Rev and Expenses) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
REVENUES
Revenues	$ 701,399	$ 711,839
OPERATING EXPENSES
Salaries, wages, and benefits	344,946	343,668
Fuel, supplies, and expenses	71,773	79,336
Depreciation and amortization	29,013	26,537
Gain on sale of property and equipment	(2,130)	(43)
Other	30,820	32,682
Total consolidated operating expenses	693,580	703,248
OPERATING INCOME
Operating income	7,819	8,591
OTHER INCOME (COSTS)
Interest and dividend income	1,375	1,478
Interest and other related financing costs	(2,947)	(2,882)
Other, net	(3,862)	(591)
TOTAL OTHER INCOME (COSTS)	(5,434)	(1,995)
INCOME BEFORE INCOME TAXES	2,385	6,596
Operating Segments | Asset-Based
REVENUES
Revenues	515,713	506,079
OPERATING EXPENSES
Salaries, wages, and benefits	283,838	280,276
Fuel, supplies, and expenses	61,225	63,972
Operating taxes and licenses	12,794	12,398
Insurance	7,824	7,991
Communications and utilities	4,711	4,616
Depreciation and amortization	23,270	20,961
Rents and purchased transportation	55,770	49,306
Shared services	48,885	50,295
Gain on sale of property and equipment	(2,164)	(34)
Innovative technology costs	4,533	1,802
Other	1,787	881
Total consolidated operating expenses	502,473	492,464
OPERATING INCOME
Operating income	13,240	13,615
Operating Segments | ArcBest
REVENUES
Revenues	164,775	173,204
OPERATING EXPENSES
Purchased transportation	137,182	140,105
Supplies and expenses	2,280	2,774
Depreciation and amortization	2,470	3,151
Shared services	21,727	23,031
Other	2,525	2,413
Total consolidated operating expenses	166,184	171,474
OPERATING INCOME
Operating income	(1,409)	1,730
Operating Segments | FleetNet
REVENUES
Revenues	52,439	53,259
OPERATING EXPENSES
Total consolidated operating expenses	51,399	51,771
OPERATING INCOME
Operating income	1,040	1,488
Other and eliminations
REVENUES
Revenues	(31,528)	(20,703)
OPERATING EXPENSES
Total consolidated operating expenses	(26,476)	(12,461)
OPERATING INCOME
Operating income	$ (5,052)	$ (8,242)

XML

STOCKHOLDERS' EQUITY (Treasury Stock) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Treasury Stock
Aggregate cost of shares repurchased during the period	$ 3,162	$ 2,663
Treasury stock (in shares)	3,554,639		3,404,639
Stock Repurchase Program
Treasury Stock
Number of shares repurchased during the period	150,000
Aggregate cost of shares repurchased during the period	$ 3,200
Amount available for repurchase	$ 10,000		$ 13,200

XML

STOCKHOLDERS' EQUITY (AOCI) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Accumulated Other Comprehensive Income (Loss)
Total after-tax amount	$ 759,206	$ 763,043	$ 721,755	$ 717,682
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Total pre-tax amount	(3,078)	260
Total after-tax amount	(2,264)	203	(12,388)	(14,238)
Unrecognized Net Periodic Benefit Credit (cost)
Accumulated Other Comprehensive Income (Loss)
Total pre-tax amount	2,831	2,898
Total after-tax amount	2,102	2,152	(10,792)	(12,749)
Interest Rate Swap
Accumulated Other Comprehensive Income (Loss)
Total pre-tax amount	(1,912)	(563)
Total after-tax amount	(1,413)	(416)	259	591
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss)
Total pre-tax amount	(3,997)	(2,075)
Total after-tax amount	$ (2,953)	$ (1,533)	$ (1,855)	$ (2,080)

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

3 Months Ended

Mar. 31, 2020

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

NOTE G – 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 March 31
	Nonunion Defined				Supplemental				Postretirement
	Benefit Pension Plan				Benefit Plan				Health Benefit Plan
	2020(1)		2019		2020		2019		2020(2)		2019
	(in thousands)
Service cost	$	—	$	—	$	—	$	—	$	47	$	80
Interest cost		—		318		3		10		144		303
Expected return on plan assets		—		(90)		—		—		—		—
Amortization of prior service credit		—		—		—		—		—		(9)
Pension settlement expense(3)		—		1,356		89		—		—		—
Amortization of net actuarial (gain) loss(4)		—		149		4		24		(149)		225
Net periodic benefit cost	$	—	$	1,733	$	96	$	34	$	42	$	599

(1) Termination of the nonunion defined benefit pension plan was completed in 2019 and the plan was liquidated as of December 31, 2019.

(2) Expense for the postretirement health benefit plan is lower for the three months ended March 31, 2020, compared to the same period of 2019, due to the impact of a lower cost prescription drug plan effective January 1, 2020.

(3) For the three months ended March 31, 2020, pension settlement expense for the supplemental benefit plan of $0.1 million (pre-tax), or $0.1 million (after-tax), was due to a $0.7 million benefit related to an officer retirement. For the three months ended March 31, 2019, pension settlement expense for the nonunion defined benefit pension plan of $1.4 million (pre-tax), or $1.0 million (after-tax), was related to $14.9 million of lump-sum distributions from the plan.

(4) The Company amortizes actuarial gains and losses over the average remaining active service period of the plan participants and does not use a corridor approach.

Multiemployer Plans

ABF Freight System, Inc. and certain other subsidiaries reported in the Company’s Asset-Based operating segment (“ABF Freight”) contribute to multiemployer pension and health and welfare plans, which have been established pursuant to the Taft-Hartley Act, to provide benefits for its contractual employees. ABF Freight’s contributions generally are based on the time worked by its contractual employees, in accordance with the 2018 ABF NMFA and other related supplemental agreements. ABF Freight recognizes as expense the contractually required contributions for each period and recognizes as a liability any contributions due and unpaid.

The 25 multiemployer pension plans to which ABF Freight contributes vary greatly in size and in funded status. Contribution obligations to these plans are generally specified in the 2018 ABF NMFA, which will remain in effect through June 30, 2023. The funding obligations to the pension plans are intended to satisfy the requirements imposed by the Pension Protection Act of 2006, which was permanently extended by the Multiemployer Pension Reform Act (the “Reform Act”) included in the Consolidated and Further Continuing Appropriations Act of 2015. Provisions of the Reform Act include, among others, providing qualifying plans the ability to self-correct funding issues, subject to various requirements and restrictions, including applying to the U.S. Department of the Treasury for the reduction of certain accrued benefits. Through the term of its current collective bargaining agreement, ABF Freight’s contribution obligations generally will be satisfied by making the specified contributions when due. However, the Company cannot determine with any certainty the contributions that will be required under future collective bargaining agreements for ABF Freight’s contractual employees.

If ABF Freight was to completely withdraw from certain multiemployer pension plans, under current law, ABF Freight would have material liabilities for its share of the unfunded vested liabilities of each such plan.

Approximately one half of ABF Freight’s total contributions to multiemployer pension plans are made to the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”). As set forth in the 2018 Annual Funding Notice for the Central States Pension Plan, the funded percentage of the plan was 27.2% as of January 1, 2018. ABF Freight received a Notice of Critical and Declining Status for the Central States Pension Plan dated March 29, 2019, in which the plan’s actuary certified that, as of January 1, 2019, the plan is in critical and declining status, as defined by the Reform Act. Critical and declining status is applicable to critical status plans that are projected to become insolvent anytime within the next 14 plan years, or if the plan is projected to become insolvent within the next 19 plan years and either the plan’s ratio of inactive participants to active participants exceeds two to one or the plan’s funded percentage is less than 80%.

As more fully described in Note I to the consolidated financial statements in Item 8 of the Company’s 2019 Annual Report on Form 10-K, ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018, which resulted in a related withdrawal liability for which ABF Freight recognized a one-time charge of $37.9 million (pre-tax) as of June 30, 2018. In accordance with the transition agreement, ABF Freight made an initial lump sum cash payment of $15.1 million in third quarter 2018 and the remainder of the withdrawal liability, which had an initial aggregate present value of $22.8 million, will be settled with monthly payments to the New England Pension Fund over a period of 23 years. In accordance with current tax law, these payments are deductible for income taxes when paid.

As of March 31, 2020, the outstanding withdrawal liability to the New England Pension Fund totaled $21.9 million, of which $0.6 million and $21.3 million was recorded in accrued expenses and other long-term liabilities, respectively. The fair value of the obligation was $27.0 million at March 31, 2020, which is equal to the present value of the future withdrawal liability payments, discounted at a 2.3% interest rate determined using the 20-year U.S. Treasury rate plus a spread (Level 2 of the fair value hierarchy).

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 2019 Annual Report on Form 10-K.

XML

GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2020

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 $87.7 million and $0.6 million reported in the ArcBest and FleetNet segments, respectively, for both March 31, 2020 and December 31, 2019.

Intangible assets consisted of the following:

		March 31, 2020						December 31, 2019
	Weighted-Average			Accumulated		Net				Accumulated		Net
	Amortization Period	Cost		Amortization		Value			Cost	Amortization		Value
	(in years)	(in thousands)						(in thousands)
Finite-lived intangible assets
Customer relationships	14	$	52,721	$	27,621	$	25,100	$	52,721	$	26,667	$	26,054
Other	11		1,315		842		473		1,294		816		478
	14		54,036		28,463		25,573		54,015		27,483		26,532
Indefinite-lived intangible assets
Trade name	N/A		32,300		N/A		32,300		32,300		N/A		32,300
Total intangible assets	N/A	$	86,336	$	28,463	$	57,873	$	86,315	$	27,483	$	58,832

The future amortization for intangible assets acquired through business acquisitions as of March 31, 2020 was as follows:

	Amortization of
	Intangible Assets
	(in thousands)
Remainder of 2020	$	2,930
2021		3,869
2022		3,842
2023		3,744
2024		3,695
Thereafter		7,493
Total amortization	$	25,573

Goodwill and indefinite-lived intangible assets are not amortized, but rather are evaluated for impairment annually or more frequently if indicators of impairment exist. Due to the impact of COVID-19 on business and freight levels, the Company considered several factors to consider if it was more likely than not that impairment of these assets existed as of March 31, 2020. In making this analysis, management considered current and forecasted business levels and estimated future cash flows over several years. Management’s assumptions include an expected economic recovery beginning in late 2020 with a more robust recovery in 2021. Based on our analysis, management determined it was more likely than not that goodwill and indefinite-lived intangible assets were not impaired as of March 31, 2020.

The evaluation of goodwill impairment requires management’s judgment and the use of estimates and assumptions to determine if indicators of impairment exist at an interim date. Assumptions require considerable judgment because changes in broad economic factors and industry factors can result in variable and volatile fair values. Changes in key estimates and assumptions that impact the fair value of the operations, including the impact of COVID-19 on the reporting units, could materially affect future analyses and result in material impairments of goodwill and indefinite-lived intangible assets.

XML

LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS

3 Months Ended

Mar. 31, 2020

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.

Environmental Matters

The Company’s subsidiaries store fuel for use in tractors and trucks in 56 underground tanks located in 16 states. Maintenance of such tanks is regulated at the federal and, in most cases, state levels. The Company believes it is in substantial compliance with all such regulations. The Company’s underground storage tanks are required to have leak detection systems. The Company is not aware of any leaks from such tanks that could reasonably be expected to have a material adverse effect on the Company.

The Company has received notices from the Environmental Protection Agency and others that it has been identified as a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act, or other federal or state environmental statutes, at several hazardous waste sites. After investigating the Company’s involvement in waste disposal or waste generation at such sites, the Company has either agreed to de minimis settlements or determined that its obligations, other than those specifically accrued with respect to such sites, would involve immaterial monetary liability, although there can be no assurances in this regard.

At March 31, 2020 and December 31, 2019, 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 $0.7 million and $0.4 million, respectively. Amounts accrued reflect management’s best estimate of the future undiscounted exposure related to identified properties based on current environmental regulations, management’s experience with similar environmental matters, and testing performed at certain sites.

XML

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Debt) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Carrying Value
Fair value disclosure
Debt obligations	$ 533,908	$ 323,504
Fair Value
Fair value disclosure
Debt obligations	541,437	326,432
Credit Facility | Level 2 | Carrying Value
Fair value disclosure
Debt obligations	250,000	70,000
Credit Facility | Level 2 | Fair Value
Fair value disclosure
Debt obligations	250,000	70,000
Accounts receivable securitization borrowings | Level 2 | Carrying Value
Fair value disclosure
Debt obligations	85,000	40,000
Accounts receivable securitization borrowings | Level 2 | Fair Value
Fair value disclosure
Debt obligations	85,000	40,000
Notes payable | Level 2 | Carrying Value
Fair value disclosure
Debt obligations	198,908	213,504
Notes payable | Level 2 | Fair Value
Fair value disclosure
Debt obligations	$ 206,437	$ 216,432

XML

GOODWILL AND INTANGIBLE ASSETS (Amortization) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Future amortization for intangible assets
Remainder of 2020	$ 2,930
2021	3,869
2022	3,842
2023	3,744
2024	3,695
Thereafter	7,493
Net Value	$ 25,573	$ 26,532

XML

STOCKHOLDERS' EQUITY (Dividends) (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	May 01, 2020	Mar. 31, 2020	Mar. 31, 2019
Dividends on Common Stock
Dividends declared (in dollars per share)		$ 0.08	$ 0.08
Dividend Amount		$ 2,033	$ 2,052
Subsequent Event
Dividends on Common Stock
Dividends declared (in dollars per share)	$ 0.08

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Multiemployer Plans) (Details) - Multiemployer pension plans - Asset-Based $ in Millions			3 Months Ended
	Jan. 01, 2019	Jun. 30, 2018 USD ($)	Mar. 31, 2020 USD ($) plan	Sep. 30, 2018 USD ($)	Jan. 01, 2018
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%
Central States Pension Plan
Multiemployer Plans
Approximate proportion of multiemployer pension plan contributions (as a percent)			50.00%
Actuarially certified projected funded percentage of multiemployer pension plan					27.20%
New England Pension Fund
Multiemployer Plans
Multiemployer pension fund withdrawal liability charge (pre-tax)		$ 37.9
Initial lump sum payment of withdrawal liability				$ 15.1
Aggregate present value of monthly payments		$ 22.8
Withdrawal liability monthly payments period (in years)				23 years
Outstanding withdrawal liability			$ 21.9
Fair value of withdrawal obligation			$ 27.0
Discount rate using 20-year U.S. Treasury (as a percent)			2.30%
New England Pension Fund | Accrued expenses
Multiemployer Plans
Outstanding withdrawal liability			$ 0.6
New England Pension Fund | Other long-term liabilities
Multiemployer Plans
Outstanding withdrawal liability			$ 21.3

XML

OPERATING SEGMENT DATA

3 Months Ended

Mar. 31, 2020

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 began a pilot test program in early 2019 to improve freight handling at ABF Freight. The pilot utilizes patented handling equipment, software, and a patented process to load and unload trailers more rapidly and safely. During

the third quarter of 2019, the presentation of operating expenses was modified to present innovative technology costs associated with the pilot test program as a separate operating expense line item for the Asset-Based segment and for the summary of consolidated expenses by category. Previously, innovative technology costs incurred directly by the segment or allocated through shared services were categorized in individual segment expense line items. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation. There was no impact on total consolidated expenses or total segment expenses as a result of the reclassifications.

Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, legal, and other company-wide services. Certain overhead costs are not attributable to any segment and remain unallocated in “Other and eliminations.” Included in unallocated costs are expenses related to investor relations, legal, the ArcBest Board of Directors, and certain technology investments. Shared services costs attributable to the operating segments are predominantly allocated based upon estimated and planned resource utilization-related metrics such as estimated shipment levels, number of pricing proposals, or number of personnel supported. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the operating segments. Management believes the methods used to allocate expenses are reasonable.

The Company’s reportable operating segments are impacted by seasonal fluctuations which affect tonnage, shipment or service event levels, and demand for services, as described below; therefore, operating results for the interim periods presented may not necessarily be indicative of the results for the fiscal year.

The Company’s reportable operating segments are as follows:

● The Asset-Based segment includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries. The segment operations include national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. In addition, the segment operations include freight transportation related to certain consumer household goods self-move services.

Freight shipments and operating costs of the Asset-Based segment can be adversely affected by inclement weather conditions. The second and third calendar quarters of each year usually have the highest tonnage levels while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, available capacity in the market, and the impact of other adverse external events or conditions, including the COVID-19 pandemic, may influence quarterly freight tonnage levels.

● The ArcBest segment includes the results of operations of the Company’s service offerings in ground expedite, truckload, truckload-dedicated, intermodal, household goods moving, managed transportation, warehousing and distribution, and international freight transportation for air, ocean, and ground.

ArcBest segment operations are influenced by seasonal fluctuations that impact customers’ supply chains. The second and third calendar quarters of each year usually have the highest shipment levels while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, available capacity in the market, and the impact of other adverse external events or conditions, including the COVID-19 pandemic, may impact quarterly business levels. Shipments of the ArcBest segment may decline during winter months because of post-holiday slowdowns, but expedite shipments can be subject to short-term increases depending on the impact of weather disruptions to customers’ supply chains. Plant shutdowns during summer months may affect shipments for automotive and manufacturing customers of the ArcBest segment, but severe weather events can result in higher demand for expedite services. Moving services of the ArcBest segment are impacted by seasonal fluctuations, generally resulting in higher business levels in the second and third quarters as the demand for moving services is typically stronger in the summer months.

● FleetNet includes the results of operations of FleetNet America, Inc. and certain other subsidiaries that provide roadside assistance and maintenance management services for commercial vehicles through a network of third-party service providers. FleetNet provides services to the Asset-Based and ArcBest segments. Approximately 20% and 14% of FleetNet’s revenues for the three months ended March 31, 2020 and 2019, respectively, are for services provided to the Asset-Based and ArcBest segments.

Emergency roadside service events of the FleetNet segment are favorably impacted by extreme weather conditions that affect commercial vehicle operations, and the segment’s results of operations will be influenced by seasonal variations in service event volume.

The Company’s other business activities and operating segments that are not reportable include ArcBest Corporation and certain other subsidiaries. Certain costs incurred by the parent holding company and the Company’s shared services subsidiary are allocated to the reporting segments. The Company eliminates intercompany transactions in consolidation. However, the information used by the Company’s management with respect to its reportable segments is before intersegment eliminations of revenues and expenses.

Further classifications of operations or revenues by geographic location are impracticable and, therefore, are not provided. The Company’s foreign operations are not significant.

The following tables reflect reportable operating segment information:

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
REVENUES
Asset-Based	$	515,713	$	506,079
ArcBest		164,775		173,204
FleetNet		52,439		53,259
Other and eliminations		(31,528)		(20,703)
Total consolidated revenues	$	701,399	$	711,839
OPERATING EXPENSES
Asset-Based
Salaries, wages, and benefits	$	283,838	$	280,276
Fuel, supplies, and expenses(1)		61,225		63,972
Operating taxes and licenses		12,794		12,398
Insurance		7,824		7,991
Communications and utilities(1)		4,711		4,616
Depreciation and amortization(1)		23,270		20,961
Rents and purchased transportation(1)		55,770		49,306
Shared services(1)		48,885		50,295
Gain on sale of property and equipment		(2,164)		(34)
Innovative technology costs(1)(2)		4,533		1,802
Other(1)		1,787		881
Total Asset-Based		502,473		492,464
ArcBest
Purchased transportation		137,182		140,105
Supplies and expenses		2,280		2,774
Depreciation and amortization		2,470		3,151
Shared services		21,727		23,031
Other		2,525		2,413
Total ArcBest		166,184		171,474
FleetNet		51,399		51,771
Other and eliminations		(26,476)		(12,461)
Total consolidated operating expenses	$	693,580	$	703,248

(1) As previously discussed in this Note, the presentation of Asset-Based segment expenses was modified in third quarter 2019 to present innovative technology costs as a separate operating expense line item. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation.

(2) Represents costs associated with the freight handling pilot test program at ABF Freight previously discussed in this Note.

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
OPERATING INCOME
Asset-Based	$	13,240	$	13,615
ArcBest		(1,409)		1,730
FleetNet		1,040		1,488
Other and eliminations		(5,052)		(8,242)
Total consolidated operating income	$	7,819	$	8,591
OTHER INCOME (COSTS)
Interest and dividend income	$	1,375	$	1,478
Interest and other related financing costs		(2,947)		(2,882)
Other, net(1)		(3,862)		(591)
Total other income (costs)		(5,434)		(1,995)
INCOME BEFORE INCOME TAXES	$	2,385	$	6,596

(1) Includes the components of net periodic benefit cost other than service cost related to the Company’s nonunion pension, SBP, and postretirement plans (see Note G) and proceeds and changes in cash surrender value of life insurance policies.

The following table presents operating expenses by category on a consolidated basis:

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
OPERATING EXPENSES
Salaries, wages, and benefits	$	344,946	$	343,668
Rents, purchased transportation, and other costs of services		217,028		221,025
Fuel, supplies, and expenses		71,773		79,336
Depreciation and amortization(1)		29,013		26,537
Other		30,820		32,682
	$	693,580	$	703,248

(1) Includes amortization of intangible assets.

XML

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

3 Months Ended

Mar. 31, 2020

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

NOTE F – 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 finance lease obligations related to the financing of revenue equipment (tractors and trailers used primarily in Asset-Based segment operations), certain other equipment, and software as follows:

	March 31		December 31
	2020		2019
	(in thousands)
Credit Facility (interest rate of 2.1%(1) at March 31, 2020)	$	250,000	$	70,000
Accounts receivable securitization borrowings (interest rate of 2.1% at March 31, 2020)		85,000		40,000
Notes payable (weighted-average interest rate of 3.3% at March 31, 2020)		198,908		213,504
Finance lease obligations (weighted-average interest rate of 3.3% at March 31, 2020)		14		15
		533,922		323,519
Less current portion		56,977		57,305
Long-term debt, less current portion	$	476,945	$	266,214

(1) The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.12% and 2.98% based on the margin of the Credit Facility as of March 31, 2020 and December 31, 2019, respectively.

Scheduled maturities of long-term debt obligations as of March 31, 2020 were as follows:

					Accounts
					Receivable
			Credit		Securitization		Notes		Finance Lease
	Total		Facility(1)		Program(1)		Payable		Obligations
	(in thousands)
Due in one year or less	$	68,124	$	4,233	$	1,245	$	62,639	$	7
Due after one year through two years		147,955		4,087		85,583		58,278		7
Due after two years through three years		51,217		4,414		—		46,803		—
Due after three years through four years		34,303		4,678		—		29,625		—
Due after four years through five years		266,658		252,430		—		14,228		—
Due after five years		—		—		—		—		—
Total payments		568,257		269,842		86,828		211,573		14
Less amounts representing interest		34,335		19,842		1,828		12,665		—
Long-term debt	$	533,922	$	250,000	$	85,000	$	198,908	$	14

(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.

Assets securing notes payable or held under finance leases were included in property, plant and equipment as follows:

	March 31		December 31
	2020		2019
	(in thousands)
Revenue equipment	$	264,884	$	265,315
Software		2,140		2,140
Service, office, and other equipment		26,344		26,344
Total assets securing notes payable or held under finance leases		293,368		293,799
Less accumulated depreciation and amortization(1)		81,672		71,405
Net assets securing notes payable or held under finance leases	$	211,696	$	222,394

(1) Amortization of assets held under finance leases and depreciation of assets securing notes payable are included in depreciation expense.

Financing Arrangements

Credit Facility

The Company has a revolving credit facility (the “Credit Facility”) under its Third Amended and Restated Credit Agreement (the “Credit Agreement”) with an initial maximum credit amount of $250.0 million, including a swing line facility in an aggregate amount of up to $25.0 million and a letter of credit sub-facility providing for the issuance of letters of credit up to an aggregate amount of $20.0 million. The Company may request additional revolving commitments or incremental term loans thereunder up to an aggregate amount of $125.0 million, subject to certain additional conditions as provided in the Credit Agreement. In March 2020, the Company borrowed an additional $180.0 million under the Credit Facility as a precautionary measure to preserve financial flexibility during the COVID-19 pandemic. As of March 31, 2020, the Company does not have any available borrowing capacity under the initial maximum credit amount of the Credit Facility.

Principal payments under the Credit Facility are due upon maturity of the facility on October 1, 2024; however, borrowings may be repaid, at the Company’s discretion, in whole or in part at any time, without penalty, subject to required notice periods and compliance with minimum prepayment amounts. Borrowings under the Credit Agreement can either be, at the Company’s election: (i) at an alternate base rate (as defined in the Credit Agreement) plus a spread; or (ii) at a Eurodollar rate (as defined in the Credit Agreement) plus a spread. The applicable spread is dependent upon the Company’s Adjusted Leverage Ratio (as defined in the Credit Agreement). The Credit Agreement contains conditions, representations and warranties, events of default, and indemnification provisions that are customary for financings of this type, including, but not limited to, a minimum interest coverage ratio, a maximum adjusted leverage ratio, and limitations on incurrence of debt, investments, liens on assets, certain sale and leaseback transactions, transactions with affiliates, mergers,

consolidations, purchases and sales of assets, and certain restricted payments. The leverage covenant under the Company’s Credit Agreement is based on a net debt calculation and consequently was not immediately impacted by the draw against the Credit Facility in March 2020. The Company was in compliance with the covenants under the Credit Agreement at March 31, 2020.

Interest Rate Swaps

The Company has an interest rate swap agreement with a $50.0 million notional amount which started on January 2, 2020 and will mature on June 30, 2022. The Company will receive floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 1.99% over the life of the agreement. The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.12% based on the margin of the Credit Facility as of March 31, 2020. The fair value of the interest rate swap of $1.9 million and $0.6 million was recorded in other long-term liabilities in the consolidated balance sheet at March 31, 2020 and December 31, 2019, respectively. The Company had a five-year interest rate swap agreement with a $50.0 million notional amount that matured on January 2, 2020 for which less than $0.1 million was recorded in other long-term liabilities in the consolidated balance sheet at December 31, 2019.

The unrealized gain or loss on the interest rate swap instruments was reported as a component of accumulated other comprehensive loss, net of tax, in stockholders’ equity at March 31, 2020 and December 31, 2019, and the change in the unrealized income or loss on the interest rate swaps for the three months ended March 31, 2020 and 2019 was reported in other comprehensive income (loss), net of tax, in the consolidated statements of comprehensive income. The interest rate swaps are subject to certain customary provisions that could allow the counterparty to request immediate settlement of the fair value liability or asset upon violation of any or all of the provisions. The Company was in compliance with all provisions of the interest rate swap agreements at March 31, 2020.

On May 4, 2020, the Company extended the term of its $50.0 million notional amount interest rate swap agreement from June 30, 2022 to October 1, 2024. The Company will receive floating-rate interest amounts based on one-month LIBOR in exchange for fixed-rate interest payments of 0.43% beginning on June 30, 2022 throughout the remaining term of the agreement. From June 30, 2022 to October 1, 2024, the extended interest rate swap agreement will effectively convert $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.56% based on the margin of the Credit Facility as of March 31, 2020.

Accounts Receivable Securitization Program

The Company’s accounts receivable securitization program, which matures on October 1, 2021, allows for cash proceeds of $125.0 million to be provided under the program and has an accordion feature allowing the Company to request additional borrowings up to $25.0 million, subject to certain conditions. Under this program, certain subsidiaries of the Company continuously sell a designated pool of trade accounts receivables to a wholly owned subsidiary which, in turn, may borrow funds on a revolving basis. This wholly owned consolidated subsidiary is a separate bankruptcy-remote entity, and its assets would be available only to satisfy the claims related to the lender’s interest in the trade accounts receivables. Borrowings under the accounts receivable securitization program bear interest based upon LIBOR, plus a margin, and an annual facility fee. The securitization agreement contains representations and warranties, affirmative and negative covenants, and events of default that are customary for financings of this type, including a maximum adjusted leverage ratio covenant. In March 2020, the Company borrowed an additional $45.0 million for a total of $85.0 million outstanding at March 31, 2020 under the program as a precautionary measure to preserve financial flexibility during the COVID-19 pandemic. The Company was in compliance with the covenants under the accounts receivable securitization program at March 31, 2020.

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 March 31, 2020, standby letters of credit of $12.0 million have been issued under the program, which reduced the available borrowing capacity to $28.0 million.

Letter of Credit Agreements and Surety Bond Programs

As of March 31, 2020, the Company had letters of credit outstanding of $12.6 million (including $12.0 million issued under the accounts receivable securitization program). The Company has programs in place with multiple surety companies for the issuance of surety bonds in support of its self-insurance program. As of March 31, 2020, surety bonds outstanding related to the self-insurance program totaled $62.3 million.

XML

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2020

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

NOTE B – FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial Instruments

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

	March 31		December 31
	2020		2019
	(in thousands)
Cash and cash equivalents
Cash deposits(1)	$	224,193	$	166,619
Variable rate demand notes(1)(2)		14,846		14,750
Money market funds(3)		113,126		20,540
Total cash and cash equivalents	$	352,165	$	201,909
Short-term investments
Certificates of deposit(1)	$	131,477	$	69,314
U.S. Treasury securities(4)		47,333		47,265
Total short-term investments	$	178,810	$	116,579

(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 increase in cash and cash equivalents and short-term investments from December 31, 2019 was due to borrowings  under the Company’s Credit Facility and accounts receivable securitization program, as further disclosed in Note F.

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, 2020 and December 31, 2019, cash, cash equivalents, and short-term investments totaling $245.9 million and $66.2 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.

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

	March 31				December 31
	2020				2019
	(in thousands)
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Credit Facility(1)	$	250,000	$	250,000	$	70,000	$	70,000
Accounts receivable securitization borrowings(2)		85,000		85,000		40,000		40,000
Notes payable(3)		198,908		206,437		213,504		216,432
	$	533,908	$	541,437	$	323,504	$	326,432

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

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

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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

	March 31, 2020
			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)	$	113,126	$	113,126	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		2,539		2,539		—		—
	$	115,665	$	115,665	$	—	$	—
Liabilities:
Interest rate swaps(3)	$	1,912	$	—	$	1,912	$	—

	December 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)	$	20,540	$	20,540	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		2,427		2,427		—		—
	$	22,967	$	22,967	$	—	$	—
Liabilities:
Interest rate swaps(3)	$	563	$	—	$	563	$	—

(1) Included in cash and cash equivalents.

(2) Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities.

(3) Included in other long-term liabilities. The fair values of the interest rate swaps were determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are considered to be in Level 3 of the fair value hierarchy. The Company assessed Level 3 inputs as insignificant to the valuation at March 31, 2020 and December 31, 2019 and considers the interest rate swap valuations in Level 2 of the fair value hierarchy.

XML

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Assets and Liabilities) (Details) - Recurring basis - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets:
Assets	$ 115,665	$ 22,967
Cash and cash equivalents
Assets:
Money market funds	113,126	20,540
Other long-term assets
Assets:
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan	2,539	2,427
Other long-term liabilities
Liabilities:
Interest rate swap	1,912	563
Level 1
Assets:
Assets	115,665	22,967
Level 1 | Cash and cash equivalents
Assets:
Money market funds	113,126	20,540
Level 1 | Other long-term assets
Assets:
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan	2,539	2,427
Level 2 | Other long-term liabilities
Liabilities:
Interest rate swap	$ 1,912	$ 563

XML

INCOME TAXES (Tax Rate) (Details)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
INCOME TAXES
Effective tax rate (as a percent)	20.30%	25.90%
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%

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowances (in dollars)	$ 6,111	$ 5,448
Other accounts receivable, allowances (in dollars)	$ 646	$ 476
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	70,000,000	70,000,000
Common stock, issued shares	28,817,109	28,810,902
Treasury stock, at cost, shares	3,554,639	3,404,639

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Total
Balances at Dec. 31, 2018	$ 287	$ 325,712	$ 501,389	$ (95,468)	$ (14,238)	$ 717,682
Balances (in shares) at Dec. 31, 2018	28,685			3,098
Increase (Decrease) in Stockholders' Equity
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				$ (2,663)		(2,663)
Purchase of treasury stock (in shares)				74
Dividends declared on common stock			(2,052)			(2,052)
Balances at Mar. 31, 2019	$ 287	327,762	504,225	$ (98,131)	(12,388)	721,755
Balances (in shares) at Mar. 31, 2019	28,685			3,172
Increase (Decrease) in Stockholders' Equity
Adjustments to beginning retained earnings for adoption of accounting standard			(198)			(198)
Adjusted Balances	$ 288	333,943	532,989	$ (104,578)	203	762,845
Balances at Dec. 31, 2019	$ 288	333,943	533,187	$ (104,578)	203	763,043
Balances (in shares) at Dec. 31, 2019	28,811			3,405
Increase (Decrease) in Stockholders' Equity
Net income			1,902			1,902
Other comprehensive income, net of tax					(2,467)	(2,467)
Issuance of common stock under share-based compensation plans (in shares)	6
Tax effect of share-based compensation plans		(60)				(60)
Share-based compensation expense		2,181				2,181
Purchase of treasury stock				$ (3,162)		(3,162)
Purchase of treasury stock (in shares)				150
Dividends declared on common stock			(2,033)			(2,033)
Balances at Mar. 31, 2020	$ 288	$ 336,064	$ 532,858	$ (107,740)	$ (2,264)	$ 759,206
Balances (in shares) at Mar. 31, 2020	28,817			3,555

XML

STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2020

STOCKHOLDERS' EQUITY

Components of accumulated other comprehensive income (loss)

	March 31		December 31
	2020		2019
	(in thousands)
Pre-tax amounts:
Unrecognized net periodic benefit credit	$	2,831	$	2,898
Interest rate swap		(1,912)		(563)
Foreign currency translation		(3,997)		(2,075)
Total	$	(3,078)	$	260
After-tax amounts:
Unrecognized net periodic benefit credit	$	2,102	$	2,152
Interest rate swap		(1,413)		(416)
Foreign currency translation		(2,953)		(1,533)
Total	$	(2,264)	$	203

Summary of changes in accumulated other comprehensive income (loss), net of tax, by component

			Unrecognized			Interest	Foreign
			Net Periodic			Rate	Currency
	Total		Benefit Costs			Swap	Translation
	(in thousands)
Balances at December 31, 2019	$	203	$	2,152	$	(416)	$	(1,533)
Other comprehensive loss before reclassifications		(2,425)		(8)		(997)		(1,420)
Amounts reclassified from accumulated other comprehensive income		(42)		(42)		—		—
Net current-period other comprehensive loss		(2,467)		(50)		(997)		(1,420)
Balances at March 31, 2020	$	(2,264)	$	2,102	$	(1,413)	$	(2,953)
Balances at December 31, 2018	$	(14,238)	$	(12,749)	$	591	$	(2,080)
Other comprehensive income (loss) before reclassifications		554		661		(332)		225
Amounts reclassified from accumulated other comprehensive loss		1,296		1,296		—		—
Net current-period other comprehensive income (loss)		1,850		1,957		(332)		225
Balances at March 31, 2019	$	(12,388)	$	(10,792)	$	259	$	(1,855)

Summary of the significant reclassifications out of accumulated other comprehensive income (loss) by component

	Unrecognized Net Periodic
	Benefit Credit (Costs)(1)(2)
	Three Months Ended March 31
	2020		2019
	(in thousands)
Amortization of net actuarial gain (loss)	$	145	$	(398)
Amortization of prior service credit		—		9
Pension settlement expense(3)		(89)		(1,356)
Total, pre-tax		56		(1,745)
Tax benefit (expense)		(14)		449
Total, net of tax	$	42	$	(1,296)

(1) Amounts in parentheses indicate increases in expense or loss.

(2) These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost as disclosed in Note G.

(3) For the three months ended March 31, 2020, pension settlement expense is related to the supplemental benefit plan (see Note G).

Summary of dividends declared

	2020				2019
	Per Share		Amount		Per Share		Amount
	(in thousands, except per share data)
First quarter	$	0.08	$	2,033	$	0.08	$	2,052

XML

GOODWILL AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2020

GOODWILL AND INTANGIBLE ASSETS

Schedule of intangible assets

		March 31, 2020						December 31, 2019
	Weighted-Average			Accumulated		Net				Accumulated		Net
	Amortization Period	Cost		Amortization		Value			Cost	Amortization		Value
	(in years)	(in thousands)						(in thousands)
Finite-lived intangible assets
Customer relationships	14	$	52,721	$	27,621	$	25,100	$	52,721	$	26,667	$	26,054
Other	11		1,315		842		473		1,294		816		478
	14		54,036		28,463		25,573		54,015		27,483		26,532
Indefinite-lived intangible assets
Trade name	N/A		32,300		N/A		32,300		32,300		N/A		32,300
Total intangible assets	N/A	$	86,336	$	28,463	$	57,873	$	86,315	$	27,483	$	58,832

Schedule of future amortization for intangible assets

The future amortization for intangible assets acquired through business acquisitions as of March 31, 2020 was as follows:

	Amortization of
	Intangible Assets
	(in thousands)
Remainder of 2020	$	2,930
2021		3,869
2022		3,842
2023		3,744
2024		3,695
Thereafter		7,493
Total amortization	$	25,573

XML

LEASES (Maturities of Operating Lease Liabilities) (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Maturities of operating lease liabilities
Remainder of 2020	$ 17,679
2021	18,426
2022	13,922
2023	10,459
2024	7,817
Thereafter	16,891
Total lease payments	85,194
Less imputed interest	(7,936)
Total operating lease liabilities	77,258
Land and Structures
Maturities of operating lease liabilities
Remainder of 2020	16,935
2021	18,145
2022	13,911
2023	10,459
2024	7,817
Thereafter	16,891
Total lease payments	84,158
Less imputed interest	(7,917)
Total operating lease liabilities	76,241
Equipment and Others
Maturities of operating lease liabilities
Remainder of 2020	744
2021	281
2022	11
Total lease payments	1,036
Less imputed interest	(19)
Total operating lease liabilities	1,017
12 years
Maturities of operating lease liabilities
Future minimum payments for leases that have not yet commenced	$ 34,700
Lease term for lease commitments that have not yet commenced	12 years
9 years
Maturities of operating lease liabilities
Future minimum payments for leases that have not yet commenced	$ 5,700
Lease term for lease commitments that have not yet commenced	9 years

XML

LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Interest rate swaps) (Details) - USD ($) $ in Millions	Nov. 30, 2014	Jun. 30, 2022	May 04, 2020	Mar. 31, 2020	Jan. 02, 2020	Dec. 31, 2019
Credit Facility
Financing Arrangements
Amount of borrowings covered by the interest rate swap				$ 50.0		$ 50.0
Effective fixed interest rate on hedged borrowings (as a percent)				3.12%		2.98%
Credit Facility | Subsequent Event | Forecast
Financing Arrangements
Amount of borrowings covered by the interest rate swap		$ 50.0
Interest rate swap agreement
Financing Arrangements
Term of swap agreement	5 years
Notional amount	$ 50.0
Interest rate swap agreement | Other long-term liabilities | Maximum
Financing Arrangements
Fair value of interest rate swap, liability						$ 0.1
Forward-starting interest rate swap agreement
Financing Arrangements
Notional amount					$ 50.0
Fixed interest rate payments (as a percent)					1.99%
Forward-starting interest rate swap agreement | Subsequent Event
Financing Arrangements
Notional amount			$ 50.0
Forward-starting interest rate swap agreement | Subsequent Event | Forecast
Financing Arrangements
Fixed interest rate payments (as a percent)		0.43%
Effective fixed interest rate on hedged borrowings (as a percent)		1.56%
Forward-starting interest rate swap agreement | Other long-term liabilities
Financing Arrangements
Fair value of interest rate swap, liability				$ 1.9		$ 0.6
Forward-starting interest rate swap agreement | Credit Facility
Financing Arrangements
Amount of borrowings covered by the interest rate swap				$ 50.0
Effective fixed interest rate on hedged borrowings (as a percent)				3.12%

XML

OPERATING SEGMENT DATA - (Concentrations) (Details)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues | Customer concentration risk | Asset-Based and ArcBest segments | FleetNet
Concentrations
Concentration Risk, Percentage	20.00%	14.00%

XML

STOCKHOLDERS' EQUITY (AOCI comp) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Changes in accumulated other comprehensive income (loss), net of tax, by component
Balances	$ 763,043	$ 717,682
OTHER COMPREHENSIVE INCOME (LOSS), net of tax	(2,467)	1,850
Balances	759,206	721,755
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss), net of tax, by component
Balances	203	(14,238)
Other comprehensive income (loss) before reclassifications	(2,425)	554
Amounts reclassified from accumulated other comprehensive income (loss)	(42)	1,296
OTHER COMPREHENSIVE INCOME (LOSS), net of tax	(2,467)	1,850
Balances	(2,264)	(12,388)
Unrecognized Net Periodic Benefit Credit (cost)
Changes in accumulated other comprehensive income (loss), net of tax, by component
Balances	2,152	(12,749)
Other comprehensive income (loss) before reclassifications	(8)	661
Amounts reclassified from accumulated other comprehensive income (loss)	(42)	1,296
OTHER COMPREHENSIVE INCOME (LOSS), net of tax	(50)	1,957
Balances	2,102	(10,792)
Interest Rate Swap
Changes in accumulated other comprehensive income (loss), net of tax, by component
Balances	(416)	591
Other comprehensive income (loss) before reclassifications	(997)	(332)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax	(997)	(332)
Balances	(1,413)	259
Foreign Currency Translation
Changes in accumulated other comprehensive income (loss), net of tax, by component
Balances	(1,533)	(2,080)
Other comprehensive income (loss) before reclassifications	(1,420)	225
OTHER COMPREHENSIVE INCOME (LOSS), net of tax	(1,420)	225
Balances	$ (2,953)	$ (1,855)

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Components of cost) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Components of net periodic benefit cost
Pension settlement expense	$ 89	$ 1,356
Nonunion Defined Benefit Pension Plan
Components of net periodic benefit cost
Interest cost		318
Expected return on plan assets		(90)
Pension settlement expense		1,356
Amortization of net actuarial (gain) loss		149
Net periodic benefit cost		1,733
Supplemental Benefit Plan
Components of net periodic benefit cost
Interest cost	3	10
Pension settlement expense	89
Amortization of net actuarial (gain) loss	4	24
Net periodic benefit cost	96	34
Postretirement Health Benefit Plan
Components of net periodic benefit cost
Service cost	47	80
Interest cost	144	303
Amortization of prior service credit		(9)
Amortization of net actuarial (gain) loss	(149)	225
Net periodic benefit cost	$ 42	$ 599

XML

EARNINGS PER SHARE (Basic and Diluted) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Basic, numerator:
Net income	$ 1,902	$ 4,888
Effect of unvested restricted stock unit awards	(1)	(9)
Adjusted net income	$ 1,901	$ 4,879
Basic, denominator:
Weighted-average shares	25,390,377	25,570,415
Earnings per common share (in dollars per share)	$ 0.07	$ 0.19
Diluted, numerator:
Net income	$ 1,902	$ 4,888
Effect of unvested restricted stock unit awards	(1)	(9)
Adjusted net income	$ 1,901	$ 4,879
Diluted, denominator:
Weighted-average shares	25,390,377	25,570,415
Effect of dilutive securities	856,423	941,934
Adjusted weighted-average shares and assumed conversions	26,246,800	26,512,349
Earnings per common share (in dollars per share)	$ 0.07	$ 0.18

XML

INCOME TAXES (Uncertain Tax Positions) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
INCOME TAXES
Reserve for uncertain tax positions		$ 0.9
Reversal of uncertain tax positions, Expiration of statute of limitations	$ 0.9

XML

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Cash and Cash Equivalents and Short-term Investments) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair value disclosure
Cash and cash equivalents	$ 352,165	$ 201,909
Short-term investments	178,810	116,579
Concentrations of Credit Risk of Financial Instruments
Cash, cash equivalents and short-term investments not FDIC-insured	245,900	66,200
Cash deposits
Fair value disclosure
Cash and cash equivalents	224,193	166,619
Variable rate demand notes
Fair value disclosure
Cash and cash equivalents	14,846	14,750
Money market funds
Fair value disclosure
Cash and cash equivalents	113,126	20,540
Certificates of deposit
Fair value disclosure
Short-term investments	131,477	69,314
U.S. Treasury securities
Fair value disclosure
Short-term investments	$ 47,333	$ 47,265

XML

GOODWILL AND INTANGIBLE ASSETS (Intangible) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Finite-lived intangible assets
Weighted Average Amortization Period	14 years
Cost	$ 54,036	$ 54,015
Accumulated Amortization	28,463	27,483
Net Value	25,573	26,532
Total intangible assets
Cost	86,336	86,315
Net Value	57,873	58,832
Trade name
Indefinite-lived intangible assets
Net Value	$ 32,300	32,300
Customer relationships
Finite-lived intangible assets
Weighted Average Amortization Period	14 years
Cost	$ 52,721	52,721
Accumulated Amortization	27,621	26,667
Net Value	$ 25,100	26,054
Other intangible assets
Finite-lived intangible assets
Weighted Average Amortization Period	11 years
Cost	$ 1,315	1,294
Accumulated Amortization	842	816
Net Value	$ 473	$ 478

XML

STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2020

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE H – STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss) were as follows:

	March 31		December 31
	2020		2019
	(in thousands)
Pre-tax amounts:
Unrecognized net periodic benefit credit	$	2,831	$	2,898
Interest rate swap		(1,912)		(563)
Foreign currency translation		(3,997)		(2,075)
Total	$	(3,078)	$	260
After-tax amounts:
Unrecognized net periodic benefit credit	$	2,102	$	2,152
Interest rate swap		(1,413)		(416)
Foreign currency translation		(2,953)		(1,533)
Total	$	(2,264)	$	203

The following is a summary of the changes in accumulated other comprehensive income (loss), net of tax, by component for the three months ended March 31, 2020 and 2019:

			Unrecognized			Interest	Foreign
			Net Periodic			Rate	Currency
	Total		Benefit Costs			Swap	Translation
	(in thousands)
Balances at December 31, 2019	$	203	$	2,152	$	(416)	$	(1,533)
Other comprehensive loss before reclassifications		(2,425)		(8)		(997)		(1,420)
Amounts reclassified from accumulated other comprehensive income		(42)		(42)		—		—
Net current-period other comprehensive loss		(2,467)		(50)		(997)		(1,420)
Balances at March 31, 2020	$	(2,264)	$	2,102	$	(1,413)	$	(2,953)
Balances at December 31, 2018	$	(14,238)	$	(12,749)	$	591	$	(2,080)
Other comprehensive income (loss) before reclassifications		554		661		(332)		225
Amounts reclassified from accumulated other comprehensive loss		1,296		1,296		—		—
Net current-period other comprehensive income (loss)		1,850		1,957		(332)		225
Balances at March 31, 2019	$	(12,388)	$	(10,792)	$	259	$	(1,855)

The following is a summary of the significant reclassifications out of accumulated other comprehensive income (loss) by component:

	Unrecognized Net Periodic
	Benefit Credit (Costs)(1)(2)
	Three Months Ended March 31
	2020		2019
	(in thousands)
Amortization of net actuarial gain (loss)	$	145	$	(398)
Amortization of prior service credit		—		9
Pension settlement expense(3)		(89)		(1,356)
Total, pre-tax		56		(1,745)
Tax benefit (expense)		(14)		449
Total, net of tax	$	42	$	(1,296)

(1) Amounts in parentheses indicate increases in expense or loss.

(2) These components of accumulated other comprehensive loss are included in the computation of net periodic benefit cost as disclosed in Note G.

(3) For the three months ended March 31, 2020, pension settlement expense is related to the supplemental benefit plan (see Note G).

Dividends on Common Stock

The following table is a summary of dividends declared during the applicable quarter:

	2020				2019
	Per Share		Amount		Per Share		Amount
	(in thousands, except per share data)
First quarter	$	0.08	$	2,033	$	0.08	$	2,052

On May 1, 2020, the Company’s Board of Directors declared a dividend of $0.08 per share to stockholders of record as of May 15, 2020.

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, 2019, the Company had $13.2 million remaining under the program for repurchases of its common stock. During the three months ended March 31, 2020, the Company purchased 150,000 shares for an aggregate cost of $3.2 million, leaving $10.0 million available for repurchase of common stock under the program.

XML

INCOME TAXES

3 Months Ended

Mar. 31, 2020

INCOME TAXES

INCOME TAXES

NOTE D – INCOME TAXES

The effective tax rate was 20.3% and 25.9% for the three months ended March 31, 2020 and March 31, 2019, respectively. 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. Due to the uncertainty surrounding the impact of the COVID-19 pandemic, for the three months ended March 31, 2020, the Company calculated the tax provision based on the actual statutory tax rate as opposed to using an annual effective tax rate, because of the inability to provide a reliable estimate of ordinary income within a reasonable range or the tax effect of nondeductible expenses.

For the three months ended March 31, 2020, the difference between the Company’s effective tax rate and the federal statutory rate primarily resulted from state income taxes, nondeductible expenses, changes in the cash surrender value of life insurance, federal alternative fuel and research and development tax credits, changes in tax valuation allowances, and the reversal of an uncertain tax position. For the three months ended March 31, 2019, the difference between the Company’s effective tax rate and the federal statutory rate primarily resulted from state income taxes, nondeductible expenses, and changes in the cash surrender value of life insurance.

As of March 31, 2020, 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 March 31, 2020 and concluded that, other than for certain deferred tax assets related to foreign tax credit carryforwards, the assets did not exceed the amount for which realization is more likely than not. In making this determination, the Company considered the future reversal of existing taxable temporary differences, future taxable income, and tax planning strategies. Additionally, as a result of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted on March 27, 2020, net operating losses originating in the tax year including December 31, 2020 may be carried back five years to a period in which the Company had substantial taxable income. Valuation allowances for deferred tax assets totaled $0.9 million and $0.7 million at March 31, 2020 and December 31, 2019, respectively.

The Company had a reserve for uncertain tax positions of $0.9 million at December 31, 2019. The reserve was reversed in the first quarter of 2020 due to the expiration of the statute of limitations.

The Company paid foreign and state income taxes of $0.3 million during the three months ended March 31, 2020 and paid $6.6 million of federal, state, and foreign income taxes during the three months ended March 31, 2019. The Company received refunds of $0.4 million of federal income taxes and refunds of less than $0.1 million of state income taxes that were paid in prior years during the three months ended March 31, 2020 and 2019, respectively.

XML

LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Tables)

3 Months Ended

Mar. 31, 2020

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

Schedule of long-term debt

	March 31		December 31
	2020		2019
	(in thousands)
Credit Facility (interest rate of 2.1%(1) at March 31, 2020)	$	250,000	$	70,000
Accounts receivable securitization borrowings (interest rate of 2.1% at March 31, 2020)		85,000		40,000
Notes payable (weighted-average interest rate of 3.3% at March 31, 2020)		198,908		213,504
Finance lease obligations (weighted-average interest rate of 3.3% at March 31, 2020)		14		15
		533,922		323,519
Less current portion		56,977		57,305
Long-term debt, less current portion	$	476,945	$	266,214

(1) The interest rate swap mitigates interest rate risk by effectively converting $50.0 million of borrowings under the Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 3.12% and 2.98% based on the margin of the Credit Facility as of March 31, 2020 and December 31, 2019, respectively.

Scheduled maturities of long-term debt obligations

Scheduled maturities of long-term debt obligations as of March 31, 2020 were as follows:

					Accounts
					Receivable
			Credit		Securitization		Notes		Finance Lease
	Total		Facility(1)		Program(1)		Payable		Obligations
	(in thousands)
Due in one year or less	$	68,124	$	4,233	$	1,245	$	62,639	$	7
Due after one year through two years		147,955		4,087		85,583		58,278		7
Due after two years through three years		51,217		4,414		—		46,803		—
Due after three years through four years		34,303		4,678		—		29,625		—
Due after four years through five years		266,658		252,430		—		14,228		—
Due after five years		—		—		—		—		—
Total payments		568,257		269,842		86,828		211,573		14
Less amounts representing interest		34,335		19,842		1,828		12,665		—
Long-term debt	$	533,922	$	250,000	$	85,000	$	198,908	$	14

(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.

Schedule of assets securing notes payable or held under capital leases

	March 31		December 31
	2020		2019
	(in thousands)
Revenue equipment	$	264,884	$	265,315
Software		2,140		2,140
Service, office, and other equipment		26,344		26,344
Total assets securing notes payable or held under finance leases		293,368		293,799
Less accumulated depreciation and amortization(1)		81,672		71,405
Net assets securing notes payable or held under finance leases	$	211,696	$	222,394

(1) Amortization of assets held under finance leases and depreciation of assets securing notes payable are included in depreciation expense.

XML

ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2020

ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION

Financial Statement Presentation

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 2019 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. The Company considered the impact of the novel coronavirus (“COVID-19”) pandemic on the estimates and assumptions used and determined that there were no material adverse impacts on the Company’s results of operations or financial position as of and for the three months ended March 31, 2020. Given the uncertainties regarding the economic environment and the impact of the COVID-19 pandemic on our business, it is possible that these estimates and assumptions may materially change in future periods.

Allowances

Allowances: On January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments – Credit Losses, (“ASC Topic 326”), which replaces the incurred loss methodology model with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade receivables and other receivables.

The Company maintains allowances for credit losses (formerly known as the allowance for doubtful accounts) and revenue adjustments on its trade receivables. The Company estimates the allowance for credit losses based on historical write-offs, factors surrounding the credit risk of specific customers, and forecasts of future economic conditions. In order to gather information regarding these trends and factors, the Company performs ongoing credit evaluations of customers, an analysis of accounts receivable aging by business segment, and an analysis of future economic conditions at period end. The allowance for revenue adjustments is an estimate based on historical revenue adjustments and current information

regarding trends and business changes. Actual write-offs or adjustments could differ from the allowance estimates due to a number of factors, including future changes in the forecasted economic environment or new factors and risks surrounding a particular customer. Accounts receivable are written off when the accounts are turned over to a collection agency or when the accounts are determined to be uncollectible. Actual write-offs and adjustments are charged against the allowances for doubtful accounts and revenue adjustments. The allowance for credit losses on the Company’s trade accounts receivable totaled $2.6 million at March 31, 2020  and $1.8  million at December 31, 2019. There were no material write-offs charged against or increases to the allowance for credit losses during the three months ended March 31, 2020.  

Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Adopted

Adopted Accounting Pronouncements

As previously discussed within Accounting Policies in this Note, effective January 1, 2020, the Company adopted ASC Topic 326, which replaces the incurred loss methodology model with an expected loss methodology referred to as the CECL methodology for the Company’s trade receivables and other receivables. The Company adopted ASC Topic 326 with the modified retrospective approach. Under this approach, results for reporting periods after January 1, 2020 are presented under ASC Topic 326 while prior period amounts continue to be reported in accordance with previously applicable accounting guidance. The Company recorded a decrease to retained earnings of $0.2 million as of January 1, 2020 for the cumulative effect of adopting ASC Topic 326.

On January 1, 2020 the Company adopted 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”) which was amended by the Financial Accounting Standards Board in August 2018. 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 were adopted on a prospective basis and did not have an impact on the Company’s consolidated financial statements.

On January 1, 2020 the Company adopted ASC Topic 820, Fair Value Measurement, which was amended to modify the disclosure requirements of fair value measurements, primarily impacting the disclosures for Level 3 fair value measurements. The amendment did not have an impact on the Company’s financial statement disclosures as of March 31, 2020.

The amendments to ASC Topic 848, Reference Rate Reform, (“ASC Topic 848”) are effective as of March 12, 2020 through December 31, 2022 and provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Company did not elect the optional expedients or apply the exceptions allowed by ASC Topic 848 during the three months ended March 31, 2020 and does not expect that the amendments, if elected, will have a significant impact on the Company’s consolidated financial statements. The Company’s revolving credit facility (“Credit Facility”) under its Third Amended and Restated Credit Agreement (“Credit Agreement”), accounts receivable securitization program, and interest rate swap agreements utilize interest rates based on LIBOR, which is expected to be phased out by the end of 2021. The Company’s Credit Facility and current interest rate swap agreement, which was amended on May 4, 2020 (see Note F), mature on October 1, 2024. The Credit Agreement provides for the use of an alternate rate of interest in accordance with the provisions of the agreement and the interest rate on the swap agreement will change to the rate in the Credit Agreement. Any changes to the terms of our borrowing arrangements which would allow for the use of an alternative to LIBOR in calculating the interest rate under such arrangements are anticipated to be effective in 2022 upon the Company’s agreement with the lenders as to the replacement reference rate.

Accounting Pronouncements Not Yet Adopted

ASC Topic 740, Income Taxes, was amended to simplify the accounting for income taxes to improve consistency of accounting methods and remove certain exceptions. The amendment is effective for the Company beginning January 1, 2021. The Company is currently assessing the impact this amendment will have on the consolidated financial statements and disclosures.

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

XML

OPERATING SEGMENT DATA (Tables)

3 Months Ended

Mar. 31, 2020

OPERATING SEGMENT DATA

Schedule of reportable operating segment information

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
REVENUES
Asset-Based	$	515,713	$	506,079
ArcBest		164,775		173,204
FleetNet		52,439		53,259
Other and eliminations		(31,528)		(20,703)
Total consolidated revenues	$	701,399	$	711,839
OPERATING EXPENSES
Asset-Based
Salaries, wages, and benefits	$	283,838	$	280,276
Fuel, supplies, and expenses(1)		61,225		63,972
Operating taxes and licenses		12,794		12,398
Insurance		7,824		7,991
Communications and utilities(1)		4,711		4,616
Depreciation and amortization(1)		23,270		20,961
Rents and purchased transportation(1)		55,770		49,306
Shared services(1)		48,885		50,295
Gain on sale of property and equipment		(2,164)		(34)
Innovative technology costs(1)(2)		4,533		1,802
Other(1)		1,787		881
Total Asset-Based		502,473		492,464
ArcBest
Purchased transportation		137,182		140,105
Supplies and expenses		2,280		2,774
Depreciation and amortization		2,470		3,151
Shared services		21,727		23,031
Other		2,525		2,413
Total ArcBest		166,184		171,474
FleetNet		51,399		51,771
Other and eliminations		(26,476)		(12,461)
Total consolidated operating expenses	$	693,580	$	703,248

(1) As previously discussed in this Note, the presentation of Asset-Based segment expenses was modified in third quarter 2019 to present innovative technology costs as a separate operating expense line item. Certain reclassifications have been made to the prior period operating segment expenses to conform to the current year presentation.

(2) Represents costs associated with the freight handling pilot test program at ABF Freight previously discussed in this Note.

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
OPERATING INCOME
Asset-Based	$	13,240	$	13,615
ArcBest		(1,409)		1,730
FleetNet		1,040		1,488
Other and eliminations		(5,052)		(8,242)
Total consolidated operating income	$	7,819	$	8,591
OTHER INCOME (COSTS)
Interest and dividend income	$	1,375	$	1,478
Interest and other related financing costs		(2,947)		(2,882)
Other, net(1)		(3,862)		(591)
Total other income (costs)		(5,434)		(1,995)
INCOME BEFORE INCOME TAXES	$	2,385	$	6,596

(1) Includes the components of net periodic benefit cost other than service cost related to the Company’s nonunion pension, SBP, and postretirement plans (see Note G) and proceeds and changes in cash surrender value of life insurance policies.

The following table presents operating expenses by category on a consolidated basis:

	Three Months Ended
	March 31
	2020		2019
	(in thousands)
OPERATING EXPENSES
Salaries, wages, and benefits	$	344,946	$	343,668
Rents, purchased transportation, and other costs of services		217,028		221,025
Fuel, supplies, and expenses		71,773		79,336
Depreciation and amortization(1)		29,013		26,537
Other		30,820		32,682
	$	693,580	$	703,248

(1) Includes amortization of intangible assets.

XML

ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION

3 Months Ended

Mar. 31, 2020

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^™ (the “Company”) is the parent holding company of freight transportation and integrated logistics businesses providing innovative 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 70% of the Company’s total revenues before other revenues and intercompany eliminations for the three months ended March 31, 2020. As of March 2020, 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 2019 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. The Company considered the impact of the novel coronavirus (“COVID-19”) pandemic on the estimates and assumptions used and determined that there were no material adverse impacts on the Company’s results of operations or financial position as of and for the three months ended March 31, 2020. Given the uncertainties regarding the economic environment and the impact of the COVID-19 pandemic on our business, it is possible that these estimates and assumptions may materially change in future periods.

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 2019 Annual Report on Form 10-K. The following policies have been updated during the three months ended March 31, 2020 for the adoption of accounting standard updates disclosed within this Note.

Allowances: On January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments – Credit Losses, (“ASC Topic 326”), which replaces the incurred loss methodology model with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade receivables and other receivables.

The Company maintains allowances for credit losses (formerly known as the allowance for doubtful accounts) and revenue adjustments on its trade receivables. The Company estimates the allowance for credit losses based on historical write-offs, factors surrounding the credit risk of specific customers, and forecasts of future economic conditions. In order to gather information regarding these trends and factors, the Company performs ongoing credit evaluations of customers, an analysis of accounts receivable aging by business segment, and an analysis of future economic conditions at period end. The allowance for revenue adjustments is an estimate based on historical revenue adjustments and current information

regarding trends and business changes. Actual write-offs or adjustments could differ from the allowance estimates due to a number of factors, including future changes in the forecasted economic environment or new factors and risks surrounding a particular customer. Accounts receivable are written off when the accounts are turned over to a collection agency or when the accounts are determined to be uncollectible. Actual write-offs and adjustments are charged against the allowances for doubtful accounts and revenue adjustments. The allowance for credit losses on the Company’s trade accounts receivable totaled $2.6 million at March 31, 2020  and $1.8  million at December 31, 2019. There were no material write-offs charged against or increases to the allowance for credit losses during the three months ended March 31, 2020.  

Adopted Accounting Pronouncements

As previously discussed within Accounting Policies in this Note, effective January 1, 2020, the Company adopted ASC Topic 326, which replaces the incurred loss methodology model with an expected loss methodology referred to as the CECL methodology for the Company’s trade receivables and other receivables. The Company adopted ASC Topic 326 with the modified retrospective approach. Under this approach, results for reporting periods after January 1, 2020 are presented under ASC Topic 326 while prior period amounts continue to be reported in accordance with previously applicable accounting guidance. The Company recorded a decrease to retained earnings of $0.2 million as of January 1, 2020 for the cumulative effect of adopting ASC Topic 326.

On January 1, 2020 the Company adopted 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”) which was amended by the Financial Accounting Standards Board in August 2018. 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 were adopted on a prospective basis and did not have an impact on the Company’s consolidated financial statements.

On January 1, 2020 the Company adopted ASC Topic 820, Fair Value Measurement, which was amended to modify the disclosure requirements of fair value measurements, primarily impacting the disclosures for Level 3 fair value measurements. The amendment did not have an impact on the Company’s financial statement disclosures as of March 31, 2020.

The amendments to ASC Topic 848, Reference Rate Reform, (“ASC Topic 848”) are effective as of March 12, 2020 through December 31, 2022 and provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Company did not elect the optional expedients or apply the exceptions allowed by ASC Topic 848 during the three months ended March 31, 2020 and does not expect that the amendments, if elected, will have a significant impact on the Company’s consolidated financial statements. The Company’s revolving credit facility (“Credit Facility”) under its Third Amended and Restated Credit Agreement (“Credit Agreement”), accounts receivable securitization program, and interest rate swap agreements utilize interest rates based on LIBOR, which is expected to be phased out by the end of 2021. The Company’s Credit Facility and current interest rate swap agreement, which was amended on May 4, 2020 (see Note F), mature on October 1, 2024. The Credit Agreement provides for the use of an alternate rate of interest in accordance with the provisions of the agreement and the interest rate on the swap agreement will change to the rate in the Credit Agreement. Any changes to the terms of our borrowing arrangements which would allow for the use of an alternative to LIBOR in calculating the interest rate under such arrangements are anticipated to be effective in 2022 upon the Company’s agreement with the lenders as to the replacement reference rate.

Accounting Pronouncements Not Yet Adopted

ASC Topic 740, Income Taxes, was amended to simplify the accounting for income taxes to improve consistency of accounting methods and remove certain exceptions. The amendment is effective for the Company beginning January 1, 2021. The Company is currently assessing the impact this amendment will have on the consolidated financial statements and disclosures.

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

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 01, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	000-19969
Entity Registrant Name	ARCBEST CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	71-0673405
Entity Address, Address Line One	8401 McClure Drive
Entity Address, City or Town	Fort Smith
Entity Address, State or Province	AR
Entity Address, Postal Zip Code	72916
City Area Code	479
Local Phone Number	785-6000
Title of 12(b) Security	Common Stock
Trading Symbol	ARCB
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		25,262,470
Entity Central Index Key	0000894405
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME	$ 1,902	$ 4,888
Pension and other postretirement benefit plans:
Net actuarial gain (loss), net of tax of: (2020 - $3; 2019 - $230)	(8)	661
Pension settlement expense, net of tax of: (2020 - $23; 2019 - $349)	66	1,007
Amortization of unrecognized net periodic benefit costs (credit), net of tax of: (2020 - $37; 2019 - $100)
Net actuarial (gain) loss	(108)	295
Prior service credit		(6)
Interest rate swap and foreign currency translation:
Change in unrealized loss on interest rate swap, net of tax of: (2020 - $352; 2019 - $118)	(997)	(332)
Change in foreign currency translation, net of tax of: (2020 - $502; 2019 - $79)	(1,420)	225
OTHER COMPREHENSIVE INCOME (LOSS), net of tax	(2,467)	1,850
TOTAL COMPREHENSIVE INCOME (LOSS)	$ (565)	$ 6,738

XML

OPERATING SEGMENT DATA - (Operating Expenses) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
OPERATING EXPENSES
Salaries, wages, and benefits	$ 344,946	$ 343,668
Rents, purchased transportation, and other costs of services	217,028	221,025
Fuel, supplies, and expenses	71,773	79,336
Depreciation and amortization	29,013	26,537
Other	30,820	32,682
Total consolidated operating expenses	$ 693,580	$ 703,248

XML

LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Financing arrangements - Letters of credit & Surety bonds) (Details) $ in Millions	Mar. 31, 2020 USD ($)
Accounts receivable securitization borrowings
Financing Arrangements
Outstanding letters of credit	$ 12.0
Letters Of Credit Agreements
Financing Arrangements
Outstanding letters of credit	12.6
Surety bonds
Financing Arrangements
Outstanding surety bonds under uncollateralized bond programs	$ 62.3

XML

LEASES (Components of Lease Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Leases
Operating lease expense	$ 5,796	$ 5,339
Variable lease expense	1,040	839
Sublease income	(92)	(67)
Total operating lease expense	$ 6,744	$ 6,111

XML

LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Assets Sec) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financing Arrangements
Total assets securing notes payable or held under finance leases	$ 293,368	$ 293,799
Less accumulated depreciation and amortization	81,672	71,405
Net assets securing notes payable or held under finance leases	211,696	222,394
Revenue equipment
Financing Arrangements
Total assets securing notes payable or held under finance leases	264,884	265,315
Software
Financing Arrangements
Total assets securing notes payable or held under finance leases	2,140	2,140
Service, office, and other equipment
Financing Arrangements
Total assets securing notes payable or held under finance leases	$ 26,344	$ 26,344

XML

ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Organization) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($) segment	Dec. 31, 2019 USD ($)
Organization and description of business
Number of reportable operating segments | segment	3
Allowance for credit losses on trade accounts receivable | $	$ 2.6	$ 1.8
Asset-Based
Organization and description of business
Percentage of the Company's revenues, before other revenues and intercompany eliminations, represented by the Asset-Based segment	70.00%
Asset-Based | Unionized employees concentration risk | Number of employees
Organization and description of business
Percentage of Asset-Based segment employees covered under collective bargaining agreement with the IBT	82.00%

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)

3 Months Ended

Mar. 31, 2020

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

Summary of the components of net periodic benefit cost

	Three Months Ended March 31
	Nonunion Defined				Supplemental				Postretirement
	Benefit Pension Plan				Benefit Plan				Health Benefit Plan
	2020(1)		2019		2020		2019		2020(2)		2019
	(in thousands)
Service cost	$	—	$	—	$	—	$	—	$	47	$	80
Interest cost		—		318		3		10		144		303
Expected return on plan assets		—		(90)		—		—		—		—
Amortization of prior service credit		—		—		—		—		—		(9)
Pension settlement expense(3)		—		1,356		89		—		—		—
Amortization of net actuarial (gain) loss(4)		—		149		4		24		(149)		225
Net periodic benefit cost	$	—	$	1,733	$	96	$	34	$	42	$	599

(1) Termination of the nonunion defined benefit pension plan was completed in 2019 and the plan was liquidated as of December 31, 2019.

(2) Expense for the postretirement health benefit plan is lower for the three months ended March 31, 2020, compared to the same period of 2019, due to the impact of a lower cost prescription drug plan effective January 1, 2020.

(3) For the three months ended March 31, 2020, pension settlement expense for the supplemental benefit plan of $0.1 million (pre-tax), or $0.1 million (after-tax), was due to a $0.7 million benefit related to an officer retirement. For the three months ended March 31, 2019, pension settlement expense for the nonunion defined benefit pension plan of $1.4 million (pre-tax), or $1.0 million (after-tax), was related to $14.9 million of lump-sum distributions from the plan.

(4) The Company amortizes actuarial gains and losses over the average remaining active service period of the plan participants and does not use a corridor approach.

XML

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2020

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Schedule components of cash and cash equivalents, short term investments, and restricted funds

	March 31		December 31
	2020		2019
	(in thousands)
Cash and cash equivalents
Cash deposits(1)	$	224,193	$	166,619
Variable rate demand notes(1)(2)		14,846		14,750
Money market funds(3)		113,126		20,540
Total cash and cash equivalents	$	352,165	$	201,909
Short-term investments
Certificates of deposit(1)	$	131,477	$	69,314
U.S. Treasury securities(4)		47,333		47,265
Total short-term investments	$	178,810	$	116,579

(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.

Schedule of fair value and carrying value disclosures of financial instruments

	March 31				December 31
	2020				2019
	(in thousands)
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Credit Facility(1)	$	250,000	$	250,000	$	70,000	$	70,000
Accounts receivable securitization borrowings(2)		85,000		85,000		40,000		40,000
Notes payable(3)		198,908		206,437		213,504		216,432
	$	533,908	$	541,437	$	323,504	$	326,432

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

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

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

Schedule of financial assets and liabilities measured at fair value on a recurring basis

	March 31, 2020
			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)	$	113,126	$	113,126	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		2,539		2,539		—		—
	$	115,665	$	115,665	$	—	$	—
Liabilities:
Interest rate swaps(3)	$	1,912	$	—	$	1,912	$	—

	December 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)	$	20,540	$	20,540	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		2,427		2,427		—		—
	$	22,967	$	22,967	$	—	$	—
Liabilities:
Interest rate swaps(3)	$	563	$	—	$	563	$	—

(1) Included in cash and cash equivalents.

(2) Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities.

(3) Included in other long-term liabilities. The fair values of the interest rate swaps were determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are considered to be in Level 3 of the fair value hierarchy. The Company assessed Level 3 inputs as insignificant to the valuation at March 31, 2020 and December 31, 2019 and considers the interest rate swap valuations in Level 2 of the fair value hierarchy.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONSOLIDATED STATEMENTS OF OPERATIONS
REVENUES	$ 701,399	$ 711,839
OPERATING EXPENSES	693,580	703,248
OPERATING INCOME	7,819	8,591
OTHER INCOME (COSTS)
Interest and dividend income	1,375	1,478
Interest and other related financing costs	(2,947)	(2,882)
Other, net	(3,862)	(591)
TOTAL OTHER INCOME (COSTS)	(5,434)	(1,995)
INCOME BEFORE INCOME TAXES	2,385	6,596
INCOME TAX PROVISION	483	1,708
NET INCOME	$ 1,902	$ 4,888
EARNINGS PER COMMON SHARE
Basic (in dollars per share)	$ 0.07	$ 0.19
Diluted (in dollars per share)	$ 0.07	$ 0.18
AVERAGE COMMON SHARES OUTSTANDING
Basic (in shares)	25,390,377	25,570,415
Diluted (in shares)	26,246,800	26,512,349
CASH DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share)	$ 0.08	$ 0.08

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
OPERATING ACTIVITIES
Net income	$ 1,902	$ 4,888
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	28,032	25,409
Amortization of intangibles	981	1,128
Pension settlement expense	89	1,356
Share-based compensation expense	2,181	2,058
Provision for losses on accounts receivable	1,383	112
Change in deferred income taxes	(2,815)	(584)
Gain on sale of property and equipment	(2,130)	(43)
Changes in operating assets and liabilities:
Receivables	3,874	3,931
Prepaid expenses	(3,429)	(5,760)
Other assets	5,800	(141)
Income taxes	2,949	(4,313)
Operating right-of-use assets and lease liabilities, net	(138)	40
Multiemployer pension fund withdrawal liability	(150)	(143)
Accounts payable, accrued expenses, and other liabilities	(15,400)	(31,309)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	23,129	(3,371)
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of financings	(6,738)	(15,543)
Proceeds from sale of property and equipment	4,692	1,039
Purchases of short-term investments	(73,973)	(13,790)
Proceeds from sale of short-term investments	12,210	4,998
Capitalization of internally developed software	(3,342)	(2,656)
NET CASH USED IN INVESTING ACTIVITIES	(67,151)	(25,952)
FINANCING ACTIVITIES
Borrowings under credit facilities	180,000
Borrowings under accounts receivable securitization program	45,000
Payments on long-term debt	(14,598)	(15,217)
Net change in book overdrafts	(10,869)	(2,524)
Payment of common stock dividends	(2,033)	(2,052)
Purchases of treasury stock	(3,162)	(2,663)
Payments for tax withheld on share-based compensation	(60)	(8)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	194,278	(22,464)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	150,256	(51,787)
Cash and cash equivalent at beginning of period	201,909	190,186
CASH AND CASH EQUIVALENTS CASH AT END OF PERIOD	352,165	138,399
NONCASH INVESTING ACTIVITIES
Accruals for equipment received	39	2,878
Lease liabilities arising from obtaining right-of-use assets	$ 10,370	$ 18,144

XML

LEGAL PROCEEDINGS, ENVIRONMENTAL MATTERS, AND OTHER EVENTS (Environmental Matters) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($) tank state	Dec. 31, 2019 USD ($)
Underground fuel storage tanks
Environmental Matters
Number of underground tanks where the company's subsidiaries store fuel for use in tractors and trucks | tank	56
Number of states in which underground tanks are located | state	16
Environmental cleanup costs | Accrued expenses
Environmental Matters
Reserve for environmental contingencies | $	$ 0.7	$ 0.4

XML

INCOME TAXES (Taxes Paid) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
State | Maximum
Income taxes
Income tax refunds received (in dollars)		$ 0.1
Federal, Foreign, and State Jurisdictions
Income taxes
Income taxes paid (in dollars)		$ 6.6
Foreign and State Jurisdictions
Income taxes
Income taxes paid (in dollars)	$ 0.3
Federal
Income taxes
Income tax refunds received (in dollars)	$ 0.4

XML

LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Summary) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Long-term debt obligations
Long-term debt	$ 533,922	$ 323,519
Less current portion	56,977	57,305
Long-term debt, less current portion	476,945	266,214
Payments under long-term debt obligations
2020	68,124
2021	147,955
2022	51,217
2023	34,303
2024	266,658
Total payments	568,257
Less amounts representing interest	34,335
Long-term debt	533,922	323,519
Credit Facility
Long-term debt obligations
Long-term debt	$ 250,000	70,000
Interest rate (as a percent)	2.10%
Amount of borrowings covered by the interest rate swap	$ 50,000	$ 50,000
Effective fixed interest rate on hedged borrowings (as a percent)	3.12%	2.98%
Payments under long-term debt obligations
2020	$ 4,233
2021	4,087
2022	4,414
2023	4,678
2024	252,430
Total payments	269,842
Less amounts representing interest	19,842
Long-term debt	250,000	$ 70,000
Credit Facility | Forward-starting interest rate swap agreement
Long-term debt obligations
Amount of borrowings covered by the interest rate swap	$ 50,000
Effective fixed interest rate on hedged borrowings (as a percent)	3.12%
Accounts receivable securitization borrowings
Long-term debt obligations
Long-term debt	$ 85,000	40,000
Interest rate (as a percent)	2.10%
Payments under long-term debt obligations
2020	$ 1,245
2021	85,583
Total payments	86,828
Less amounts representing interest	1,828
Long-term debt	85,000	40,000
Notes payable
Long-term debt obligations
Long-term debt	$ 198,908	213,504
Weighted-average interest rate (as a percent)	3.30%
Payments under long-term debt obligations
2020	$ 62,639
2021	58,278
2022	46,803
2023	29,625
2024	14,228
Total payments	211,573
Less amounts representing interest	12,665
Long-term debt	198,908	213,504
Finance lease obligations
Long-term debt obligations
Long-term debt	$ 14	15
Weighted-average interest rate (as a percent)	3.30%
Payments under long-term debt obligations
2020	$ 7
2021	7
Total payments	14
Long-term debt	$ 14	$ 15

XML

LONG-TERM DEBT AND FINANCING ARRANGEMENTS (Securitization program) (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2020 USD ($)
Financing Arrangements
Borrowings under accounts receivable securitization program		$ 45,000
Accounts receivable securitization borrowings
Financing Arrangements
Maximum borrowing capacity	$ 125,000	125,000
Additional borrowing capacity that may be requested	25,000	25,000
Borrowings under accounts receivable securitization program	45,000
Amount outstanding	85,000	85,000
Outstanding letters of credit	12,000	12,000
Remaining borrowing capacity	$ 28,000	$ 28,000

XML

EARNINGS PER SHARE (AntiDil) (Details) - shares shares in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Stock awards
Antidilutive securities
Outstanding stock awards not included in calculation of diluted earnings (loss) per share (in shares)	0.2	0.2

XML

STOCKHOLDERS' EQUITY (Reclass) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Unrecognized Net Periodic Benefit Credit (cost)
Significant reclassifications out of accumulated other comprehensive loss by component
Total, pre-tax	$ 56	$ (1,745)
Tax benefit (expense)	(14)	449
Total, net of tax	42	(1,296)
Amortization of net actuarial gain (loss)
Significant reclassifications out of accumulated other comprehensive loss by component
Total, pre-tax	145	(398)
Amortization of prior service credit
Significant reclassifications out of accumulated other comprehensive loss by component
Total, pre-tax		9
Pension settlement expense
Significant reclassifications out of accumulated other comprehensive loss by component
Total, pre-tax	$ (89)	$ (1,356)

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Nonunion) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Pension and other postretirement benefit plans
Pension settlement expense, pre-tax	$ (89)	$ (1,356)
Pension settlement expense, net of tax	66	1,007
Nonunion Defined Benefit Pension Plan
Pension and other postretirement benefit plans
Pension settlement expense, pre-tax		(1,356)
Pension settlement expense, net of tax		1,000
Lump-sum distributions		$ 14,900
Supplemental Benefit Plan
Pension and other postretirement benefit plans
Benefit	700
Pension settlement expense, pre-tax	(89)
Pension settlement expense, net of tax	$ 100

XML

ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION (Adopted Pronouncements) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019
Adopted Accounting Pronouncements
Retained earnings	$ 532,858		$ 533,187
ASC Topic 326, Financial Instruments-Credit Losses
Adopted Accounting Pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted		true
ASC Topic 326, Financial Instruments-Credit Losses | Adjustment
Adopted Accounting Pronouncements
Retained earnings		$ 200
ASC Topic 350-40, Goodwill and Other-Internal-Use Software
Adopted Accounting Pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted		true
ASC Topic 820, Fair Value Measurement
Adopted Accounting Pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted		true

XML

GOODWILL AND INTANGIBLE ASSETS (Goodwill) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Goodwill by reportable operating segment
Goodwill	$ 88,320	$ 88,320
ArcBest
Goodwill by reportable operating segment
Goodwill	87,700	87,700
FleetNet
Goodwill by reportable operating segment
Goodwill	$ 600	$ 600

XML

INCOME TAXES (Allowance) (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Deferred tax assets:
Valuation allowance	$ 0.9	$ 0.7

XML

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2020

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
	March 31
	2020		2019
	(in thousands, except share and per share data)
Basic
Numerator:
Net income	$	1,902	$	4,888
Effect of unvested restricted stock awards		(1)		(9)
Adjusted net income	$	1,901	$	4,879
Denominator:
Weighted-average shares		25,390,377		25,570,415
Earnings per common share	$	0.07	$	0.19
Diluted
Numerator:
Net income	$	1,902	$	4,888
Effect of unvested restricted stock awards		(1)		(9)
Adjusted net income	$	1,901	$	4,879
Denominator:
Weighted-average shares		25,390,377		25,570,415
Effect of dilutive securities		856,423		941,934
Adjusted weighted-average shares and assumed conversions		26,246,800		26,512,349
Earnings per common share	$	0.07	$	0.18

Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested RSUs that receive dividends, which are considered participating securities. Beginning with 2015 grants, the RSU agreements were modified to remove dividend rights; therefore, the RSUs granted subsequent to 2015 are not participating securities. For each of the three-month periods ended March 31, 2020 and 2019, 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.

XML

LEASES

3 Months Ended

Mar. 31, 2020

Leases

LEASES

NOTE E – 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 components of operating lease expense were as follows:

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Operating lease expense	$	5,796	$	5,339
Variable lease expense		1,040		839
Sublease income		(92)		(67)
Total operating lease expense	$	6,744	$	6,111

The operating cash flows from operating lease activity were as follows:

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Noncash change in operating right-of-use assets	$	5,815	$	4,730
Change in operating lease liabilities		(5,953)		(4,690)
Operating right-use-of-assets and lease liabilities, net	$	(138)	$	40
Cash paid for amounts included in the measurement of operating lease liabilities	$	(5,925)	$	(5,290)

Maturities of operating lease liabilities at March 31, 2020 were as follows:

					Equipment
			Land and		and
	Total		Structures(1)		Other
	(in thousands)
Remainder of 2020	$	17,679	$	16,935	$	744
2021		18,426		18,145		281
2022		13,922		13,911		11
2023		10,459		10,459		—
2024		7,817		7,817		—
Thereafter		16,891		16,891		—
Total lease payments		85,194		84,158		1,036
Less imputed interest		(7,936)		(7,917)		(19)
Total	$	77,258	$	76,241	$	1,017

(1) Excludes future minimum payments for leases which were executed but had not yet commenced as of March 31, 2020 of $34.7 million and $5.7 million which will be paid over 12 and 9 years, respectively. The Company plans to take possession of these leased spaces in mid-2020.