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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

‎VULCAN MATERIALS COMPANY
‎(Exact name of registrant as specified in its charter)

‎ New Jersey  ‎(State or other jurisdiction of incorporation)			‎20-8579133 ‎(I.R.S. Employer Identification No.)
‎1200 Urban Center Drive, Birmingham, Alabama ‎(Address of principal executive offices)				‎35242 ‎(zip code)
‎(205) 298-3000 ‎(Registrant's telephone number including area code)
‎Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
‎Title of each class	‎Trading Symbol				Name of each exchange on ‎which registered
Common Stock, $1 par value	VMC				New York Stock Exchange
‎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 þ No o ‎ ‎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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o ‎ ‎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 þ		‎Accelerated filer o				‎Smaller reporting company o
‎Non-accelerated filer o						‎Emerging growth company o
‎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. o
‎Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
‎Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
‎                    Class						Shares outstanding ‎      at April 21, 2020
Common Stock, $1 Par Value						132,434,322

 

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part I financial information

  ITEM 1

FINANCIAL STATEMENTS

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited	March 31			December 31			March 31
in thousands	2020			2019			2019
Assets
Cash and cash equivalents	$       120,041			$       271,589			$         30,838
Restricted cash	232			2,917			270
Accounts and notes receivable
Accounts and notes receivable, gross	601,182			573,241			563,084
Allowance for doubtful accounts	(3,517)			(3,125)			(2,554)
Accounts and notes receivable, net	597,665			570,116			560,530
Inventories
Finished products	403,612			391,666			369,743
Raw materials	33,676			31,318			27,951
Products in process	5,010			5,604			4,976
Operating supplies and other	28,449			29,720			26,727
Inventories	470,747			458,308			429,397
Other current assets	88,095			76,396			62,816
Total current assets	1,276,780			1,379,326			1,083,851
Investments and long-term receivables	57,987			60,709			50,952
Property, plant & equipment
Property, plant & equipment, cost	8,907,788			8,749,217			8,559,549
Allowances for depreciation, depletion & amortization	(4,506,700)			(4,433,179)			(4,284,211)
Property, plant & equipment, net	4,401,088			4,316,038			4,275,338
Operating lease right-of-use assets, net	420,930			408,189			426,381
Goodwill	3,167,061			3,167,061			3,161,842
Other intangible assets, net	1,083,515			1,091,475			1,085,398
Other noncurrent assets	222,021			225,995			213,090
Total assets	$  10,629,382			$  10,648,793			$  10,296,852
Liabilities
Current maturities of long-term debt	25			25			24
Short-term debt	0			0			178,500
Trade payables and accruals	243,019			265,159			248,119
Other current liabilities	232,632			270,379			232,964
Total current liabilities	475,676			535,563			659,607
Long-term debt	2,785,566			2,784,315			2,780,589
Deferred income taxes, net	648,405			633,039			568,229
Deferred revenue	178,568			179,880			184,744
Operating lease liabilities	399,489			388,042			403,426
Other noncurrent liabilities	551,352			506,097			483,048
Total liabilities	$    5,039,056			$    5,026,936			$    5,079,643
Other commitments and contingencies (Note 8)
Equity
Common stock, $1 par value, Authorized 480,000 shares,
Outstanding 132,433, 132,371 and 132,069 shares, respectively	132,433			132,371			132,069
Capital in excess of par value	2,782,738			2,791,353			2,789,864
Retained earnings	2,885,084			2,895,871			2,467,201
Accumulated other comprehensive loss	(209,929)			(197,738)			(171,925)
Total equity	$    5,590,326			$    5,621,857			$    5,217,209
Total liabilities and equity	$  10,629,382			$  10,648,793			$  10,296,852
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

‎

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VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF
‎COMPREHENSIVE INCOME

	Three Months Ended
Unaudited	March 31
in thousands, except per share data	2020			2019
Total revenues	$    1,049,242			$       996,511
Cost of revenues	847,519			804,836
Gross profit	201,723			191,675
Selling, administrative and general expenses	86,430			90,268
Gain on sale of property, plant & equipment
and businesses	999			7,297
Other operating expense, net	(3,991)			(4,271)
Operating earnings	112,301			104,433
Other nonoperating income (expense), net	(9,336)			3,129
Interest expense, net	30,773			32,934
Earnings from continuing operations
before income taxes	72,192			74,628
Income tax expense	12,194			10,693
Earnings from continuing operations	59,998			63,935
Earnings (loss) on discontinued operations, net of tax	260			(636)
Net earnings	$         60,258			$         63,299
Other comprehensive income, net of tax
Deferred loss on interest rate derivative	(14,680)			0
Amortization of prior interest rate derivative loss	794			55
Amortization of actuarial loss and prior service
cost for benefit plans	1,695			235
Other comprehensive income (loss)	(12,191)			290
Comprehensive income	$         48,067			$         63,589
Basic earnings (loss) per share
Continuing operations	$             0.45			$             0.48
Discontinued operations	0.00			0.00
Net earnings	$             0.45			$             0.48
Diluted earnings (loss) per share
Continuing operations	$             0.45			$             0.48
Discontinued operations	0.00			0.00
Net earnings	$             0.45			$             0.48
Weighted-average common shares outstanding
Basic	132,567			132,043
Assuming dilution	133,259			133,054
Depreciation, depletion, accretion and amortization	$         95,480			$         89,181
Effective tax rate from continuing operations	16.9%			14.3%
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

‎

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VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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notes to condensed consolidated financial statements

Note 1: summary of significant accounting policies

NATURE OF OPERATIONS

Vulcan Materials Company (the “Company,” “Vulcan,” “we,” “our”), a New Jersey corporation, is the nation's largest supplier of construction aggregates (primarily crushed stone, sand and gravel) and a major producer of asphalt mix and ready-mixed concrete.

We operate primarily in the United States and our principal product — aggregates — is used in virtually all types of public and private construction projects and in the production of asphalt mix and ready-mixed concrete. We serve markets in twenty states, Washington D.C., and the local markets surrounding our operations in Mexico. Our primary focus is serving metropolitan markets in the United States that are expected to experience the most significant growth in population, households and employment. These three demographic factors are significant drivers of demand for aggregates. While aggregates is our focus and primary business, we produce and sell asphalt mix and/or ready-mixed concrete in our Alabama, Arizona, California, Maryland, New Mexico, Tennessee, Texas, Virginia and Washington D.C. markets.

BASIS OF PRESENTATION

Our accompanying unaudited condensed consolidated financial statements were prepared in compliance with the instructions to Form 10-Q and Article 10 of Regulation S-X and thus do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. We prepared the accompanying condensed consolidated financial statements on the same basis as our annual financial statements, except for the adoption of new accounting standards as described in Note 17. Our Condensed Consolidated Balance Sheet as of December 31, 2019 was derived from the audited financial statement, but it does not include all disclosures required by GAAP. In the opinion of our management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. For further information, refer to the consolidated financial statements and footnotes included in our most recent Annual Report on Form 10-K. Operating results for the three month period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, particularly in light of the uncertainty over the economic and operational impacts of the current novel coronavirus (COVID-19) pandemic.

We are operating as an essential business and while the COVID-19 pandemic has not yet materially impacted our business, operations, or financial results, it may have far-reaching impacts on many aspects of our operations, directly and indirectly, including with respect to its impacts on customer behaviors, business and manufacturing operations, our employees, and the market generally. Our condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets, liabilities, revenues and expenses. Such estimates and assumptions affect, among other things, our goodwill and long-lived asset valuations; inventory valuation; assessment of the annual effective tax rate; valuation of deferred income taxes; allowance for doubtful accounts; measurement of cash bonus plans; and pension plan assumptions. Events and changes in circumstances arising after March 31, 2020, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

Due to the 2005 sale of our Chemicals business as described within this Note under the caption Discontinued Operations, the results of the Chemicals business are presented as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income.

RESTRICTED CASH

Restricted cash consists of cash proceeds from the sale of property held in escrow for the acquisition of replacement property under like-kind exchange agreements and cash reserved by other contractual agreements (such as asset purchase agreements) for a specified purpose and therefore is not available for use for other purposes. The escrow accounts are administered by an intermediary. Cash restricted pursuant to like-kind exchange agreements remains restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property. Restricted cash is included with cash and cash equivalents in the accompanying Condensed Consolidated Statements of Cash Flows.

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LEASES

Our nonmineral leases with initial terms in excess of one year are recognized on the balance sheet as right-of-use (ROU) assets and lease liabilities. Mineral leases are exempt from balance sheet recognition.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU assets are adjusted for any prepaid lease payments and lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The non-lease components of our lease agreements are not separated from the lease components.

For additional information about leases see Note 2.

DISCONTINUED OPERATIONS

In 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation. The financial results of the Chemicals business are classified as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income for all periods presented. Results from discontinued operations are as follows:

	Three Months Ended
	March 31
in thousands	2020			2019
Discontinued Operations
Pretax gain (loss)	$           354			$          (638)
Income tax (expense) benefit	(94)			2
Earnings (loss) on discontinued operations,
net of tax	$           260			$          (636)

Our discontinued operations include charges/credits related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business (including certain matters as discussed in Note 8). There were no revenues from discontinued operations for the periods presented.

EARNINGS PER SHARE (EPS)

Earnings per share are computed by dividing net earnings by the weighted-average common shares outstanding (basic EPS) or weighted-average common shares outstanding assuming dilution (diluted EPS), as set forth below:

	Three Months Ended
	March 31
in thousands	2020			2019
Weighted-average common shares
outstanding	132,567			132,043
Dilutive effect of
Stock-Only Stock Appreciation Rights	345			742
Other stock compensation plans	347			269
Weighted-average common shares
outstanding, assuming dilution	133,259			133,054

All dilutive common stock equivalents are reflected in our earnings per share calculations. In periods of loss, shares that otherwise would have been included in our diluted weighted-average common shares outstanding computation would be excluded.

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Antidilutive common stock equivalents are not included in our earnings per share calculations. The number of antidilutive common stock equivalents for which the exercise price exceeds the weighted-average market price is as follows:

 

RECLASSIFICATIONS

Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2020 presentation.

 

Note 2: Leases

Our portfolio of nonmineral leases is composed almost entirely of operating leases (we do not have any material finance leases) for real estate (including office buildings, aggregates sales yards, and concrete and asphalt sites) and equipment (including railcars and rail track, barges, office equipment and plant equipment).

Operating lease ROU assets and liabilities and the weighted-average lease term and discount rate are as follows:

		March 31			December 31			March 31
in thousands	Classification on the Balance Sheet	2020			2019			2019
Assets
Operating lease ROU assets		$     461,712			$     441,656			$     434,970
Accumulated amortization		(40,782)			(33,467)			(8,589)
Total lease assets	Operating lease right-of-use assets, net	$     420,930			$     408,189			$     426,381
Liabilities
Current
Operating	Other current liabilities	$       32,045			$       29,971			$       31,255
Noncurrent
Operating	Operating lease liabilities	399,489			388,042			403,426
Total lease liabilities		$     431,534			$     418,013			$     434,681
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases		10.1			9.9			10.3
Weighted-average discount rate
Operating leases		4.2%			4.3%			4.4%

Our lease agreements do not contain residual value guarantees, restrictive covenants or early termination options that we deem material.

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Lease expense for operating leases is recognized on a straight-line basis over the lease term. The components of operating lease expense are as follows:

		Three Months Ended
		March 31
in thousands		2020			2019
Lease Cost
Operating lease cost		$       14,106			$       14,127
Short-term lease cost 1		9,385			8,700
Variable lease cost		3,132			3,068
Sublease income		(734)			(610)
Total lease cost		$       25,889			$       25,285

Cash paid for operating leases was $13,328,000 and $13,333,000 for the three months ended March 31, 2020 and 2019, respectively, and was reflected as reductions to operating cash flows.

Maturity analysis on an undiscounted basis of our operating lease liabilities as of March 31, 2020 is as follows:

		Operating
in thousands		Leases
Maturity of Lease Liabilities
2020 (remainder)		$       39,045
2021		49,240
2022		44,481
2023		39,295
2024		35,634
Thereafter		593,029
Total minimum lease payments		$     800,724
Less: Lease payments representing interest		369,190
Present value of future minimum lease payments		$     431,534
Less: Current obligations under leases		32,045
Long-term lease obligations		$     399,489

 

 

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Note 3: Income Taxes

In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020. The CARES Act provides numerous tax relief provisions and stimulus measures. A temporary favorable change to the prior year and current year limitations on interest deductions and a temporary suspension of certain payment requirements for the employer portion of Social Security taxes are the relief provisions that are expected to provide us the greatest benefit. In the first quarter of 2020 (i.e., the period of enactment), an expected cash tax benefit of $13,301,000 was recorded to account for the favorable change to the prior year limitation on interest deductions.

Our estimated annual effective tax rate (EAETR) is based on full-year expectations of pretax earnings, statutory tax rates, permanent differences between book and tax accounting such as percentage depletion, and tax planning alternatives available in the various jurisdictions in which we operate. For interim financial reporting, we calculate our quarterly income tax provision in accordance with the EAETR. Each quarter, we update our EAETR based on our revised full-year expectation of pretax earnings and calculate the income tax provision so that the year-to-date income tax provision reflects the EAETR. Significant judgment is required in determining our EAETR.

In the first quarter of 2020, we recorded income tax expense from continuing operations of $12,194,000 compared to income tax expense from continuing operations of $10,693,000 in the first quarter of 2019. The increase in tax expense was primarily related to lower excess tax benefits from share-based compensation quarter over quarter.

We recognize deferred tax assets and liabilities (which reflect our best assessment of the future taxes we will pay) based on the differences between the book basis and tax basis of assets and liabilities. Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns while deferred tax liabilities represent items that will result in additional tax in future tax returns. A summary of our deferred tax assets and liabilities is included in Note 9 “Income Taxes” in our Annual Report on Form 10-K for the year ended December 31, 2019.

Each quarter we analyze the likelihood that our deferred tax assets will be realized. A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not (a likelihood of more than 50%) that some portion, or all, of a deferred tax asset will not be realized. At December 31, 2020, we project Alabama state net operating loss (NOL) carryforward deferred tax assets of $63,384,000 against which we project to have a valuation allowance of $29,183,000. At this time, we do not expect any future adjustment to this valuation allowance. The Alabama NOL carryforward, if not utilized, would expire between 2023 and 2032.

We recognize a tax benefit associated with a tax position when, in our judgment, it is more likely than not that the position will be sustained based upon the technical merits of the position. For a tax position that meets the more likely than not recognition threshold, we measure the income tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized. A liability is established for the unrecognized portion of any tax benefit. Our liability for unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation.

 

 

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Note 4: revenueS

Revenues are measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes we collect are excluded from revenues. Costs to obtain and fulfill contracts (primarily asphalt construction paving contracts) are immaterial and are expensed as incurred when the expected amortization period is one year or less.

Total revenues are primarily derived from our product sales of aggregates (crushed stone, sand and gravel, sand and other aggregates), asphalt mix and ready-mixed concrete, and include freight & delivery costs that we pass along to our customers to deliver these products. We also generate service revenues from our asphalt construction paving business and service revenues related to our aggregates business, such as landfill tipping fees. Our total service revenues were $39,564,000 and $34,515,000 for the three months ended March 31, 2020 and 2019, respectively.

Our products typically are sold to private industry and not directly to governmental entities. Although approximately 45% to 55% of our aggregates shipments have historically been used in publicly-funded construction, such as highways, airports and government buildings, relatively insignificant sales are made directly to federal, state, county or municipal governments/agencies. Therefore, although reductions in state and federal funding can curtail publicly-funded construction, the vast majority of our aggregates business is not directly subject to renegotiation of profits or termination of contracts with state or federal governments.

Our segment total revenues by geographic market for the three month periods ended March 31, 2020 and 2019 are disaggregated as follows:

	Three Months Ended March 31, 2020
in thousands	Aggregates			Asphalt			Concrete			Calcium			Total
Total Revenues by Geographic Market 1
East	$     239,869			$     17,883			$     62,120			$              0			$      319,872
Gulf Coast	493,297			33,856			16,965			2,026			546,144
West	135,060			88,050			15,680			0			238,790
Segment sales	$     868,226			$   139,789			$     94,765			$       2,026			$   1,104,806
Intersegment sales	(55,564)			0			0			0			(55,564)
Total revenues	$     812,662			$   139,789			$     94,765			$       2,026			$   1,049,242

	Three Months Ended March 31, 2019
in thousands	Aggregates			Asphalt			Concrete			Calcium			Total
Total Revenues by Geographic Market 1
East	$     224,902			$     18,216			$     54,716			$              0			$      297,834
Gulf Coast	496,633			37,053			16,505			1,951			552,142
West	113,430			76,821			12,416			0			202,667
Segment sales	$     834,965			$   132,090			$     83,637			$       1,951			$   1,052,643
Intersegment sales	(56,132)			0			0			0			(56,132)
Total revenues	$     778,833			$   132,090			$     83,637			$       1,951			$      996,511

PRODUCT REVENUES

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs at a point in time when our aggregates, asphalt mix and ready-mixed concrete are shipped/delivered and control passes to the customer. Revenue for our products is recorded at the fixed invoice amount and payment is due by the 15^th day of the following month — we do not offer discounts for early payment.

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Freight & delivery generally represents pass-through transportation we incur (including our administrative costs) and pay to third-party carriers to deliver our products to customers and are accounted for as a fulfillment activity. Likewise, the costs related to freight & delivery are included in cost of revenues.

Freight & delivery revenues are as follows:

	Three Months Ended
	March 31
in thousands	2020			2019
Freight & Delivery Revenues
Total revenues	$  1,049,242			$     996,511
Freight & delivery revenues 1	(113,961)			(162,605)
Total revenues excluding freight & delivery	$     935,281			$     833,906

CONSTRUCTION PAVING SERVICE REVENUES

Revenue from our asphalt construction paving business is recognized over time using the percentage-of-completion method under the cost approach. The percentage of completion is determined by costs incurred to date as a percentage of total costs estimated for the project. Under this approach, recognized contract revenue equals the total estimated contract revenue multiplied by the percentage of completion. Our construction contracts are unit priced, and an account receivable is recorded for amounts invoiced based on actual units produced. Contract assets for estimated earnings in excess of billings, contract assets related to retainage provisions and contract liabilities for billings in excess of costs are immaterial. Variable consideration in our construction paving contracts is immaterial and consists of incentives and penalties based on the quality of work performed. Our construction paving contracts may contain warranty provisions covering defects in equipment, materials, design or workmanship that generally run from nine months to one year after project completion. Due to the nature of our construction paving projects, including contract owner inspections of the work during construction and prior to acceptance, we have not experienced material warranty costs for these short-term warranties.

VOLUMETRIC PRODUCTION PAYMENT DEFERRED REVENUES

In 2013 and 2012, we sold a percentage interest in certain future aggregates production for net cash proceeds of $226,926,000. These transactions, structured as volumetric production payments (VPPs):

relate to eight quarries in Georgia and South Carolina

provide the purchaser solely with a nonoperating percentage interest in the subject quarries’ aggregates production

contain no minimum annual or cumulative guarantees by us for production or sales volume, nor minimum sales price

are both volume and time limited (we expect the transactions will last approximately 25 years, limited by volume rather than time)

We are the exclusive sales agent for, and transmit quarterly to the purchaser the proceeds from the sale of, the purchaser’s share of aggregates production. Our consolidated total revenues exclude the revenue from the sale of the purchaser’s share of aggregates.

The proceeds we received from the sale of the percentage interest were recorded as deferred revenue on the balance sheet. We recognize revenue on a unit-of-sales basis (as we sell the purchaser’s share of production) relative to the volume limitations of the transactions. Given the nature of the risks and potential rewards assumed by the buyer, the transactions do not reflect financing activities.

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Reconciliation of the VPP deferred revenue balances (current and noncurrent) is as follows:

	Three Months Ended
	March 31
in thousands	2020			2019
Deferred Revenue
Balance at beginning of year	$     185,339			$     192,783
Revenue recognized from deferred revenue	(1,342)			(1,652)
Balance at end of period	$     183,997			$     191,131

Based on expected sales from the specified quarries, we expect to recognize $7,500,000 of VPP deferred revenue as income during the 12-month period ending March 31, 2021 (reflected in other current liabilities in our March 31, 2020 Condensed Consolidated Balance Sheet).

 

 

Note 5: Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as described below:

Level 1: Quoted prices in active markets for identical assets or liabilities

Level 2: Inputs that are derived principally from or corroborated by observable market data

Level 3: Inputs that are unobservable and significant to the overall fair value measurement

Our assets subject to fair value measurement on a recurring basis are summarized below:

	Level 1 Fair Value
	March 31			December 31			March 31
in thousands	2020			2019			2019
Fair Value Recurring
Rabbi Trust
Mutual funds	$       19,001			$       22,883			$       20,953
Total	$       19,001			$       22,883			$       20,953

	Level 2 Fair Value
	March 31			December 31			March 31
in thousands	2020			2019			2019
Fair Value Recurring
Rabbi Trust
Money market mutual fund	$           520			$        1,340			$           490
Total	$           520			$        1,340			$           490

We have two Rabbi Trusts for the purpose of providing a level of security for the employee nonqualified retirement and deferred compensation plans and for the directors' nonqualified deferred compensation plans. The fair values of these investments are estimated using a market approach. The Level 1 investments include mutual funds for which quoted prices in active markets are available. Level 2 investments are stated at estimated fair value based on the underlying investments in the fund (short-term, highly liquid assets in commercial paper, short-term bonds and certificates of deposit).

Net gains (losses) of the Rabbi Trust investments were $(5,060,000) and $1,863,000 for the three months ended March 31, 2020 and 2019, respectively. The portions of the net gains (losses) related to investments still held by the Rabbi Trusts at March 31, 2020 and 2019 were $(5,060,000) and $1,905,000, respectively.

The carrying values of our cash equivalents, restricted cash, accounts and notes receivable, short-term debt, trade payables and accruals, and all other current liabilities approximate their fair values because of the short-term nature of these instruments. Additional disclosures for derivative instruments and interest-bearing debt are presented in Notes 6 and 7, respectively.