SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
DECEMBER 31, 19992000 0-11757
J.B. HUNT TRANSPORT SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ARKANSAS 71-0335111
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
615 J.B. HUNT CORPORATE DRIVE 72745
LOWELL, ARKANSAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(501) 820-0000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONENone
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK,Common Stock, $.01 PAR VALUEPar Value
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTIONS 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 THE FILING
REQUIREMENTS FOR AT LEAST THE PAST 90 DAYS.
YES __X__X NO
_____--- ---
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K (SECTION 229.405 OF THIS CHAPTER) IS NOT CONTAINED
HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN
DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART
III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [ ]
THE AGGREGATE MARKET VALUE OF 17,213,28215,215,986 SHARES OF THE REGISTRANT'S $.01 PAR
VALUE COMMON STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT AS OF FEBRUARY
18,
200028, 2001 WAS $187,194,442$240,564,739 (BASED UPON $10.875$15.81 PER SHARE BEING THE CLOSING SALE
PRICE ON THAT DATE, AS REPORTED BY NASDAQ). IN MAKING THIS CALCULATION, THE
ISSUER HAS ASSUMED, WITHOUT ADMITTING FOR ANY PURPOSE, THAT ALL EXECUTIVE
OFFICERS AND DIRECTORS OF THE REGISTRANT, AND NO OTHER PERSONS, ARE
AFFILIATES.
THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF FEBRUARY 18, 2000: 35,638,986.28, 2001: 35,280,616.
DOCUMENTS INCORPORATED BY REFERENCE
CERTAIN PORTIONS OF THE NOTICE AND PROXY STATEMENT FOR THE ANNUAL MEETING OF THE
STOCKHOLDERS TO BE HELD APRIL 20, 200026, 2001 PART II.
PART I
ITEM 1. BUSINESS
- ------------------
GENERAL
J.B. Hunt Transport Services, Inc., together with its wholly-owned
subsidiaries ("JBH"JBHT" or the "Company"), is a diversified transportation
services and logistics company operating under the jurisdiction of the U.S. Department of
Transportation (DOT) and various state regulatory agencies. JBHJBHT is an
Arkansas holding company incorporated on August 10, 1961. Through its
subsidiaries JBHand associated companies, JBHT provides a wide range of
logistics and transportation services to a diverse group of customers. The
Company directly manages or provides tailored, technology-driven solutions to
a growing list of Fortune 500 companies. These customers may request
specifically targeted transportation service or outsource their entire
logisticstransportation function to JBH.JBHT, or an associated company. The Company also
directly transports full-load containerizable freight throughout the
continental United States and portions of Canada and Mexico. Transportation
services may utilize JBHJBHT equipment and employees, or may employ equipment
and services provided by associated or unrelated third parties in the
transportation industry. For the periods presented, theThe Company had threecurrently operates four distinct
operating segments: Van/Intermodaldry-van truck only ("Van"JBT"); J.B. Hunt Logistics, intermodal ("JBHL"JBI"); and Dedicated Contract Services, dedicated
contract services ("DCS"). See Note (9) Segment
Information of and logistics business segments. Effective July 1,
2000, the NotesCompany, along with five other large, publicly-held transportation
companies, contributed its logistics business to Consolidated Financial Statements.
VANa new, commonly owned
company, Transplace.com, LLC.
JBT
Primary transportation service offerings classified in this segment
include full truck-load, dry-van, containerizable freight which is typically transported
utilizing company-owned revenue equipment. Freight is picked up at the dock
or specified location of the shipper and transported directly to the location
of the consignee. The load may be transported entirely by company-owned and
controlled power equipment or a portion of the movement may be handled by a
third-party motor carrier or a railroad. Approximately 46% of
Van revenue in 1999 was transported by a railroad for a portion of the
movement. If any portion of a movement is handled by a railroad, the entire
amount billed to the customer is considered to be intermodal revenue.carrier. Typically, the charges for the entire movement are
billed to the customer by the Company and the Company, in turn, pays the
railroad or third-party for their portion of the transportation services provided. In 1993, rail
operations were expanded to utilize high-cube containers which can be
separated from the chassis and double-stacked on rail cars to provide improved
productivity. Freight may be transported by railJBT
operates utilizing traditional
trailer-on-flatcar (TOFC) medium for a portion of the line-haul, or containers
separated from the chassis, double-stacked on railcars and moved as
container-on-flatcar (COFC). The Company has agreements with eight different
railroads and substantially all of the freight carried under these rail
arrangements receives priority space on trains and preferential loading and
unloading service at rail facilities.
JBH Van has certain Canadian authorities which were initially granted
in 1988 and may transport freight to and from all points in the continental
United States to Quebec, British Columbia and Ontario. The Company has
authorization to operate directly in all the Canadian provinces, but to date
has served limited points in Canada, primarily through interchange operations
with Canadian motor carriers. The Company has provided transportation servicesoperated its JBT and JBI segments
in combined fashion in periods prior to and from Mexico since 1989, primarily through interchange operations with
various Mexican motor carriers. A joint venture agreement with Transportacion
Maritima Mexicana, one of the largest transportation companiesJanuary 1, 2000. This combined
operation was reported as Van/Intermodal ("Van") in Mexico, was
signed in 1992.prior periods. At
December 31, 1999, Van2000, the JBT segment operated approximately 6,7305,850 tractors,
18,120 trailers and 35,300 trailers/containers. Vanemployed 8,462 people, 6,789 of which were drivers. JBT
gross operating revenues were
$1,415revenue was $834 million in 1999,2000, an increase of 3%9% over 1999.
JBI
Transportation service offerings of the JBI segment utilize agreements
with various railroads to provide proven intermodal freight solutions to JBI
customers in all major lanes of commerce in the United States, Canada, and
Mexico. The Company differentiates itself from others through its premium
service network, as well as, coordinated door to door service on
company-owned and controlled assets. The Company established its first
intermodal agreement with the Santa Fe Railway in 1989. Through growth of
this transportation segment and additions, deletions, and mergers of rail
carriers, the Company now has agreements with seven North American rail
carriers: BNSF, Norfolk Southern, CSX, Kansas City Southern, Union Pacific,
Canadian National, and Florida East Coast railroads. Typically, freight is
picked up at the dock or specified location of the shipper and transported to
the rail carrier for loading on to rail cars. Upon completion of the rail
routing, the freight is picked up at the rail carrier's ramp and transported
to the consignee. These originating and destination drays may be transported
entirely by company-owned and controlled power equipment or may be handled by
a third-party motor carrier. It is the Company's customary business practice
that all charges for the entire movement are billed to the customer by the
Company and the Company, in turn, pays the rail carrier and third-party motor
carrier for their portion of the transportation services provided. In 1993,
rail operations were expanded to utilize high-cube containers which can be
separated from the chassis and double-stacked on rail cars to provide
improved productivity. This concept is know as container-on-flatcar (COFC).
The agreements the Company has with its rail carriers allow for the majority
of JBI business carried under these rail agreements to receive priority space
on trains and preferential loading and unloading at rail facilities. At
December 31, 2000, the JBI segment operated approximately 910 tractors,
21,930 containers and employed 1,705 people, 1,410 of which were drivers. JBI
gross revenue was $681 million in 2000, an increase of 5% over 1999.
2
DCS
Since 1992, JBHT has offered dedicated contract carriage as a service
option. DCS segment operations specialize in the design, development, and
execution of supply chain solutions. Capitalizing on advanced systems and
technologies, DCS offers engineered transportation solutions that support
private fleet conversion, dedicated fleet creation, and transportation system
augmentation. DCS operations typically provide customized services that are
governed by long-term contracts and currently include dry van, flatbed, and
temperature-controlled operations. Near 100% on-time service is standard with
efficient routes executed to design specifications.
DCS operations focus on driving out cost and enhancing customer value
through leveraging the JBHT freight network for backhaul infusion. Network
freight may be used to reposition equipment near outbound domiciles, thereby
reducing inefficient empty miles and system cost. DCS also frequently finds
synergy in shared resources with the JBT and JBI segments including terminals,
maintenance shops, bulk fuel locations, and trailer pools providing further
economies of scale. In the year 2000, DCS reported gross revenues of $479
million, a 49% increase over 1999 and a 50% compound annual growth rate since
1998. JBHLIncreased utilization and productivity drove top-line revenue growth as
the number of tractors increased 43% to 3,890 in 2000. Total DCS employees were
4,746 at December 31, 2000, 4,083 of which were drivers.
LOGISTICS
The Company formally began offering logistics transportation logistics services in
1992. JBHL1992 through a wholly-owned subsidiary, J.B. Hunt Logistics (JBL). JBL services
typically refer tofrequently included an arrangement whereby a shipper maymight outsource a
substantial portion of or theirits entire distribution and transportation process to one
organization. JBHL providesThe JBL segment business included a wide range of comprehensive
transportation and management services including experienced professional
managers, information and optimization technology, and the actual design or
redesign of system solutions. A new JBHLJBL customer or service arrangement may requirehave
required a significant amount of up-front analysis and design time, while
alternatives arewere considered and custom systems and software were developed.
Effective July 1, 2000, the Company contributed substantially all of its JBL
segment business, all related intangible assets and $5 million of cash to a
newly-formed, commonly-owned company, Transplace.com, LLC ("TPC").
TPC is an Internet-based global transportation logistics company. The
initial members include the Company, along with five other large, publicly-held
transportation companies: Covenant Transport, Inc.; M.S. Carriers, Inc.; Swift
Transportation Co., Inc.; U.S. Xpress Enterprises, Inc., and Werner Enterprises,
Inc. The Company presently has an approximate 27% membership interest in TPC
and, accordingly, utilizes the equity method of accounting. The financial
results of TPC since inception, are developed.
Onceincluded on a logistics arrangement isone-line, non-operating item
included on the Consolidated Statements of Earnings entitled "equity in place, JBHL may utilize Van and/or DCS
ownedearnings
of associated companies." Equity in earnings from TPC totaled $440,000 in 2000.
ASSOCIATED COMPANY - MEXICO
The Company has provided transportation services to and controlledfrom Mexico since
1989. These services frequently involve equipment interchange operations with
various Mexican motor carriers. A joint venture agreement with Transportacion
Maritima Mexicana, one of the largest transportation equipment, unrelated third-party equipmentcompanies in Mexico, was
signed in 1992. The joint venture, Comercializadora Internacional de Carga, St.
de CV and employees, orits subsidiaries, originate and complete northbound and southbound
international truck movements between the U.S. and Mexico. The joint venture
also provides Mexican domestic irregular route truck service, refrigerated
freight services, Mexican dedicated contract business and short-haul drayage to
and from the Mexican maritime ports and rail heads. The Company's share of its
Mexican joint venture operating results are included on a combination to meetone-line,
non-operating item on the customer's service requirements.
JBHL gross operating revenues were $388Consolidated Statements of Earnings entitled "equity
in earnings of associated companies." Equity in earnings from the Company's
Mexican joint venture totaled $4.3 million in 1999, an increase of 22%
over 1998.
2
DCS
The Company began formally offering dedicated contract services in 1992.
DCS operations typically include company-owned revenue equipment2000 and employee
drivers that are assigned to a specific customer, traffic lane or service. The
service is engineered and customized for the specific customer and is
typically in accordance with a written, long-term agreement. Frequently DCS
operations provide service to customers that wish to augment or outsource
their private fleet. It is common for one customer's dedicated service
requirements to relate to limited traffic lanes or freight moving in only one
direction. As a result, DCS operations frequently utilize Van freight to
provide backhauls which allow equipment to be repositioned for the DCS
customer's next movement. The DCS and Van segments also frequently share
facilities such as terminals, maintenance shops, bulk fuel locations and
trailer pools. At December 31, 1999, DCS operated approximately 2,700 tractors
and 4,150 trailers. DCS gross operating revenues were $320$3.1 million in 1999, an
increase of 51% over 1998.1999.
OTHER
Prior to 1996, the Company had operated additional businesses including a
flatbed division, a business that transported small parcels, and a division
that specialized in the transportation of hazardous commodities. In early
1996, the Company embarked upon a strategy to concentrate its efforts on Van,
JBHL and DCS. In accordance with that strategy, assets and operations of other
service offerings were subsequently sold. The small parcel and hazardous
commodities businesses were sold in 1996 and the flatbed business was sold in
1997.
The Company announced a decision in late 1999, a decision to splitseparate the operation of
the Van business into separatetruck (JBT) and intermodal (JBI) segments. In late 2000, a
decision was made to supplement Company owned tractors with independent
contractors (I/C's). An I/C is a driver who personally owns one or more tractors
and truck business segments. This separation is in
progress andagrees to lease that equipment to the Company. These arrangements typically
call for the I/C to transport freight offered by the Company intendsutilizing a tractor
owned by the I/C, in trailers owned or controlled by the Company. This new
program was initiated by the JBT segment in December of 2000. At December 31,
2000, 16 I/C's were leasing tractors to begin reporting on four segments
(Intermodal, Truck, JBHL and DCS) in the first quarter of 2000.Company.
3
MARKETING AND OPERATIONS
JBHJBHT transports a wide range of products including automotive parts,
department store merchandise, paper and wood products, food and beverages,
plastics, chemicals and manufacturing materials and supplies. The Company's
primary customers include many of the "Fortune 500" companies, but no single
customer accounted for more than 8%12% of revenues during 1999.2000. A broad geographic
dispersion and a good balance in the type of freight transported allows JBHJBHT
some protection from major seasonal fluctuations. However, consistent with the
truckload industry in general, freight is typically stronger during the second
half of the year, with peak volume occurring in August through mid November.
Revenue and earnings are also affected by bad weather, holidays, fuel prices and
railroad service levels.
The Company generally markets all three of its service offerings through a
nationwide marketing network. All transportation services offered are typically
billed directly to the customer by JBHJBHT and all inquiries, claims and other
customer contacts are handled by the Company. Certain marketing, sales,
engineering and design functions are assigned to each operating segment.
However, marketing strategy, pricing and national account service coordination
is managed at the corporate level.
PERSONNEL
At December 31, 1999, JBH2000, JBHT employed approximately 14,70015,980 people, including
10,60012,280 drivers. Historically the truckload transportation industry and the
Company have experienced shortages of qualified drivers. In addition, driver
turnover rates for truckload motor carriers frequently exceed 100%. In September
of 1996, J.B. HuntJBHT announced a new compensation program for the approximate 3,500
over-the-road VanJBT drivers. This comprehensive package, which was effective in
February 25,of 1997, included an average 33% increase in wages for this group of
employees. This program was designed to attract and retain a professional and
experienced work force capable of delivering a high level of customer service.
As anticipated, this increase in driver wages and benefits was partially offset
by lower driver recruiting and training expense, reduced accident costs and
better equipment utilization. The average driver turnover in the VanJBT segment
business was 49% in 1999 and 46% in 1998, down from 86% in 1996.approximately 66% during 2000. Drivers are frequently designated as local, regional, regular route or
dedicated and over-the-road and typically compensated on
a rate-per-mile basis, a rate-per-week basis or a combination of factors. JBHJBHT
also employed approximately 2,9202,970 office personnel and 1,150730 mechanics at December
31, 1999.2000. No employees are represented by collective bargaining agreements and
management believes that its relationship with its employees is excellent.
3
REVENUE EQUIPMENT
At December 31, 1999, JBH2000, JBHT owned or leased approximately 9,46010,650
tractors and operated 17,32022,380 trailers and 22,15021,930 containers. JBHJBHT believes that
modern, late-model, clean equipment differentiates quality customer service,
increases equipment utilization and reduces maintenance costs and downtime. Accordingly,The
Company generally operates with newer revenue equipment in the averageJBT segment, with
the age of the Van tractortractors and trailing fleet was approximatelytrailers approximating two years and four years,
respectively, at December 31, 1999. In 1993,2000. Slightly older equipment and tractors
designed for local and regional operations are typically utilized in the Company
commenced receiving a newly-designed container and chassis combination that
could be transported over the road by truck and also be moved by rail or ship.
The container and chassis may be transported as a single unit by rail (TOFC)
or the containerJBI
segment. Specially designed high-cube containers which can be separated from the
chassis and double-stacked (COFC)
on rail cars or ships for improved productivity. Containers comprised
approximately 63%are also operated by JBI. The average
age of the Van trailing fleetJBI tractors and containers at December 31, 1999.2000 was approximately three
years and five years, respectively. The composition of the dedicated contract
fleet varies with specific customer service requirements. All JBHJBHT revenue
equipment is maintained in accordance with a specific maintenance program
primarily based on age and miles traveled.
The JBHL businessCOMPETITION
JBHT is non-asset based, since the revenue equipment is provided
by Van, DCS and third parties.
COMPETITION
JBH isone of the largest publicly held truckload carriercarriers in the United
States. It competes primarily with other irregular route, truckload common
carriers. Less-than-truckload common carriers and private carriers generally
provide limited competition for truckload carriers. JBH isJBHT and its associated
companies are one of a few carriers offering nationwide logistics management and
dedicated revenue equipment services. Although a number of carriers may provide
competition on a regional basis, only a limited number of companies represent
competition in all markets. The extensive rail network developed in conjunction
with the various railroads also allows the Company the opportunity to
differentiate its services in the marketplace.
4
REGULATION
Prior to December of 1995, theThe Company's operations in interstate
commerce were regulatedas a for-hire carrier are subject to regulation by
the Interstate Commerce Commission ("ICC").
Commencing in JanuaryU.S. Department of 1996,Transportation's Federal Motor Carrier Safety
Administration (FMCSA) and by various Canadian provinces. Entry controlled
barriers have largely been removed as a result of federal deregulation statutes
such as the Interstate Commerce Commission Termination Act closed the ICC and transferred all remaining regulatory responsibilities
to a new Surface Transportation Board and to the Federal Highway
Administration. Motor carrier operations are subject to safety requirements
prescribed by the United States DOT governing interstate operation. Such
matters as weight and dimension of equipment and commercial driver's licensing
are also subject to federal and state regulations. A federal requirement that
all drivers obtain a commercial driver's license became effective in April
1992.
The federal Motor Carrier Act of 1980 was the start of a program to
increase competition among motor carriers and limit the level of regulation in
the industry (sometimes referred to as "deregulation")1995 (ICCTA). The
Motor Carrier ActFMCSA continues to enforce safety regulations and has proposed new rules which,
if approved in their present form, would limit driver's hours of 1980 enabled applicants to obtain operating authority more easily and
allowed interstate motor carriers, such as the Company, to change their rates
by a certain percentage per year without approval. The new law also allowed
for the removalservice.
President Bush is considering implementation of many route and commodity restrictions regarding the
transportation of freight. As a resultprovisions of the Motor Carrier Act of 1980, the
Company was able to obtain unlimited authority to carry general commodities
throughout the 48 contiguous states. Effective January 1, 1995, the federal
government issued guidelinesNorth America
Free Trade Agreement (NAFTA), which allow motormay result in increased competition between
U.S. and Mexican carriers more flexibility in
intrastate operations. Although this reduced level of state regulation
increased the level of competition in some regions, thefor truckload services moving between these two
countries. The Company believes it has ultimately benefited from this legislation.responded effectively to the marketplace
changes caused by increased domestic competition and that it can effectively
respond to any foreseeable changes in FMCSA regulations or NAFTA implementation.
ITEM 2. PROPERTIES
- --------------------
The Company's corporate headquarters are in Lowell, Arkansas. A
150,000-square-foot building was constructed and occupied in September 1990. In addition to theThe
Company also utilizes its former corporate headquarters, the Company owns a separate 40-acre
tract in Lowell, Arkansas with two separate buildings totaling 14,000 square
feet of office space and 50,000 square feet of maintenance and warehouse
space. These buildings servebuilding as the Lowell operations terminal, tractor
maintenance facility and additional administrativegeneral offices. A new terminal and
maintenance facility was constructed and occupied in Chicago, Illinois during
1996. A new terminal and maintenance facility was also constructed and
occupied in Kansas City, Missouri during early 1999. In 1999,
a new 20,000 square foot building was constructed and occupied near the
corporate headquarters. A portion of this leased facility will serveserves as a backup
data center and provide disaster recovery support services. 4
An additional 20,000
square foot building consisting of general office space for Corporate employees
was completed and occupied in 2000. This building is located next door to the
data center building and is a leased facility.
Principal outside facilities consist primarily of general offices which
support operational, safety and maintenance functions. In addition to the
principal facilities listed below, the Company leases numerous small offices and
trailer parking yards in various locations throughout the county to support
customer trailing equipment pool commitments.
A summary of the Company's principal facilities follows:
Maintenance Shop Office Space
Location Acreage (square feet) (square feet)
- ----------------------------------------------------------------------------------------------------------------------
Atlanta, Georgia 30 29,800 10,400
Chicago, Illinois 27 50,000 14,000
Dallas, Texas 14 24,000 7,800
Detroit, Michigan 27 44,300 10,800
East Brunswick, New Jersey 20 20,000 7,800
Houston, Texas 13 24,700 7,200
Kansas City, Missouri 10 31,000 6,700
Little Rock, Arkansas 24 29,200 7,200
Louisville, Kentucky 14 40,000 10,000
Lowell, Arkansas (corporate headquarters) 25 -- 150,000
Lowell, Arkansas 40 50,200 14,000
Lowell, Arkansas (office and data center) 2 -- 20,000
Memphis, Tennessee 10 26,700 8,000
Phoenix, Arizona 14 10,000 5,300
San Bernardino, California 8 14,000 4.000
South Gate, California 12 12,000 5,500
Syracuse, New York 13 19,000 8,000
In addition to the above facilities, the Company leases numerous small offices
and trailer parking yards in various locations throughout the country.
5
ITEM 3. LEGAL PROCEEDINGS
- ---------------------------
The Company is involved in certain claims and pending litigation arising
from the normal conduct of business. Based on the present knowledge of the facts
and, in certain cases, opinions of outside counsel, management believes the
resolution of claims and pending litigation will not have a material adverse
effect on the financial condition or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------------------------------------------------------------
No matters were submitted during the fourth quarter of 19992000 to a vote of
security holders.
EXECUTIVE OFFICERS OF THE COMPANY
Information with respect to the executive officers of the Company is set
forth below:
Executive
Name Age Position with Company Officer Since
- ---- --- --------------------- -------------
J.B. Hunt 7374 Senior Chairman of the Board; Director 1961
Wayne Garrison 4748 Chairman of the Board; Director 1979
Johnelle Hunt 6869 Secretary; Director 1972
Kirk Thompson 4647 President and Chief Executive Officer; Director 1984
Paul R. Bergant 5354 Executive Vice President, Marketing and Chief Marketing Officer 1985
Bob D. Ralston 5354 Executive Vice President, Equipment and Properties 1989
Jerry W. Walton 5354 Executive Vice President, Finance and Administration
and Chief Financial Officer 1991
Robert E. Logan (1) 61 Executive Vice President, Chief Information Officer 1997
Craig Harper 4243 Executive Vice President, Operations
and Chief Operations Officer 1997
Jun-Sheng Li (2) 41(1) 42 President J.B. Hunt Logistics
and Executive Vice President, Integrated Solutions 1998
John N. Roberts III (3) 35(2) 36 President, Dedicated Contract Services,
and Executive Vice President, Enterprise Solutions 1997
Kay J. Palmer (4) 36(3) 37 Chief Information Officer 1999
(1) Mr. Logan held the Chief Information Officer position until June, 1999, at
which time Ms. Palmer assumed the Chief Information Officer
responsibilities.
(2) Mr.Dr. Li joined the Company in 1994 as Senior Vice President of J.B. Hunt
Logistics. In June of 1995, he was named President of J.B. Hunt Logistics
and in June of 1998, he was appointed to the additional post of Executive
Vice President, Integrated Solutions. (3)In July, 2000, Dr. Li took the
position of Chief Executive Officer, President and Chairman of the Board of
Transplace.com, LLC, while also remaining an employee of JBHT until
December 31, 2000.
(2) Mr. Roberts joined the Company in 1989 as a management trainee. In December
of 1990, he became a Regional Marketing Manager. In February of 1996, he
was named Vice President, Marketing Strategy and was appointed President,
Dedicated Contract Services, in July of 1997. In June of 1998, he was
appointed to the additional position of Executive Vice President of
Enterprise Solutions.
(4)(3) Ms. Palmer joined the Company in 1988 as a programming specialist. In June
of 1989, she was named Director of Application Services. In June of 1995,
she was named Vice President of Applications. She became Senior Vice
President of Information Services in August of 1998 and named Chief
Information Officer in June of 1999.
6
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER - ------------------------------------------------------------------------------
MATTERS
- -------
PRICE RANGE OF COMMON STOCK
The Company's common stock is traded in the over-the-counter market under
the symbol "JBHT." The following table sets forth, for the calendar years
indicated, the range of high and low sales prices for the Company's common stock
as reported by the National Association of Securities Dealers Automated
Quotations National Market System ("NASDAQ").
2000 1999
1998
----------------- -------------------------------- --------------
Period High Low High Low
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1st Quarter $16.00 $10.50 $26.25 $18.00
$30.63 $17.38
2nd Quarter 17.50 13.13 23.25 14.19
36.13 27.50
3rd Quarter 16.00 11.50 16.75 11.88
38.88 14.00
4th Quarter 17.25 10.50 15.00 12.38 23.00 12.31
On February 18, 2000,28, 2001, the high and low sales prices for the Company's
common stock as reported by the NASDAQ were $11.25$16.00 and $10.75,$14.50, respectively. As
of February 18, 2000,28, 2001, the Company had 1,6421,563 stockholders of record.
DIVIDEND POLICY
On January 21, 2000, the Board of Directors declared a quarterly dividend
of $.05 per share, payablepaid on February 17, 2000 to shareholders of record on
February 3, 2000. The Company declared and paid cash dividends of $.20 per share
in 1999 and 1998. On February 16, 2000, the Board of Directors announced a
decision to discontinue its policy of paying quarterly cash dividends. The
Board indicated an intent to repurchase up to 500,000 sharesNo
dividends have been paid since February of outstanding
JBHT common stock with the cash previously used to pay dividends.2000.
7
ITEM 6. SELECTED FINANCIAL DATA
- ---------------------------------
(Dollars in millions, except per share amounts)
Years Ended December 31 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
1990
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Operating revenues $2,160.4 $2,045.1 $1,841.6 $1,554.3 $1,486.7 $1,352.2 $1,207.6 $1,020.9 $912.0 $733.3
$579.8
Operating income 77.4 103.0 42.9 60.4 21.363.4 74.3 101.5 42.1 60.2 22.8 84.9 78.6 69.1 59.4 56.9
Earnings (loss) before
cumulative effect of changes
in accounting methods 36.1 31.9 46.8 11.4 22.1 (2.2) 40.4 38.2 36.9 29.5 30.0
Basic earnings (loss) per share
before cumulative effect of
changes in accountingccounting methods 1.02 .90 1.32 .31 .58 (.06) 1.05 1.00 1.03 .85
.85
Cash dividends per share .05 .20 .20 .20 .20 .20 .20 .20 .20 .19
.16
Total assets 1,231.9 1,127.5 1,171.5 1,021.9 1,043.4 1,016.8 993.7 862.4 715.7 520.1
452.7
Long-term debt and lease obligations 300.4 267.6 417.0 322.8 332.6 339.0339.9 299.2 303.5 216.3 156.9
137.6
Stockholders' equity 428.0 401.4 375.7 338.0 357.3 356.9 377.9 344.0 308.6 215.8
191.1
Diluted earnings per share were $1.02, $.89, $1.28, $.31 and $.58, for the years 2000, 1999, 1998, 1997 and 1996, respectively.
Percentage of Operating Revenue
Years Ended December 31 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
1990
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Operating revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and employee benefits 35.6 34.9 34.9 34.4 32.6 33.8 33.5 36.4 38.2 40.0
41.4
PurchasedRents and purchased transportation 30.8 30.7 30.6 27.2 25.4 23.9 18.432.1 33.7 33.7 33.1 29.0 26.8 24.1 18.5 12.2 7.0 0.7
Fuel and fuel taxes 11.3 8.3 7.5 9.1 10.8 10.6 10.9 12.4 14.2 16.3
17.3
Depreciation 6.2 7.3 7.47.6 8.4 8.4 9.6 9.2 8.2 9.5 9.4 9.78.9 10.2 10.2 10.1 10.3 10.1
Operating supplies and expenses 9.1 8.3 8.4 8.0 8.4 6.9 7.26.1 6.2 5.3 5.9 6.2 7.0 6.7 7.1 7.4 8.0
8.8
Insurance and claims 1.8 2.0 1.8 2.4 3.9 3.8 3.1 4.0 4.8 4.7
5.4
Operating taxes and licenses 1.5 1.3 1.3 1.6 1.9 2.0 2.2 2.8 2.8 3.0
3.2
General and administrative expenses 1.3 1.7 1.4 1.3 1.5 1.51.7 1.2 1.9 2.4 2.2 1.9 2.0 2.1 2.3- 1.2 1.4
Communication and utilities 1.2 1.0 1.0 1.1 1.2 1.1 1.1 1.0 1.3 1.4
1.4
Special charges - - - - - 1.3 - - - -
-
---- ----- ---- ---- ---- ---- ---- ---- ---- -------- ----- ----- ----- ----- ----- ----- ----- -----
Total operating expenses 96.2 94.4 97.2 95.9 98.497.1 96.4 94.5 97.3 96.0 98.3 93.0 92.3 92.4 91.9
90.2
---- ---- ---- ---- ---- ---- ---- ---- ---- --------- ----- ----- ----- ----- ----- ----- ----- ----- -----
Operating income 3.8 5.6 2.8 4.1 1.62.9 3.6 5.5 2.7 4.0 1.7 7.0 7.7 7.6 8.1
9.8
Interest expense 1.4 1.6 1.6 1.7 1.8 1.6 1.4(1.1) (1.4) (1.6) (1.6) (1.6) (1.8) (1.6) (1.4) (1.2) (1.5)
Equity in earnings of associated
companies .2 .2 .1 .1 - (.1) - - - -
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Earnings before income taxes 2.0 2.4 4.0 1.2 1.5 1.22.4 (.2) 5.4 6.3 6.4 6.6
Income taxes .3 .8 1.5 .5 .9 - 2.1 2.6 2.3 2.6 3.4
Cumulative effect of changes in
accounting methods - - - - - - - - .2 (.2) -
----- ----- ----- ----- ----- ----- ------ ------ ----- --------- ----- -----
Net earnings (loss) 1.7% 1.6% 2.5% .7% 1.5% (.2%) 3.3% 3.7% 4.3% 3.8%
5.2%
===== ===== ===== ===== ===== ===== ====== ====== ===== ========= ===== =====
The following table sets forth certain operating data of the Company.
Years Ended December 31 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
1990
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total loads 2,696,658 2,769,834 2,243,856 1,802,006 1,605,546 1,361,251 1,187,815 1,081,013 960,031 796,929
596,574
Average number of tractors owned/
leased in the fleet during the
year 10,055 9,183 8,207 7,629 7,728 7,559 7,094 6,890 6,424 5,286
4,413
Tractors operatedowned/leased (at year end) 10,650 9,460 8,906 7,508 7,750 7,706 7,412 6,775 7,004 5,843
4,729Independent contractors (at year end) 16 - - - - - - - - -
Trailers/containers (at year end) 44,310 39,465 35,366 30,391 27,773 24,618 22,687 19,089 17,391 12,389
10,563
Tractor miles (in thousands) 1,000,127 986,288 922,560 790,018 810,450 772,199 740,626 718,767 733,700 638,926 551,175
8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
- ---------------------------------------------------------------------------
FINANCIAL CONDITION
- -------------------
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements of the Company and related footnotes
appearing in this annual report.
SUMMARY OF 2000
Financial and operating results for the year 2000 were impacted by a
number of significant items. Consolidated operating revenues for 2000 increased
6% over 1999. Excluding the JBL operations, which were contributed to TPC as of
July 1, 2000, revenue growth for the remaining segments was approximately 15%.
The increase in fuel surcharge revenue associated with higher costs of fuel in
the current year accounted for approximately 4% of revenue growth for these
remaining segments. Prior to January 1, 2000, the JBT and JBI businesses had
been operated and reported together as the Van business segment. Accordingly,
2000 was the first full year that certain JBT and JBI identifiable information
was available.
JBT segment revenue, which consists primarily of full truckload, dry-van
freight, increased 9%, to $833.8 million in 2000, from $763.2 million, in 1999.
Revenue per loaded mile, excluding fuel surcharges, increased 3.4% in 2000. The
JBT company owned/leased tractor fleet totaled 5,850 at December 31, 2000. A
new initiative to utilize independent contractors, who own their tractors was
commenced in late 2000. In addition to its company owned tractors, the JBT
segment had operating arrangements with 16 independent contractors at December
31, 2000. The JBT segment incurred an operating loss of $7.1 million in 2000.
Since the JBT and JBI segments were operated in combined fashion during 1999,
no comparative operating results were available. A portion of the year 2000 JBT
operating loss was due to certain costs incurred to separate the JBT and JBI
business units.
The JBI segment business, which includes primarily truckload freight
transported by rail and certain repositioning truck freight, grew 5%, to $681.1
million in 2000, from $651.6 million in 1999. Intermodal revenue per loaded
mile in 2000, exclusive of fuel surcharges, was essentially flat compared with
1999. The JBI tractor fleet totaled 910 at December 31, 2000. The intermodal
segment generated operating income of $36.7 million in 2000. A comparable
amount for 1999 is not available.
DCS segment business primarily includes services provided with
company-owned revenue equipment and employee drivers assigned to specific
customers or traffic lanes. During 2000, DCS segment revenue grew 49%, to
$478.6 million, from $320.2 million in 1999. A portion of the DCS segment
revenue growth was due to transfers of equipment and drivers from the JBT
business segment. The DCS tractor fleet totaled 3,890 at December 31, 2000. DCS
operating income was $28.4 million in 2000, compared with $24.1 million in
1999. The lower margin on the DCS segment business in 2000 was primarily due to
a higher proportionate share of corporate support costs being assigned to the
business.
As previously mentioned, the JBL business was contributed to TPC effective
July 1, 2000. JBL generated $230 million of revenue and $8.1 million of
operating income between January 1, 2000 and June 30, 2000. The Company's share
of TPC's results of operations were reported in a one-line, non-operating item
on the consolidated statements of earnings and totaled $440,000 in 2000. No
gain or loss was recognized upon formation and contribution of JBL segment
assets to TPC.
9
RESULTS OF OPERATIONS
2000 COMPARED WITH 1999
Operating Segments
For Years Ended December 31
(in millions of dollars)
Gross Revenue Operating Income
-------------------------------------------- ----------------------
2000 1999 % Change 2000 1999
---- ---- -------- ---- ----
JBT $833.8 $763.2 9% $(7.1) --
JBI 681.1 651.6 5% 36.7 --
------- ------- --- ---- -----
Van 1,514.9 1,414.8 7% 29.6 $44.4
DCS 478.6 320.2 49% 28.4 24.1
Logistics 230.0* 387.9 (41%) 8.1* 10.5
Other -- -- -- (2.7) (4.7)
------- ------- --- ---- -----
Subtotal 2,223.5 2,122.9 5% 63.4 74.3
Inter-segment eliminations (63.1) (77.8) -- -- --
------- ------- --- ---- -----
Total $2,160.4 $2,045.1 6% $63.4 $74.3
======== ======== === ===== =====
*As of December 31, 2000, TPC qualifies as a reportable business segment for
financial reporting purposes. However, the logistics segment information shown
above excludes TPC from its inception in July 2000. TPC is accounted for on the
equity method.
The following table sets forth items in the Consolidated Statements of Earnings
as a percentage of operating revenues and the percentage increase or decrease
of those items as compared with the prior year.
Percentage of Percentage
Operating Revenue Change
----------------------- -------------
2000 1999 2000 vs. 1999
------ ------ -------------
Operating revenues 100.0% 100.0% 5.6%
Operating expenses:
Salaries, wages and employee benefits 35.6% 34.9% 7.9%
Rents and purchased transportation 32.1 33.7 .8
Fuel and fuel taxes 11.3 8.3 43.3
Depreciation 6.2 7.3 (9.8)
Operating supplies and expenses 6.1 6.2 4.1
Insurance and claims 1.8 2.0 (3.9)
Operating taxes and licenses 1.5 1.3 20.4
General and administrative expenses 1.3 1.7 (17.8)
Communication and utilities 1.2 1.0 15.1
------ ------ -------
Total operating expenses 97.1 96.4 6.4
------ ------ -------
Operating income 2.9 3.6 (14.6)
Interest expense (1.1) (1.4) (9.2)
Equity in earnings of associated companies .2 .2 52.1
------ ------ -------
Earnings before income taxes 2.0 2.4 (13.5)
Income taxes .3 .8 (62.9)
------ ------ -------
Net earnings 1.7% 1.6% 13.1%
====== ====== =======
10
OPERATING EXPENSES
Total operating expenses in 2000 increased 6.4% over 1999, while total
operating revenues increased 5.6%. Operating expenses expressed as a percentage
of operating revenue (operating ratio) were 97.1% in 2000, compared with 96.4%
in 1999. These comparisons were impacted by the contribution of the JBL segment
business to TPC, effective July 1, 2000. Salaries, wages and employee benefits
increased 7.9% during 2000 and rose to 35.6% of revenue in 2000, from 34.9% in
1999. These increases were primarily due to increases in driver compensation
and higher costs of medical insurance. The higher level of driver compensation
expense in 2000, was due to changes in the mix of drivers and not a pay rate
change. Rents and purchased transportation expense increased .8% and declined
slightly as a percentage of revenue, reflecting a substantial decrease in
purchased transportation, due to the contribution of the JBL segment business,
offset by an increase in rent expense for leased revenue equipment as discussed
below. Fuel and fuel tax expense increased 43.3% and rose to 11.3% of revenue
in 2000, from 8.3% in 1999. Fuel expense was driven by an approximate 35%
higher cost per gallon and slightly lower fuel miles per gallon. Fuel
surcharges, which were initiated in late 1999, recovered approximately 90% of
higher fuel costs during 2000.
Depreciation expense decreased 9.8% and also declined as a percentage of
revenue, primarily due to transactions to sell and leaseback certain trailing
equipment in 2000 and 1999. These transactions and a decision to rent, rather
than buy, additional trailers decreased depreciation expense and increased
rents and purchased transportation expenses in 2000. Operating supplies and
expenses increased 4.1%, but remained approximately the same percentage of
revenue in 2000 and 1999. The 20.4% increase in operating taxes and licenses
expense was due to the larger size of the tractor fleet and a higher state base
plate cost per tractor in 2000. Communication and utility costs were up 15.1%,
primarily due to expanded data and telecommunications networks and higher
satellite communication expenses.
Interest expense declined 9.2% in 2000, primarily due to the reduction of
average debt balances in 2000 versus 1999, resulting from the sale and
leaseback transactions. The equity in earnings of associated companies amounts
represent the Company's share of earnings from operations in Mexico and from
TPC. Earnings recognized from Mexican operations in 2000 totaled $4.3 million,
compared with $3.1 million in 1999. Earnings recognized from TPC were $440,000
in 2000. The effective income tax rates were approximately 15% in 2000 and 35%
in 1999. The primary reason for the decrease in the year 2000 effective income
tax rate was the benefit of the amortization of the gain on the sale and
leaseback transaction, which closed in late 1999.
As a result of the above, net earnings for 2000 were $36.1 million, or
diluted earnings per share of $1.02, compared with $31.9 million in 1999, or
$.89 per diluted share. The average number of shares outstanding remained
substantially the same in 2000 and in 1999.
SUMMARY OF 1999
The 1999 financial and operating results were impacted by a number of
significant items during the year. Van (JBT and JBI combined) revenue growth
was limited to 3%, partly due to rail service delays which occurred during the
second and third quarters of the year. Intermodal1999. JBT loads increased about 6%, while JBI load
count declined approximately 3% during 1999, while truck only loads increased about 6%.1999. Tractor count in the Van segment
was essentially flat for the year. Truck onlyJBT revenue per loaded mile, before fuel
surcharges, was up approximately 1%, while intermodalJBI rates declined about 1%. Van
revenue growth increased slightly during the fourth quarter of 1999 due to fuel
surcharges which were initiated as fuel costs began to rise significantly.
Operating income in the Van segment was reduced, in part, by higher revenue
equipment maintenance and tire costs, and significant increases in the cost of
fuel. In addition, an initiative to separate the intermodalJBT and truckJBI businesses
resulted in higher third party dray expense during the latter part of the year.
The 22% increase in JBHL segment revenue during 1999 was consistent with
the prior year. This growth reflected new logistics agreements with new
customers and growth of business volumes with existing customers. The increase
in 1999 JBHL operating income was primarily related to higher revenue levels
with some lower purchased transportation costs providing for slightly better
margins on some business.1999.
DCS segment revenue grew 51% to $320.2 million in 1999 from $211.9 million
in 1998. This increase in DCS revenue was driven by new customer contracts and
projects and fleet additions to existing contracts. The higher level of DCS
operating income during 1999 was primarily due to the growth of segment
revenue. Margins in the DCS business declined slightly during 1999, partly due
to higher fuel costs and higher driver wage expense. The 22% increase in JBL
segment revenue during 1999 was consistent with the prior year. This growth
reflected new logistics agreements with new customers and growth of business
volumes with existing customers. The increase in 1999 JBL operating income was
primarily related to higher revenue levels with some lower purchased
transportation costs providing for slightly better margins on some business.
The operating losses classified as "other" in 1999 and 1998 were primarily
a result of corporate administrative expenses which were not allocated to the
business segments.
11
RESULTS OF OPERATIONS
1999 COMPARED WITH 1998
Operating Segments
For Years Ended December 31
(in millions of dollars)
Gross Revenue Operating Income
---------------------------------------------- ------------------------------------------------------------------- --------------------
1999 1998 % Change 1999 1998
------- ------- -------- ---- -----
1999 1998 % Change 1999 1998
---- ----JBT $763.2 $733.6 4% -- --
JBI 651.6 644.8 1% -- --
------- ------- -------- ---- ----
Van/Intermodal $1,414.8 $1,378.4-----
Van 1,414.8 1,378.4 3% $44.444.4 $81.1
JBHL 387.9 317.3 22 10.5 7.5
DCS 320.2 211.9 5151% 24.1 17.0
JBL 387.9 317.3 22% 10.5 7.5
Other -- 8.0 -- (1.6) (2.6)(4.7) (4.1)
------- ------- -------- -------- ---------- ----- ------
Subtotal 2,122.9 1,915.6 11 77.4 103.011% 74.3 101.5
Inter-segment eliminations (77.8) (74.0) -- -- --
------- ------- -------- -------- ---------- ----- ------
Total $2,045.1 $1,841.6 11% $77.4 $103.0$74.3 $101.5
======== ======== ============== ===== ======
9
The following table sets forth items in the Consolidated Statements of Earnings
as a percentage of operating revenues and the percentage increase or decrease of
those items as compared with the prior year.
Percentage of Percentage
Operating Revenue Change
-------------------------------------------- -------------
1999 1998 1999 vs. 1998
---- ---------- ------ -------------
Operating revenues 100.0% 100.0% 11.0%
Operating expenses:
Salaries, wages and employee benefits 34.9% 34.9% 11.0%
PurchasedRents and purchased transportation 30.8 30.7 11.433.7 33.7 11.2
Fuel and fuel taxes 8.3 7.5 23.123.2
Depreciation 7.3 7.4 9.97.6 6.1
Operating supplies and expenses 9.1 8.3 22.06.2 5.3 29.2
Insurance and claims 2.0 1.8 24.1
Operating taxes and licenses 1.3 1.3 12.9
General and administrative expenses 1.5 1.5 7.41.7 1.4 33.1
Communication and utilities 1.0 1.0 10.8
----- ----- ------ ------ -------
Total operating expenses 96.2 94.4 13.2
----- -----96.4 94.5 13.3
------ ------ -------
Operating income 3.8 5.6 (24.9)3.6 5.5 (26.8)
Interest expense 1.4 1.6(1.4) (1.6) (1.2)
----- -----Equity in earnings of associated companies .2 .1 108.6
------ ------ -------
Earnings before income taxes 2.4 4.0 (34.0)
Income taxes .8 1.5 (37.6)
----- ----- ------ ------ -------
Net earnings 1.6% 2.5% (31.9%)
===== =====(31.9)%
====== ====== =======
12
OPERATING EXPENSES
Total operating expenses in 1999 increased 13%13.3% over 1998, while total
operating revenues increased 11%11.0%. Operating expenses expressed as a percentage
of operating revenues (operating ratio) were 96.2%96.4% in 1999, compared with 94.4%94.5%
in 1998. Salaries, wages and employee benefits increased 11%11.0% during 1999 and
remained exactly the same percentage of operating revenue for 1999 and 1998.
PurchasedRents and purchased transportation expense increased 11.4%11.2% and also maintained a
consistent relationship with operating revenues. While fuel costs were below
prior year levels during the first quarter of 1999, cost per gallon started to
rise during March and April. During the third quarter of 1999, fuel prices
averaged nearly $.20 per gallon higher than the comparable period in 1998 and
the spread widened to nearly $.30 per gallon by November of 1999. For the year
1999, fuel and fuel taxes increased 23.1%23.2% and grew from 7.5% of operating
revenue in 1998 to 8.3% in 1999.
Depreciation expense increased 9.9%6.1% during 1999, but declined slightly as
a percentage of operating revenues. The amount of depreciation expense on
revenue equipment increased in relative proportion to the size of the fleet.
However, total 1999 depreciation expense also increased due to lower gains on
the sale of certain assets. Gains on asset dispositions reduce depreciation
expense, while losses on dispositions increase depreciation. A net loss of
$849,000 was incurred on dispositions in 1999, which increased depreciation,
compared with gains on dispositions of $4.1 million in 1998, which reduced
depreciation expense.
Depreciation expense in 1999 was reduced, in part, by a sale and immediate
leaseback of certain trailing equipment. This transaction closed during the
fourth quarter of 1999. Operating supplies and expenses increased 22%29.2% during
1999 and rose as a percentage of operating revenues. This increase was
primarily due to higher revenue equipment maintenance and tire expenditures
during 1999.
Insurance and claims expense, which had declined significantly from 1997
to 1998, increased approximately 24%24.1% in 1999. While the frequency of vehicle collisions
declined slightly during 1999, the severity, or cost per collision, rose
significantly during 1999. Operating taxes and licenses increased 12.9% during
1999, partly due to the growth of the tractor fleet and increases in licensing
fees charged by certain states. General and administrative expenses increased
7.4%33.1%, but remained nearly the same percentage of operating revenue for both
years. A portion of this increased expense was for rental and maintenance of
computer equipment. Communication and utilities increased 10.8%, reflecting
expanded data and telecommunications networks and higher satellite
communications costs. Interest expense declined slightly and the effective
income tax rate declined to 35% in 1999 from 37% in 1998. These decreases were
due, in part, to the sale and leaseback transaction described above. The
overall impact of this sale and leaseback transaction increased 1999 earnings
per share by approximately $.02. As a result of this sale and leaseback transaction, future
years' rent expense (included in operating supplies and expenses) will be
greater and depreciation, interest and income tax expense will be less than
what would otherwise have been reported absent the transaction.
10
As a result of the above, net earnings for 1999 declined to $31.9 million,
or diluted earnings per share of $.89, compared with $46.8 million in 1998, or
$1.28 per diluted share. The average number of weighted average shares
outstanding (before the effect of dilutive stock options) remained
substantially the same for 1999 and 1998. A decrease in weighted average shares
assuming dilution resulted from the decreased effect of dilutive stock options
caused by a decline in the Company's average price of common stock during 1999.
SUMMARY OF 1998
J.B. Hunt's 1998 financial and operating results reflected a number of
positive trends when compared with 1997. For the first time since 1996, the
Company experienced a net increase in the tractor fleet. A 9% increase in Van
tractor count and a 17% increase in the Van driver force during 1998 contributed
to a 19% increase in segment revenue. Intermodal revenue, which is included in
the Van segment, increased 12% during 1998 and also helped support revenue
growth. Van truck only revenue per loaded mile increased nearly 2% during 1998,
while intermodal rates declined nearly 3%. The significant increase in the
driver to tractor ratio also helped improve tractor utilization to 2,645 miles
per week in 1998 from 2,555 in 1997. This approximate $225 million increase in
segment revenue and higher tractor utilization contributed to the significant
increase in 1998 operating income. Van earnings were also favorably impacted in
1998 by lower fuel prices and lower insurance and claims costs.
The 25% increase in the JBHL segment revenue during 1998 was due to new
logistics agreements with new customers and growth of business levels with
existing customers. The increase in 1998 JBHL operating income was primarily
related to the higher revenue levels, as JBHL margins remained relatively
constant. DCS segment revenue increased 41% to $211.9 million in 1998 from
$150.7 million in 1997. This increase in DCS revenue was driven by both new
customer contracts and additional projects or fleet additions to existing
contracts. The higher level of DCS operating income during 1998 was primarily
due to the growth of segment revenue and cost reduction actions in certain
projects. Lower fuel costs also contributed to higher operating income in the
DCS segment. Other revenue in 1997 included the flatbed business which was sold
in 1997.
1998 COMPARED WITH 1997
Operating Segments
For Years Ended December 31
(in millions of dollars)
Gross Revenue Operating Income
----------------------------------------- --------------------
1998 1997 % Change 1998 1997
---- ---- -------- ---- ----
Van/Intermodal $1,378.4 $1,153.5 19% $ 81.1 $28.2
JBHL 317.3 254.1 25 7.5 6.1
DCS 211.9 150.7 41 17.0 10.9
Other 8.0 59.8 (87) (2.6) (2.3)
------- ------- ---- ----- -----
Subtotal 1,915.6 1,618.1 18 103.0 42.9
Inter-segment eliminations (74.0) (63.8) -- -- --
--------- --------- --- ------ -----
Total $1,841.6 $1,554.3 18% $103.0 $42.9
======== ======== ===== ====== =====
11
The following table sets forth items in the Consolidated Statements of
Earnings as a percentage of operating revenues and the percentage increase or
decrease of those items as compared with the prior year.
Percentage of Percentage
Operating Revenues Change
------------------------ -------------
1998 1997 1998 vs. 1997
------ ------ -------------
Operating revenues 100.0% 100.0% 18.5%
Operating expenses:
Salaries, wages and employee benefits 34.9% 34.4% 20.3%
Purchased transportation 30.7 30.6 18.7
Fuel and fuel taxes 7.5 9.1 (3.0)
Depreciation 7.4 8.4 4.3
Operating supplies and expenses 8.3 8.4 17.3
Insurance and claims 1.8 2.4 (13.8)
Operating taxes and licenses 1.3 1.6 (2.3)
General and administrative expenses 1.5 1.2 49.0
Communication and utilities 1.0 1.1 13.3
------ -----
Total operating expenses 94.4 97.2 15.0
------ -----
Operating income 5.6 2.8 140.1
Interest expense 1.6 1.6 16.8
------ -----
Earnings before income taxes 4.0 1.2 305.5
Income taxes 1.5 .5 294.9
------ -----
Net earnings 2.5% .7% 312.1%
====== ===== ======
OPERATING EXPENSES
Total operating expenses in 1998 increased 15% over 1997, while total
operating revenues increased nearly 19% during the same period. Operating
expenses expressed as a percentage of operating revenues (operating ratio) were
94.4% in 1998, compared with 97.2% in 1997. Salaries, wages and employee
benefits increased 20% during 1998 and rose to 34.9% of revenue in 1998 from
34.4% in 1997. This increase was primarily due to an increase in driver wages
driven by the mix change of more experienced, higher paid drivers, partly offset
by lower worker's compensation claims costs. The increase in purchased
transportation expense was related to the growth of intermodal and JBHL
business, which results in higher payments to railroads and third-party motor
carriers for purchased transportation services. Significantly lower fuel costs
per gallon and slightly higher fuel miles per gallon performance helped drive
fuel and fuel tax expense down in 1998.
Depreciation expense increased approximately 4% during 1998, but declined
to 7.4% of revenue in 1998 from 8.4% in 1997. The amount of revenue equipment
depreciation expense increased in relative proportion to the size of the fleet.
However, depreciation was reduced by gains on the sale of certain assets. Gains
on asset dispositions reduce depreciation expense and totaled $4.1 million in
1998, compared with $.7 million in 1997. Gains were recognized during 1998 on
the sale of land in Lowell, Arkansas, a small subsidiary company and certain
tractors and trailing equipment. Operating supplies and expenses include
maintenance on revenue equipment and tires and increased in relative proportion
to the fleet size. The decline in operating supplies and expenses as a
percentage of revenue was due primarily to the growth of non-asset based
revenue.
The significant decrease in insurance and claims expense was the result of
fewer vehicle collisions during 1998 and a decline in the cost per collision.
The Company was successful in attracting and retaining experienced professional
drivers that have been involved in fewer vehicle collisions and reduced accident
costs. The decline in operating taxes and licenses was due, in part, to refunds
received from certain state taxing authorities. The increase in general and
administrative expenses was partly due to higher levels of spending for computer
rental and maintenance. This spending was related to the decision to lease
rather than purchase certain computer equipment and also for Year 2000
compliance work. Communications and utilities increased in relative proportion
to revenue growth. Interest expense increased 17%, primarily due to higher debt
levels. The effective income tax rate was 37% in 1998 and 38% in 1997.
As a result of the above, net earnings for 1998 increased to $46.8 million,
or diluted earnings per share of $1.28, compared with $11.4 million in 1997, or
$.31 per diluted share. A decrease in the number of weighted average shares
outstanding (before the effect of dilutive stock options), was primarily due to
the Company's acquisition of treasury shares. An increase in weighted average
shares assuming dilution resulted from the increased effect of dilutive stock
options caused by the increase in the Company's average market price of common
stock during 1998.
12
LIQUIDITY AND CAPITAL RESOURCES
The Company generates significant amounts of cash from operating
activities. Net cash provided by operating activities was $125 million in 2000,
$136 million in 1999 and $181 million in 19981998. The decline in cash flow over the
past two years partly reflects the Company's decision to acquire new revenue
equipment through operating leases rather than purchase. Other factors impacting
cash flow have been increases in prepaid lease and $160 millioninsurance costs in 1997. During the three year period
ended December 31, 1999, primary operating cash requirements were applied to2000;
increases in accounts receivable other current assets (inventories, licensesin 1999 and permits)1998, a trend which was reversed in
2000, with the contribution of JBL to TPC and to pay claims. Primary sources of cash included net earnings,
depreciation, trade accounts payable and deferred income taxes.improvements in the receivable
aging.
Net cash used in investing activities was $100 million in 2000, $19
million in 1999 and $259 million in 1998 and $89 million in 1997.1998. The primary use of funds for
investing activities was the acquisition of new revenue equipment. New tractor purchases
wereThe number
of new tractors purchased totaled approximately 1,900 in 2000, 2,200 in 1999,
2,900 in 1998 and 2,400 in 1997.1998. The levelamount of investment spending forto acquire trailing equipment
varied significantly during the three year period ended December 31, 1999.2000. The
total number of trailing pieces of equipment purchased was approximately 3,600
in 2000, 2,200 in 1999 and 4,700 in 1998 and 490 in
1997.1998. Net cash used infor investing
activities in 2000 was also reduced duringby the sale and leaseback of approximately $66
million of trailers in September of 2000. Net cash used for investing
activities in 1999 was reduced by a
financing transaction which closed during the fourth quarter. The arrangement
involved a sale and immediate leaseback of
certain trailing revenue equipment.
This transaction generated13
approximately $175 million of trailing equipment. The Company also elected to
rent a significant number of trailers during 2000. As mentioned previously, a
$5 million cash proceeds from sale of
equipment, which were used primarily to reduce outstanding debt.investment in TPC was also made in 2000.
Net financing activities consumed approximately $32 million in 2000 and
$113 million in 1999, and $71 million in
1997, andbut generated $83 million in 1998. Proceeds of approximately $175 million
from the 1999 sale
and leaseback transactionof trailing equipment which approximated $66 million in 2000 and
$175 million in 1999 were used to reduce commercial paper notes.note balances and
long-term debt. The Company sold $100 million of 7.00% senior notes in
September of 1998, which will mature in September of 2004. Financing activities also
included the purchase of treasury stock, which totaled $7.6 million in 2000 and
$5.8 million in 1998 and $22.0
million in 1997.1998. Dividends of approximately $7$1.8 million were paid during each
year of 1997 through 1999.in 2000
and $7.1 million were paid in both 1999 and 1998. The Company announced in
February of 2000, a decision to discontinue paying dividends. In January of
2001, Moody's Investors Service downgraded the ratings of the Company's senior
unsecured debt to Baa3 from Baa2 and its commercial paper to Prime-3 from
Prime-2.
During 2000, the Company entered into various capital lease agreements to
lease revenue equipment with a policynet book value of paying dividends and an intent to use those funds to
repurchase up to 500,000 shares of its common stock. These shares will be held
in treasury for general corporate purposes, which may include acquisitions or
employee stock options.approximately $94 million.
SELECTED BALANCE SHEET DATA
As of December 31 2000 1999 1998
1997
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Working capital ratio 1.06 1.09 1.09 .97
Current maturities of long-term debt and lease obligations (millions) $60.0 $ 16.4 $ 17.5$101 $60 $16
Total debt and capitalized lease obligations (millions) $401 $328 $ 433 $ 340$433
Total debt to equity .94 .82 1.15 1.01
Total debt as a percentage of total capital .48 .45 .54 .50
The Company is authorized to issue up to $240$150 million in notes under a
commercial paper note program, of which $35$74 million was outstanding at December
31, 1999.2000.
From time to time the Board of Directors authorizes the repurchase of
Company common stock. Purchases of Company stock were:
2000 1999 1998
1997
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of shares acquired 500,000 -- 225,000 1,468,000
Price range of shares $10.94 - $16.13 -- $17.50 - $28.00 $13.50 - $17.00
At December 31, 1999,2000, the Company had committed to purchase approximately
$242$90 million of revenue and service equipment net of expected proceeds from sale
or trade-in allowances. Additional capital spending for new revenue equipment is
anticipated during 2000,2001, however, funding for such expenditures is expected to
come from cash generated from operations and existing borrowing facilities. 13
The
Company had approximately $75.6 million of unused borrowing capacity under its
committed revolving lines of credit.
YEAR 2000
- ---------
The Company utilizes and is dependent upon a wide variety of complex
information technologies (IT) to conduct daily business operations. The Year
2000 issue could have resulted in system disruptions or failures. A
comprehensive action plan was initiated in 1996 to conduct systematic reviews of
all internal hardware, software and functions to either verify that the system
was Year 2000 compliant or modify/replace the software or system as required. A
number of the primary financial systems utilized to pay vendors, track customer
accounts receivable and produce regular financial reports were converted to be
Year 2000 compliant.
The Company focused significant resources during 1998 and 1999 on the Year
2000 issue, with the goal of no material business or system disruption related
to dates on or after January 1, 2000. In addition to the work conducted on
internal IT systems, the Company initiated formal communications and requested
certifications of Year 2000 compliance from certain significant customers and
suppliers. A Year 2000 Business Continuity Plan was developed and completed on
June 30, 1999. The Plan provided for the establishment of a Year 2000 Command
Center which was activated on December 15, 1999 to monitor critical IT and other
systems and functions.
As of the date of this filing, the Company haddid not experiencedexperience any material Year 2000 problems or
disruptions with internal systems, nor hadand has not experienced any material problems
or disruptions been experienced with key customers or suppliers. From
inception of the Company's efforts on the Year 2000 issue through December 31,
1999, total costs of approximately $1.7 million were incurred related to the
Year 2000 readiness issue. These expenses included external consultants,
professional advisors, hardware and software. These costs were charged to
operations as incurred and excluded employee salaries and fringe benefits and
certain new system acquisitions, development and upgrades that relate to ongoing
business activity.suppliers systems.
14
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes new
accounting and reporting standards for derivative financial instruments and for
hedging activities. SFAS 133 requires an entity to measure all derivatives at
fair value and to recognize them in the balance sheet as an asset or liability,
depending on the entity's rights or obligations under the applicable derivative
contract. The recognition of changes in fair value of a derivative that affect
the income statement will depend on the intended use of the derivative. If the
derivative does not qualify as a hedging instrument, the gain or loss on the
derivative will be recognized currently in earnings. If the derivative qualifies
for special hedge accounting, the gain or loss on the derivative will either (1)
be recognized in income along with an offsetting adjustment to the basis of the
item being hedged or (2) be deferred in other comprehensive income and
reclassified to earnings in the same period or periods during which the hedged
transaction affects earnings. SFAS 133 will be effective
forwas amended by Statement of Financial
Accounting Standards No. 138 ("SFAS 138") in June 2000 that amended the
Company beginning with the first fiscal quarter after June 15, 2000.accounting and reporting standards of SFAS 133 may not be applied retroactivelyfor certain derivative
instruments and certain hedging activities. SFAS 138 also amended SFAS 133 for
decisions made by the FASB relating to financial statements of prior
periods.the Derivatives Implementation Group
process. The Company has not determined the impact thatcompleted its analysis of Statement 133 willand does not
expect adoption as of January 1, 2001 to have a material effect on itsresults of
operations or financial statements and believes that such determination will not be
meaningful until closer to the date of initial adoption.position.
FORWARD-LOOKING STATEMENTS
This report contains statements that may be considered as forward-looking
or predictions concerning future operations. Such statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's belief or interpretation of
information currently available. TheseShareholders and prospective investors are
cautioned that actual results and experience may differ materially from the
forward-looking statements and assumptions involve certain risks and uncertainties and
management can give no assurance that such expectations will be realized.as a result of many factors. Among all the factors
and events that are not within the Company's control and could have a material
impact on future operating results are general economic conditions, cost and
availability of diesel fuel, adverse weather conditions and competitive rate
fluctuations and availability of drivers. Current and future changes in fuel
prices could result in significant fluctuations of quarterly earnings. Financial
and operating results of the Company may fluctuate as a result of these and
other risk factors as detailed from time to time in Company filings with the
Securities and Exchange Commission.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ---------------------------------------------------------------------
The Company's earnings are affected by changes in short-term interest
rates as a result of its issuance of short-term commercial paper. However, dueThe Company
from time to its
selective utilization oftime utilizes interest rate swaps to mitigate the effects of
interest rate changes are mitigated.changes; none were outstanding at December 31, 2000. Risk can be
estimated by measuring the impact of a near-term adverse movement of 10% in
short-term market interest rates. If short-term market interest rates average
10% more in 2000 than in 1999,during the next twelve months, there would be no material adverse
impact on the Company's results of operations.operations based on variable rate debt
outstanding at December 31, 2000. At December 31, 1999, the Company had no interest rate swap agreements in effect.
The Company has no material future earnings or cash flow exposures from changes
in interest rates related to its long-term debt obligations as all of the
Company's long-term debt obligations have fixed rates. At December 31, 1999,2000, the fair value of the
Company's fixed rate long-term obligations approximated carrying value.
Although the Company conducts business in foreign countries,
international operations are not material to the Company's consolidated
financial position, results of operations or cash flows. Additionally, foreign
currency transaction gains and losses were not material to the Company's results
of operations for the year ended December 31, 1999.2000. Accordingly, the Company is
not currently subject to material foreign currency exchange rate risks from the
effects that exchange rate movements of foreign currencies would have on the
Company's future costs or on future cash flows it would receive from its foreign
investment. To date, the Company has not entered into any foreign currency
forward exchange contracts or other derivative financial instruments to hedge
the effects of adverse fluctuations in foreign currency exchange rates.
15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- -----------------------------------------------------
PAGE
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Independent Auditors' Report 17
Consolidated Balance Sheets as of December 31, 19992000 and 19981999 18
Consolidated Statements of Earnings for years ended December 31, 2000, 1999, 1998 and 19971998 20
Consolidated Statements of Stockholders' Equity for years ended December 31, 2000, 1999, 1998 and 19971998 21
Consolidated Statements of Cash Flows for years ended December 31, 2000, 1999, 1998 and 19971998 23
Notes to Consolidated Financial Statements 25
16
INDEPENDENT AUDITORS' REPORT
The Board of Directors
J.B.J. B. Hunt Transport Services, Inc.:
We have audited the accompanying consolidated balance sheets of J.B.J. B. Hunt
Transport Services, Inc. and subsidiaries as of December 31, 19992000 and 1998,1999, and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1999.2000.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
auditing
standards.in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of J.B.J. B. Hunt Transport
Services, Inc. and subsidiaries as of December 31, 19992000 and 1998,1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999,2000, in conformity with accounting
principles generally accepted accounting principles.
KPMG LLP
Little Rock, Arkansasin the United States of America.
Tulsa, Oklahoma
February 4, 20002, 2001
17
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 19992000 and 19981999
(Dollars in thousands, except per share amounts)
ASSETS 2000 1999
1998
------------ ------------------------- --------------
Current assets:
Cash and cash equivalents $ 5,370 12,606 9,227
Trade accounts receivable 225,797 238,573
184,367
Inventories 7,233 7,825 6,917
Prepaid licenses and permits 17,224 17,380 14,887
Other current assets 75,347 18,757
8,598
Deferred income taxes (note 4) -- 1,275
------------ ------------------------- --------------
Total current assets 330,971 295,141
225,271
------------ ------------------------- --------------
Property and equipment, at cost:
Revenue and service equipment 1,117,689 1,038,056
1,235,824
Land 19,987 20,949 20,337
Structures and improvements 76,159 76,517 67,937
Furniture and office equipment 120,622 103,872
93,935
------------ ------------------------- --------------
Total property and equipment 1,334,457 1,239,394 1,418,033
Less accumulated depreciation 489,282 453,509
492,633
------------ ------------------------- --------------
Net property and equipment 845,175 785,885
925,400
------------ ------------------------- --------------
Other assets (note 7) 55,775 46,438
20,808
------------ ------------------------- --------------
$ 1,231,921 1,127,464
1,171,479
============ ============
(Continued)
============= ==============
18
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2000 and 1999 and 1998
(Dollars in thousands, except per share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999
1998
------------ ------------
-------------- --------------
Current liabilities:
Current maturities of long-term debt (note 2) $ 84,400 60,000
16,350Current installments of obligations under capital leases (note 8) 16,489 0
Trade accounts payable 158,585 180,009 147,967
Claims accruals 13,260 788 6,131
Accrued payroll 29,148 19,462 23,684
Other accrued expenses 10,390 10,371
11,909
------------ ------------Deferred income taxes (note 4) 13,002 4,185
-------------- --------------
Total current liabilities 270,630 206,041
------------ ------------325,274 274,815
-------------- --------------
Long-term debt, excluding current maturities (note 2) 222,694 267,639
417,045Obligations under capital leases, excluding current installments (note 8) 77,694 0
Claims accruals 4,974 7,368 7,166
Deferred income taxes (note 4) 180,441 165,570
------------ ------------173,282 176,256
-------------- --------------
Total liabilities 803,918 726,078
795,822
------------ -------------------------- --------------
Stockholders' equity (notes 2 and 3):
Preferred stock, par value $100. Authorized 10,000,000
shares; none outstanding -- --0 0
Common stock, par value $.01 per share. Authorized
100,000,000 shares; issued 39,009,858 shares 390 390
Additional paid-in capital 107,090 107,172 106,985
Retained earnings 385,221 350,928 326,145
Accumulated other comprehensive loss (6,502) (5,324)
(5,621)
------------ -------------------------- --------------
486,199 453,166 427,899
Treasury stock, at cost (3,370,872(3,795,400 shares in 19992000 and
3,401,5013,370,872 shares in 1998)1999) (58,196) (51,780)
(52,242)
------------ -------------------------- --------------
Total stockholders' equity 428,003 401,386 375,657
Commitments and contingencies (notes 2, 3, 4, 5 and 8)
------------ -------------------------- --------------
$ 1,231,921 1,127,464
1,171,479
============ ========================== ==============
See accompanying notes to consolidated financial statements.
19
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Earnings
Years ended December 31, 2000, 1999 1998 and 19971998
(Dollars in thousands, except per share amounts)
2000 1999 1998 1997
------------ ------------ ------------
Operating revenues $ 2,160,447 2,045,073 1,841,628 1,554,292
Operating expenses:
Salaries, wages and employee benefits (note 5) 769,393 713,378 642,946
534,415
PurchasedRents and purchased transportation 629,163 564,575 475,768694,756 689,561 619,902
Fuel and fuel taxes 242,835 169,407 137,561
141,770
Depreciation 149,817 136,304 130,661134,391 148,968 140,355
Operating supplies and expenses 186,146 152,622 130,065130,947 125,748 97,295
Insurance and claims 38,982 40,555 32,674 37,904
Operating taxes and licenses 32,641 27,118 24,029 24,588
General and administrative expenses 30,750 28,636 19,22528,563 34,740 26,091
Communication and utilities 24,528 21,309 19,237 16,986
------------ ------------ ------------
Total operating expenses 1,967,643 1,738,584 1,511,3822,097,036 1,970,784 1,740,090
------------ ------------ ------------
Operating income 77,430 103,044 42,91063,411 74,289 101,538
Interest expense 28,346 28,700 24,578(25,747) (28,346) (28,700)
Equity in earnings of associated companies 4,777 3,141 1,506
------------ ------------ ------------
Earnings before income taxes 42,441 49,084 74,344 18,332
Income taxes (note 4) 6,366 17,175 27,507 6,966
------------ ------------ ------------
Net earnings $ 36,075 31,909 46,837 11,366
============ ============ ============
Basic earnings per share $ .901.02 0.90 1.32 .31
============ ============ ============
Diluted earnings per share $ .891.02 0.89 1.28 .31
============ ============ ============
See accompanying notes to consolidated financial statements.
20
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 2000, 1999 1998 and 19971998
(Dollars in thousands, except per share amounts)
ADDITIONAL
COMMON PAID-IN
STOCK CAPITAL
------------ ------------Common Paid-in
Stock Capital
----------- -----------
Balances at December 31, 1996 $ 390 105,897
Tax expense of stock options exercised -- (54)
Sale of treasury stock to employees -- 146
Forfeiture of restricted stock -- (307)
Repurchase of treasury stock -- --
Cash dividends paid ($.20 per share) -- --
Comprehensive income - net earnings -- --
------------ ------------
Balances at December 31, 1997 390 105,682
Tax benefit of stock options exercised -- 925
Sale of treasury stock to employees -- 382
Forfeiture of restricted stock -- (4)
Repurchase of treasury stock -- --
Cash dividends paid ($.20 per share) -- --
Comprehensive income - net earnings -- --
------------ ----------------------- -----------
Balances at December 31, 1998 390 106,985
Sale of subsidiary stock -- 200
Tax benefit of stock options exercised -- 55
Sale of treasury stock to employees -- (65)
Forfeiture of restricted stock to employees -- (3)
Cash dividends paid ($.20 per share) -- --
Comprehensive income:
Net earnings -- --
Foreign currency translation adjustments -- --
------------ ----------------------- -----------
Total comprehensive income -- --
------------ ------------=========== ===========
Balances at December 31, 1999 $ 390 107,172
============ ============
See accompanying notes to consolidated financial statements.
(Continued)Remeasurement of stock options -- 110
Tax benefit of stock options exercised -- 31
Sale of treasury stock to employees -- (223)
Repurchase of treasury stock -- --
Cash dividends paid ($0.05 per share) -- --
Comprehensive income:
Net earnings -- --
Foreign currency translation adjustments -- --
----------- -----------
Total comprehensive income -- --
----------- -----------
Balances at December 31, 2000 390 107,090
=========== ===========
21
ACCUMULATED TOTAL
OTHER STOCKHOLDERS'
COMPREHENSIVE RETAINED COMPREHENSIVE TREASURY EQUITY
INCOME EARNINGS LOSS STOCK (NOTESAccumulated Total
Other Stockholders'
Comprehensive Retained Comprehensive Treasury Equity
Income Earnings Loss Stock (Notes 2 ANDand 3)
-------------------- ----------------- ------------------ ----------------- -------------------
- ------------ ----------- ------------- ----------- ---------------
282,364 (5,621) (25,775) 357,255
-- -- -- (54)
-- -- 182 328
-- -- (1,269) (1,576)
-- -- (22,034) (22,034)
(7,321) -- -- (7,321)
$ 11,366 11,366 -- -- 11,366
==================== ----------------- ------------------ ----------------- -------------------
286,409 (5,621) (48,896) 337,964
-- -- -- 925
-- -- 2,486 2,868
-- -- (18) (22)
-- -- (5,814) (5,814)
(7,101) -- -- (7,101)
$ 46,837 46,837 -- -- 46,837
==================== ----------------- ------------------ ----------------- -------------------============ ----------- ----------- ----------- -----------
326,145 (5,621) (52,242) 375,657
-- -- -- 200
-- -- -- 55
-- -- 477 412
-- -- (15) (18)
(7,126) -- -- (7,126)
31,909 31,909 -- -- 31,909
297 -- 297 -- 297
-------------------- ----------------- ------------------ ----------------- -------------------- ------------ ----------- ----------- ----------- -----------
$ 32,206 -- -- -- --
==================== ----------------- ------------------ ----------------- -------------------============ =========== =========== =========== ===========
350,928 (5,324) (51,780) 401,386
================= ================== ================= ===================-- -- -- -- 110
-- -- -- -- 31
-- -- -- 1,160 937
-- -- -- (7,576) (7,576)
-- (1,782) -- -- (1,782)
36,075 36,075 -- -- 36,075
(1,178) -- (1,178) -- (1,178)
- ------------ ----------- ----------- ----------- -----------
$ 34,897 -- -- -- --
============ ----------- ----------- ----------- -----------
385,221 (6,502) (58,196) 428,003
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
22
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 2000, 1999 1998 and 19971998
(Dollars in thousands)
2000 1999 1998
1997
----------------- ---------------- --------------------------- ----------- -----------
Cash flows from operating activities:
Net earnings $ 36,075 31,909 46,837 11,366
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 149,817 136,304 130,661134,391 148,968 140,355
(Gain) loss on sale of revenue equipment 267 849 (4,051)
Provision for noncurrent deferred income taxes 14,871 24,661 (1,250)5,843 16,146 25,722
Equity in joint venture earnings of associated companies (4,777) (3,141) (1,506)
(806)
Tax benefit (expense) of stock options exercised 31 55 925
(54)Remeasurement of options 110 -- --
Forfeiture of restricted stock -- (18) (22) (1,576)
Amortization of discount, net 55 594 (145) 219(144)
Changes in operating assets and liabilities:
Trade accounts receivable 12,776 (54,206) (15,169)
(15,327)
Other assets (58,057) (26,624) (5,686) 11,248
Deferred income taxes 1,275 1,062 8,663
Trade accounts payable (21,424) 32,042 9,458
22,165
Claims accruals 10,078 (5,141) (24,177) (9,019)
Accrued payroll and other accrued expenses 9,705 (5,760) 8,820
3,640
----------------- ---------------- --------------------------- ----------- -----------
Net cash provided by operating
activities 125,073 135,673 181,362
159,930
---------------- ---------------- --------------------------- ----------- -----------
Cash flows from investing activities:
Additions to property and equipment (225,672) (224,795) (306,128)
(174,141)Investment in associated company (5,000) -- --
Proceeds from sale of equipment 126,350 214,493 41,231 84,192
Decrease (increase) in other assets 4,404 (9,128) 5,858
1,121
----------------- ---------------- --------------------------- ----------- -----------
Net cash used in investing activities (99,918) (19,430) (259,039)
(88,738)
----------------- ---------------- --------------------------- ----------- -----------
(Continued)
23
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
Years ended December 31, 2000, 1999 1998 and 19971998
(Dollars in thousands)
2000 1999 1998
1997
----------------- ---------------- ---------------------------- ----------- -----------
Cash flows from financing activities:
Net repaymentsborrowings (repayments) of commercial
paper borrowings $ 39,400 (96,350) (1,150) (37,250)
Proceeds from long-term debt -- -- 99,400 --
Repayments of long-term debt (60,000) (10,000) (5,000)
(5,000)Principal payments under capital lease obligations (3,370) -- --
Proceeds from sale of subsidiary stock -- 200 -- --
Proceeds from sale of treasury stock 937 412 2,868 328
Repurchase of treasury stock (7,576) -- (5,814)
(22,034)
Dividends paid ( 7,126)(1,782) (7,126) (7,101)
(7,321)
----------------- ---------------- ---------------------------- ----------- -----------
Net cash provided by (used in)
financing activities (32,391) (112,864) 83,203
(71,277)
----------------- ---------------- ---------------------------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (7,236) 3,379 5,526 (85)
Cash and cash equivalents at beginning of year 12,606 9,227 3,701
3,786
================= ================ ================------------ ----------- -----------
Cash and cash equivalents at end of year $ 5,370 12,606 9,227
3,701
================= ================ ============================ =========== ===========
Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Interest $ 26,138 28,944 26,387
24,634============ =========== ===========
Income taxes $ 3,654 95 11
(6,162)
================= ================ ============================ =========== ===========
Non-cash activities:
Capital lease obligations for revenue equipment $ 97,553 -- --
============ =========== ===========
Assets contributed to associated company $ 2,927 -- --
============ =========== ===========
See accompanying notes to consolidated financial statements.
24
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 1998 and 19971998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) DESCRIPTION OF BUSINESSDescription of Business
J. B. Hunt Transport Services, Inc., together with its
wholly-owned subsidiaries ("Company"), is a diversified
transportation services and logistics company operating under the jurisdiction
of the U.S. Department of Transportation and various state
regulatory agencies.
For the periods presented, theThe Company had threehas four distinct operating segments: Van/Truck;
Intermodal; Logistics; and Dedicated Contract Services. See note
9.10.
(b) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial
statements of the Company and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been
eliminated in consolidation.
(c) CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company
considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.
(d) TIRES IN SERVICE
The Company capitalizes tires placed in service on new revenue
equipment as a part of the equipment cost. Replacement tires and
costs for recapping tires are expensed at the time the tires are
placed in service.
(e) PROPERTY AND EQUIPMENT
Depreciation of property and equipment is calculated on the
straight-line method over the estimated useful lives of 5 -to 10
years for revenue and service equipment, 10 to 40 years for
structures and improvements, and 3 to 10 years for furniture and
office equipment.
Gains (losses) on dispositionsProperty and equipment under capital leases are stated at the
present value of revenueminimum lease payments; and other equipment, which are included in depreciation expense, were
approximately $(849,000), $4,051,000 and $664,000 foramortized over the
years
ended December 31, 1999, 1998 and 1997, respectively.straight-line method over the shorter of the lease term or
estimated useful life of the asset.
(f) REVENUE RECOGNITION
The Company recognizes revenue based on relative transit time in
each reporting period with expenses recognized as incurred.
25 (Continued)
25
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 1998 and 19971998
(g) INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(h) EARNINGS PER SHARE
A reconciliation of the numerator and denominator of basic and
diluted earnings per share is shown below (in thousands, except
per share amounts):
YEARS ENDED DECEMBER 31,
-------------------------------------------------------
2000 1999 1998 1997
--------------- --------------- ----------------
Basic earnings per share:
Numerator (net earnings) $ 36,075 31,909 46,837 11,366
=============== =============== ================
Denominator (weighted
average shares outstanding) 35,313 35,628 35,582 36,405
=============== =============== ================
Earnings per share $ 1.02 .90 1.32 .31
=============== =============== ================
Diluted earnings per share:
Numerator (net earnings) $ 36,075 31,909 46,837 11,366
=============== =============== ================
Denominator:
Weighted average shares
outstanding 35,313 35,628 35,582 36,405
Effect of common stock
options 104 174 1,019 43
--------------- --------------- ----------------
35,417 35,802 36,601 36,448
=============== =============== ================
Earnings per share $ 1.02 .89 1.28 .31
=============== =============== ================
26 (Continued)
26
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 1998 and 19971998
Options to purchase shares of common stock that were outstanding
during each year but were not included in the computation of
diluted earnings per share because the options' exercise price was
greater than the average market price of the common shares are
shown in the table below.
2000 1999 1998 1997
------------------- ------------------- -------------------
Number of shares under option 4,316,0005,394,000 4,318,000 162,000 4,420,000
Range of exercise prices $ 14.00 - 37.50 $ 17.38 - 37.50 $ 26.00 - 37.50 $ 15.63 - 24.63
(i) CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade
receivables. Concentrations of credit risk with respect to trade
receivables are limited due to the Company's large number of
customers and the diverse range of industries which they
represent. As of December 31, 19992000 and 1998,1999, the Company had no
significant concentrations of credit risk.
(j) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses interest rate swaps to hedge the effects of
fluctuations in interest rates. The differential paid or received
on interest rate swap agreements is accrued as interest rates
change and is charged or credited to interest expense over the
life of the agreements. Any gains or losses realized upon the
termination of an interest rate swap agreement are deferred and
amortized over the remaining life of the original term as a charge
or credit to interest expense.
(k) FOREIGN CURRENCY TRANSLATION
Local currencies are generally considered the functional
currencies outside the United States. Assets and liabilities are
translated at year-end exchange rates for operations in local
currency environments. Income and expense items are translated at
average rates of exchange prevailing during the year.
Prior to January 1, 1997, foreignForeign currency translation adjustments, which reflect foreign
currency exchange rate changes applicable to the net assets of the
Mexican operations have been recorded as a separate item of
accumulated other comprehensive loss in stockholders' equity. From January 1, 1997 throughequity for
the years ended December 31, 1999 and 2000. For the year ended
December 31, 1998, Mexico was considered a highly inflationary
economy as defined by Statement of Financial Accounting Standards
("SFAS") No. 52, FOREIGN CURRENCY TRANSLATION.Foreign Currency Translation. Accordingly, the
more stable currency of the reporting parent (the Company) was
used, and the effect of exchange rates resulting in translation
adjustments (Continued)
27
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999, 1998 and 1997
have been recorded as a component of net earnings for
the yearsyear ended December 31, 1998 and 1997.1998. As of January 1, 1999, Mexico is
no longer considered a highly inflationary economy.
Accordingly,
the local currency has been used, and the effect of exchange rates
resulting in translation adjustments have been recorded as a
separate item of accumulated other comprehensive loss in
stockholders' equity for the year ended December 31, 1999.
(l)(k) STOCK BASED COMPENSATION
The Company has adopted the disclosure requirements of SFAS No.
123, ACCOUNTING FOR STOCK-BASED COMPENSATIONAccounting for Stock-Based Compensation and, as permitted
under SFAS No. 123, applies Accounting Principles Board Opinion
No. 25 and related interpretations in accounting for compensation
costs for its stock option plans. Accordingly, compensation
expense is recognized on the date of grant only if the current
market price of the underlying common stock at date of grant
exceeds the exercise price.
(m)27 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(l) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF
The Company continually evaluates the carrying value of its assets
for events or changes in circumstances which indicate that the
carrying value may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the fair
value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.
(n)(m) USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to prepare
the consolidated financial statements in conformity with generally
accepted accounting principles. Actual results could differ from
those estimates.
(o)(n) COMPREHENSIVE INCOME
Comprehensive income consists of net earnings and foreign currency
translation adjustments and is presented in the consolidated
statements of stockholders' equity.
(Continued)
28
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(p)(o) RECLASSIFICATIONS
To conform to the 19992000 presentation, certain accounts for 19981999 and
19971998 have been reclassified. The reclassifications had no effect
on net earnings.earnings and stockholders' equity previously reported.
(2) LONG-TERM DEBT
Long-term debt consists of (in thousands):
2000 1999
1998
-------------- ---------------------------- -----------
Commercial paper $ 74,400 35,000 131,350
Senior notes payable, interest at 7.84% payable
semiannually -- 5,000
Senior notes payable, due 11/17/00, interest at
6.25% payable semiannually 25,000- 25,000
Senior notes payable, due 12/12/00, interest at
6.00% payable semiannually 25,000- 25,000
Senior notes payable, due 9/1/03, interest at
6.25% payable semiannually 98,260 98,260
Senior notes payable, due 9/15/04, interest at
7.00% payable semiannually 95,000 100,00095,000
Senior subordinated notes, interest at 7.80%
payable semiannually 40,000 50,000
50,000
-------------- --------------------------- -----------
307,660 328,260
434,61028 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
Less current maturities (84,400) (60,000) (16,350)
Unamortized discount (566) (621)
(1,215)
-------------- --------------------------- -----------
$ 222,694 267,639
417,045
============== =========================== ===========
Under its commercial paper note program, the Company is authorized to
issue up to $240$150 million in notes. These notes are supported by two
credit
agreements, which aggregate $240$150 million, with a group of banks, of which
$120 million expires March 7, 2000 and $120 million expires
March 20, 2002.December 14, 2001. The effective rate on the commercial note
program was 5.27%7.28% and 5.70% for the years ended5.32% as of December 31, 19992000 and 1998,1999,
respectively. The 7.84% senior notes were repaid in 1999 and the 7.80% senior subordinated notes are payable in five
equal annual installments beginning October 30, 2000. Under the terms of
the credit agreements, the Company had additional unused borrowing
capacity of approximately $75.6 million at December 31, 2000.
Under the terms of the credit agreements and the note agreements, the
Company is required to maintain certain financial covenants including
leverage tests, minimum tangible net worth levels and other financial
ratios. The Company was in compliance with all of the financial covenants
at December 31, 1999.
(Continued)
29
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999, 1998 and 19972000.
Current maturities of long-term debt at December 31, 19992000 consist of
senior notes payablecommercial paper due in 20002001 and the firstsecond installment of the 7.80%
senior subordinated notes. The aggregate annual maturities of long-term
debt for each of the fivefour years ending December 31 are as follows (in
thousands): 2000,
$60,000; 2001, $10,000;$84,400; 2002, $45,000;$10,000; 2003, $108,260; and 2004,
$105,000.
(3) CAPITAL STOCK
The Company maintains a Management Incentive Plan ("Plan") that provides
various vehicles to compensate key employees with Company common stock.stock or
common stock equivalents. Under the original Plan, the Company was
authorized to award, in aggregate, not more than 5,000,000 shares. During
1998 and again in 2000, the stockholders of the Company amended the Plan
whereby the Company is now authorized to award, in aggregate, not more
than 6,500,0008,500,000 shares. At December 31, 19992000 there were approximately
605,0001,935,000 shares available for grant under the Plan. The Company has
utilized three such vehicles to award stock or grant options to purchase
the Company's common stock: restricted stock awards, restricted options
and nonstatutory stock options.
Restricted stock awards are granted to key employees subject to
restrictions regarding transferability and assignment. Shares of Company
common stock are issued to the key employees and held by the Company
until each employee becomes vested in the award. Vesting of the awards
generally occurs over a four yearfour-year period of time from the award date.
Termination of the employee for any reason other than death, disability
or certain cases of retirement causes the unvested portion of the award
to be forfeited.
29 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
The Plan provides that nonstatutory stock options may be granted to key
employees for the purchase of Company common stock for 100% of the fair
market value of the common stock at the grant date. The options generally
vest over a ten yearten-year period and are forfeited if the employee terminates
for any reason. The Company amended certain vested options related to
employees of its logistics segment, extending the exercise period after
termination. This resulted in a remeasurement of these options and
accordingly $110,000 was charged to compensation expense in 2000.
Compensation expense (benefit) under the Plan for restricted stock awards
is charged to earnings over the vesting period and amounted to
approximately $(5,400)$0, ($5,400), $20,000, and $(78,000)$20,000 for the years ended December 31,
2000, 1999 and 1998, and 1997,
respectively.
(Continued)
30
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999, 1998 and 1997
A summary of the restricted and nonstatutory options to purchase Company
common stock follows:
WEIGHTED
AVERAGE NUMBER
NUMBER EXERCISE PRICE OF SHARES
OF SHARES PER SHARE EXERCISABLE
---------------- ------------------------------ ------------------ ----------------
Outstanding at December 31, 1996 2,740,925 $ 17.45 294,950
Granted 800,000 14.73
Exercised (57,650) 16.81
Terminated (443,350) 17.81
----------------
Outstanding at December 31, 1997 3,039,925 $ 16.70 274,225
Granted 602,000 18.12
Exercised (176,760) 16.66
Terminated (115,275) 16.81
------------------------------
Outstanding at December 31, 1998 3,349,890 16.98 323,390
Granted 471,000 14.03
Exercised (26,375) 12.90
Terminated (56,950) 16.09
------------------------------
Outstanding at December 31, 1999 3,737,565 16.65 551,940
================ ================Granted 908,250 12.75
Exercised (98,100) 13.06
Terminated (237,950) 16.15
--------------
Outstanding at December 31, 2000 4,309,765 15.94 831,812
============== ================== ================
During 1995, the Board of Directors established a nonqualified stock
option plan to provide performance based compensation to the Chairman of
the Board. The plan allows the Chairman the option to purchase up to 2.5
million shares of the Company's common stock at a price of $17.63 per
share. These options vestvested after five years, except for special
circumstances in whichyears. Under the options vest earlier. Theoriginal plan the
options must be exercised within one year of vesting and all unexercised
options will terminate. On January 21,During 2000, the Boardstockholders of Directors, pending
stockholder approval, extendedthe Company
amended the plan whereby the exercise period from one yearwas extended to be within
two years.years of vesting.
30 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
Had the Company determined compensation cost based on the fair value at
the grant date for its stock options under SFAS No. 123, the Company's
net earnings would have been reduced to the pro forma amounts indicated
below.
2000 1999 1998
1997
----------- ----------- ----------------------- ------------ ------------
Net earnings (in thousands) As reported $ 36,075 31,909 46,837
11,366
Pro forma 30,723 27,391 42,881 7,800
Basic earnings per share As reported 1.02 .90 1.32
.31
Pro forma .87 .77 1.21 .21
Diluted earnings per share As reported 1.02 .89 1.28
.31
Pro forma .87 .76 1.17 .21
(Continued)
31
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999, 1998 and 1997
Pro forma net earnings reflects only options granted since December 31,
1995. Therefore, the full impact of calculating compensation costs for
stock options under SFAS No. 123 is not reflected in the pro forma net
earnings amounts presented above because compensation cost is reflected
over the options' vesting periods of 5 to 10 years and compensation cost
for options granted prior to January 1, 1996 is not considered.
The per share weighted-average fair value of stock options granted during
2000, 1999 and 1998 was $9.07, $4.13 and 1997 was $4.13, $13.23, and $6.86, respectively, on the
date of grant using the Black Scholes option-pricing model with the
following weighted-average assumptions: 2000 - expected dividend yield
0.0%, volatility of 52.4%, risk-free interest rate of 5.2%, and an
expected life of 6.6 years; 1999 - expected dividend yield 1.2%,
volatility of 51.6%, risk-free interest rate of 6.5%, and an expected
life of 7.3 years; 1998 - expected dividend yield .9%, volatility of
65.5%, risk-free interest rate of 4.7%, and an expected life of 7.7
years; 1997 - expected dividend yield 1.1%, volatility of
34.1%, risk-free interest rate of 5.8%, and an expected life of 7.7
years.
The following table summarizes information about stock options
outstanding at December 31, 1999:2000:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------------- -------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE REMAINING EXERCISE EXERCISE
OF EXERCISE OPTIONS CONTRACTUAL PRICE OPTIONS PRICE
PRICES OUTSTANDING LIFE (IN YEARS) PER SHARE EXERCISABLE PER SHARE
---------------- -------------- --------------- ------------- -------------- -------------
$ 10.63 - 11.37 114,750 7.7 $ 10.67 250 $ 10.88
11.58 - 15.00 1,435,950 7.3 $ 13.47 288,175 $ 13.691,830,800 6.9 13.13 404,060 13.43
15.01 - 18.75 4,202,440 3.5 17.42 141,940 16.664,309,040 2.6 17.36 209,340 16.46
18.76 - 22.50 348,000 6.8 20.10 64,300 20.37368,000 5.6 20.13 143,225 19.94
22.51 - 26.25 106,675 6.1 23.62 46,825 23.1099,675 5.3 23.64 53,525 23.21
26.26 - 30.00 134,500 9.4 28.92 9,700117,000 8.4 28.76 19,400 28.63
30.01 - 37.50 10,000 9.58.5 37.50 1,0002,000 37.50
---------------- -------------- --------------- ------------- -------------- -------------
$ 11.5810.63 - 37.50 6,237,565 4.76,809,265 4.1 $ 17.04 551,94016.56 831,800 $ 16.3416.35
================ ============== =============== ============= ============== =============
On January 21, 2000, the Company's Board of Directors declared a cash
dividend of $.05 per share payable on February 17, 2000 to shareholders
of record on February 3, 2000.31 (Continued)
32
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 1998 and 19971998
(4) INCOME TAXES
Total income tax expense for the years ended December 31, 1998, 19972000, 1999 and
19961998 was allocated as follows (in thousands):
2000 1999 1998
1997
------------ ------------------------ ------------
Earnings before income taxes $ 6,366 17,175 27,507 6,966
Stockholders' equity, for tax benefit
(expense) of stock options exercised 31 55 925
(54)
------------ ------------------------ ------------
$ 6,335 17,120 26,582
7,020
============ ======================= ============
Refundable income taxes at December 31, 2000 and 1999 were $3,133,000 and
1998 were $3,000 and
$937,000,$3,000,000, respectively. These amounts have been included in other
current assets on the balance sheet.
Income tax expense (benefit) attributable to earnings before income taxes
consists of (in thousands):
2000 1999 1998
1997
------------ ------------ ----------------------- ---------- ----------
Current expense (benefit):expense:
Federal $ 66 662 1,410 (715)
State and local 457 367 375
268
------------- ------------ ---------------------- ---------- ----------
523 1,029 1,785
(447)
------------- ------------ ---------------------- ---------- ----------
Deferred expense (benefit):
Federal 8,032 18,233 21,354 7,096
State and local (2,189) (2,087) 4,368
317
------------- ------------ ---------------------- ---------- ----------
5,843 16,146 25,722
7,413
------------- ------------ ---------------------- ---------- ----------
Total tax expense $ 6,366 17,175 27,507
6,966
============= ============ ====================== ========== ==========
The following is a reconciliation betweenIncome tax expense attributable to earnings before income taxes differed
from the effective incomeamounts computed using the statutory federal tax rate andof 35% for
the applicable statutory Federal income tax rate for each of the
three fiscal years in the period ended December 31, 1999:following reasons (in thousands):
2000 1999 1998
1997
------------ ----------- ------------------------ ----------
Income tax - statutory rate 35.00% 35.00 35.00$ 14,854 17,179 26,020
State tax, net of Federal effect (1,125) (869) 3,050
Sale/leaseback benefit (1.77) 4.15 2.07(7,863) (741) -
Other, net 1.77 (2.15) 0.93500 1,606 (1,563)
----------- ----------- -------------
Effective income---------- ----------
Total tax rate 35.00% 37.00 38.00expense $ 6,366 17,175 27,507
=========== =========== ======================= ==========
32 (Continued)
33
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 1998 and 19971998
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 19992000 and 19981999 are presented below (in thousands):
2000 1999
1998
------------- ---------------------------- ---------------
Deferred tax assets:
Claims accruals, principally due to accrual
for financial reporting purposes $ 7,232 7,261 8,020
Tax credit carryforwards 9,105 7,321
7,321Net operating loss carryforwards 37,830 43,395
Accounts receivable, principally due to
allowance for doubtful accounts 3,227 3,999
3,972
Other 5,101 4,176
3,892
------------ ---------------------------- --------------
Total gross deferred tax assets 22,757 23,205
------------ -------------62,495 66,152
--------------- --------------
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation and
capitalized interest $ 137,903 174,570182,712 181,298
Prepaid permits and insurance, principally
due to expensing for income tax purposes 20,222 12,809 7,943
Sale and leaseback transaction 44,709 --36,144 44,007
Other 7,777 4,987
------------ -------------9,701 8,479
--------------- --------------
Total gross deferred tax liabilities 203,198 187,500
------------ -------------248,779 246,593
--------------- --------------
Net deferred tax liability $ 186,284 180,441
164,295
============= ============================ ==============
The Company believes its history of profitability and taxable income, the
reversal of deferred tax liabilities, and its utilization of tax planning
sufficiently supports the carrying amount of the deferred tax assets.
Accordingly, the Company has not recorded a valuation allowance as all
deferred tax benefits are more likely than not to be realized.
At December 31, 1999,2000, the Company had available net operating loss
("NOL") carryforwards of approximately $104,915,000 expiring from the
year 2007 to 2017. Additionally, the Company had general business tax
credit carryforwards of approximately $2,621,000$4,405,000 expiring from the year
2007 to 2009, and alternative minimum tax credit carryforwards with no
expiration of approximately $4,700,000.
33 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(5) EMPLOYEE BENEFIT PLANS
The Company maintains a defined contribution employee retirement plan,
which includes a 401(k) option, under which all employees are eligible to
participate. The Company matches a specified percentage of employee
contributions, subject to certain limitations. For the years ended
December 31, 2000, 1999 1998 and 1997,1998, total Company contributions to the
plan, including matching 401(k) contributions, were $6,553,000,
$7,348,000 and $6,533,000, and $4,951,000, respectively.
(Continued)
34
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(6) FAIR VALUE OF SIGNIFICANT FINANCIAL INSTRUMENTS
(a) CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, AND TRADE ACCOUNTS
PAYABLE
The carrying amount approximates fair value because of the short
maturity of these instruments.
(b) LONG-TERM DEBT
The carrying amount of the commercial paper debt approximates the
fair value because of the short maturity of the commercial paper
instruments.
The fair value of the fixed rate debt is presented as the present
value of future cash flows discounted using the Company's current
borrowing rate for notes of comparable maturity. The calculation
arrives at a theoretical amount the Company would pay a
creditworthy third party to assume its fixed rate obligations and
not the termination value of these obligations. Consistent with
market practices, such termination values may include various
prepayment and termination fees that the Company would
contractually be required to pay if it retired the debt early.
INTEREST RATE SWAP AGREEMENTS
The fair values of interest rate swap agreements are obtained from dealer
quotes. These values represent the estimated amount the Company would pay
to terminate such agreements, taking into consideration current interest
rates and the creditworthiness of the counterparties. All interest rate
swap agreements were terminated during 1999 for an insignificant gain.
The estimated fair values of the Company's financial instruments
are summarized as follows (in thousands):
AT DECEMBER 31, 19992000 AT DECEMBER 31, 1998
-------------------------------1999
--------------------------------- -----------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------------- ---------------------------- -------------- ------------- ------------
Cash and cash equivalents $ 5,370 5,377 12,606 12,606
9,227 9,227
Accounts receivable 225,797 225,797 238,573 238,573 184,367 184,367
Trade accounts payable 150,585 150,585 180,009 180,009 147,967 147,967
Long-term debt:
Commercial paper 74,400 74,400 35,000 35,000 131,350 131,350
Fixed rate obligations 233,260 234,352 293,260 287,754
303,260 302,131
Interest rate swap agreements -- -- -- (1,622)
============= ============================ ============== ============= ============
34 (Continued)
35
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 1998 and 19971998
(7) RELATED PARTY TRANSACTIONS
The Company advances premiums on life insurance policies on the lives of
the Company's principal stockholder and his wife. All premiums paid by
the Company, along with accrued interest thereon, are reimbursable from a
trust which is the owner and beneficiary of the policy. The Company has a
guarantee from the stockholder for the amount of premiums paid by the
Company together with interest at the rate of 5% per annum.annum until June of
2000. In July of 2000 the Board of Directors approved an adjustment to
the interest rate to be the average borrowing rate of the Company for
July 2000 which was 7.15%. The amounts reimbursable to the Company amount
to approximately $7,044,000$8,002,000 and $6,068,000$7,044,000 at December 31, 19992000 and 1998,1999,
respectively, and amounts are included in other assets in the accompanying
consolidated balance sheets. See also note 9 for disclosure of
transactions with an associated company.
(8) COMMITMENTS AND CONTINGENCIES
During 1999, the Company entered into a sale and leaseback transaction
for a portion of its container fleet. Containers having a net book value
of approximately $175 million$175,000,000 were sold to third party leasing companies
at approximate net book value. A gain on thisthe transaction has been
deferred and will be amortized to income in relation to rent expense
recognized under the leases. The containers are being leased back under
operating leases over terms of four to ten years. The Company also leases
terminal facilities, shuttle yards and computer equipment under operating
leases having various terms. Under the terms of certain lease agreements,
the Company is required to maintain certain covenants including minimum
credit ratings. The futureCompany was in compliance with this requirement at
December 31, 2000.
During 2000 the Company entered into various capital lease agreements to
lease revenue equipment. These capital leases are secured by revenue
equipment with a net book value at December 31, 2000 of approximately
$94,000,000 and contain certain guarantees of residual value at the end
of the lease terms with fixed price purchase options.
35 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDAIRIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
Future minimum lease payments under all noncancellablenoncancelable operating leases at(with
initial or remaining lease terms in excess of one year) and future
minimum capital lease payments as of December 31, 1999, principally for revenue equipment, are shown in the
following table (in thousands):2000 are:
CAPITAL OPERATING
LEASES LEASES
------------ ------------
2000 $84,315
2001 49,072$ 20,239 65,142
2002 37,07520,239 38,414
2003 23,92458,761 22,336
2004 21,9418,310 18,366
2005 - 17,228
Thereafter 35,372- 17,949
------------ ------------
Total minimum lease payments 107,549 179,435
============
Less amount representing interest (at rates
ranging from 8.0% to 8.5%) 13,366
------------
Present value of net minimum
capital lease payments 94,183
Less current installments of obligations
under capital leases 16,489
------------
Obligations under capital leases
excluding current installments $ 77,694
============
At December 31, 2000 gross property and equipment and accumulated
amortization recorded under capital leases was $97,553,000 and
$3,158,000, respectively.
Total rent expense was $87,545,000 in 2000, $39,862,000 in 1999, and
$28,692,000 in 1998, and
$17,656,000 in 1997, respectively.
At December 31, 1999,2000, the Company had committed to purchase $242 millionapproximately
$90,000,000 of revenue and service equipment net of expected proceeds
from sale or trade-in allowances.
The Company is involved in certain claims and pending litigation arising
from the normal conduct of business. Based on the present knowledge of
the facts and, in certain cases, opinions of outside counsel, management
believes the resolution of claims and pending litigation will not have a
material adverse effect on the financial condition or results of
operations of the Company.
36 (Continued)
36
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIESSUBSIDAIRIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(9) INVESTMENT IN AFFILIATED COMPANY
In March 2000, the Company, along with five other motor carriers,
announced the intent to contribute all of its non-asset based logistics
business into a recently formed joint venture, Transplace.com (TPC). TPC
is an internet-based global transportation logistics company. TPC
commenced operations effective July 1, 2000. The Company contributed all
of its logistics segment business and 1997
(9)all related intangible assets, plus
$5.0 million of cash, in exchange for an approximate 27% initial
membership interest in TPC. The Company accounts for its approximate 27%
interest in TPC utilizing the equity method of accounting. No gain or
loss was recognized upon formation and contribution of logistics segment
assets to TPC. The excess of the Company's share of TPC's net assets over
its cost basis is being amortized over 20 years on a straight-line
method. Equity in earnings of TPC was not significant in 2000.
The Company provided various services to TPC under a shared service
agreement, the terms of which expired on December 31, 2000. The services
included the following: payroll and benefits; accounting; computer system
maintenance; office facilities; and telecommunications. The fees from
these services approximated $2,971,000 in 2000 and were recorded in the
consolidated statement of earnings as reimbursements of salaries, wages
and employee benefits and general and administrative expenses.
At December 31, 2000, the Company had advanced to TPC in the form of a
loan $5,600,000. This amount was repaid in full during January 2001.
The Company earned revenues of $43,500,000 from TPC in providing
transportation services in the last six months of 2000.
At December 31, 2000, trade accounts receivable includes $1,148,000 due
from TPC for freight and fees related to the shared service agreement.
37 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDAIRIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(10) SEGMENT INFORMATION
Van/The Company had four reportable business segments during 2000. Segments
included Truck (JBT), Intermodal services include(JBI), Dedicated Contract Services (DCS)
and Logistics. JBT business includes full truck-load, dry-Van,
container-sizabledry-van freight
which is typically transported utilizing company-owned or controlled
revenue equipment. This freight is typically transported over roads and
highways and does not move by rail. The load may beJBI segment includes freight
which is transported entirely by company-owned and controlled equipment or arail over at least some portion of the movement
may
be handledand also includes certain repositioning truck freight moved by JBI
equipment or third-party carriers, when such highway movement is intended
to direct JBI equipment back toward intermodal operations. The JBT and
JBI business segments were operated in combined fashion (formally
reported as Van/Intermodal in prior periods) and limited identifiable
comparative information is available for JBT and JBI prior to January 1,
2000. Accordingly, the Company has provided comparable segment
information for the year ended December 31, 2000 based on the prior
segmentation, which included JBT and JBI as the former segment,
"Van/Intermodal".
DCS segment business typically includes company-owned revenue equipment
and employee drivers which are assigned to a third-party motor carrierspecific customer, traffic
lane or service. DCS operations usually include formal, written long-term
agreements or contracts which govern services performed and applicable
rates.
Prior to July 1, 2000, the Logistics business segment primarily consisted
of J. B. Hunt Logistics (JBL) a railroad. Logistics
provideswholly-owned subsidiary which provided a
wide range of comprehensive transportation and freight management
services. Such services includingincluded experienced professional managers,
information and optimization technology and the actual design or redesign
of freight system solutions. Logistics may utilize Van/Intermodal and/JBL utilized JBT, JBI or dedicated contractDCS owned andor
controlled equipment, unrelated third-party equipmentassets and employees, or third-party carriers, or a
combination to meet the customer'scustomer service requirements. Dedicated Contract ServicesJBL services typically
include company-owned revenue
equipment and employee drivers that are assigned to a specific customer,
traffic lane or service. The dedicated service is engineered and
customized for the specific customer and is typicallywere provided in accordance with a written long-term agreement. Substantially allagreements. As
discussed in Note 9, the Company exchanged its ownership in JBL for an
initial membership interest in TPC. Effective July 1, 2000, the Company
began accounting for its ownership in TPC utilizing the equity method of
accounting. As of December 31, 2000, TPC qualifies as a reportable
business segment and, accordingly, the Logistics segment information
shown below includes both JBL and TPC. Information for TPC included in
the following tables is the entity's results of operations without regard
to the Company's ownership interest which is then subtracted in
reconciling to the consolidated statement of earnings.
38 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDAIRIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
The Company's customers are geographically dispersed across the United
States and includes many of the Company's"Fortune 500" companies. One customer
accounted for approximately 12% of consolidated operating revenues are from domestic customers. Intersegment revenues primarily
consist of Van/Intermodal services provided to logistics. Such services
are priced at approximately the same basis as services to external
customers. Certain administrativein
2000. No single customer exceeded 10% in 1999 and other costs are allocated among the
segments utilizing various allocation factors which include revenues,
equipment usage and maintenance, accounts receivable and other estimates.
Substantially all of the Company's capital expenditures are made by the
Van/Intermodal division with assets transferred to the dedicated contract
division as needed.1998. A summary of
othercertain segment information is presented below (in millions):
ASSETS
----------------------------------------------------------------------------------
2000 1999 1998
1997
----------- ----------- --------------------- ---------- ----------
Truck $ 871 -- --
Intermodal 128 -- --
---------- ---------- ----------
Van/Intermodal $ 900 1,025 931999 826 925
Logistics 33 73 43 29
Dedicated Contract Services 138 95 62
42
Other (includes corporate) 59 41 20
----------- ----------- -----------corporate and
intersegment eliminations) 62 133 141
---------- ---------- ----------
Total $ 1,232 1,127 1,171
1,022
=========== =========== ===================== ========== ==========
REVENUES
--------------------------------------
2000 1999 1998
---------- ---------- ----------
Truck $ 834 763 734
Intermodal 681 652 645
---------- ---------- ----------
Van/Intermodal 1,515 1,415 1,379
Logistics 727 388 317
Dedicated Contract Services 479 320 212
Other -- -- 8
---------- ---------- ----------
Total segment revenues 2,721 2,123 1,916
Inter-segment eliminations (63) (78) (74)
Less revenues of equity method investee (498) -- --
---------- ---------- ----------
Consolidated statements of earnings amount $ 2,160 2,045 1,842
========== ========== ==========
39 (Continued)
37
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIESSUBSIDAIRIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 1998 and 19971998
REVENUES
--------------------------------------------OPERATING INCOME
--------------------------------------
2000 1999 1998
1997
----------- ----------- --------------------- ---------- ----------
Truck $ (7) -- --
Intermodal 37 -- --
---------- ---------- ----------
Van/Intermodal $ 1,415 1,379 1,15330 44 81
Logistics 388 317 2549 11 8
Dedicated Contract Services 320 212 15128 24 17
Other (3) (5) (4)
---------- ---------- ----------
Total segment operating income 64 74 102
Less operating income of equity method investee
(1) -- 8 60
----------- ----------- -----------
Subtotal 2,123 1,916 1,618
Inter-segment eliminations (78) (74) (64)
----------- ----------- -----------
Total--
---------- ---------- ----------
Consolidated statements of earnings amount $ 2,045 1,842 1,554
=========== =========== ===========
OPERATING INCOME
--------------------------------------------63 74 102
========== ========== ==========
DEPRECIATION EXPENSE
--------------------------------------
2000 1999 1998
1997
----------- ----------- --------------------- ---------- ----------
Truck $ 65 -- --
Intermodal 23 -- --
---------- ---------- ----------
Van/Intermodal $ 44 81 2888 113 109
Logistics 11 8 6
Dedicated Contract Services 24 17 11
Other (2) (3) (2)
----------- ----------- -----------
Total $ 77 103 43
=========== =========== ===========
NET DEPRECIATION EXPENSE
--------------------------------------------
1999 1998 1997
----------- ----------- -----------
Van/Intermodal $ 113 106 96
Logistics 1-- 1 1
Dedicated Contract Services 36 26 18
13
Other 10 11 21
----------- ----------- -----------9 12
---------- ---------- ----------
Total $ 150 136 131
=========== =========== ===========134 149 140
========== ========== ==========
The Company announced in late 1999, a decision to split the
Van/Intermodal business into separate intermodal and truck business
segments. This segregation is in progress and the Company intends to
begin reporting on four segments (Intermodal, Truck, Logistics and
Dedicated Contract Services) in the first quarter of 2000.40 (Continued)
38
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIESSUBSIDAIRIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
and 1997
(10)(11) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Operating results by quarter for the years ended December 31, 19992000 and
19981999 are as follows (in thousands, except per share data):
QUARTER
-----------------------------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
------------ ------------- ------------ ----------------------- ----------- ----------- -----------
2000:
Operating revenues $ 533,556 583,500 509,422 533,969
=========== =========== =========== ===========
Operating income $ 9,554 20,347 15,817 17,694
=========== =========== =========== ===========
Net earnings $ 5,013 11,054 9,123 10,885
=========== =========== =========== ===========
Basic earnings per share $ .14 .31 .26 .31
=========== =========== =========== ===========
Diluted earnings per share $ .14 .31 .26 .31
=========== =========== =========== ===========
1999:
Operating revenues $ 470,244 497,554 523,901 553,374
============ ============= ============ ======================= =========== =========== ===========
Operating income $ 24,174 24,240 14,975 14,041
============ ============= ============ ======================= =========== =========== ===========
Net earnings $ 10,585 10,785 4,958 5,581
============ ============= ============ ======================= =========== =========== ===========
Basic earnings per share $ .30 .30 .14 .16
============ ============= ============ ======================= =========== =========== ===========
Diluted earnings per share $ .29 .30 .14 .16
============ ============= ============ ============
1998:
Operating revenues $ 413,466 460,985 473,388 493,789
============ ============= ============ ============
Operating income $ 21,658 31,613 24,424 25,349
============ ============= ============ ============
Net earnings $ 9,483 15,624 10,848 10,882
============ ============= ============ ============
Basic earnings per share $ .27 .44 .30 .31
============ ============= ============ ============
Diluted earnings per share $ .26 .42 .30 .30
============ ============= ============ ======================= =========== =========== ===========
3941 (Continued)
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No reports on Form 8-K have been filed within the twenty-four months prior
to December 31, 19992000 involving a change of accountants or disagreements on
accounting and financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS
The schedule of directors is hereby incorporated by reference from the
Notice and Proxy Statement Forfor Annual Stockholder's Meeting of Stockholders to be held April
20, 200026, 2001 set forth under section entitled "Proposal One Election of Directors".
EXECUTIVE OFFICERS
Information with respect to executive officers of the Company is set forth
in Item 4 of this Report under the caption "Executive Officers of the Company".
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required for Items 11 and 12 is hereby incorporated by
reference from the Notice and Proxy Statement Forfor Annual Stockholders' Meeting of Stockholders
to be held on April 20, 200026, 2001 set forth under sections entitled "Stock Ownership,"Principal
Stockholders of the Company," "Report of the Compensation Committee, on Executive Compensation," "2000 Performance
Based"2001
Performance-based Compensation," and "Compensation Committee Interlocks and
Insider Participation."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required for Item 13 is hereby incorporated by reference
from Note (7) Related Party Transactions AND NOTE (9) INVESTMENT IN AFFILIATED
COMPANY of the Notes to Consolidated Financial Statements and from the Notice
and Proxy Statement Forfor Annual Stockholders' Meeting of Stockholders to be held on April 20, 200026,
2001 set forth under the section entitled "Compensation Committee Interlocks and
Insider Participation."
PART IV
ITEM 14. EXHIBITS
The following documents are filed as part of this report:
(a) Exhibits
The response to this portion of Item 14 is submitted as a separate section
of this report ("Exhibit Index").
4042
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant had duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Lowell,
Arkansas, on February 28,2000.March 9, 2001.
J.B. HUNT TRANSPORT SERVICES, INC.
(Registrant)
By: /s/ Kirk Thompson
-------------------------------------------------------------------------------------
Kirk Thompson
President and Chief Executive Officer
By: /s/ Jerry W. Walton
-------------------------------------------------------------------------------------
Jerry W. Walton
Executive Vice President, Finance and Administration,
Chief Financial Officer
By: /s/ Donald G. Cope
-------------------------------------------------------------------------------------
Donald G. Cope
Senior Vice President, Controller,
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ John A. Cooper, Jr. Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors
John A. Cooper, Jr.
/s/ Wayne Garrison Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors (Chairman)
Wayne Garrison
/s/ Gene George Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors
Gene George
/s/ Thomas L. Hardeman Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors
Thomas L. Hardeman
/s/ J. Bryan Hunt, Jr. Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors (Vice Chairman)
J. Bryan Hunt, Jr.
/s/ J.B. Hunt Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors (Senior Chairman)
J.B. Hunt
/s/ Johnelle Hunt Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors (Corporate
Johnelle Hunt Secretary)
/s/ Lloyd E. Peterson Member of the Board February 28, 2000
- -------------------------------------------- of Directors
Lloyd E. Peterson
/s/ Kirk Thompson Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors (President and
Kirk Thompson Chief Executive Officer)
/s/ John A. White Member of the Board February 28, 2000March 9, 2001
- -------------------------------------------------------------------------- of Directors
John A. White
4143
EXHIBIT INDEX
Exhibit
Number Description
- --------------------------------------------------------------------------------
3A The Company's Amended and Restated Articles of Incorporation dated May
19, 1988 (incorporated by reference from Exhibit 4A of the Company's
S-8 Registration Statement filed April 16, 1991; Registration Statement
Number 33-40028).
3B The Company's Amended Bylaws dated September 19, 1983 (incorporated by
reference from Exhibit 3C of the Company's S-1 Registration Statement
filed February 7, 1985; Registration Number 2-95714).
10A Material Contracts of the Company (incorporated by reference from
Exhibits 10A-10N of the Company's S-1 Registration Statement filed
February 7, 1985; Registration Number 2-95714).
10B The Company has an Employee Stock Purchase Plan filed on Form S-8 on
February 3, 1984 (Registration Number 2-93928), and a Management
Incentive Plan filed on Form S-8 on April 16, 1991 (Registration
Statement Number 33-40028). The Management Incentive Plan is
incorporated herein by reference from Exhibit 4B of Registration
Statement 33-40028. The Company amended and restated its Employee
Retirement Plan on Form S-8 (Registration Statement Number 33-57127)
filed December 30, 1994. The Employee Retirement Plan is incorporated
herein by reference from Exhibit 99 of Registration Statement Number
33-57127. The Company amended and restated its Management Incentive
Plan on Form S-8 (Registration Statement Number 33-40028) filed July 7,
1995. The Company filed the Chairman's Stock Option Incentive Plan as
part of a definitive 14A on March 26, 1996.
21 Subsidiaries of J.B. Hunt Transport Services, Inc.
- J.B. Hunt Transport, Inc., a Georgia corporation
- L.A., Inc., an Arkansas corporation
- J.B. Hunt Corp., a Delaware corporation
- J.B. Hunt Logistics, Inc., an Arkansas corporation
- Comercializadora Internacional de Cargo S.A. De C.V., a
Mexican corporation
- Hunt Mexicana, S.A. de C.V., a Mexican corporation
- Servicios de Logistica de Mexico, S.A. de C.V., a
Mexican corporation
- Servicios Administratios de Logistica, S.A. de C.V., a
Mexican corporation
- Asesoria Administrativa de Logistica, S.A. de C.V., a
Mexican corporation.
- FIS, Inc., a Nevada corporation
23 Consent of KPMG LLP
27 Financial Data Schedule for the year ended December 31, 1999.
42Exhibit
Number Description
- --------------------------------------------------------------------------------
3A The Company's Amended and Restated Articles of Incorporation dated May
19, 1988 (incorporated by reference from Exhibit 4A of the Company's
S-8 Registration Statement filed April 16, 1991; Registration Statement
Number 33-40028).
3B The Company's Amended Bylaws dated September 19, 1983 (incorporated by
reference from Exhibit 3C of the Company's S-1 Registration Statement
filed February 7, 1985; Registration Number 2-95714).
10A Material Contracts of the Company (incorporated by reference from
Exhibits 10A-10N of the Company's S-1 Registration Statement filed
February 7, 1985; Registration Number 2-95714).
10B The Company has an Employee Stock Purchase Plan filed on Form S-8 on
February 3, 1984 (Registration Number 2-93928), and a Management
Incentive Plan filed on Form S-8 on April 16, 1991 (Registration
Statement Number 33-40028). The Management Incentive Plan is
incorporated herein by reference from Exhibit 4B of Registration
Statement 33-40028. The Company amended and restated its Employee
Retirement Plan on Form S-8 (Registration Statement Number 33-57127)
filed December 30, 1994. The Employee Retirement Plan is incorporated
herein by reference from Exhibit 99 of Registration Statement Number
33-57127. The Company amended and restated its Management Incentive
Plan on Form S-8 (Registration Statement Number 33-40028) filed July 7,
1995. The Company filed the Chairman's Stock Option Incentive Plan as
part of a definitive 14A on March 26, 1996.
21 Subsidiaries of J.B. Hunt Transport Services, Inc.
- J.B. Hunt Transport, Inc., a Georgia corporation
- L.A., Inc., an Arkansas corporation
- J.B. Hunt Corp., a Delaware corporation
- J.B. Hunt Logistics, Inc., an Arkansas corporation
- Comercializadora Internacional de Cargo S.A. De C.V., a
Mexican corporation
- Hunt Mexicana, S.A. de C.V., a Mexican corporation
- Servicios de Logistica de Mexico, S.A. de C.V., a Mexican
corporation
- Servicios Administratios de Logistica, S.A. de C.V., a
Mexican corporation
- Asesoria Administrativa de Logistica, S.A. de C.V., a
Mexican corporation.
- FIS, Inc., a Nevada corporation
23 Consent of KPMG LLP
44