FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1995March 31, 1996
OR
/ /[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBERCommission file number 0-11757
J.B. HUNT TRANSPORT SERVICES, INC.
(Exact name of registrant as specified in its charter)
ARKANSASArkansas 71-0335111
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
615 J.B. HUNT CORPORATE DRIVE, LOWELL, ARKANSASHunt Corporate Drive, Lowell, Arkansas 72745
(Address of principal executive offices, and Zip Code)
(501) 820-0000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days.
Yes X No
--- ---
THE NUMBER OF SHARES OF THE COMPANY'SThe number of shares of the Company's $.01 PAR VALUE COMMON STOCK OUTSTANDING
ON SEPTEMBER 30, 1995 WAS 38,692,399.par value common stock outstanding on
March 31, 1996 was 38,046,421
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The interim consolidated financial statements contained herein reflect all
adjustments which, in the opinion of management, are necessary for a fair
statement of the financial condition, results of operations and cash flows for the
periods presented. They have been prepared in accordance with Rule 10-01 of
Regulation S-X and do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements.
Operating results for the three and nine month periodsperiod ended September 30, 1995March 31, 1996 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1995.1996.
The interim consolidated financial statements have been reviewed by KPMG
Peat Marwick LLP, independent public accountants.
These interim consolidated financial statements should be read in
conjunction with the Company's latest annual report and Form 10-K for the year
ended December 31, 1994.
Index
-----1995.
INDEX
Consolidated Statements of Earnings for the Three
and Nine Months Ended September 30, 1995March 31, 1996 and 1994................................1995.................................. Page 3
Consolidated Balance Sheets as of
September 30, 1995March 31, 1996 and December 31,1994..........................31,1995................................... Page 4
Consolidated Statements of Cash Flows for the
NineThree Months Ended September 30, 1995March 31, 1996 and 1994....................1995............................ Page 5
Notes to Consolidated Financial Statements
as of September 30, 1995.........................................March 31, 1996.................................................. Page 6
Review Report of KPMG Peat Marwick LLP............................ PageLLP....................................Page 8
ITEM 2.
Management's Discussion and Analysis of Results of Operations
and Financial Condition..........................................Condition............................................... Page 9
2
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF EARNINGSConsolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
- ---------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31
- - --------------------------------------------------------------------------------
1996 1995
1994 1995 1994
- ---------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Operating revenues $355,114 $313,911 $993,757 $876,308$ 354,014 $ 309,424
Operating expenses:expenses
Salaries, wages and employee benefits 119,082 103,411 339,686 296,575116,436 105,117
Purchased transportation 101,451 77,173 262,265 205,94797,971 77,452
Fuel and fuel taxes 35,818 32,712 105,956 97,18040,134 35,582
Depreciation 30,974 28,028 96,751 78,38434,144 32,023
Operating supplies and expenses 24,875 20,952 72,192 59,52422,598 20,987
Insurance and claims 14,074 9,242 36,589 28,30413,165 10,541
General and administrative expenses 7,463 6,312
Operating taxes and licenses 6,535 7,122 19,390 19,363
General and administrative expenses 7,893 7,017 23,794 20,7067,162 5,879
Communication and utilities 4,696 3,228 10,466 9,0964,509 1,793
- ---------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Total operating expenses 345,398 288,885 967,089 815,079343,582 295,686
- ---------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Operating income 9,716 25,026 26,668 61,22910,432 13,738
Interest expense 6,135 5,257 18,720 14,275
Other non-operating expense 660 -- 660 --5,911 5,976
- ---------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Earnings before income taxes 2,921 19,769 7,288 46,9544,521 7,762
Income taxes 1,081 7,509 2,697 17,3931,718 2,872
- ---------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Net earnings $1,840 $12,260 $4,591 $29,561$ 2,803 $ 4,890
- ---------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Common shares outstanding 38,669 38,616 38,598 38,55338,074 38,555
- ---------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Earnings per share: $0.05 $0.32 $0.12 $0.77share $ 0.07 $ 0.13
- ---------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
3
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
- -------------------------------------------------------------------------------------
September 30,- --------------------------------------------------------------------------------
MARCH 31, 1996 DECEMBER 31, 1995
December 31, 1994
- -------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and temporary investments $ 4,368-- $ 2,1424,260
Accounts receivable 156,601 138,295163,001 143,002
Prepaid expenses 24,082 32,71322,193 29,645
Deferred income taxes 8,103 8,08313,967 10,171
- -------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Total current assets 193,154 181,233199,161 187,078
- -------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Property and equipment 1,166,571 1,089,2351,197,091 1,184,808
Less accumulated depreciation 366,838 299,539386,801 375,798
- -------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Net property and equipment 799,733 789,696810,290 809,010
- - --------------------------------------------------------------------------------
Other 25,616 22,77018,815 20,694
- -------------------------------------------------------------------------------------
$1,018,503- --------------------------------------------------------------------------------
$ 993,6991,028,266 $ 1,016,782
- -------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portionmaturities of long-term debt $ 74,93043,250 $ 68,07530,310
Trade accounts payable 76,712 48,84788,001 86,466
Claims accruals 40,361 34,24833,654 38,014
Accrued expenses 23,581 24,03128,762 25,986
Other current liabilities 128 2,7204,079 3,823
- -------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Total current liabilities 215,712 177,921197,746 184,599
- -------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Long-term debt 293,950 299,243339,392 339,015
Claims accruals 16,750 16,75013,500 13,500
Deferred income taxes 118,430 121,887123,377 122,729
Stockholders' equity 373,661 377,898354,251 356,939
- -------------------------------------------------------------------------------------
$1,018,503- --------------------------------------------------------------------------------
$ 993,6991,028,266 $ 1,016,782
- -------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
4
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
NINE- - --------------------------------------------------------------------------------
THREE MONTHS ENDED
SEPTEMBER 30
(In thousands) (Unaudited)MARCH 31
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
1996 1995
1994
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 4,5912,803 $ 29,5614,890
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation net of gain on disposition
of equipment 96,751 78,38434,144 32,023
Deferred income tax expense (benefit) (3,477) 7,046taxes (3,148) (2,053)
Tax benefit of stock options exercised 316 718162 264
Changes in assets and liabilities:
Accounts receivable (18,306) (901)(19,999) (6,842)
Prepaid expenses 8,631 (445)7,452 6,355
Trade accounts payable 27,865 28,1691,535 20,515
Claims accruals 6,113 (526)
Other(4,360) 1,246
Accrued expenses and other current
liabilities (3,042) 3,9923,032 (230)
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Net cash provided by operating
activities 119,442 145,99821,621 56,168
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and equipment (145,400) (246,421)(50,601) (48,408)
Proceeds from sale of equipment 38,612 60,04015,177 15,196
Increase in other assets (8,464) (7,206)555 (4,149)
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Net cash used in investing activities (115,252) (193,587)(34,869) (37,361)
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (repayments) of long-term debt 1,562 50,184short-term
obligations 13,317 (13,471)
Proceeds from sale of treasury stock 2,263 2,615550 427
Repurchase of treasury stock (2,998) --
Dividends paid (5,789) (5,780)(1,881) (1,927)
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (1,964) 47,0198,988 (14,971)
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Net increase (decrease) in cash 2,226 (570)and temporary
investments (4,260) 3,836
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Cash -and temporary investments at beginning
of period 4,260 2,142
3,390
- ------------------------------------------------------------------------------ --------------------------------------------------------------------------------
Cash -and temporary investments at end of
period $ 4,3680 $ 2,8205,978
- -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Supplemental disclosure of cash flow
information:
Cash paid (refunded) during the period for:
Interest $ 19,0565,255 $ 15,5636,833
Income Taxes 3,050 8,133(1,114) 1,875
- -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
5
J.B. HUNT TRANSPORT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) LONG-TERM DEBT
Long-term debt consists of (in thousands):
9/30/95 12/31/94
------- --------
Commercial paper $189,133 $182,595
Senior notes payable, interest at
6.25% payable semiannually 99,747 99,723
Senior notes payable, interest at
7.75% payable semiannually 10,000 10,000
Senior notes payable, interest at
7.84% payable semiannually 20,000 25,000
Senior subordinated notes, interest
at 7.80% payable semiannually 50,000 50,000
-------- --------
368,880 367,318
Less current maturities (74,930) (68,075)
-------- --------
$293,950 $299,2433/31/96 12/31/95
------- --------
Commercial paper $158,250 $145,310
Senior notes payable, interest at 6.25%
payable semiannually 100,000 100,000
Senior notes payable, interest at 7.75%
payable semiannually 5,000 5,000
Senior notes payable, interest at 7.84%
payable semiannually 20,000 20,000
Senior subordinated notes, interest at 7.80%
payable semiannually 50,000 50,000
Senior notes payable, interest at 6.25%
payable semiannually 25,000 25,000
Senior notes payable, interest at 6.00%
payable semiannually 25,000 25,000
-------- --------
383,250 370,310
Less current maturities (43,250) (30,310)
Unamortized discount (608) (985)
-------- --------
$339,392 $339,015
-------- --------
-------- --------
The Company is authorized to issue up to $250 million in notes under its
commercial paper note program. TheThese notes are supported by two credit
agreements with a group of banks. One agreement for $125 million expires March
31, 199627, 1997 and $125 million expires March 31, 1997.1999.
The 6.25% senior notes were issued on September 1, 1993 and are due on
September 1, 2003.
The 7.75% senior notes were issued on October 1, 1991 and are payable in
five equal annual installments beginning October 31, 1992.
The 7.84% senior notes were issued on March 31, 1992 and are payable in
five equal annual installments beginning March 31, 1995.
The 7.80% senior subordinated notes were issued on October 30, 1992 and are
payable in five equal annual installments beginning October 30, 2000.
6
(2)The 6.25% senior notes were issued on November 17, 1995 and are payable at
maturity on November 17, 2000.
The 6.00% senior notes were issued on December 12, 1995 and are payable at
maturity on December 12, 2000.
2) CAPITAL STOCK
The Company maintains a Management Incentive Plan that provides various
vehicles to compensate key employees with Company common stock. A summary of
the restricted and nonstatutorynon-statutory options to purchase Company common stock
follows:
Number of
Number of Option price shares
shares per share exercisable
-------- ------------ -----------
Outstanding at December 31, 1994 1,334,461 $6.00 - 24.63 399,536
-------
-------
Granted 1,487,500 15.63 - 19.25
Exercised (113,980) 6.00 - 15.33
Terminated (100,750) 10.83 - 23.00
--------- -------------
Outstanding at September 30, 1995 2,607,231 9.33 - 24.63 418,906
--------- ------------- -------
--------- -------------Number of
Number of Option price shares
shares per share exercisable
------ --------- -----------
Outstanding at December 31, 1995 2,725,731 $ 9.33 - 24.63 415,606
-------
-------
Granted 75,000 15.63 - 19.25
Exercised (112,581) 6.00 - 13.17
Terminated (110,450) 13.17 - 22.75
-------- -------------
Outstanding at March 31, 1996 2,577,700 $ 9.33 - 24.63 285,375
--------- -------------- -------
--------- -------------- -------
On October 19, 1995,April 16, 1996, the Company's Board of Directors declared a regular
quarterly cash dividend of $.05 per share payable on November
22, 1995May 20, 1996 to
stockholders of record on NovemberMay 3, 1995.1996.
7
INDEPENDENT AUDITORS' REPORT
The Board of Directors
J.B. Hunt Transport Services, Inc.:
We have reviewed the condensed consolidated balance sheet of J.B. Hunt Transport
Services, Inc. and subsidiaries as of September 30, 1995,March 31, 1996, and the related condensed
consolidated statements of earnings and cash flows for the three-month and nine-month periods
ended September 30,March 31, 1996 and 1995, and 1994, in accordance with standards established by the
American Institute of Certified Public Accountants.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of J.B. Hunt Transport Services, Inc.
and subsidiaries as of December 31, 1994,1995, and the related consolidated
statements of earnings,operations, stockholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 7, 1995,9, 1996, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1994,1995, is fairly presented, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
/s/ KPMG Peat Marwick LLP
-------------------------
Little Rock, Arkansas
October 16, 1995April 12, 1996
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following discussion should be read in conjunction with the attached
interim consolidated financial statements and notes thereto, and with the
Company's audited consolidated financial statements and notes thereto for the
calendar year ended December 31, 1994.1995.
RESULTS OF OPERATIONS
The following table sets forth the change in amounts and percentage change
between the thirdfirst quarter of 19951996 and the comparable period in 19941995 of certain
revenue, expense and operating items.
Three Months Ended September 30,March 31, 1996 vs. 1995
vs. 1994
(In(in thousands except tractor data)
Increase
(Decrease) %
in amounts change
---------- ------
Operating revenues $41,203 13%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Average number of tractors in the fleet 484 7%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Operating expenses:
Salaries, wages and employee benefits $15,671 15%
Purchased transportation 24,278 31%
- ---------------------------------------------------------------------------
Fuel and fuel taxes 3,106 9%
Depreciation 2,946 11%
- ---------------------------------------------------------------------------
Operating supplies and expenses 3,923 19%
Insurance and claims 4,832 52%
- ---------------------------------------------------------------------------
Operating taxes and licenses (587) (8%)
General and administrative expenses 876 12%
Communication and utilities 1,468 45%
- ---------------------------------------------------------------------------
Total operating expenses 56,513 20%
- ---------------------------------------------------------------------------
Operating income (15,310) (61%)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Increase
(Decrease) %
in amounts Change
---------- ------
Average number of tractors in the fleet 273 4%
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Operating revenues $44,590 14%
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Operating expenses:
Salaries, wages and employee benefits $11,319 11%
Purchased transportation 20,519 26%
- - --------------------------------------------------------------------------------
Fuel and fuel taxes 4,552 13%
Depreciation 2,121 7%
- - --------------------------------------------------------------------------------
Operating supplies and expenses 1,611 8%
Insurance and claims 2,624 25%
- - --------------------------------------------------------------------------------
General and administrative expenses 1,151 18%
Operating taxes and licenses 1,283 22%
Communication and utilities 2,716 151%
- - --------------------------------------------------------------------------------
Total operating expenses $47,896 16%
- - --------------------------------------------------------------------------------
Operating Income ($3,306) (24)%
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
The following discussion relates to the table set forth above and the
attached interim consolidated financial statements for the quarter ended September 30, 1995March
31, 1996 and 1994.1995.
9
OPERATING REVENUES
Operating revenues for the thirdfirst quarter of 19951996 increased 13approximately
$45 million, or 14 percent, to $355.1$354 million, from $313.9$309 million in the thirdfirst
quarter of 1994.1995. The average number of total tractors in the fleet increased 74
percent during the same period. The truckload market remained softincrease in revenue between quarters
includes the following by type of freight:
Increase in Revenue
First Quarter 1996 vs. First Quarter 1995
(millions of dollars)
Intermodal $27
Dedicated Contract 8
Logistics Management 5
Other, net 5
----
$45
----
----
Intermodal volume continued to grow with loads up 26 percent during the
thirdfirst quarter of 1995. This soft demand combined with excess equipment
capacity resulted in lower truck and intermodal rates. Lower revenue per
loaded mile, in turn, reduced margins compared1996. The market also continued to respond favorably to the
thirdCompany's dedicated contract and logistics management service offerings.
Dedicated and logistics arrangements typically involve a written contract to
provide revenue equipment and/or management services for a period of one year or
more. Revenues and earnings were negatively impacted during the first quarter
of 1994.
Revenue and load count for core dry van operations during1996 by a two to three percent decline in general freight rates, depending
upon the current quarter
were essentially equal to 1994. Within dry van operations, intermodal load
count increased 24 percent for the third quartertype of 1995, while truck only
load count decreased 11 percent.
9
service.
OPERATING EXPENSES
Total operating expenses for the thirdfirst quarter of 19951996 increased
$56.5approximately $48 million, or 2016 percent over the comparable period of 1994.1995.
Operating income declined $15.3$3.3 million to $9.7$10.4 million. In addition to soft demand andthe
decline in freight rates, operating income was reduced by lower revenue per mile, a numbergains on
equipment dispositions. Equipment gains were only $125,000 in the first quarter
of expense categories increased more rapidly than
revenue. The continued increase of intermodal and third party logistics
volume changes the typical relationship of certain expense categories to
operating revenues. This business results1996, compared with $1.6 million in revenue growth since1995. Although the Company billsplans to
continue trading and disposing of revenue equipment, gains are not expected to
be significant during the customer for freight transportation services. However,
Company equipment and driver related expenses such as fuel and fuel taxes,remainder of 1996. Equipment gains offset
depreciation and driver wages may not remain proportional to revenue. Atexpense in the same time, purchased transportation may increase significantly reflecting
payments to railroads and third party carriers. The Company believes that
increased intermodal and logistics operations may ultimately impact expense
and margin trends. However, no material specific trends or components have
yet been identified which significantly impact the resultsConsolidated Statements of operations.Earnings.
Salaries, wages and employee benefits increased 1511 percent during the first
quarter of 1996, reflecting a pay increase implementedeffective in April, 1995 for the
Company's least experienced drivers. Higher worker's compensation, medical and retirement plan costs
also contributed to this increase. Purchased transportation expense increased
31
percent,26 percent. This increase primarily duereflects payments to continued growth ofrailroads and
third-party companies for intermodal and third party
logistics volume.transportation services provided to the
Company. Fuel and fuel taxes increased 913 percent, essentially in
line with the 7 percent growth in the tractor fleet, combined with slightly
higher fuel cost per gallon. Depreciation expense increased 11 percent,
reflectingprimarily due to a 9 percent
increase in cost per gallon. Fuel cost per gallon continued to increase rapidly
in March and April of 1996. The Company initiated a fuel surcharge in April to
help offset this cost increase, however, fuel costs will most likely reduce
earnings during the trailing fleetsecond quarter of 1996.
10
Insurance and on-board computer
equipment installedclaims expense increased 25 percent. Management was
disappointed with a significant increase in all road tractors. Depreciationthe number of accidents and cargo
claims and has focused on preventative measures. General and administrative
expense also reflects
net gain on the disposition of revenue equipment which approximated $3.5
million in each quarter.
Operating supplies and expenses increased 1918 percent, primarily due to higher tractor maintenancedriver recruiting and
repairtraining expenses. The Company has electedOperating taxes and licenses increased 22 percent, partly
due to retain certain older model tractors.higher state licensing and use tax expense. The significant increase in
insurance
and claims expense was due primarily to two serious accidents which occurred
during the third quarter of 1995. Operating taxes and licenses declined, in
part, due to growth of intermodal and third-party logistics, and certain
credits and refunds from taxing authorities. The general and administrative
expense increase reflects higher reserves for certain questionable or
uncollectible accounts receivable. The 45 percent increase in communicationscommunication and utilities was primarily due to certain rate reductions and
one-time credits recognized during the thirdfirst quarter of 1994.
Interest expense increased by $.9 million, primarily related to higher
levels of debt associated with the acquisition of new containers and chassis.
Other non-operating expense relates to losses incurred in connection with
non-operating investments which were recognized according to the equity
method of accounting. The effective income tax rate was 37 percent in 1995
and 38 percent in 1994.1995.
LIQUIDITY AND CAPITAL RESOURCES
This discussion of corporate liquidity and capital resources should be read
in conjunction with information presented in the Consolidated Statements of Cash
Flows and the Consolidated Balance Sheets.
Net cash provided by operating activities forwas approximately $22 million
during the nine months ending
September 30, 1995 was $119.4 million,first quarter of 1996 compared to $146.0with $56 million in 1994.
Cash flow1995. This
decrease in net cash provided was negatively impacted by lower net earnings and increased
accounts receivable. Theprimarily due to an increase in accounts
receivable was primarily a
resultand cash payments made during the first quarter of higher operating revenues, since the average time to collect was
similar1996 for both periods. The Company's current
10
ratio was 1.02 atclaims
accruals and payables for revenue equipment purchases.
SELECTED BALANCE SHEET DATA
As of
-------------------------------------------------
March 31, 1996 December 31, 1994, .80 at June 30, 1995 and .90 at
September 30, 1995. The primary reason for the improved currentMarch 31, 1995
-------------- ----------------- --------------
Working capital ratio from
June, 19951.01 1.01 .97
Current maturities of long-
term debt (millions) $43 $30 $61
Total debt (millions) $383 $369 $354
Total debt to the current quarter wasequity 1.08 1.03 .93
Total debt as a decrease in the current portionpercentage
of long-term debt. The Company expects its short-term liquidity measurements to
fluctuate slightly withtotal capital spending levels, funding programs and
earnings..52 .51 .48
Net additions to property and equipment were $106.8during the first quarter of 1996
totaled $35.4 million forcompared with $33.2 million in 1995. While total debt
levels have increased during the nine months ended September 30, 1995, compared to $186.4 in 1994. This
decrease primarily reflects lower capital expenditures for trailing
equipment. The dry van fleet consisted of 82 percent new-design containers
and chassis at September 30, 1995.past year, the Company's liquidity has not
changed significantly. The Company filed a prospectus supplement with the Securities and Exchange
Commission on June 14, 1995. The supplement enables the Company to sell up
to $150 million of medium-term notes, with maturities of nine months or moregenerates significant cash from the date of issuance. To date no sales have been made related to this
supplement.
The Company plans to fund future capital expenditures with cash provided
by operating
activities and additional borrowings, if required.has borrowing capacity to meet its committed and contemplated
cash expenditures.
11
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None applicable.
ITEM 2. CHANGES IN SECURITIES
None applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None applicable.
ITEM 5. OTHER INFORMATION
The Company announced on October 19, 1995 thatApril 22, 1996 the Boardcompletion of Directors had authorized the repurchasea combination
of up to 1.0 million sharesits Parcel Management Services division into CTC Distribution
Services, L.L.C. (CTC) of outstanding common stock. This announcement was in addition to
a Board authorization in October, 1994 to repurchase up to 500,000
shares, of which approximately 410,000 have been purchased.St. Paul Minnesota. The Company intends to hold these sharesreceived a 5
percent ownership stake in treasuryCTC with warrants that allow an increase in
its ownership position in the future. The transaction will be
accounted for general
corporate purposes, which may include employee stock options and
restricted stock awards.
11
At an October 19, 1995 meeting, the Boardas a contribution of Directors established
a special non-qualified stock option plan to provide incentive
compensation to the new Chairman of the Board. The plan must be
approved by the shareholders of the Company at the annual meeting
in May of 1996. The plan allows the Chairman the option to purchase
up to 2.5 million shares of the company's $0.01 par value common
stock at a price of $17.63. These options are exercisable after
five years, exceptassets for special circumstances in which the options
vest earlier. The options must be exercised within one year of
vesting and all unexercised options will terminate.CTC ownership units.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J.B. HUNT TRANSPORT SERVICES, INC.
DATE: November 1, 1995May 7, 1996 BY: /s/ Kirk Thompson
--------------------------- -------------------------------------------------------- --------------------------------
Kirk Thompson
President and
Chief Executive Officer
DATE: November 1, 1995May 7, 1996 BY: /s/ Jerry W. Walton
-------------------------------------------------- ---------------------------------
Jerry W. Walton
Executive Vice President, Finance
and Chief Financial Officer
13