On February 28, 2002,2003, the high and low sales prices for the Company’sour common stock as reported by the NASDAQ were $25.24$24.91 and $23.40,$24.51, respectively. As of February 28, 2002, the Company2003, we had 1,4401,378 stockholders of record.

DIVIDEND POLICY

On January 21,  2000, theour Board of Directors declared a quarterly dividend of $.05 per share,  paid on February 17, 2000 to shareholders of record on February 3, 2000. The CompanyWe declared and paid cash dividends of $.20 per share in 1999 and 1998.  On February 16, 2000, theour Board of Directors announced a decision to discontinue itsour policy of paying quarterly cash dividends.  No dividends have been paid since February of 2000.

79

ITEM 6.   SELECTED FINANCIAL DATA

(Dollars in millions, except per share amounts)

(1) As a result of a change in method of accounting for insurance reserves, retained earnings was restated as of December 31, 1996. See Note 12 of the Notes to Consolidated Financial Statements.

(2)  The impact of the change in accounting for insurance reserves as discussed in Note 12 of the Notes to Consolidated Financial Statements would have resulted in an increase to net earnings of approximately $6.8 million in fiscal 1997.  Accordingly, operating income, net earnings and diluted earnings per share have been restated by approximately $11.0 million, $6.8 million and 19 cents, respectively.

Percentage of Operating Revenue

The following table sets forth certain operating data of the Company.data.

810

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

FORWARD-LOOKING STATEMENTS

This report contains statements that may be considered to be forward-looking or predictions concerning future operations or events.  Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are inherently uncertain, subject to risks and should be viewed with caution.  These statements are based on management’sour belief or interpretation of information currently available.  Shareholders and prospective investors are cautioned that actual results and future events may differ materially from the forward-looking statements as a result of many factors.  Among all the factors and events that are not within the Company’sour control and could have a material impact on future operating results include:  general economic and business conditions, competition and competitive rate fluctuations, cost and availability of diesel fuel, ability to attract and retain qualified drivers, a loss of one or more major customers, interference with or termination of our relationships with certain railroads, insurance costs and availability, claims expense, retention of key employees, terrorists attacks or actions, acts of war, cost and availability of diesel fuel, adverse weather conditions, competitive rate fluctuations, availability of drivers,new or different environmental or other laws and regulations, increased costs for new revenue equipment resale or trade valuesdecreases in the value of used equipment and the ability of revenue equipment manufacturers to perform in accordance with agreements for guaranteed equipment trade-in values.  Current and future changes in fuel prices could result in significant fluctuations of quarterly earnings.  The above is not an all-inclusive list.  Financial and operating results of the CompanyJBHT may fluctuate as a result of these and other risk factors or events as described from time to time in Companyour filings with the Securities and Exchange Commission.  The Company assumesWe assume no obligation to update any forward-looking statement to the extent it becomeswe become aware that it will not be achieved for any reason.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Certain amounts included in or affecting the Company’sour financial statements and related disclosures must be estimated, requiring certain assumptions with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared.

The preparation of our financial statements in conformity with generally accepted accounting principles requires managementus to make estimates and assumptions that affect:

•                  the amounts reported for assets and liabilities;

•                  the disclosure of contingent assets and liabilities at the date of the financial statements; and

•                  the amounts reported for revenues and expenses during the reporting period.

Therefore, the reported amounts of assets and liabilities, revenues and expenses and associated disclosures with respect to contingent assets and obligations are necessarily affected by these estimates.  Management evaluatesWe evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with experts and other methods considered reasonable in the particular circumstances.  Nevertheless, actual results may differ significantly from estimates.  Any effects on business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

In preparing our financial statements and related disclosures, managementwe must use estimates in determining the economic useful lives of assets, provisions for uncollectible accounts receivable, exposures under self-insurance plans and various other recorded or disclosed amounts.  However, management believeswe believe that certain accounting policies are of more significance in the financial statement preparation process than others and are discussed below.  To the extent that actual outcomes differ from estimates, or additional facts and circumstances cause managementus to revise estimates, earnings will be affected.

Workers’ Compensation and Accident Costs

        The Company purchasesWe purchase insurance coverage for a portion of our expenses related to employee injuries (workers’ compensation), vehicular collisions and accidents and cargo claims.  Most insurance arrangements include a level of self insurance (deductible) coverage applicable to each claim, but provide an umbrella policy to limit the Company’sour exposure to catastrophic claim costs that are completely insured.  The amounts of self insurance change from time to time based on certain measurement dates and policy expiration dates.  The Company’sOur current insurance coverage specifies that the first $5,000 of any claim is self insured and that the self insured limit on certainthe majority of our claims was up to $2 million in 2001 and decreased tois $1.5 million, effective January 1, 2002, which is prefunded with itsour insurance carrier.  The Company isWe are substantially self insuredself-insured for loss of and damage to itsour owned and leased revenue equipment.  CompanyOur safety and claims personnel work directly with representatives from theour insurance companies to continually update the estimated ultimate cost of each claim.  At December 31, 2001, the Company 2002, we

11

had approximately $14$15 million of estimated net claims payable.  In addition, the Company iswe are required to pay certain advanced deposits and monthly premiums.  At December 31, 2001, the Company2002, we had a prepaid insurance asset of approximately $38$45 million.

9

        During the fourth quarter of 2001, the Company modified its method of estimating and recording its ultimate cost related to auto liability and workers’ compensation claims, which will result in a more accurate estimate of the Company’s ultimate loss from claims.  The Company began applying loss development factors to its accident and workers’ compensation claims history.  This new method results in a more accurate estimate of the Company’s ultimate loss from claims than its prior method.  This new method resulted in a restatement of the following balances at December 31, 1998:  a $10.2 million decrease in retained earnings, a $16.3 million increase in claims payable and a $6.1 million increase in deferred tax assets.  These adjustments had no material impact on year 2000 and 1999 consolidated earnings.

Revenue Equipment

        The Company operatesWe operate a significant number of tractors, trailers and containers in connection with itsour business.  This equipment may be purchased or acquired under capital or operating leases.  In addition, we may rent revenue equipment may be rented from third parties and various railroads under short-term rental arrangements.  Revenue equipment which is purchased is depreciated on the straight-line method over the estimated useful life down to an estimated salvage or trade-in value.  Equipment acquired under capital leases is initially recorded at the net present value of the minimum lease payments and amortized on the straight-line method over the lease term or the estimated useful life, which everwhichever is shorter.

        The Company hasWe have an agreement with itsour primary tractor supplier for guaranteed residual or trade-in values for certain new equipment acquired since 1999.  The Company hasWe have utilized these values in accounting for purchased and leased tractors.  If the supplier was unable to perform under the terms of such agreements, it could have a material negative impact on the Company’sour financial results.

Revenue Recognition

        The Company recognizesWe recognize revenue based on the relative transit time of the freight transported.  Accordingly, a portion of the total revenue which will be billed to the customer once a load is delivered is recognized in each reporting period based on the percentage of the freight pickup and delivery service that has been completed at the end of the reporting period.

Segments

        The CompanyWe operated three segments during the calendar year 2001.2002.  Segments included Truck (JBT), Intermodal (JBI) and Dedicated Contract Services (DCS).  JBT business included full truck-load, dry-van freight which is primarily transported utilizing company-owned or controlled revenue equipment.  Freight in the JBT segment is typically transported over roads and highways and no portion of a movement involves railroads.  The JBI segment includes freight which is transported by rail over at least a portion of the movement.  JBI freight may also include certain repositioning truck loads which are moved by JBI equipment or third-party carriers, in circumstances where the movement directs JBI equipment back toward intermodal operations.  DCS segment business usually includes company-owned revenue equipment and employee drivers who are assigned to a specific customer, traffic lane or service.  DCS operations most frequently involve formal, written long-term agreements which govern services performed and applicable rates.

Prior to July 1, 2000, the Logistics business segment (JBL) primarily consisted of J.B. Hunt Logistics, a wholly-owned subsidiary which provided a wide range of comprehensive transportation and freight management services.  Such services included experienced professional managers, information and freight optimization technology and the actual design or redesign of freight system solutions.  JBL utilized JBT, JBI or DCS owned or controlled assets and employees, or third-party carriers, or a combination of these options to meet service requirements.  JBL services were typically provided in accordance with written long-term agreements.  Effective July 1, 2000, JBL exchanged its ownership in substantially all of its assets for an initial membership interest in TPC.

TPI.  As of January 1, 2003, we increased our interest in TPI from approximately 27% to 37%.

1012

RESULTS OF OPERATIONS

2002 Compared With 2001

Operating Segments

For Years Ended December 31

(in millions of dollars)

The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related footnotes appearing in this annual report.

Overview of 2002

Our consolidated net earnings for calendar year 2002 were $51.8 million, or diluted earnings per share of $1.33, compared with 2001 full-year earnings of $32.9 million, or 91 cents per diluted share.  We generated $101 million of operating income in 2002, a nearly 40% increase over the $72.2 million of operating income in 2001.  Our operating ratio was 95.5% in 2002 and 96.6% in 2001.  Our increase in 2002 net earnings was in spite of an effective income tax rate which rose to 30.8% from 23.5% in 2001 and the number of diluted shares outstanding increasing by nearly 8%.  The increase in shares outstanding reflects a secondary public offering, which closed in June of 2002.   Each of our three segments contributed to the improved earnings levels in 2002.

JBT segment gross revenue was essentially flat, totaling $827.3 million in 2002 and $828.6 million in 2001.  However, 2002 revenues were generated with approximately 3% fewer tractors.  In addition, 2002 fuel surcharge revenues were $14.2 million lower than the comparable amount in 2001, which negatively impacted the revenue comparison by approximately 2%.  Truck segment operating income rose to $26.6 million in 2002, from $8.7 million in 2001.  The improvement in 2002 operating income reflected higher revenue per loaded mile, reduced empty miles and lower driver pay rates.  A significant portion of the higher revenue per loaded mile and reduced empty miles was a result of our continued focus on yield management and improved revenue quality.  The reduction in driver pay per mile was a result of changes in pay scales for newly-hired drivers.

JBI segment gross revenue grew 9%, to $809.1 million in 2002, from $740.5 million in 2001.  Revenue growth was due, in part, to continued demand for our intermodal service offering and conversion of our container fleet to 100% 53-foot units.  Operating income in the JBI segment rose to $54.6 million in 2002 from $42.1 million in 2001.  Our JBI operating ratio was 93.3% in 2002 and 94.3% in 2001.  Financial results in this segment were enhanced by improved container utilization, improved driver productivity and a focus on revenue quality.

DCS segment revenue grew nearly 15%, to $628.3 million in 2002, from $548.7 million in 2001.  Revenue growth was primarily a result of a 9% increase in the size of the DCS tractor fleet and our focus on improving the quality of individual fleets.  While operating income rose to $19.7 million in 2002 from $17.4 million in 2001, the segment’s operating ratio was 96.9% in 2002 and 96.8% in 2001.  We reduced some costs in the DCS segment such as driver pay and overhead, however, higher accident and claims expenses, as well as new project start up costs, more than offset the improvements.

13

The following table sets forth items in our 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.

Consolidated Operating Expenses

Total operating expenses in 2002 increased 5.9% over 2001, while operating revenues rose 7.0%.  Our operating ratio improved to 95.5% in 2002, compared with 96.6% in 2001.  Salaries, wages and employee benefits expense increased 3.6% in 2002, and declined to 36.4% of revenue in 2002 from 37.6% in 2001.  As previously mentioned, a lower mileage pay rate in our JBT segment for newly-hired drivers and the use of additional independent contractors were primary contributors to the relationship of this cost category to operating revenues.  Partly offsetting a decline in drivers’ wages relative to revenue were increases in maintenance wages, workers’ compensation, health insurance and office employee incentive expenses.  We opened some new company managed maintenance facilities and increased our mechanic labor force by about 14% in order to reduce the amount of maintenance that we outsource.  We also experienced higher costs in workers’ compensation and other fringe benefit programs and paid additional incentive payments to our office and administrative personnel that resulted from improved 2002 net earnings.

Rents and purchased transportation expense increased 15.5%, primarily due to the growth of our JBI business segment and the related payments to railroads and drayage carriers and the use of more independent contractors.  The 6.8% decline in fuel and fuel tax expense was primarily a result of fuel costs per gallon averaging about 5% less vs. 2001.  Operating supplies and expenses were down 10.3% in 2002 reflecting the reduced amount of outsourced tractor and trailer maintenance work and our focus on reducing travel expenses.  The 32.4% increase in insurance and claims costs reflects escalating liability insurance premiums which have been experienced industry wide and our higher accident costs.  The significant increase in general and administrative expenses was due primarily to higher driver advertising and recruiting expense in 2002 and changes in our gains and losses on revenue equipment dispositions.  In 2002, we had a $1.8 million net loss on equipment and facility dispositions, compared with a net gain of $4.8 million in 2001.

Our net interest expense declined in 2002, partly due to the approximate $68 million of capital we raised through a secondary public offering of common stock which closed in June of 2002.  We increased our effective income tax rate to 30.8% in 2002, from 23.5% in 2001, primarily to reflect additional taxes associated with our increased earnings.

14

Equity in losses of associated companies reflects our share of operating results for TPI and for our Mexican joint venture.  Amounts included the following:

JBHT’s financial exposure is limited to its approximate $8.5 million investment in TPI as we have not made any additional commitments or guaranteed any of TPI’s financial obligations.

The year 2001 financial results of our Mexican joint venture primarily reflect adjustments to the carrying value of the investment due to the anticipated sale of our interests.  During the first quarter of 2002, we sold our joint venture interest in Mexico for its carrying value, to the majority owner, Transportacion Maritima Mexicana (TMM).  We recorded an $18.1 million note receivable from TMM, which, according to the terms of this sale, will be paid in four annual payments of approximately $4.5 million, plus interest at 5% per annum, through June of 2005.  The first payment was received as scheduled in June of 2002.

2001 Compared With 2000

Operating Segments

For Years Ended December 31

(in millions of dollars)

*As of December 31, 2000, TPCTPI qualified as a reportable business segment for financial reporting purposes. However, the logistics segment (JBL) information for 2001 shown above excludes TPC from its inception in July 2000.  TPCTPI.  TPI is accounted for on the equity method and does not qualify as a reporting segment in 2001.

The following discussion and analysis should be read in conjunction with theour Consolidated Financial Statements of the Company and related footnotes appearing in this annual report.

Overview of 2001

Financial and operating results for the year 2001 were impacted by a number of significant items.  General economic conditions in the transportation industry were soft during the majority of the year and fuel costs varied dramatically, sometimes changing more than 10% from one month to the next.  However, overall fuel costs for 2001 were down from the prior year.  Consolidated operating revenues for 2001 decreased approximately 3% from 2000.  Excluding the JBL operations, which were contributed to TPCTPI as of July 1, 2000, revenue growth for the remaining business segments was approximately 6%.  The growth in the remaining segments is attributable to expansion of the Company’sour operating fleet of tractors from an average of 10,055 in 2000 to 10,710 in 2001, an average increase of 655 tractors or 6.5%.  While fuel costs and related fuel surcharge revenues varied significantly during 2001, the net change in fuel surcharge revenue had less than a 1% impact on revenue between 2001 and 2000.

JBT segment revenue totaled $828.6 million in 2001, down 1% from 2000.  This decline was due in part to the softer economy that created a reduced demand for freight.  The CompanyJBT began focusing on improving the operating ratio through cost management initiatives rather than JBT fleet growth.  The Company hasWe had no plans to grow the JBT fleet until such time that a reasonable operating income hashad been achieved, warranting the additional investment of capital.  JBT tractor count,

15

including independent contractors (I/C’s) declined nearly 3% during 2001 and tractor utilization was also down approximately 3%.  However, revenue per loaded mile increased 3.2%3.9%, excluding fuel surcharges, reflecting freight mix changes and pure rate increases,.  The Truck segment generated operating income of $8.7 million in 2001, compared with a loss of $7.1 million in 2000.  As a result of a new initiative commenced in late 2000, the number of I/C’s in JBT grew to 337 in 2001, from 16 at the end of 2000.  Continued volatility in the earnings power of the Truck unit is likely to prevail until supply and demand factors in the truckload industry improve.  Additional improvement is significantly dependent upon increases in the availability of freight.

JBI segment business was reasonably strong during 2001 and grew 9% to $740.5 million from $681.1 million in 2000.  The Intermodal segment held its tractor count essentially flat at 910 during 2001. Unlike the other segments, growth of JBI is not easily tracked by number of tractors, as JBI can utilize outside dray carriers and the other JBHT business units to support load and revenue growth.  The increase in revenue can be attributed to a 5% increase in the number of loads from 2000 to 2001, coupled with a 1.7% increase in revenue per loaded mile, excluding fuel surcharges.  As a result of revenue growth and utilization of containers, JBI operating income climbed 13%15% in 2001 to $42.1 million from $36.7 million in 2000.

11

DCS segment revenue grew 15% during 2001, to $548.7 million from $478.6 million in 2000.  This growth rate was down significantly from recent years due to:  1) soft economic conditions which made companies more apprehensive about changing or outsourcing their transportation needs, and;  2) the Company’sour unwillingness to reduce rates to increase market share.  The DCS segment tractor fleet grew by 15% during 2001, but revenue growth was limited by idle tractors throughout most of the year.  DCS generated $17.4 million of operating income in 2001, compared with $28.4 million in 2000.  The lower margin and reduced operating income was primarily a result of idle tractors and a higher proportionate amount of shared trailer pool and corporate support costs being assigned to the business, as a result of improving the tracking of trailer usage and the increased internal transfer price, which is charged by JBT and JBI when DCS utilizes their assigned trailers.  Cost control and close analysis of individual fleet profitability remains a DCS objective.  As in the case of Truck, DCS has no fleet growth planned for 2002.

For the year ended December 31, 2001, the Company’sJBHT’s share of TPC’sTPI’s results of operations totaled a loss of $1.9 million, compared with earnings of $440,000 for the six month period ended December 31, 2000.  TPC’sTPI’s operating loss in 2001 was primarily due to start up expenses.  JBHT’s financial exposure is limited to its approximate $6.4 million investment in TPCTPI as the Company haswe have not made any additional commitments or guaranteed any of TPC’sTPI’s financial obligations.

The following table sets forth items in theour 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.

16

Consolidated Operating Expenses

Total operating expenses in 2001 declined 3.3% from 2000, decreasing in relative proportion to operating revenues.  The Company’sOur operating ratio (operating expenses expressed as a percentage of operating revenues) improved slightly to 96.6% in 2001 from 97.1% in 2000.  As previously mentioned, the JBL segment was contributed to TPCTPI effective July 1, 2000.  This approximate 10% reduction in consolidated operating revenues was the primary factor in reduced rents and purchased transportation expense.  The JBI segment relied solely on JBT and third party carriers for transportation services and accordingly, purchased transportation costs as a percent of revenue were significantly higher than the other segments.  The decline in fuel and fuel tax expense was primarily due to significantly lower fuel cost per gallon in late 2001.  The increase in 2001 operating supplies and expenses reflected higher tractor and trailing equipment maintenance and tire costs.  Insurance and claims costs reflected higher collision rates in JBT during 2001.  The significant decline in general and administrative expenses was due to an approximate $5.5 million gain on the sale of a group of trailers, which closed in March of 2001.  Gains on revenue equipment dispositions are included in this expense classification and totaled a net gain of $4.8 million in 2001, compared with a loss of $267,000 in 2000.

12

Equity in earnings (loss) of associated companies reflects the Company’sour share of operating results for TPCTPI and for the Mexican joint venture.  Equity in earnings amounts included the following:

The year 2001 financial results of the Company’sour Mexican joint venture primarily reflectreflected adjustments to the carrying value of the investment due to the anticipated sale of the Company’sour interests.  The Company hasWe had an agreement in principle for a sale to the majority owner of the joint venture.  This transaction is expected to bewas consummated in early 2002.  If the transaction closes under the current terms and conditions, no material impact on earnings is anticipated.

        2000 Compared With 1999

Operating Segments

For Years Ended December 31

(in millions of dollars)

*As of December 31, 2000, TPC qualified 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.

Overview 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 increased 9%, to $833.8 million in 2000, from $763.2 million, in 1999.  Revenue per loaded mile, excluding fuel surcharges, increased 3.2% 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.  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.

13

        The JBI segment business 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 increase in revenue was primarily due to a 5% increase in revenue per load over 1999 and the JBI tractor fleet totaled 908 at December 31, 2000.  The intermodal segment generated operating income of $36.7 million in 2000.  A comparable amount for 1999 is not available.

        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 increased 43% to total 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.

        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 was reported on 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.

        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.

        Consolidated Operating Expenses

        Total operating expenses in 2000 increased 6.4% over 1999, in relative proportion to the increase in operating revenues.  The Company’s operating ratio (operating expenses expressed as a percentage of operating revenues) increased to 97.1% in 2000 from 96.4% in 1999.  As previously mentioned the JBL segment was contributed to TPC effective July 1, 2000.  This change reduced the rate of revenue growth and was the primary factor in the reduction of rents and purchased transportation expense as a percent of revenue in 2000.  The significant increase in fuel and fuel tax expense was driven by an approximate 35% higher cost per gallon and slightly lower fuel miles per gallon in 2000.  Fuel surcharges, which were initiated in late 1999, recovered approximately 90% of higher fuel costs during 2000.  The more than 20% increase in operating taxes and licenses expense was due to the 13% increase of the tractor fleet and higher state base plate license cost per tractor in 2000.  The decline in general and administrative expenses was primarily a result of unusually high bad debt expense in 1999 and system support charges paid by TPC in 2000.  Those payments to the Company from TPC reduced general and administrative expenses.  Gain and loss on equipment dispositions are also included in this classification and totaled a loss of $267,000 and $849,000 in 2000 and 1999, respectively.  The lower year 2000 interest expense reflected the reduction of average debt balances, partly due to the use of the proceeds from sale and leaseback transactions to pay outstanding debt balances.

14

        Equity in earnings of associated companies reflects the Company’s share of operating results for TPC and for the Mexican joint venture.  Equity in earnings amounts include the following:

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

        The Company generatesWe generate significant amounts of cash from operating activities.  Net cash provided by operating activities increased towas $174 million in 2002, $172 million in 2001 compared toand $125 million in 2000.  While 2002 and 2001 reflected a typical level of cash provided by operating activities, 2000 and $136 million in 1999.  The increase from 2000 to 2001 was mainly due to increases in prepaid lease expense related toimpacted by a significant upfront paymentprepayment for an operating lease which was funded in lateearly 2000.  The decrease in cash provided by operations in 2000 versus 1999 is due to the items mentioned above and the Company’s decision to acquire revenue equipment through capital and operating leases rather than purchase.

        Net cashCash flows used in investing activities was $24 million in 2001, $100 million in 2000primarily reflect additions to and $19 million in 1999.  The primary usedispositions from our fleet of funds for investing activities was the acquisition of new revenue equipment.  During the latter part of 2000 through late 2001, we utilized capital leases to acquire tractors.  Tractor additions since October 2001 have been purchased.  The majority of our trailing equipment additions since October 2000 have been under operating lease programs.  Net invested cash was reduced in 2001, primarily due to the utilization of operating and capital leases.  Net invested cash in 1999 was reducedprovided by proceeds from a sale and leaseback of approximately $175 million of trailing equipment.

        Cash used in financing activities was $103in 2002 reflects our $68 million secondary stock offering, which closed in 2001, $32 million in 2000 and $113 million in 1999.  The increase in 2001 is due primarily to net repaymentsJune of commercial paper.  The decrease in 2000 when compared to 1999 is due to the use of proceeds received from the sale leaseback transaction in 1999 to reduce the outstanding2002.  We discontinued a commercial paper balance at December 31, 1999.

borrowing program during 2001 and ceased paying cash dividends in early 2000.

SELECTED BALANCE SHEET DATA