SECURITIES AND EXCHANGE COMMISSION
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, 2000 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:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 Par 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 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 15,215,986 SHARES OF THE REGISTRANT'S $.01 PAR
VALUE COMMON STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT AS OF FEBRUARY
28, 2001 WAS $240,564,739 (BASED UPON $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 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 26, 2001 PART II.
PART I
ITEM 1. BUSINESS
GENERAL
J.B. Hunt Transport Services, Inc., together with its wholly-owned
subsidiaries ("JBHT" or the "Company"), is a diversified transportation
services company operating under the jurisdiction of the U.S. Department of
Transportation (DOT) and various state regulatory agencies. JBHT is an
Arkansas holding company incorporated on August 10, 1961. Through its
subsidiaries and 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
transportation function to 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 JBHT equipment and employees, or may employ equipment
and services provided by associated or unrelated third parties in the
transportation industry. The Company currently operates four distinct
operating segments: dry-van truck only ("JBT"), intermodal ("JBI"), dedicated
contract services ("DCS") and logistics business segments. Effective July 1,
2000, the Company, along with five other large, publicly-held transportation
companies, contributed its logistics business to a new, commonly owned
company, Transplace.com, LLC.
JBT
Primary transportation service offerings classified in this segment
include full truck-load, dry-van, 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. Typically, the charges for the entire movement are
billed to the customer by the Company and the Company, in turn, pays the
third-party for their portion of the transportation services provided. JBT
operates utilizing 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 operated its JBT and JBI segments
in combined fashion in periods prior to January 1, 2000. This combined
operation was reported as Van/Intermodal ("Van") in prior periods. At
December 31, 2000, the JBT segment operated approximately 5,850 tractors,
18,120 trailers and employed 8,462 people, 6,789 of which were drivers. JBT
gross revenue was $834 million in 2000, an increase of 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. Increased 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 services in
1992 through a wholly-owned subsidiary, J.B. Hunt Logistics (JBL). JBL services
frequently included an arrangement whereby a shipper might outsource a
substantial portion of its entire distribution and transportation process to one
organization. The 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 JBL customer or service arrangement may have
required a significant amount of up-front analysis and design time, while
alternatives were 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 included on a one-line, non-operating item
included on the Consolidated Statements of Earnings entitled "equity in earnings
of associated companies." Equity in earnings from TPC totaled $440,000 in 2000.
ASSOCIATED COMPANY - MEXICO
The Company has provided transportation services to and from 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 companies in Mexico, was
signed in 1992. The joint venture, Comercializadora Internacional de Carga, St.
de CV and its 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 one-line,
non-operating item on the Consolidated 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 2000 and $3.1 million in 1999.
OTHER
The Company announced a decision in late 1999, to separate the operation of
the Van business into truck (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 agrees to lease that equipment to the Company. These arrangements typically
call for the I/C to transport freight offered by the Company utilizing 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 the Company.
3
MARKETING AND OPERATIONS
JBHT 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 12% of revenues during 2000. A broad geographic
dispersion and a good balance in the type of freight transported allows JBHT
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 of its service offerings through a
nationwide marketing network. All transportation services offered are typically
billed directly to the customer by JBHT 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, 2000, JBHT employed approximately 15,980 people, including
12,280 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, JBHT announced a new compensation program for the approximate 3,500
over-the-road JBT drivers. This comprehensive package, which was effective in
February 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 JBT segment
business was approximately 66% during 2000. Drivers are typically compensated on
a rate-per-mile basis, a rate-per-week basis or a combination of factors. JBHT
also employed approximately 2,970 office personnel and 730 mechanics at December
31, 2000. No employees are represented by collective bargaining agreements and
management believes that its relationship with its employees is excellent.
REVENUE EQUIPMENT
At December 31, 2000, JBHT owned or leased approximately 10,650
tractors and operated 22,380 trailers and 21,930 containers. JBHT believes that
modern, late-model, clean equipment differentiates quality customer service,
increases equipment utilization and reduces maintenance costs and downtime. The
Company generally operates with newer revenue equipment in the JBT segment, with
the age of tractors and trailers approximating two years and four years,
respectively, at December 31, 2000. Slightly older equipment and tractors
designed for local and regional operations are typically utilized in the JBI
segment. Specially designed high-cube containers which can be separated from the
chassis and double-stacked on rail cars are also operated by JBI. The average
age of JBI tractors and containers at December 31, 2000 was approximately three
years and five years, respectively. The composition of the dedicated contract
fleet varies with specific customer service requirements. All JBHT revenue
equipment is maintained in accordance with a specific maintenance program
primarily based on age and miles traveled.
COMPETITION
JBHT is one of the largest publicly held truckload carriers 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. JBHT 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
The Company's operations as a for-hire carrier are subject to regulation by
the U.S. Department of 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 of 1995 (ICCTA). The
FMCSA continues to enforce safety regulations and has proposed new rules which,
if approved in their present form, would limit driver's hours of service.
President Bush is considering implementation of provisions of the North America
Free Trade Agreement (NAFTA), which may result in increased competition between
U.S. and Mexican carriers for truckload services moving between these two
countries. The Company believes it has 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. The
Company also utilizes its former corporate building as general offices. In 1999,
a new 20,000 square foot building was constructed and occupied near the
corporate headquarters. A portion of this leased facility serves as a backup
data center and provide disaster recovery support services. 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
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 2000 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 74 Senior Chairman of the Board; Director 1961
Wayne Garrison 48 Chairman of the Board; Director 1979
Johnelle Hunt 69 Secretary; Director 1972
Kirk Thompson 47 President and Chief Executive Officer; Director 1984
Paul R. Bergant 54 Executive Vice President, Marketing and Chief Marketing Officer 1985
Bob D. Ralston 54 Executive Vice President, Equipment and Properties 1989
Jerry W. Walton 54 Executive Vice President, Finance and Administration
and Chief Financial Officer 1991
Craig Harper 43 Executive Vice President, Operations
and Chief Operations Officer 1997
Jun-Sheng Li (1) 42 President J.B. Hunt Logistics
and Executive Vice President, Integrated Solutions 1998
John N. Roberts III (2) 36 President, Dedicated Contract Services,
and Executive Vice President, Enterprise Solutions 1997
Kay J. Palmer (3) 37 Chief Information Officer 1999
(1) 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. 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.
(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
--------------- --------------
Period High Low High Low
---------------------------------------------------------------------------------------------
1st Quarter $16.00 $10.50 $26.25 $18.00
2nd Quarter 17.50 13.13 23.25 14.19
3rd Quarter 16.00 11.50 16.75 11.88
4th Quarter 17.25 10.50 15.00 12.38
On February 28, 2001, the high and low sales prices for the Company's
common stock as reported by the NASDAQ were $16.00 and $14.50, respectively. As
of February 28, 2001, the Company had 1,563 stockholders of record.
DIVIDEND POLICY
On January 21, 2000, the 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 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. No
dividends have been paid since February of 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
- ------------------------------------------------------------------------------------------------------------------------------------
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
Operating income 63.4 74.3 101.5 42.1 60.2 22.8 84.9 78.6 69.1 59.4
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
Basic earnings (loss) per share
before cumulative effect of
changes in ccounting methods 1.02 .90 1.32 .31 .58 (.06) 1.05 1.00 1.03 .85
Cash dividends per share .05 .20 .20 .20 .20 .20 .20 .20 .20 .19
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
Long-term debt and lease obligations 300.4 267.6 417.0 322.8 332.6 339.9 299.2 303.5 216.3 156.9
Stockholders' equity 428.0 401.4 375.7 338.0 357.3 356.9 377.9 344.0 308.6 215.8
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
- ------------------------------------------------------------------------------------------------------------------------------------
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
Rents and purchased transportation 32.1 33.7 33.7 33.1 29.0 26.8 24.1 18.5 12.2 7.0
Fuel and fuel taxes 11.3 8.3 7.5 9.1 10.8 10.6 10.9 12.4 14.2 16.3
Depreciation 6.2 7.3 7.6 8.4 8.9 10.2 10.2 10.1 10.3 10.1
Operating supplies and expenses 6.1 6.2 5.3 5.9 6.2 7.0 6.7 7.1 7.4 8.0
Insurance and claims 1.8 2.0 1.8 2.4 3.9 3.8 3.1 4.0 4.8 4.7
Operating taxes and licenses 1.5 1.3 1.3 1.6 1.9 2.0 2.2 2.8 2.8 3.0
General and administrative expenses 1.3 1.7 1.4 1.3 1.5 1.7 1.2 - 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
Special charges - - - - - 1.3 - - - -
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total operating expenses 97.1 96.4 94.5 97.3 96.0 98.3 93.0 92.3 92.4 91.9
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Operating income 2.9 3.6 5.5 2.7 4.0 1.7 7.0 7.7 7.6 8.1
Interest expense (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 2.4 (.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
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%
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
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
- ------------------------------------------------------------------------------------------------------------------------------------
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
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
Tractors owned/leased (at year end) 10,650 9,460 8,906 7,508 7,750 7,706 7,412 6,775 7,004 5,843
Independent 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
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
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 1999. JBT loads increased about 6%, while JBI load
count declined approximately 3% during 1999. Tractor count in the Van segment
was essentially flat for the year. JBT revenue per loaded mile, before fuel
surcharges, was up approximately 1%, while JBI 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 JBT and JBI businesses
resulted in higher third party dray expense during the latter part of 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
------- ------- -------- ---- -----
JBT $763.2 $733.6 4% -- --
JBI 651.6 644.8 1% -- --
------- ------- -------- ---- -----
Van 1,414.8 1,378.4 3% 44.4 $81.1
DCS 320.2 211.9 51% 24.1 17.0
JBL 387.9 317.3 22% 10.5 7.5
Other -- 8.0 -- (4.7) (4.1)
------- ------- -------- ---- -----
Subtotal 2,122.9 1,915.6 11% 74.3 101.5
Inter-segment eliminations (77.8) (74.0) -- -- --
------- ------- -------- ---- -----
Total $2,045.1 $1,841.6 11% $74.3 $101.5
======== ======== ======== ===== ======
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%
Rents and purchased transportation 33.7 33.7 11.2
Fuel and fuel taxes 8.3 7.5 23.2
Depreciation 7.3 7.6 6.1
Operating supplies and expenses 6.2 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 1.7 1.4 33.1
Communication and utilities 1.0 1.0 10.8
------ ------ -------
Total operating expenses 96.4 94.5 13.3
------ ------ -------
Operating income 3.6 5.5 (26.8)
Interest expense (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)%
====== ====== =======
12
OPERATING EXPENSES
Total operating expenses in 1999 increased 13.3% over 1998, while total
operating revenues increased 11.0%. Operating expenses expressed as a percentage
of operating revenues (operating ratio) were 96.4% in 1999, compared with 94.5%
in 1998. Salaries, wages and employee benefits increased 11.0% during 1999 and
remained exactly the same percentage of operating revenue for 1999 and 1998.
Rents and purchased transportation expense increased 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 23.2% and grew from 7.5% of operating
revenue in 1998 to 8.3% in 1999.
Depreciation expense increased 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.
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 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 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
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 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.
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 1998. 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 insurance costs in 2000;
increases in accounts receivable in 1999 and 1998, a trend which was reversed in
2000, with the contribution of JBL to TPC and 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. The primary use of funds for
investing activities was the acquisition of new revenue equipment. The number
of new tractors purchased totaled approximately 1,900 in 2000, 2,200 in 1999,
2,900 in 1998. The amount of investment spending to acquire trailing equipment
varied significantly during the three year period ended December 31, 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. Net cash used for investing
activities in 2000 was reduced by 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 sale and immediate leaseback of
13
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 investment in TPC was also made in 2000.
Net financing activities consumed approximately $32 million in 2000 and
$113 million in 1999, but generated $83 million in 1998. Proceeds from the sale
and leaseback of trailing equipment which approximated $66 million in 2000 and
$175 million in 1999 were used to reduce commercial paper note balances and
long-term debt. The Company sold $100 million of 7.00% senior notes in
September of 1998, which 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. Dividends of approximately $1.8 million were paid 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 net book value of approximately $94 million.
SELECTED BALANCE SHEET DATA
As of December 31 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------
Working capital ratio 1.06 1.09 1.09
Current maturities of long-term debt and lease obligations (millions) $101 $60 $16
Total debt and capitalized lease obligations (millions) $401 $328 $433
Total debt to equity .94 .82 1.15
Total debt as a percentage of total capital .48 .45 .54
The Company is authorized to issue up to $150 million in notes under a
commercial paper note program, of which $74 million was outstanding at December
31, 2000.
From time to time the Board of Directors authorizes the repurchase of
Company common stock. Purchases of Company stock were:
2000 1999 1998
--------------------------------------------------------------------------------------
Number of shares acquired 500,000 -- 225,000
Price range of shares $10.94 - $16.13 -- $17.50 - $28.00
At December 31, 2000, the Company had committed to purchase approximately
$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 2001, however, funding for such expenditures is expected to
come from cash generated from operations and existing borrowing facilities. The
Company had approximately $75.6 million of unused borrowing capacity under its
committed revolving lines of credit.
YEAR 2000
- ---------
The Company did not experience any material Year 2000 problems or
disruptions with internal systems, and has not experienced any material problems
or disruptions with customers or suppliers systems.
14
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards 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 was amended by Statement of Financial
Accounting Standards No. 138 ("SFAS 138") in June 2000 that amended the
accounting and reporting standards of SFAS 133 for certain derivative
instruments and certain hedging activities. SFAS 138 also amended SFAS 133 for
decisions made by the FASB relating to the Derivatives Implementation Group
process. The Company has completed its analysis of Statement 133 and does not
expect adoption as of January 1, 2001 to have a material effect on results of
operations or financial 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. Shareholders and prospective investors are
cautioned that actual results and experience 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'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. The Company
from time to time utilizes interest rate swaps to mitigate the effects of
interest rate 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 during the next twelve months, there would be no material adverse
impact on the Company's results of operations based on variable rate debt
outstanding at December 31, 2000. At December 31, 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, 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, 2000 and 1999 18
Consolidated Statements of Earnings for years ended December 31, 2000, 1999, and 1998 20
Consolidated Statements of Stockholders' Equity for years ended December 31, 2000, 1999, and 1998 21
Consolidated Statements of Cash Flows for years ended December 31, 2000, 1999, and 1998 23
Notes to Consolidated Financial Statements 25
16
INDEPENDENT AUDITORS' REPORT
The Board of Directors
J. B. Hunt Transport Services, Inc.:
We have audited the accompanying consolidated balance sheets of J. B. Hunt
Transport Services, Inc. and subsidiaries as of December 31, 2000 and 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, 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
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. Hunt Transport
Services, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.
Tulsa, Oklahoma
February 2, 2001
17
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2000 and 1999
(Dollars in thousands, except per share amounts)
ASSETS 2000 1999
------------- --------------
Current assets:
Cash and cash equivalents $ 5,370 12,606
Trade accounts receivable 225,797 238,573
Inventories 7,233 7,825
Prepaid licenses and permits 17,224 17,380
Other current assets 75,347 18,757
------------- --------------
Total current assets 330,971 295,141
------------- --------------
Property and equipment, at cost:
Revenue and service equipment 1,117,689 1,038,056
Land 19,987 20,949
Structures and improvements 76,159 76,517
Furniture and office equipment 120,622 103,872
------------- --------------
Total property and equipment 1,334,457 1,239,394
Less accumulated depreciation 489,282 453,509
------------- --------------
Net property and equipment 845,175 785,885
------------- --------------
Other assets (note 7) 55,775 46,438
------------- --------------
$ 1,231,921 1,127,464
============= ==============
18
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2000 and 1999
(Dollars in thousands, except per share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999
-------------- --------------
Current liabilities:
Current maturities of long-term debt (note 2) $ 84,400 60,000
Current installments of obligations under capital leases (note 8) 16,489 0
Trade accounts payable 158,585 180,009
Claims accruals 13,260 788
Accrued payroll 29,148 19,462
Other accrued expenses 10,390 10,371
Deferred income taxes (note 4) 13,002 4,185
-------------- --------------
Total current liabilities 325,274 274,815
-------------- --------------
Long-term debt, excluding current maturities (note 2) 222,694 267,639
Obligations under capital leases, excluding current installments (note 8) 77,694 0
Claims accruals 4,974 7,368
Deferred income taxes (note 4) 173,282 176,256
-------------- --------------
Total liabilities 803,918 726,078
-------------- --------------
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
Retained earnings 385,221 350,928
Accumulated other comprehensive loss (6,502) (5,324)
-------------- --------------
486,199 453,166
Treasury stock, at cost (3,795,400 shares in 2000 and
3,370,872 shares in 1999) (58,196) (51,780)
-------------- --------------
Total stockholders' equity 428,003 401,386
Commitments and contingencies (notes 2, 3, 4, 5 and 8)
-------------- --------------
$ 1,231,921 1,127,464
============== ==============
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 and 1998
(Dollars in thousands, except per share amounts)
2000 1999 1998
------------ ------------ ------------
Operating revenues $ 2,160,447 2,045,073 1,841,628
Operating expenses:
Salaries, wages and employee benefits (note 5) 769,393 713,378 642,946
Rents and purchased transportation 694,756 689,561 619,902
Fuel and fuel taxes 242,835 169,407 137,561
Depreciation 134,391 148,968 140,355
Operating supplies and expenses 130,947 125,748 97,295
Insurance and claims 38,982 40,555 32,674
Operating taxes and licenses 32,641 27,118 24,029
General and administrative expenses 28,563 34,740 26,091
Communication and utilities 24,528 21,309 19,237
------------ ------------ ------------
Total operating expenses 2,097,036 1,970,784 1,740,090
------------ ------------ ------------
Operating income 63,411 74,289 101,538
Interest expense (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
Income taxes (note 4) 6,366 17,175 27,507
------------ ------------ ------------
Net earnings $ 36,075 31,909 46,837
============ ============ ============
Basic earnings per share $ 1.02 0.90 1.32
============ ============ ============
Diluted earnings per share $ 1.02 0.89 1.28
============ ============ ============
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 and 1998
(Dollars in thousands, except per share amounts)
Common Paid-in
Stock Capital
----------- -----------
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
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 (Notes 2 and 3)
- ------------ ----------- ------------- ----------- ---------------
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 and 1998
(Dollars in thousands)
2000 1999 1998
------------ ----------- -----------
Cash flows from operating activities:
Net earnings $ 36,075 31,909 46,837
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 134,391 148,968 140,355
(Gain) loss on sale of revenue equipment 267 849 (4,051)
Provision for deferred income taxes 5,843 16,146 25,722
Equity in earnings of associated companies (4,777) (3,141) (1,506)
Tax benefit of stock options exercised 31 55 925
Remeasurement of options 110 -- --
Forfeiture of restricted stock -- (18) (22)
Amortization of discount, net 55 594 (144)
Changes in operating assets and liabilities:
Trade accounts receivable 12,776 (54,206) (15,169)
Other assets (58,057) (26,624) (5,686)
Trade accounts payable (21,424) 32,042 9,458
Claims accruals 10,078 (5,141) (24,177)
Accrued payroll and other accrued expenses 9,705 (5,760) 8,820
------------ ----------- -----------
Net cash provided by operating
activities 125,073 135,673 181,362
------------ ----------- -----------
Cash flows from investing activities:
Additions to property and equipment (225,672) (224,795) (306,128)
Investment in associated company (5,000) -- --
Proceeds from sale of equipment 126,350 214,493 41,231
Decrease (increase) in other assets 4,404 (9,128) 5,858
------------ ----------- -----------
Net cash used in investing activities (99,918) (19,430) (259,039)
------------ ----------- -----------
23
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
Years ended December 31, 2000, 1999 and 1998
(Dollars in thousands)
2000 1999 1998
------------ ----------- -----------
Cash flows from financing activities:
Net borrowings (repayments) of commercial
paper borrowings $ 39,400 (96,350) (1,150)
Proceeds from long-term debt -- -- 99,400
Repayments of long-term debt (60,000) (10,000) (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
Repurchase of treasury stock (7,576) -- (5,814)
Dividends paid (1,782) (7,126) (7,101)
------------ ----------- -----------
Net cash provided by (used in)
financing activities (32,391) (112,864) 83,203
------------ ----------- -----------
Net increase (decrease) in cash and cash equivalents (7,236) 3,379 5,526
Cash and cash equivalents at beginning of year 12,606 9,227 3,701
------------ ----------- -----------
Cash and cash equivalents at end of year $ 5,370 12,606 9,227
============ =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 26,138 28,944 26,387
============ =========== ===========
Income taxes $ 3,654 95 11
============ =========== ===========
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 and 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
J. B. Hunt Transport Services, Inc., together with its
wholly-owned subsidiaries ("Company"), is a diversified
transportation services company operating under the jurisdiction
of the U.S. Department of Transportation and various state
regulatory agencies.
The Company has four distinct operating segments: Truck;
Intermodal; Logistics; and Dedicated Contract Services. See note
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.
Property and equipment under capital leases are stated at the
present value of minimum lease payments; and amortized over the
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)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(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
--------------- --------------- ----------------
Basic earnings per share:
Numerator (net earnings) $ 36,075 31,909 46,837
=============== =============== ================
Denominator (weighted
average shares outstanding) 35,313 35,628 35,582
=============== =============== ================
Earnings per share $ 1.02 .90 1.32
=============== =============== ================
Diluted earnings per share:
Numerator (net earnings) $ 36,075 31,909 46,837
=============== =============== ================
Denominator:
Weighted average shares
outstanding 35,313 35,628 35,582
Effect of common stock
options 104 174 1,019
--------------- --------------- ----------------
35,417 35,802 36,601
=============== =============== ================
Earnings per share $ 1.02 .89 1.28
=============== =============== ================
26 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
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
------------------- ------------------- -------------------
Number of shares under option 5,394,000 4,318,000 162,000
Range of exercise prices $ 14.00 - 37.50 $ 17.38 - 37.50 $ 26.00 - 37.50
(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, 2000 and 1999, the Company had no
significant concentrations of credit risk.
(j) 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.
Foreign 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 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. Accordingly, the
more stable currency of the reporting parent (the Company) was
used, and the effect of exchange rates resulting in translation
adjustments have been recorded as a component of net earnings for
the year ended December 31, 1998. As of January 1, 1999, Mexico is
no longer considered a highly inflationary economy.
(k) STOCK BASED COMPENSATION
The Company has adopted the disclosure requirements of SFAS No.
123, Accounting 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.
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.
(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.
(n) COMPREHENSIVE INCOME
Comprehensive income consists of net earnings and foreign currency
translation adjustments and is presented in the consolidated
statements of stockholders' equity.
(o) RECLASSIFICATIONS
To conform to the 2000 presentation, certain accounts for 1999 and
1998 have been reclassified. The reclassifications had no effect
on net earnings and stockholders' equity previously reported.
(2) LONG-TERM DEBT
Long-term debt consists of (in thousands):
2000 1999
------------- -----------
Commercial paper $ 74,400 35,000
Senior notes payable, due 11/17/00, interest at
6.25% payable semiannually - 25,000
Senior notes payable, due 12/12/00, interest at
6.00% payable semiannually - 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 95,000
Senior subordinated notes, interest at 7.80%
payable semiannually 40,000 50,000
------------- -----------
307,660 328,260
28 (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)
Unamortized discount (566) (621)
------------- -----------
$ 222,694 267,639
============= ===========
Under its commercial paper note program, the Company is authorized to
issue up to $150 million in notes. These notes are supported by credit
agreements, which aggregate $150 million, with a group of banks, which
expires December 14, 2001. The effective rate on the commercial note
program was 7.28% and 5.32% as of December 31, 2000 and 1999,
respectively. 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, 2000.
Current maturities of long-term debt at December 31, 2000 consist of
commercial paper due in 2001 and the second installment of the 7.80%
senior subordinated notes. The aggregate annual maturities of long-term
debt for each of the four years ending December 31 are as follows (in
thousands): 2001, $84,400; 2002, $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 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 8,500,000 shares. At December 31, 2000 there were approximately
1,935,000 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-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-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 $0, ($5,400), and $20,000 for the years ended December 31,
2000, 1999 and 1998, respectively.
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, 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 vested after five years. Under the original plan the
options must be exercised within one year of vesting and all unexercised
options will terminate. During 2000, the stockholders of the Company
amended the plan whereby the exercise period was extended to be within
two 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
------------ ------------ ------------
Net earnings (in thousands) As reported $ 36,075 31,909 46,837
Pro forma 30,723 27,391 42,881
Basic earnings per share As reported 1.02 .90 1.32
Pro forma .87 .77 1.21
Diluted earnings per share As reported 1.02 .89 1.28
Pro forma .87 .76 1.17
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 $13.23, 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.
The following table summarizes information about stock options
outstanding at December 31, 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 1,830,800 6.9 13.13 404,060 13.43
15.01 - 18.75 4,309,040 2.6 17.36 209,340 16.46
18.76 - 22.50 368,000 5.6 20.13 143,225 19.94
22.51 - 26.25 99,675 5.3 23.64 53,525 23.21
26.26 - 30.00 117,000 8.4 28.76 19,400 28.63
30.01 - 37.50 10,000 8.5 37.50 2,000 37.50
---------------- -------------- --------------- ------------- -------------- -------------
$ 10.63 - 37.50 6,809,265 4.1 $ 16.56 831,800 $ 16.35
================ ============== =============== ============= ============== =============
31 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(4) INCOME TAXES
Total income tax expense for the years ended December 31, 2000, 1999 and
1998 was allocated as follows (in thousands):
2000 1999 1998
------------ ----------- ------------
Earnings before income taxes $ 6,366 17,175 27,507
Stockholders' equity, for tax benefit
of stock options exercised 31 55 925
------------ ----------- ------------
$ 6,335 17,120 26,582
============ =========== ============
Refundable income taxes at December 31, 2000 and 1999 were $3,133,000 and
$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
---------- ---------- ----------
Current expense:
Federal $ 66 662 1,410
State and local 457 367 375
---------- ---------- ----------
523 1,029 1,785
---------- ---------- ----------
Deferred expense (benefit):
Federal 8,032 18,233 21,354
State and local (2,189) (2,087) 4,368
---------- ---------- ----------
5,843 16,146 25,722
---------- ---------- ----------
Total tax expense $ 6,366 17,175 27,507
========== ========== ==========
Income tax expense attributable to earnings before income taxes differed
from the amounts computed using the statutory federal tax rate of 35% for
the following reasons (in thousands):
2000 1999 1998
----------- ---------- ----------
Income tax - statutory rate $ 14,854 17,179 26,020
State tax, net of Federal effect (1,125) (869) 3,050
Sale/leaseback benefit (7,863) (741) -
Other, net 500 1,606 (1,563)
----------- ---------- ----------
Total tax expense $ 6,366 17,175 27,507
=========== ========== ==========
32 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 2000 and 1999 are presented below (in thousands):
2000 1999
--------------- ---------------
Deferred tax assets:
Claims accruals, principally due to accrual
for financial reporting purposes $ 7,232 7,261
Tax credit carryforwards 9,105 7,321
Net operating loss carryforwards 37,830 43,395
Accounts receivable, principally due to
allowance for doubtful accounts 3,227 3,999
Other 5,101 4,176
--------------- --------------
Total gross deferred tax assets 62,495 66,152
--------------- --------------
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation and
capitalized interest 182,712 181,298
Prepaid permits and insurance, principally
due to expensing for income tax purposes 20,222 12,809
Sale and leaseback transaction 36,144 44,007
Other 9,701 8,479
--------------- --------------
Total gross deferred tax liabilities 248,779 246,593
--------------- --------------
Net deferred tax liability $ 186,284 180,441
=============== ==============
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, 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 $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 and 1998, total Company contributions to the
plan, including matching 401(k) contributions, were $6,553,000,
$7,348,000 and $6,533,000, respectively.
(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.
The estimated fair values of the Company's financial instruments
are summarized as follows (in thousands):
AT DECEMBER 31, 2000 AT DECEMBER 31, 1999
--------------------------------- -----------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
--------------- -------------- ------------- ------------
Cash and cash equivalents $ 5,370 5,377 12,606 12,606
Accounts receivable 225,797 225,797 238,573 238,573
Trade accounts payable 150,585 150,585 180,009 180,009
Long-term debt:
Commercial paper 74,400 74,400 35,000 35,000
Fixed rate obligations 233,260 234,352 293,260 287,754
=============== ============== ============= ============
34 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(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 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 $8,002,000 and $7,044,000 at December 31, 2000 and 1999,
respectively, and 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 $175,000,000 were sold to third party leasing companies
at approximate net book value. A gain on the 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 Company 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 noncancelable operating leases (with
initial or remaining lease terms in excess of one year) and future
minimum capital lease payments as of December 31, 2000 are:
CAPITAL OPERATING
LEASES LEASES
------------ ------------
2001 $ 20,239 65,142
2002 20,239 38,414
2003 58,761 22,336
2004 8,310 18,366
2005 - 17,228
Thereafter - 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, respectively.
At December 31, 2000, the Company had committed to purchase approximately
$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)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDAIRIES
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 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
The Company had four reportable business segments during 2000. Segments
included Truck (JBT), Intermodal (JBI), Dedicated Contract Services (DCS)
and Logistics. JBT business includes full truck-load, dry-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 JBI segment includes freight
which is transported by rail over at least some portion of the movement
and 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 specific 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 wholly-owned subsidiary which provided a
wide range of comprehensive transportation and freight management
services. Such services included experienced professional managers,
information and 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 to meet customer service requirements. JBL services typically
were provided in accordance with written long-term agreements. 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 "Fortune 500" companies. One customer
accounted for approximately 12% of consolidated operating revenues in
2000. No single customer exceeded 10% in 1999 and 1998. A summary of
certain segment information is presented below (in millions):
ASSETS
--------------------------------------
2000 1999 1998
---------- ---------- ----------
Truck $ 871 -- --
Intermodal 128 -- --
---------- ---------- ----------
Van/Intermodal 999 826 925
Logistics 33 73 43
Dedicated Contract Services 138 95 62
Other (includes corporate and
intersegment eliminations) 62 133 141
---------- ---------- ----------
Total $ 1,232 1,127 1,171
========== ========== ==========
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)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDAIRIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
OPERATING INCOME
--------------------------------------
2000 1999 1998
---------- ---------- ----------
Truck $ (7) -- --
Intermodal 37 -- --
---------- ---------- ----------
Van/Intermodal 30 44 81
Logistics 9 11 8
Dedicated Contract Services 28 24 17
Other (3) (5) (4)
---------- ---------- ----------
Total segment operating income 64 74 102
Less operating income of equity method investee
(1) -- --
---------- ---------- ----------
Consolidated statements of earnings amount $ 63 74 102
========== ========== ==========
DEPRECIATION EXPENSE
--------------------------------------
2000 1999 1998
---------- ---------- ----------
Truck $ 65 -- --
Intermodal 23 -- --
---------- ---------- ----------
Van/Intermodal 88 113 109
Logistics -- 1 1
Dedicated Contract Services 36 26 18
Other 10 9 12
---------- ---------- ----------
Total $ 134 149 140
========== ========== ==========
40 (Continued)
J. B. HUNT TRANSPORT SERVICES, INC.
AND SUBSIDAIRIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(11) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Operating results by quarter for the years ended December 31, 2000 and
1999 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
=========== =========== =========== ===========
41 (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, 2000 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 for Annual Meeting of Stockholders to be held April
26, 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 for Annual Meeting of Stockholders
to be held on April 26, 2001 set forth under sections entitled "Principal
Stockholders of the Company," "Report of the Compensation Committee," "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 for Annual Meeting of Stockholders to be held on April 26,
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").
42
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 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 March 9, 2001
- ------------------------------ of Directors
John A. Cooper, Jr.
/s/ Wayne Garrison Member of the Board March 9, 2001
- ------------------------------ of Directors (Chairman)
Wayne Garrison
/s/ Gene George Member of the Board March 9, 2001
- ------------------------------ of Directors
Gene George
/s/ Thomas L. Hardeman Member of the Board March 9, 2001
- ------------------------------ of Directors
Thomas L. Hardeman
/s/ J. Bryan Hunt, Jr. Member of the Board March 9, 2001
- ------------------------------ of Directors (Vice Chairman)
J. Bryan Hunt, Jr.
/s/ J.B. Hunt Member of the Board March 9, 2001
- ------------------------------ of Directors (Senior Chairman)
J.B. Hunt
/s/ Johnelle Hunt Member of the Board March 9, 2001
- ------------------------------ of Directors (Corporate
Johnelle Hunt Secretary)
/s/ Kirk Thompson Member of the Board March 9, 2001
- ------------------------------ of Directors (President and
Kirk Thompson Chief Executive Officer)
/s/ John A. White Member of the Board March 9, 2001
- ------------------------------ of Directors
John A. White
43
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
44