<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11757
J.B. HUNT TRANSPORT SERVICES, INC.
(Exact name of registrant as specified in its charter)
Arkansas 71-0335111
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
615 J.B. Hunt Corporate Drive, Lowell, Arkansas 72745
(Address of principal executive offices, and Zip Code)
(501) 820-0000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No
----- -----
The number of shares of the Company's $.01 par value common stock outstanding on
March 31, 1994 was 38,553,325.
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The interim consolidated financial statements contained herein reflect all
adjustments which, in the opinion of management, are necessary for a fair
statement of the financial condition, results of operations and cash flows for
the periods presented. They have been prepared in accordance with Rule 10-01 of
Regulation S-X and do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements.
Operating results for the three month period ended March 31, 1994 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1994.
The interim consolidated financial statements have been reviewed by KPMG
Peat Marwick, independent public accountants.
These interim financial statements should be read in conjunction with the
Company's latest annual report (portions of which are incorporated by reference
in the Form 10-K for the year ended December 31, 1993).
INDEX
Consolidated Statements of Earnings for the Three Month
Periods Ended March 31, 1994 and 1993........................... Page 3
Consolidated Balance Sheets as of
March 31, 1994 and December 31,1993............................. Page 4
Consolidated Statements of Cash Flows for the
Three Month Periods Ended March 31, 1994 and 1993............... Page 5
Notes to Consolidated Financial Statements
as of March 31, 1994............................................ Page 6
Review Report of KPMG Peat Marwick................................... Page 8
ITEM 2.
Management's Discussion and Analysis of Results of Operations
and Financial Condition......................................... Page 9
2
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J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31
- ---------------------------------------------------------------------------
1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Operating revenues $ 264,663 $ 247,181
Operating expenses:
Salaries, wages and employee benefits 92,565 94,797
Fuel and fuel taxes 32,393 33,471
Purchased transportation and spotting 60,364 39,998
Depreciation 24,492 23,347
Operating supplies and expenses 18,562 18,364
Insurance and claims 9,192 11,023
Operating taxes and licenses 5,184 6,935
Communication and utilities 2,883 3,124
General and administrative expenses 6,009 5,263
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Total operating expenses 251,644 236,322
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Operating income 13,019 10,859
Interest expense 4,487 2,949
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Earnings before income taxes 8,532 7,910
Income taxes 2,806 2,927
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Net earnings $ 5,726 $ 4,983
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Common shares outstanding 38,503 38,145
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Earnings per share: $ .15 $ .13
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</TABLE>
3
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J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARCH 31, 1994 DECEMBER 31, 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and temporary investments $ 2,763 $ 3,390
Accounts receivable 129,064 137,284
Prepaid expenses 25,306 23,210
Deferred income taxes 5,407 4,593
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Total current assets 162,540 168,477
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Property and equipment 958,619 913,962
Less accumulated depreciation 246,735 232,323
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Net property and equipment 711,884 681,639
Other 17,449 12,326
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$891,873 $862,442
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 59,525 $ 37,578
Claims accruals 36,331 35,124
Accrued expenses 22,680 20,007
Other current liabilities 1,840 2,981
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Total current liabilities 120,376 95,690
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Long-term debt 302,427 303,499
Claims accruals 12,000 12,000
Deferred income taxes 107,304 107,289
Stockholders' equity 349,766 343,964
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$891,873 $862,442
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</TABLE>
4
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J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31
(IN THOUSANDS) (UNAUDITED)
- -------------------------------------------------------------------------------------------
1994 1993
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 5,726 $ 4,983
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, net of gain on disposition of equipment 24,492 23,347
Provision for noncurrent deferred income taxes 15 754
Tax benefit of stock options exercised 567 (70)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 8,220 (4,751)
Decrease (increase) in other current assets (2,910) 4,311
Increase (decrease) in trade accounts payable 21,947 (2,597)
Increase in claims accruals 1,207 2,834
Increase in other current liabilities 1,532 4,533
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Net cash provided by operating activities 60,796 33,344
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Cash flows from investing activities:
Additions to property and equipment (73,869) (29,702)
Proceeds from sale of equipment 19,132 11,506
Increase in other assets (5,123) (558)
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Net cash used in investing activities (59,860) (18,754)
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Cash flows from financing activities:
Net proceeds from (repayments of) long-term debt (1,072) (12,831)
Proceeds from exercise of stock options 1,432 438
Dividends paid (1,923) (1,907)
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Net cash used by financing activities (1,563) (14,300)
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Net increase (decrease) in cash (627) 290
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Cash -- beginning of period 3,390 1,833
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Cash -- end of period $ 2,763 $ 2,123
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Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 5,383 $ 2,342
Income Taxes 2,490 2,536
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</TABLE>
5
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J.B. HUNT TRANSPORT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) LONG-TERM DEBT
Long-term debt consists of (in thousands):
<TABLE>
<CAPTION>
3/31/94 12/31/93
------- --------
<S> <C> <C>
Commercial paper $ 106,062 $ 106,492
Senior notes payable, interest at 6.25%
payable semiannually 99,699 99,691
Senior notes payable, interest at 9.20%
payable semiannually 6,666 6,666
Senior notes payable, interest at 7.75%
payable semiannually 15,000 15,000
Senior notes payable, interest at 7.84%
payable semiannually 25,000 25,000
Senior subordinated notes, interest at
7.80% payable semiannually 50,000 50,000
Other -0- 650
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$ 302,427 $ 303,499
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</TABLE>
The Company's commercial paper note program was modified effective April 1,
1994, to reduce administration expenses. The program currently consists of two
$100 million revolving credit agreements which expire through March 31, 1997.
The terms of the two agreements remain substantially the same as described in
the Company's annual report for 1993.
The 6.25% senior notes were issued on September 1, 1993 and are due on
September 1, 2003.
The 9.20% senior notes were issued on July 1, 1988 and are payable in three
equal annual installments beginning July 1, 1992.
The 7.75% senior notes were issued on October 1, 1991 and are payable in
five equal annual installments beginning October 31, 1992.
The 7.84% senior notes were issued on March 31, 1992 and are payable in
five equal annual installments beginning March 31, 1995.
The 7.80% senior subordinated notes were issued on October 30, 1992 and are
payable in five equal annual installments beginning October 30, 2000.
The Company intends to pay 1994 maturities with borrowings under its other
credit arrangements. Accordingly, all debt has been classified as long-term as
of March 31, 1994.
6
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(2) CAPITAL STOCK
The Company maintains a Management Incentive Plan that provides various
vehicles to compensate key employees with Company common stock. A summary of
the options to purchase common stock and non-statutory stock options activity
follows:
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF OPTION PRICE SHARES
SHARES PER SHARE EXERCISABLE
-------- ------------ -----------
<S> <C> <C> <C>
Outstanding at December 31, 1993 1,189,356 $ 6.00 - 24.63 369,663
Granted 58,500 18.25 - 23.50
Exercised 132,935 6.00 - 19.50
Terminated 8,730 6.00 - 14.83
--------- ------------- -------
Outstanding at March 31, 1994 1,106,191 6.00 - 24.63 257,563
--------- ------------- -------
--------- ------------- -------
</TABLE>
On March 29, 1994, the Company's Board of Directors declared a regular
quarterly cash dividend of $.05 per share payable on May 19, 1994, to
stockholders of record on May 3, 1994.
7
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
J.B. Hunt Transport Services, Inc.:
We have reviewed the condensed consolidated balance sheet of J.B. Hunt Transport
Services, Inc. and subsidiaries as of March 31, 1994, and the related condensed
consolidated statements of earnings and cash flows for the three-month periods
ended March 31, 1994 and 1993, in accordance with standards established by the
American Institute of Certified Public Accountants.
A review of the interim financial information consists principally of obtaining
an understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of J.B. Hunt Transport Services, Inc.
and subsidiaries as of December 31, 1993, and the related consolidated
statements of earnings, stockholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 11, 1994, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1993, is fairly presented, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
/s/ KPMG Peat Marwick
Little Rock, Arkansas
April 13, 1994
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion should be read in conjunction with the attached
interim consolidated financial statements and notes thereto, and with the
Company's audited financial statements and notes thereto for the calendar year
ended December 31, 1993.
RESULTS OF OPERATIONS
The following table sets forth the change in amounts and percentage change
between the first quarter of 1994 and the comparable period in 1993 of certain
revenue, expense and operating items.
(IN THOUSANDS EXCEPT TRACTOR DATA)
THREE MONTHS ENDED MARCH 31, 1994 VS. 1993
<TABLE>
<CAPTION>
INCREASE
(DECREASE) %
IN AMOUNTS CHANGE
-------------- --------
<S> <C> <C>
Operating revenues $17,482 7%
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Average number of tractors in the fleet (196) (3)
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Operating expenses:
Salaries, wages and employee benefits (2.232) (2)
Fuel and fuel taxes (1,078) (3)
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Purchased transportation and spotting 20,366 51
Depreciation 1,145 5
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Operating supplies and expenses 198 1
Insurance and claims (1,831) (17)
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Operating taxes and licenses (1,751) (25)
Communication and utilities (241) (8)
General and administrative expenses 746 14
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Total operating expenses 15,322 6
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Operating income $2,160 20%
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</TABLE>
Consolidated revenues for the first quarter ended March 31, 1994 increased
7 percent, to $264.7 million, compared to $247.2 million in 1993. The increase
in revenue reflects continued growth of specialized carrier operations,
particularly dedicated contract, logistics and flatbed services. The average
number of total tractors in the fleet,
9
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including local units, declined 3 percent in the first quarter of 1994, compared
to the first quarter of 1993. This decline was primarily due to the continued
growth of dry van business transported utilizing intermodal railroad services.
Total operating expenses for the first quarter of 1994 increased 6 percent
over the same period of 1993. Operating income increased 20 percent, from $10.9
million in 1993 to $13.0 million in 1994.
Salaries, wages and employee benefits declined 2 percent for the quarter
consistent with the decrease in the average number of tractors in the fleet.
Fuel and fuel taxes decreased 3 percent in direct relationship to fleet size,
with fuel miles per gallon and cost per gallon at substantially the same levels
for both periods.
The 51 percent increase in purchased transportation and spotting reflects
the growth of intermodal volume and an increase in payments to third party
transportation companies for logistics services provided. The increase in
depreciation expense is in-line with revenue growth and reflects the continued
investment in new containers, chassis and on-board computers. The decrease in
insurance and claims expense reflects the Company's focus on safety and a
corresponding reduction in accident frequency.
Operating taxes and licenses expense decreased 25 percent due in part, to
the growth of intermodal traffic and a corresponding decrease of tractor miles.
Communication and utilities declined due to certain rate reductions and on-board
communication devices installed in a portion of the fleet. General and
administrative expenses rose 14 percent primarily due to increased spending for
advertising and other driver recruiting expenses.
Interest expense increased significantly during the first quarter of 1994
due to higher levels of long-term debt associated with acquisitions of revenue
equipment. The effective income tax rate declined to approximately 33 percent
from 37 percent in 1993, reflecting additional tax credits and favorable state
tax audits settled during the first quarter of 1994.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the three months ended March
31, 1994 was $60.8 million, up from $33.3 million in 1993. A significant
portion of this increase relates to revenue equipment which was sold in late
1993, which funds were received during the first quarter of 1994.
Net additions to property and equipment for the first quarter of 1994
totaled $55 million compared to $18 million in 1993. This increase reflects
planned investments in containers, chassis and on-board computer equipment.
Gross additions to property and equipment will continue to be significant during
the next few quarters.
10
<PAGE>
The Company modified its commercial paper note program effective April 1,
1994. The program currently consists of two $100 million revolving credit
agreements which expire through March 31, 1997.
The Company plans to fund future capital expenditures with additional
borrowings under an outstanding shelf registration, existing credit facilities
and cash provided by operations.
11
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the period covered by this
report.
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J.B. HUNT TRANSPORT SERVICES, INC.
DATE: April 27, 1994 BY: /s/ Kirk Thompson
-------------- --------------------
Kirk Thompson
President and
Chief Executive Officer
DATE: April 27,1994 BY: /s/ Jerry W. Walton
-------------- --------------------
Jerry W. Walton
Executive Vice President, Finance
and Chief Financial Officer
13
