<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 June 30, 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 June 30, 1994 was 38,560,016.
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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 and six month periods ended June 30, 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 consolidated 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 and Six Month
Periods Ended June 30, 1994 and 1993.................................. Page 3
Consolidated Balance Sheets as of
June 30, 1994 and December 31, 1993................................... Page 4
Consolidated Statements of Cash Flows for the
Six Month Periods Ended June 30, 1994 and 1993........................ Page 5
Notes to Consolidated Financial Statements
as of June 30, 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 Six Months Ended
June 30 June 30
- - ----------------------------------------------------------------------------------------------
1994 1993 1994 1993
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 297,735 $ 260,400 $ 562,398 $ 507,581
Operating expenses:
Salaries, wages and employee benefits 100,599 96,113 193,164 190,910
Fuel and fuel taxes 32,075 32,242 64,468 65,713
Purchased transportation and spotting 68,410 45,825 128,774 85,823
Depreciation 25,864 17,273 50,356 40,620
Operating supplies and expenses 20,010 18,242 38,572 36,606
Insurance and claims 9,870 11,383 19,062 22,406
Operating taxes and licenses 7,058 7,266 12,242 14,201
Communication and utilities 2,985 3,144 5,868 6,268
General and administrative expenses 7,679 4,558 13,688 9,821
- - ----------------------------------------------------------------------------------------------
Total operating expenses 274,550 236,046 526,194 472,368
- - ----------------------------------------------------------------------------------------------
Operating income 23,185 24,354 36,204 35,213
Interest expense 4,532 2,926 9,019 5,875
- - ----------------------------------------------------------------------------------------------
Earnings before income taxes 18,653 21,428 27,185 29,338
Income taxes 7,078 7,928 9,884 10,855
- - ----------------------------------------------------------------------------------------------
Net earnings $ 11,575 $ 13,500 $ 17,301 $ 18,483
==============================================================================================
Common shares outstanding 38,540 38,193 38,521 38,170
==============================================================================================
Earnings per share: $ .30 $ .35 $ 0.45 $ 0.48
==============================================================================================
</TABLE>
3
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J.B. Hunt Transport Services, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------
June 30, 1994 December 31, 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
Assets
- - ------
Current assets:
Cash and temporary investments $ 3,093 $ 3,390
Accounts receivable 122,491 137,284
Prepaid expenses 26,204 23,210
Deferred income taxes 2,693 4,593
- - -------------------------------------------------------------------------------
Total current assets 154,481 168,477
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Property and equipment 1,017,645 913,962
Less accumulated depreciation 260,140 232,323
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Net property and equipment 757,505 681,639
Other 18,421 12,326
- - -------------------------------------------------------------------------------
$930,407 $862,442
===============================================================================
Liabilities and Stockholders' Equity
- - ------------------------------------
Current liabilities:
Current portion of long-term debt $ 35,891 $ ----
Trade accounts payable 71,030 37,578
Claims accruals 32,372 35,124
Accrued expenses 23,392 20,007
Other current liabilities 1,796 2,981
- - -------------------------------------------------------------------------------
Total current liabilities 164,481 95,690
- - -------------------------------------------------------------------------------
Long-term debt 283,765 303,499
Claims accruals 12,000 12,000
Deferred income taxes 110,709 107,289
Stockholders' equity 359,452 343,964
- - -------------------------------------------------------------------------------
$930,407 $862,442
===============================================================================
</TABLE>
4
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J.B. Hunt Transport Services, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------
Six Months Ended
June 30
(in thousands) (Unaudited)
- - ------------------------------------------------------------------------------------
1994 1993
- - ------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 17,301 $ 18,483
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, net of gain on disposition of equipment 50,356 40,620
Provision for noncurrent deferred income taxes 3,420 4,261
Tax benefit of stock options exercised 704 335
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 14,793 (27,707)
Decrease (increase) in other current assets (1,094) 6,190
Increase in trade accounts payable 33,452 8,562
Increase (decrease) in claims accruals (2,752) 1,710
Increase in other current liabilities 2,200 9,375
- - ------------------------------------------------------------------------------------
Net cash provided by operating activities 118,380 61,829
- - ------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and equipment (161,421) (110,307)
Proceeds from sale of equipment 35,199 35,614
Increase in other assets (6,095) (2,244)
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Net cash used in investing activities (132,317) (76,937)
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Cash flows from financing activities:
Net proceeds from long-term debt 16,157 17,306
Proceeds from exercise of stock options 1,332 1,565
Dividends paid (3,849) (3,816)
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Net cash used by financing activities 13,640 15,055
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Net decrease in cash (297) (53)
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Cash - beginning of period 3,390 1,833
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Cash - end of period $ 3,093 $ 1,780
====================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 9,146 $ 5,802
Income Taxes 3,431 3,151
====================================================================================
</TABLE>
5
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J.B. HUNT TRANSPORT SERVICES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
(1) Long-Term Debt
<TABLE>
<CAPTION>
Long-term debt consists of (in thousands):
6/30/94 12/31/93
------- --------
<S> <C> <C>
Commercial paper $123,283 $106,492
Senior notes payable, interest at 6.25%
payable semiannually 99,707 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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Total debt 319,656 303,499
Less current portion (35,891) ---
-------- --------
Long-term debt $283,765 $303,499
======== ========
</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, were payable in three
equal annual installments beginning July 1, 1992 and were paid off as of July 1,
1994.
The 7.75% senior notes were issued on October 1, 1991 and are payable in
five equal annual installments beginning October 31, 1992.
The 7.84% senior notes were issued on March 31, 1992 and are payable in five
equal annual installments beginning March 31, 1995.
The 7.80% senior subordinated notes were issued on October 30, 1992 and are
payable in five equal annual installments beginning October 30, 2000.
6
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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 89,000 18.25 - 23.50
Exercised (170,390) 6.00 - 19.50
Terminated (34,980) 6.00 - 14.83
---------- ------------- -------------
Outstanding at June 30, 1994 1,072,986 376,333
========= =======
</TABLE>
On July 13, 1994, the Company's Board of Directors declared a regular
quarterly cash dividend of $.05 per share payable on August 15, 1994, to
stockholders of record on August 2, 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 June 30, 1994, and the related condensed
consolidated statements of earnings and cash flows for the three-month and six-
month periods ended June 30, 1994 and 1993, in accordance with standards
established by the American Institute of Certified Public Accountants.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of J.B. Hunt Transport Services, Inc.
and subsidiaries as of December 31, 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 June 30, 1994, 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
July 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 consolidated 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 second quarter of 1994 and the comparable period in 1993 of
certain revenue, expense and operating items.
Three Months Ended June 30, 1994 vs. 1993
(In thousands except tractor data)
<TABLE>
<CAPTION>
Increase
(Decrease) %
in amounts change
-------------- ---------
<S> <C> <C>
Operating revenues $ 37,335 14%
==============================================================================
Average number of tractors in the fleet 111 2%
==============================================================================
Operating expenses:
Salaries, wages and employee benefits 4,486 5%
Fuel and fuel taxes (167) (1)
- - ------------------------------------------------------------------------------
Purchased transportation and spotting 22,585 49
Depreciation 8,591 50
- - ------------------------------------------------------------------------------
Operating supplies and expenses 1,768 10
Insurance and claims (1,513) (13)
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Operating taxes and licenses (208) (3)
Communication and utilities (159) (5)
General and administrative expenses 3,121 68
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Total operating expenses 38,504 16
- - ------------------------------------------------------------------------------
Operating income ($1,169) (5%)
==============================================================================
</TABLE>
The following discussion relates to the table set forth above and the
attached interim consolidated financial statements for the quarter ended June
30, 1994. Operating revenues for the second quarter ended June 30, 1994
increased $37.3 million, or 14 percent, to $297.7 million, compared to $260.4
million in 1993. The
9
<PAGE>
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, including local units, increased 2
percent in the second quarter of 1994, compared to the second quarter of 1993.
Total operating expenses for the second quarter of 1994 increased $38.5
million, or 16 percent, over the same period of 1993. Operating income declined
$1.2 million to $23.2 million for the second quarter of 1994. The decline in
operating income was due to a change in the estimate of salvage value for
certain trailers adopted effective April 1, 1993, which increased operating
income for the second quarter of 1993 by $2.5 million. In addition, fewer
trailers were disposed of during the second quarter of 1994, resulting in lower
gains on revenue equipment transactions. After consideration of the change in
estimate and lower equipment gains, operating income during the second quarter
of 1994 was slightly higher than the comparable period in 1993.
Salaries, wages and employee benefits increased 5 percent during the
second quarter of 1994, reflecting personnel additions primarily in dedicated
and logistics operations. Fuel cost per gallon and miles per gallon were at
similar levels in 1994 and 1993. The 49 percent increase in purchased
transportation and spotting was a result of the continued growth of intermodal
volume and increased payments to third party transportation companies for
logistics services.
The significant increase in depreciation was due primarily to the change
in salvage value in 1993 and lower trailer gains in 1994 discussed above.
Depreciation expense also reflects additional trailing equipment (containers and
chassis) added to the fleet during 1994, in connection with intermodal
operations.
Operating supplies and expenses increased in relative proportion to
operating revenues and reflect slightly higher tractor and trailer maintenance
expenses. The decline in insurance and claims expense reflects the focus on
safety commensed during the third quarter of 1993 and resulting reductions in
accident frequency in 1994.
Operating taxes and licenses decreased due, in part, to the growth of
intermodal traffic and a corresponding decrease in tractor miles. Communication
and utilities declined due to certain rate reductions and on-board communication
devices installed in a portion of the fleet. The increase in general and
administrative expenses reflect significant spending for driver recruiting and
retention activities.
Interest expense increased significantly during the second quarter of
1994 due to higher levels of debt associated with acquisitions of new revenue
equipment.
10
<PAGE>
Liquidity and Capital Resources
- - -------------------------------
Net cash provided by operating activities for the six months ended June
30, 1994 was $118.4 million, up from $61.8 million in 1993. A significant
portion of this increase related to revenue equipment which was sold in late
1993, with the related funds received during the first few months of 1994.
Net additions to property and equipment during the first six months of
1994 totaled $126 million, compared to $75 million in 1993. This increase
reflects planned investments in containers, chassis and on-board computer
equipment. Additions to property and equipment will continue to be significant
during the remainder of 1994.
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.
11
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
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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
- - ------- ---------------------------------------------------
The annual meeting of stockholders of J.B. Hunt Transport Services, Inc.
was held on May 12, 1994. Proxies for the meeting were solicited pursuant to
Regulation 14A of the Securities Exchange Act of 1934. At the meeting,
stockholders voted on the following resolutions with the vote tabulations so
indicated:
<TABLE>
<CAPTION>
Votes
-------------------------------------
For Aganist Abstained
----------- ----------- -----------
<S> <C> <C> <C>
1. To fix the number of Directors
at ten for the ensuing year 33,875,269 0 30,465
2. To ratify the appointment of
KPMG Peat Marwick as the
Company's independent public
accountants for the next fiscal
year. 33,881,297 6,761 17,676
</TABLE>
There was no solicitation in opposition to management's nominees for
Directors as listed in the proxy statement and each nominee was elected with in
excess of ninety-nine percent of the shares entitled to vote. Stockholders also
granted discretionary authority to the proxies to vote for such other matters as
might properly come before the meeting or any adjournment thereof, however, no
such business came before the Annual Meeting.
12
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Item 5. Other Information
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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.
13
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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: August 2, 1994 BY: /s/ Kirk Thompson
---------------------- ---------------------------
Kirk Thompson
President and
Chief Executive Officer
DATE: August 2, 1994 BY: /s/ Jerry W. Walton
---------------------- --------------------------
Jerry W. Walton
Executive Vice President, Finance
and Chief Financial Officer
14
