<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, 1995
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, 1995 was 38,577,164.
<PAGE>
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, 1995 are not necessarily indicative of the results that may be expected
for the entire year ending December 31, 1995.
The interim consolidated financial statements have been reviewed by KPMG
Peat Marwick LLP, independent public accountants.
These interim consolidated financial statements should be read in conjunction
with the Company's latest annual report and Form 10-K for the year ended
December 31, 1994.
INDEX
<TABLE>
<S> <C>
Consolidated Statements of Earnings for the Three and Six Months
Ended June 30, 1995 and 1994........................................... Page 3
Consolidated Balance Sheets as of
June 30, 1995 and December 31,1994..................................... Page 4
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1995 and 1994................................ Page 5
Notes to Consolidated Financial Statements
as of June 30, 1995.................................................... Page 6
Review Report of KPMG Peat Marwick LLP................................. Page 8
ITEM 2.
Management's Discussion and Analysis of Results of Operations
and Financial Condition................................................ Page 9
</TABLE>
2
<PAGE>
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
------------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues $329,219 $297,735 $638,643 $562,398
Operating expenses:
Salaries, wages and employee benefits 115,487 100,599 220,604 193,164
Purchased transportation 83,362 68,410 160,814 128,774
Fuel and fuel taxes 34,555 32,075 70,137 64,468
Depreciation 33,755 25,864 65,778 50,356
Operating supplies and expenses 26,331 20,010 47,318 38,572
Insurance and claims 11,974 9,870 22,515 19,062
Operating taxes and licenses 6,976 7,058 12,855 12,242
General and administrative expenses 9,588 7,679 15,900 13,688
Communication and utilities 3,977 2,985 5,770 5,868
-------- -------- -------- --------
Total operating expenses 326,005 274,550 621,691 526,194
-------- -------- -------- --------
Operating income 3,214 23,185 16,952 36,204
Interest expense 6,609 4,532 12,585 9,019
-------- -------- -------- --------
Earnings (loss) before income taxes (3,395) 18,653 4,367 27,185
Income taxes (1,256) 7,078 1,616 9,884
-------- -------- -------- --------
Net earnings (loss) $ (2,139) $ 11,575 $ 2,751 $ 17,301
======== ======== ======== ========
Common shares outstanding 38,569 38,540 38,562 38,521
======== ======== ======== ========
Earnings (loss) per share: $ (0.06) $ 0.37 $ 0.07 $ 0.45
======== ======== ======== ========
</TABLE>
3
<PAGE>
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- ------------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and temporary investments $ 3,233 $ 2,142
Accounts receivable 144,998 138,295
Prepaid expenses 26,272 32,713
Deferred income taxes 8,083 8,083
---------- -----------
Total current assets 182,586 181,233
---------- -----------
Property and equipment 1,175,424 1,089,235
Less accumulated depreciation 353,594 299,539
---------- -----------
Net property and equipment 821,830 789,696
Other 23,230 22,770
---------- -----------
$1,027,646 $993,699
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $ 95,150 68,075
Trade accounts payable 73,214 48,847
Claims accruals 35,956 34,248
Accrued expenses 25,032 24,031
Other current liabilities 115 2,720
---------- -----------
Total current liabilities 229,467 177,921
---------- -----------
Long-term debt 292,506 299,243
Claims accruals 16,750 16,750
Deferred income taxes 116,784 121,887
Stockholders' equity 372,139 377,898
---------- -----------
$1,027,646 $993,699
=========== ===========
</TABLE>
4
<PAGE>
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30
(In thousands) (Unaudited)
----------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,751 $ 17,301
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, net of gain on disposition of equipment 65,778 50,356
Provision (credit) for noncurrent deferred income taxes (5,103) 3,419
Tax benefit of stock options exercised 287 704
Changes in assets and liabilities:
Accounts receivable (6,703) 14,793
Prepaid expenses 6,441 (1,094)
Trade accounts payable 24,367 33,452
Claims accruals 1,708 (2,752)
Other current liabilities (1,604) 2,200
--------- ---------
Net cash provided by operating activities 87,922 118,379
--------- ---------
Cash flows from investing activities:
Additions to property and equipment (119,441) (161,420)
Proceeds from sale of equipment 21,529 35,199
Increase in other assets (5,765) (6,096)
--------- ---------
Net cash used in investing activities (103,677) (132,317)
--------- ---------
Cash flows from financing activities:
Net borrowings of long-term debt 20,338 16,158
Proceeds from sale of treasury stock 363 1,332
Dividends paid (3,855) (3,849)
--------- ---------
Net cash provided by financing activities 16,846 13,641
--------- ---------
Net increase (decrease) in cash 1,091 (297)
--------- ---------
Cash - beginning of period 2,142 3,390
--------- ---------
Cash - end of period $ 3,233 $ 3,093
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 12,736 $ 9,146
Income Taxes 3,645 3,431
========= =========
</TABLE>
5
<PAGE>
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>
6/30/95 12/31/94
-------- ---------
<S> <C> <C>
Commercial paper $207,917 $182,595
Senior notes payable, interest at 6.25%
payable semiannually 99,739 99,723
Senior notes payable, interest at 7.75%
payable semiannually 10,000 10,000
Senior notes payable, interest at 7.84%
payable semiannually 20,000 25,000
Senior subordinated notes, interest at
7.80% payable semiannually 50,000 50,000
-------- ----------
387,656 367,318
Less cureent maturities: (95,150) (68,075)
-------- ---------
292,506 299,243
========= ==========
</TABLE>
The Company is authorized to issue up to $250 million in notes under its
commercial paper note program. The notes are supported by two credit
agreements with a group of banks. One agreement for $125 million expires
March 31, 1996 and $125 million expires March 31, 1997.
The 6.25% senior notes were issued on September 1, 1993 and are due on
September 1, 2003.
The 7.75% senior notes were issued on October 1, 1991 and are payable in
five equal annual installments beginning October 31, 1992.
The 7.84% senior notes were issued on March 31, 1992 and are payable in
five equal annual installments beginning March 31, 1995.
The 7.80% senior subordinated notes were issued on October 30, 1992 and
are payable in five equal annual installments beginning October 30, 2000.
6
<PAGE>
(2) CAPITAL STOCK
The Company maintains a Management Incentive Plan that provides various
vehicles to compensate key employees with Company common stock. A summary of
the restricted and nonstatutory options to purchase Company common stock
follows:
<TABLE>
<CAPTION>
Number of
Number of Option price shares
shares per share exercisable
--------- ------------ -----------
<S> <C> <C> <C>
Outstanding at December 31, 1994 1,334,461 $ 6.00 - 24.63 399,536
=======
Granted 72,500 15.63 - 19.25
Exercised (100,780) 6.00 - 15.33
Terminated (85,750) 10.83 - 23.00
--------- --------------
Outstanding at June 30, 1995 1,220,431 9.33 - 24.63 432,856
========== ============== =======
</TABLE>
On July 20, 1995, the Company's Board of Directors declared a regular
quarterly cash dividend of $.05 per share payable on August 18, 1995 to
stockholders of record on August 2, 1995.
7
<PAGE>
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, 1995,
and the related condensed consolidated statements of earnings and
cash flows for the three and six months ended June 30, 1995 and 1994,
in accordance with standards established by the American Institute of
Certified Public Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of
interim financial information, applying analytical review procedures
to financial data, and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope
than an audit in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of J.B. Hunt
Transport Services, Inc. and subsidiaries as of December 31, 1994,
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 7, 1995, we expressed an
unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1994, is fairly
presented, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
/s/ KPMG Peat Marwick LLP
Little Rock, Arkansas
July 18, 1995
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion should be read in conjunction with the
attached interim consolidated financial statements and notes thereto,
and with the Company's audited consolidated financial statements and
notes thereto for the calendar year ended December 31, 1994.
RESULTS OF OPERATIONS
The following table sets forth the change in amounts and percentage
change between the second quarter of 1995 and the comparable period
in 1994 of certain revenue, expense and operating items.
Three Months Ended June 30, 1995 vs. 1994
(In thousands except tractor data)
<TABLE>
<CAPTION>
Increase
(Decrease) %
In Amounts Change
---------- ------
<S> <C> <C>
Operating revenues $ 31,484 11%
======== ===
Average number of tractors in the fleet 815 12%
======== ===
Operating expenses:
Salaries, wages and employee benefits $ 14,888 15%
Purchased transportation 14,952 22%
-------- ---
Fuel and fuel taxes 2,480 8%
Depreciation 7,891 31%
-------- ---
Operating supplies and expenses 6,321 32%
Insurance and claims 2,104 21%
-------- ---
Operating taxes and licenses (82) (1%)
General and administrative expenses 1,909 25%
Communication and utilities 992 33%
-------- ---
Total operating expenses 51,455 19%
-------- ---
Operating income (19,971) (86%)
======== ====
</TABLE>
The following discussion relates to the table set forth above and the
attached interim consolidated financial statements for the quarter
ended June 30, 1995 and 1994.
Operating revenues for the second quarter of 1995 increased 11
percent to $329.2 million, from $297.7 million in the second quarter
of 1994. The average number of total tractors in the fleet increased
12 percent during the same period. Truck and intermodal dry van
freight volume was unseasonably soft during the second quarter of
1995. The soft demand for dry van services also resulted in a
slightly lower revenue per mile, primarily due to changes in freight
mix. While dry van revenue for the second quarter of 1995 was
essentially equal to 1994, continued growth of specialized carrier
9
<PAGE>
services such as dedicated contract, logistics, flatbed and special
commodities accounted for the $31 million of increased revenue.
Total operating expenses for the second quarter of 1995 increased
$51.5 million, or 19 percent, over the comparable period of 1994.
Operating income declined nearly $20 million to $3.2 million. In
addition to soft demand, the significant decline in operating income
was primarily due to fewer equipment gains, a driver pay increase and
other cost increases.
Salaries, wages and employee benefits increased 15 percent,
reflecting a pay adjustment implemented in April, 1995 for the
Company's least experienced drivers. Purchased transportation
increased 22 percent primarily due to continued growth of intermodal
volume and payments to third-party transportation companies for
logistics services. Fuel and fuel taxes increased at a rate similar
to the increase in revenue with 1995 fuel cost per gallon and miles
per gallon approximately equal to 1994.
The 31 percent increase in depreciation expense was due to significantly
lower equipment gains in 1995 and higher levels of depreciation expense on a
larger trailing equipment fleet and on-board computer equipment installed in
tractors. The increase in operating supplies and expenses reflects
significantly higher tractor maintenance costs associated with operating an
older fleet. The Company may elect to operate slightly older tractors in
certain fleets with local or regional traffic lanes.
Insurance and claims expense increased 21 percent, primarily due
to unusually high cargo claim costs. The Company's accident rate and
liability cost in 1995 was similar to 1994. Operating taxes and
licenses decreased slightly, due, in part, to the growth of
intermodal traffic and a relative decrease in tractor miles. The 25
percent increase in general and administrative expenses was due
primarily to higher levels of spending for driver advertising and
recruiting and recognition of certain uncollectible accounts
receivable amounts. Communications and utilities expense increased
33 percent due to certain rate reductions and credits recognized
during the second quarter of 1994.
Interest expense increased by $2.1 million or 46 percent, primarily related
to higher levels of debt associated with the acquisition of new containers and
chassis. The effective income tax rate was 37 percent in 1995 and 38 percent in
1994.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended
June 30, 1995 was $ 87.9 million, compared to $ 118.4 million in
1994. Cash flow was negatively impacted by lower net earnings in
1995, deferred income tax accruals and an increase in the average
time to collect accounts receivable. Net additions to property and
equipment during the six months ended June 30, 1995 were $ 97.9
million, compared to $ 126.2 million in 1994. This decrease
primarily reflects lower capital expenditures for trailing equipment.
With more than 80 percent of the dry van fleet converted to
containers, capital spending for 1995 should remain below 1994 levels.
10
<PAGE>
The Company filed a prospectus supplement with the Securities and
Exchange Commission on June 14, 1995. The supplement enables the Company to
sell up to $150 million of medium-term notes, due nine months or more from
the date of issuance. The exact timing and amount of future note sales has
not been determined.
The Company plans to fund future capital expenditures with cash provided
by operating activities and additional borrowings, if required.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None applicable.
ITEM 2. CHANGES IN SECURITIES
None applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of J. B. Hunt Transport Services, Inc.
was held on May 11, 1995. 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 Against Abstained
---------- --------- ---------
<S> <C> <C> <C>
1. To elect ten (10) directors and to
fix the number of directors for
the ensuing year at ten (10). 34,172,332 0 129,301
2. To approve the Amended 27,549,508 1,534,479 231,055
Management Incentive Plan
3. To ratify the appointment of
KPMG Peat Marwick LLP as the
Company's independent public
accountants for the next fiscal year. 34,245,829 17,670 38,134
</TABLE>
11
<PAGE>
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.
ITEM 5. OTHER INFORMATION
As discussed in Part 1, Item 2, the Company filed a prospectus supplement
with the Securities and Exchange Commission on June 14, 1995.
The Company filed an Amendment No. 1 to Form S-8 on July 7, 1995
(registration number 33-40028). This filing amended and restated the
Company's Management Incentive Plan and registered an additional 2
million shares of common stock for issuance under the Plan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Form 8-K on July 7, 1995, announcing the
filing of a prospectus supplement enabling the sale of up to
$150 million of medium-term notes. The Form 8-K also
incorporated as exhibits certain documents related to the
prospectus supplement and a press release dated June 19, 1995.
The press release indicated that earnings for the second quarter
ending June 30, 1995 would be significantly below expectations.
12
<PAGE>
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 9, 1995 BY: /s/ Kirk Thompson
--------------------------- -------------------------------
Kirk Thompson
President and
Chief Executive Officer
DATE: August 9,1995 BY: /s/ Jerry W. Walton
--------------------------- -------------------------------
Jerry W. Walton
Executive Vice President, Finance
and Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,233
<SECURITIES> 0
<RECEIVABLES> 144,998
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 182,586
<PP&E> 1,175,424
<DEPRECIATION> 353,594
<TOTAL-ASSETS> 1,027,646
<CURRENT-LIABILITIES> 229,467
<BONDS> 0
<COMMON> 390
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,027,646
<SALES> 638,643
<TOTAL-REVENUES> 638,643
<CGS> 0
<TOTAL-COSTS> 621,691
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,585
<INCOME-PRETAX> 4,367
<INCOME-TAX> 1,616
<INCOME-CONTINUING> 2,751
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,751
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
