<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, 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 March 31, 1995 was 38,572,964.
<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 month period ended March 31, 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
Consolidated Statements of Earnings for the Three Months
Ended March 31, 1995 and 1994............................Page 3
Consolidated Balance Sheets as of March 31, 1995 and
December 31,1994.........................................Page 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1995 and 1994............................Page 5
Notes to Consolidated Financial Statements as of
March 31, 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
2
<PAGE>
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31
- ------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Operating revenues $309,424 $264,663
Operating expenses
Salaries, wages and employee benefits 105,117 92,565
Purchased transportation 77,452 60,364
Fuel and fuel taxes 35,582 32,393
Depreciation 32,023 24,492
Operating supplies and expenses 20,987 18,562
Insurance and claims 10,541 9,192
Operating taxes and licenses 5,879 5,184
General and administrative expenses 6,312 6,009
Communication and utilities 1,793 2,883
- ------------------------------------------------------------------------
Total operating expenses 295,686 251,644
- ------------------------------------------------------------------------
Operating income 13,738 13,019
Interest expense 5,976 4,487
- ------------------------------------------------------------------------
Earnings before income taxes 7,762 8,532
Income taxes 2,872 2,806
- ------------------------------------------------------------------------
Net earnings $ 4,890 $ 5,726
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Common shares outstanding 38,555 38,503
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Earnings per share $ 0.13 $ 0.15
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
</TABLE>
3
<PAGE>
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
MARCH 31, 1995 DECEMBER 31, 1994
- -------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and temporary investments $ 5,978 $ 2,142
Accounts receivable 145,137 138,295
Prepaid expenses 26,358 32,713
Deferred income taxes 8,083 8,083
- ------------------------------------------------------------------------
Total current assets 185,556 181,233
- ------------------------------------------------------------------------
Property and equipment 1,113,627 1,089,235
Less accumulated depreciation 322,742 299,539
- ------------------------------------------------------------------------
Net property and equipment 790,885 789,696
- ------------------------------------------------------------------------
Other 26,919 22,770
- ------------------------------------------------------------------------
$1,003,360 $ 993,699
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 60,650 $ 68,075
Trade accounts payable 69,362 48,847
Claims accruals 35,494 34,248
Accrued expenses 24,580 24,031
Other current liabilities 1,941 2,720
- ------------------------------------------------------------------------
Total current liabilities 192,027 177,921
- ------------------------------------------------------------------------
Long-term debt 293,197 299,243
Claims accruals 16,750 16,750
Deferred income taxes 119,834 121,887
Stockholders' equity 381,552 377,898
- ------------------------------------------------------------------------
$1,003,360 $ 993,699
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
</TABLE>
4
<PAGE>
J.B. HUNT TRANSPORT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31
(In thousands) (Unaudited)
- -------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,890 $ 5,726
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, net of gain on disposition of equipment 32,023 24,492
Provision (credit) for noncurrent deferred income taxes (2,053) 15
Tax benefit of stock options exercised 264 567
Changes in assets and liabilities:
Accounts receivable (6,842) 8,220
Prepaid expenses 6,355 (2,910)
Trade accounts payable 20,515 21,947
Claims accruals 1,246 1,207
Other current liabilities (230) 1,532
- -------------------------------------------------------------------------------
Net cash provided by operating activities 56,168 60,796
- -------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and equipment (48,408) (73,869)
Proceeds from sale of equipment 15,196 19,132
Increase in other assets (4,149) (5,123)
- -------------------------------------------------------------------------------
Net cash used in investing activities (37,361) (59,860)
- -------------------------------------------------------------------------------
Cash flows from financing activities:
Net repayments of long-term debt (13,471) (1,072)
Proceeds from sale of treasury stock 427 1,432
Dividends paid (1,927) (1,923)
- -------------------------------------------------------------------------------
Net cash provided by financing activities (14,971) (1,563)
- -------------------------------------------------------------------------------
Net increase (decrease) in cash 3,836 (627)
- -------------------------------------------------------------------------------
Cash - beginning of period 2,142 3,390
- -------------------------------------------------------------------------------
Cash - end of period $ 5,978 $ 2,763
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 6,833 $ 5,383
Income Taxes 1,875 2,490
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</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>
3/31/95 12/31/94
------- --------
<S> <C> <C>
Commercial paper $174,116 $182,595
Senior notes payable, interest at 6.25%
payable semiannually 99,731 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
-------- --------
353,847 367,318
Less current maturities (60,650) (68,075)
-------- --------
293,197 299,243
-------- --------
-------- --------
</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 62,500 15.63-19.25
Exercised (77,580) 6.00-13.17
Terminated (23,250) 13.17-22.75
---------- ------------
Outstanding at March 31, 1995 1,296,131 6.00 - 24.63 317,081
---------- ------------ -------
---------- ------------ -------
</TABLE>
On April 13, 1995, the Company's Board of Directors declared a
regular quarterly cash dividend of $.05 per share payable on May
19, 1995 to stockholders of record on May 3, 1995.
7
<PAGE>
KPMG Peat Marwick LLP
1400 Worthen Bank Building
200 West Capitol Avenue
Little Rock, AR 72201-3619
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,
1995, and the related condensed consolidated statements of earnings
and cash flows for the three-month periods ended March 31, 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
April 12, 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 first quarter of 1995 and the
comparable period in 1994 of certain revenue, expense and
operating items.
Three Months Ended March 31, 1995 vs. 1994
(In thousands except tractor data)
<TABLE>
<CAPTION>
Increase
(Decrease) %
in amounts change
---------- ------
<S> <C> <C>
Operating revenues $44,761 17%
-------------------------------------------------------------
-------------------------------------------------------------
Average number of tractors in the fleet 661 10%
-------------------------------------------------------------
-------------------------------------------------------------
Operating expenses:
Salaries, wages and employee benefits $12,552 14%
Purchased transportation 17,088 28%
-------------------------------------------------------------
Fuel and fuel taxes 3,189 10%
Depreciation 7,531 31%
-------------------------------------------------------------
Operating supplies and expenses 2,425 13%
Insurance and claims 1,349 15%
-------------------------------------------------------------
Operating taxes and licenses 695 13%
General and administrative expenses 303 5%
Communication and utilities (1,090) (38%)
-------------------------------------------------------------
Total operating expenses 44,042 18%
-------------------------------------------------------------
Operating income 719 6%
-------------------------------------------------------------
-------------------------------------------------------------
</TABLE>
The following discussion relates to the table set forth
above and the attached interim consolidated financial statements
for the quarter ended March 31, 1995 and 1994.
Operating revenues for the quarter ended March 31, 1995
increased 17 percent, to $309.4 million, compared to $264.7
million in 1994. The $44.7 million increase in revenue included
$17 million of dry van volume, $13 million from Dedicated
Contract Services, $6 million from J.B. Hunt Logistics and $8
million from other specialized transportation services.
Increases in revenue from J.B. Hunt Logistics and Dedicated
Contract Services were brisk and exceeded our expectations while
intermodal and truck dry van volume fell significantly below
plan. Slowing economic activity began in February and
accelerated throughout the remainder of the quarter. Freight
movement improved slightly near the end of March but remains
sluggish and below expectations. The average number of total
tractors in the fleet, including local units increased 10 percent
in the first quarter of 1995, compared to the same period in
1994. Due to the
9
<PAGE>
diversity of transportation services provided, including intermodal
and logistics management, revenue growth cannot be directly related
to the size of the tractor fleet.
Total operating expenses for the first quarter of 1995
increased $44.0 million, or 18 percent, over the comparable
period of 1994. Operating income increased $.7 million to $13.7
million, a 6 percent increase over the first quarter of 1994.
Salaries, wages and employee benefits increased 14 percent
during the first quarter of 1995, reflecting the increase in
fleet size and personnel additions primarily in dedicated and
logistics operations. Purchased transportation expense increased
28 percent due to continued growth of intermodal volume and
increased payments to third party companies for logistics
services. Fuel and fuel taxes increased 10 percent, in line with
the increase in the size of the fleet. Savings from a slightly
lower fuel cost per gallon was offset by higher state fuel tax
expense.
Depreciation expense increased 31 percent due to
significantly lower gains on the disposition of revenue equipment
in 1995 and a 17 percent increase in the size of the trailing
fleet. Operating supplies and expenses increased 13 percent,
reflecting fleet size and travel expenses of dedicated and
logistics personnel.
The 15 percent increase in insurance and claims was partly
due to some unusually high cargo damage experienced during the
first quarter of 1995. Operating taxes and licenses increased 13
percent due to fleet size and slightly higher accrual rates. The
significant decrease in communication and utilities was primarily
due to certain rate reductions and credits recognized during the
first quarter of 1995. General and administrative expense
reflects certain equipment rental credits which more than offset
increases in driver advertising and recruiting expenses.
Interest expense increased by $1.5 million or 33 percent,
primarily due to higher levels of debt associated with the
acquisition of new containers and chassis during 1994 and
slightly higher rates in 1995. The effective income tax rate was
37 percent in 1995 compared to 33 percent for the first quarter
of 1994. The 1994 rate was lower reflecting tax credits and
favorable state tax audits settled during the quarter.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the first
quarter of 1995 was $56.2 million, compared to $60.8 million in
1994. Except for a slight increase in accounts receivable, net
cash provided by operations during the first quarter of 1995 was
in line with normal expectations for such period. Net additions
to property and equipment during the first quarter of 1995
totaled $33.2 million compared to $54.7 million in 1994. This
decrease primarily reflects lower capital expenditures for
containers, chassis and on-board computer equipment. With more
than 75 percent of the dry van fleet converted to containers,
capital spending during 1995 should remain below 1994 levels.
The Company plans to fund future capital expenditures with
cash provided by operating activities and additional borrowings,
if required.
10
<PAGE>
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
None applicable.
ITEM 5. OTHER INFORMATION
None applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedules
(b) Reports on Form 8-K
None were filed during the period covered by this report.
11
<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: May 10, 1995 BY: /s/ Kirk Thompson
--------------------- ------------------------------
Kirk Thompson
President and
Chief Executive Officer
DATE: May 10, 1995 BY: /s/ Jerry W. Walton
--------------------- ------------------------------
Jerry W. Walton
Executive Vice President, Finance
and Chief Financial Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 5,978
<SECURITIES> 0
<RECEIVABLES> 145,137
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 185,556
<PP&E> 1,113,627
<DEPRECIATION> 322,742
<TOTAL-ASSETS> 1,003,360
<CURRENT-LIABILITIES> 192,027
<BONDS> 0
<COMMON> 390
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,003,360
<SALES> 309,424
<TOTAL-REVENUES> 309,424
<CGS> 0
<TOTAL-COSTS> 295,686
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,976
<INCOME-PRETAX> 7,762
<INCOME-TAX> 2,872
<INCOME-CONTINUING> 4,890
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,890
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
