-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U20SvALoH+nv4FloBH5AcyV2SxBv2gTbZSBa1uO9nnYhmoWVE5YbXN+O5XUa/2l1 /LhDE2NkiSKcLuvz1CoDrA== 0000912057-96-016436.txt : 19960903 0000912057-96-016436.hdr.sgml : 19960903 ACCESSION NUMBER: 0000912057-96-016436 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960807 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUNT J B TRANSPORT SERVICES INC CENTRAL INDEX KEY: 0000728535 STANDARD INDUSTRIAL CLASSIFICATION: 4213 IRS NUMBER: 710335111 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11757 FILM NUMBER: 96604829 BUSINESS ADDRESS: STREET 1: 615 JB HUNT CORPORATE DR CITY: LOWELL STATE: AR ZIP: 72745 BUSINESS PHONE: 5018200000 10-Q 1 FORM 10-Q 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, 1996 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, 1996 was 38,118,056 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 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, 1996 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 1996. 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, 1995. INDEX Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1996 and 1995........................................ Page 3 Consolidated Balance Sheets as of June 30, 1996 and December 31,1995.................................. Page 4 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995............................. Page 5 Notes to Consolidated Financial Statements as of June 30, 1996................................................. 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 J.B. HUNT TRANSPORT SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
- - ---------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 - - ---------------------------------------------------------------------------------------------------------------- 1996 1995 1996 1995 - - ---------------------------------------------------------------------------------------------------------------- Operating revenues $ 372,573 $ 329,219 $ 726,587 $ 638,643 Operating expenses Salaries, wages and employee benefits 122,186 115,487 238,622 220,604 Purchased transportation 98,857 83,362 196,828 160,814 Fuel and fuel taxes 42,115 34,555 82,249 70,137 Depreciation 29,867 33,755 64,011 65,778 Operating supplies and expenses 23,905 26,331 46,503 47,318 Insurance and claims 18,005 11,974 31,170 22,515 General and administrative expenses 8,351 9,588 15,814 15,900 Operating taxes and licenses 7,120 6,976 14,282 12,855 Communication and utilities 4,731 3,977 9,240 5,770 - - ---------------------------------------------------------------------------------------------------------------- Total operating expenses 355,137 326,005 698,719 621,691 - - ---------------------------------------------------------------------------------------------------------------- Operating income 17,436 3,214 27,868 16,952 Interest expense 6,362 6,609 12,273 12,585 - - ---------------------------------------------------------------------------------------------------------------- Earnings (loss) before income taxes 11,074 (3,395) 15,595 4,367 Income taxes 4,208 (1,256) 5,926 1,616 - - ---------------------------------------------------------------------------------------------------------------- Net earnings (loss) $ 6,866 $ (2,139) $ 9,669 $ 2,751 - - ---------------------------------------------------------------------------------------------------------------- - - ---------------------------------------------------------------------------------------------------------------- Common shares outstanding 38,061 38,569 38,068 38,562 - - ---------------------------------------------------------------------------------------------------------------- - - ---------------------------------------------------------------------------------------------------------------- Earnings (loss) per share $ 0.18 $ (0.06) $ 0.25 $ 0.07 - - ---------------------------------------------------------------------------------------------------------------- - - ----------------------------------------------------------------------------------------------------------------
3 J.B. HUNT TRANSPORT SERVICES, INC. CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) - - -------------------------------------------------------------------------------- JUNE 30, 1996 DECEMBER 31, 1995 - - -------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 6,000 $ 4,260 Accounts receivable 167,743 143,002 Prepaid expenses 19,376 29,645 Deferred income taxes 11,987 10,171 - - -------------------------------------------------------------------------------- Total current assets 205,106 187,078 - - -------------------------------------------------------------------------------- Property and equipment 1,222,127 1,184,808 Less accumulated depreciation 403,149 375,798 - - -------------------------------------------------------------------------------- Net property and equipment 818,978 809,010 - - -------------------------------------------------------------------------------- Other assets 22,327 20,694 - - -------------------------------------------------------------------------------- $1,046,411 $1,016,782 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 61,870 $ 30,310 Trade accounts payable 86,986 86,466 Claims accruals 34,875 38,014 Accrued expenses 27,954 25,986 Other current liabilities 3,216 3,823 - - -------------------------------------------------------------------------------- Total current liabilities 214,901 184,599 - - -------------------------------------------------------------------------------- Long-term debt 334,357 339,015 Claims accruals 13,500 13,500 Deferred income taxes 123,312 122,729 Stockholders' equity 360,341 356,939 - - -------------------------------------------------------------------------------- $1,046,411 $1,016,782 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- 4 J.B. HUNT TRANSPORT SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) - - -------------------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30 - - -------------------------------------------------------------------------------- 1996 1995 - - -------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 9,669 $ 2,751 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, net of gain on disposition of equipment 64,011 65,778 Deferred income taxes (1,233) (5,103) Tax benefit of stock options exercised 386 287 Changes in assets and liabilities: Accounts receivable (24,741) (6,703) Prepaid expenses 10,269 6,441 Trade accounts payable 520 24,367 Claims accruals (3,139) 1,708 Accrued expenses and other current liabilities 1,361 (1,604) - - -------------------------------------------------------------------------------- Net cash provided by operating activities 57,103 87,922 - - -------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property and equipment (95,786) (119,441) Proceeds from sale of equipment 21,807 21,529 Increase in other assets (2,791) (5,765) - - -------------------------------------------------------------------------------- Net cash used in investing activities (76,770) (103,677) - - -------------------------------------------------------------------------------- Cash flows from financing activities: Net borrowings of short-term obligations 26,902 20,338 Proceeds from sale of treasury stock 2,066 363 Repurchase of treasury stock (3,778) -- Dividends paid (3,783) (3,855) - - -------------------------------------------------------------------------------- Net cash provided by financing activities 21,407 16,846 - - -------------------------------------------------------------------------------- Net increase in cash and cash equivalents 1,740 1,091 - - -------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 4,260 2,142 - - -------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 6,000 $ 3,233 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 12,418 $ 12,736 Income Taxes 789 3,645 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- 5 J.B. HUNT TRANSPORT SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) LONG-TERM DEBT Long-term debt consists of (in thousands): 6/30/96 12/31/95 -------- -------- Commercial paper $176,870 $145,310 Senior notes payable, interest at 6.25% payable semiannually 100,000 100,000 Senior notes payable, interest at 7.75% payable semiannually 5,000 5,000 Senior notes payable, interest at 7.84% payable semiannually 15,000 20,000 Senior subordinated notes, interest at 7.80% payable semiannually 50,000 50,000 Senior notes payable, interest at 6.25% payable semiannually 25,000 25,000 Senior notes payable, interest at 6.00% payable semiannually 25,000 25,000 -------- -------- 396,870 370,310 Less current maturities (61,870) (30,310) Unamortized discount (643) (985) -------- -------- $334,357 $339,015 -------- -------- -------- -------- The Company is authorized to issue up to $250 million in notes under its commercial paper note program. These notes are supported by two credit agreements with a group of banks. One agreement for $125 million expires March 27, 1997 and $125 million expires March 31, 1999. 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 The 6.25% senior notes were issued on November 17, 1995 and are payable at maturity on November 17, 2000. The 6.00% senior notes were issued on December 12, 1995 and are payable at maturity on December 12, 2000. 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 non-statutory options to purchase Company common stock follows: Number of Number of Option price shares shares per share exercisable --------- -------------- ----------- Outstanding at December 31, 1995 2,725,731 $ 9.33 - 24.63 415,606 ----------- Granted 2,660,000 17.63 - 21.25 Exercised (188,656) 9.67 - 18.75 Terminated (205,850) 11.58- 22.75 --------- -------------- ----------- Outstanding at June 30, 1996 4,991,225 $ 9.33 - 24.63 328,900 --------- -------------- ----------- On July 18, 1996, the Company's Board of Directors declared a regular quarterly cash dividend of $.05 per share payable on August 19, 1996 to stockholders of record on August 2, 1996. 7 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, 1996, and the related condensed consolidated statements of earnings and cash flows for the three-month and six- month periods ended June 30, 1996 and 1995, 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, 1995, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 9, 1996, 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, 1995, 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 12, 1996 8 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, 1995. RESULTS OF OPERATIONS The following table sets forth the change in amounts and percentage change between the second quarter of 1996 and the comparable period in 1995 of certain revenue, expense and operating items. Three Months Ended June 30, 1996 vs. 1995 (In thousands except tractor data) Increase (decrease) % in amounts change ---------- --------- Operating revenues $43,354 13% ------------------------------------------------------------------ ------------------------------------------------------------------ Average number of tractors in the fleet (110) (1%) ------------------------------------------------------------------ ------------------------------------------------------------------ Operating expenses: Salaries, wages and employee benefits 6,699 6% Purchased transportation 15,495 19% ------------------------------------------------------------------ Fuel and fuel taxes 7,560 22% Depreciation (3,888) (12%) ------------------------------------------------------------------ Operating supplies and expenses (2,426) (9%) Insurance and claims 6,031 50% ------------------------------------------------------------------ General and administrative expenses (1,237) (13%) Operating taxes and licenses 144 2% Communication and utilities 754 19% ------------------------------------------------------------------ Total operating expenses 29,132 9% ------------------------------------------------------------------ Operating income 14,222 443% ------------------------------------------------------------------ ------------------------------------------------------------------ The following discussion relates to the table set forth above and the attached interim consolidated financial statements for the quarter ended June 30, 1996 and 1995. OPERATING REVENUES Operating revenues for the second quarter of 1996 increased approximately $43 million, or 13 percent, to $372.6 million from $329.2 million in the second quarter of 9 1995. The average number of total tractors in the fleet decreased 1 percent during the same period. The increase in revenue between quarters includes the following by type of freight: Increase in Revenue Second Quarter 1996 vs. Second Quarter 1995 (millions of dollars) Intermodal $26 Logistics management 8 Dedicated contract 3 Other, net 6 --- $43 --- Intermodal volume continued to increase with loads up 23 percent during the second quarter of 1996. Business conditions and tractor productivity measurements both showed positive improvement during the second quarter. The van division's tractor utilization was at the highest level in more than five years. Operating revenues and earnings were negatively impacted during the second quarter of 1996 by a two to two and one-half percent decline in general freight rates depending upon the type of service. OPERATING EXPENSES Total operating expenses for the second quarter of 1996 increased approximately $29 million, or 9 percent over the comparable period of 1995. Operating income increased by $14 million to $17.4 million from $3.2 million. The significant increase in 1996 operating income, from an unusually low second quarter of 1995, was due primarily to the higher tractor utilization mentioned above. In addition, a pretax gain of approximately $3 million was recognized during the current quarter, from the combination of the Company's parcel management services operation into CTC Distribution Services, L.L.C. of St. Paul, Minnesota. This transaction, which was announced in April 1996, was accounted for as an exchange of assets. Gains on the disposition of revenue equipment, which had been significant in some prior reporting periods, were approximately $115,000 in the second quarter of 1996 (excluding the parcel management gain), compared with $912,000 in 1995. Equipment gains are classified as a reduction of depreciation expense in the Consolidated Statements of Operations. Salaries, wages and employee benefits increased 6 percent during the second quarter of 1996, reflecting pay increases for the Company's least experienced drivers effective in April, 1995 and increases for other employees during 1996. Purchased transportation expense increased 19 percent, reflecting payments to railroads and third-party companies for intermodal and transportation services provided to the Company. Fuel and fuel taxes increased 22 percent, primarily due to a 13 percent increase in cost per gallon. This increase was partially offset by additional fuel surcharge revenue billed to customers during the current quarter. After a rapid increase in March, April and May of 1996, fuel cost per gallon declined in June. Rapid changes in fuel costs can significantly impact earnings. 10 The decline in depreciation expense was primarily due to the gain on the parcel management combination described above. Lower tractor and trailing equipment maintenance costs were the primary causes of the 9 percent decline in operating supplies and expenses. The 50 percent increase in insurance and claims costs was a result of significantly higher accident frequency and severity. The Company announced in June 1996, a decision to limit the speed of its tractors to 59 miles per hour in order to improve safety. The 13 percent decrease in general and administrative expense was due, in part, to lower driver advertising and recruiting costs. The increase in communication and utilities expenses was primarily due to certain rate reductions and one-time credits recognized during the second quarter of 1995. LIQUIDITY AND CAPITAL RESOURCES This discussion of corporate liquidity and capital resources should be read in conjunction with information presented in the Consolidated Statements of Cash Flows and the Consolidated Balance Sheets. Net cash provided by operating activities was approximately $57 million for the six months ended June 30, 1996 compared with $88 million in 1995. This decrease in net cash provided was primarily due to an increase in accounts receivable and certain cash payments made during the first quarter of 1996 for claims accruals and payables for revenue equipment purchases. SELECTED BALANCE SHEET DATA As of ---------------------------------------------- June 30, 1996 December 31, 1995 June 30, 1995 ---------------------------------------------- Working capital ratio .95 1.01 .82 Current maturities of long- term debt (millions) $ 62 $ 30 $ 95 Total debt (millions) $ 396 $ 369 $ 388 Total debt to equity 1.10 1.03 1.04 Total debt as a percentage of total capital .52 .51 .51 Net additions to property and equipment during the first six months of 1996 totaled $74.0 million compared with $97.9 million in 1995. While total debt levels have increased slightly during the past year, the Company's liquidity has not changed significantly. The Company generates significant cash from operating activities and has borrowing capacity to meet its committed and contemplated cash expenditures. In July 1996, Moody's Investors Service changed its rating of the Company's senior unsecured debt from A3 to Baa2 and the rating of subordinated debt from Baa1 to Baa3. 11 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 9, 1996. 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: Votes ---------------------------------- For Against Abstained ---------------------------------- 1. To elect ten (10) directors and to fix the number of directors for the ensuing year at ten (10). 36,138,344 0 175,503 2. To approve the Chairman's Stock Option Incentive Plan. 29,575,982 4,080,030 49,676 3. To ratify the appointment of KPMG Peat Marwick LLP as the Company's independent public accountants for the next fiscal year. 36,279,495 12,452 21,900 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 None applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 Financial Data Schedule 12 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 6, 1996 BY: /s/ Kirk Thompson -------------------------- ----------------------------- Kirk Thompson President and Chief Executive Officer DATE: AUGUST 6, 1996 BY: /s/ Jerry W. Walton -------------------------- ----------------------------- Jerry W. Walton Executive Vice President, Finance and Chief Financial Officer 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 US DOLLARS 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 1,000 6,000 0 167,743 0 0 205,106 1,222,127 403,149 1,046,411 214,901 0 0 0 390 0 1,046,411 726,587 726,587 0 698,719 0 0 12,273 15,595 5,926 9,669 0 0 0 9,669 .25 .25
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