-----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, TBKuwWQlNZCbIIG6ptYmRICfeGw/H1AsYoV7fNZ0VJITGSdkY53EXZm9XnaygVoO jMpSrKGHVlqOfe7aPD/oAA== 0000912057-96-025603.txt : 19961113 0000912057-96-025603.hdr.sgml : 19961113 ACCESSION NUMBER: 0000912057-96-025603 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUNT J B TRANSPORT SERVICES INC CENTRAL INDEX KEY: 0000728535 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [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: 96658897 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 September 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 organization) Identification No.) 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 September 30, 1996 was 37,996,906 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 nine month periods ended September 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 Earnings for the Three and Nine Months Ended September 30, 1996 and 1995.................................... Page 3 Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995............................. Page 4 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1995........................ Page 5 Notes to Consolidated Financial Statements as of September 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 EARNINGS (in thousands, except per share data) (unaudited) - ------------------------------------------------------------------------------------------ Three Months Ended Nine Months Ended September 30 September 30 - ------------------------------------------------------------------------------------------ 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------ Operating revenues $378,739 $355,114 $1,105,326 $993,757 Operating expenses Salaries, wages and employee benefits 124,914 119,082 363,536 339,686 Purchased transportation 115,258 101,451 312,086 262,265 Fuel and fuel taxes 38,043 35,818 120,292 105,956 Depreciation 28,147 30,974 92,158 96,751 Operating supplies and expenses 22,957 24,875 69,460 72,192 Insurance and claims 14,021 14,074 45,191 36,589 General and administrative expenses 6,645 7,893 22,459 19,390 Operating taxes and licenses 6,738 6,535 21,020 23,794 Communication and utilities 4,583 4,696 13,823 10,466 - ------------------------------------------------------------------------------------------ Total operating expenses 361,306 345,398 1,060,025 967,089 - ------------------------------------------------------------------------------------------ Operating income 17,433 9,716 45,301 26,668 Interest expense 6,010 6,135 18,283 18,720 Other non-operating expense -- 660 -- 660 - ------------------------------------------------------------------------------------------ Earnings before income taxes 11,423 2,921 27,018 7,288 Income taxes 4,341 1,081 10,267 2,697 - ------------------------------------------------------------------------------------------ Net earnings $ 7,082 $ 1,840 $ 16,751 $ 4,591 - ------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------ Common shares outstanding 38,095 38,669 38,077 38,598 - ------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------ Earnings per share $ 0.19 $ 0.05 $ 0.44 $ 0.12 - ------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------
3 J.B. HUNT TRANSPORT SERVICES, INC. CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) - ---------------------------------------------------------------------------- September 30, 1996 December 31, 1995 - ---------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 2,938 $ 4,260 Accounts receivable 171,007 143,002 Prepaid expenses 14,884 29,645 Deferred income taxes 10,171 10,171 - ---------------------------------------------------------------------------- Total current assets 199,000 187,078 - ---------------------------------------------------------------------------- Property and equipment 1,223,443 1,184,808 Less accumulated depreciation 400,346 375,798 - ---------------------------------------------------------------------------- Net property and equipment 823,097 809,010 - ---------------------------------------------------------------------------- Other assets 26,851 20,694 - ---------------------------------------------------------------------------- $ 1,048,948 $ 1,016,782 - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 64,550 $ 30,310 Trade accounts payable 79,442 86,466 Claims accruals 32,931 38,014 Accrued expenses 30,184 25,986 Other current liabilities 4,254 3,823 - ---------------------------------------------------------------------------- Total current liabilities 211,361 184,599 - ---------------------------------------------------------------------------- Long-term debt 332,510 339,015 Claims accruals 13,500 13,500 Deferred income taxes 125,466 122,729 Stockholders' equity 366,111 356,939 - ---------------------------------------------------------------------------- $ 1,048,948 $ 1,016,782 - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- 4 J.B. HUNT TRANSPORT SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) - -------------------------------------------------------------------------------------------- Nine Months Ended September 30 - -------------------------------------------------------------------------------------------- 1996 1995 - -------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 16,751 $ 4,591 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, net of gain on disposition of equipment 92,158 96,751 Deferred income taxes 2,737 (3,477) Tax benefit of stock options exercised 381 316 Changes in assets and liabilities: Accounts receivable (28,005) (18,306) Prepaid expenses 14,761 8,631 Trade accounts payable (7,024) 27,865 Claims accruals (5,083) 6,113 Accrued expenses and other current liabilities 4,629 (3,042) - -------------------------------------------------------------------------------------------- Net cash provided by operating activities 91,305 119,442 - -------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property and equipment (146,927) (145,400) Proceeds from sale of equipment 40,682 38,612 Increase in other assets (4,759) (8,464) - -------------------------------------------------------------------------------------------- Net cash used in investing activities (111,004) (115,252) - -------------------------------------------------------------------------------------------- Cash flows from financing activities: Net borrowings of long-term obligations 27,735 1,562 Proceeds from sale of treasury stock 2,137 2,263 Repurchase of treasury stock (5,806) -- Dividends paid (5,689) (5,789) - -------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 18,377 (1,964) - -------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (1,322) 2,226 - -------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 4,260 2,142 - -------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 2,938 $ 4,368 - -------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 18,364 $ 19,056 Income Taxes 974 3,050 - -------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------
5 J.B. HUNT TRANSPORT SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) LONG-TERM DEBT Long-term debt consists of (in thousands): 9/30/96 12/31/95 -------- -------- Commercial paper $179,550 $145,310 Senior notes payable, interest at 6.25% payable semiannually 98,260 100,000 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 -------- -------- 397,810 370,310 Less current maturities (64,550) (30,310) Unamortized discount (750) (985) -------- -------- $332,510 $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 2,792,500 17.63 - 21.25 Exercised (191,456) 9.67 - 18.75 Terminated (270,350) 11.58 - 23.00 --------- -------------- Outstanding at September 30, 1996 5,056,425 $ 9.33 - 24.63 322,850 --------- -------------- ------- --------- -------------- ------- On October 17, 1996, the Company's Board of Directors declared a regular quarterly cash dividend of $.05 per share payable on November 22, 1996 to stockholders of record as of November 4, 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 September 30, 1996, and the related condensed consolidated statements of earnings and cash flows for the three-month and nine-month periods ended September 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 October 11, 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 third quarter of 1996 and the comparable period in 1995 of certain revenue, expense and operating items. Three Months Ended September 30, 1996 vs. 1995 (In thousands except tractor data) Increase (decrease) % in amounts change ---------- ------ Operating revenues $23,625 7% - --------------------------------------------------------------- Average number of tractors in the fleet (50) (1%) - --------------------------------------------------------------- Operating expenses: Salaries, wages and employee benefits $ 5,832 5% Purchased transportation 13,807 14% - --------------------------------------------------------------- Fuel and fuel taxes 2,225 6% Depreciation (2,827) (9%) - --------------------------------------------------------------- Operating supplies and expenses (1,918) (8%) Insurance and claims (53) 0% - --------------------------------------------------------------- General and administrative expenses (1,248) (16%) Operating taxes and licenses 203 3 Communication and utilities (113) (2%) - --------------------------------------------------------------- Total operating expenses 15,908 5% - --------------------------------------------------------------- Operating income $ 7,717 79% - --------------------------------------------------------------- - --------------------------------------------------------------- The following discussion relates to the table set forth above and the attached interim statements for the quarter ended September 30, 1996 and 1995. OPERATING REVENUES Operating revenues for the third quarter of 1996 increased approximately $24 million, or 7 percent, to $378.7 million from $355.1 million in the third quarter of 9 1995. The average number of total tractors in the fleet decreased 1 percent during the same period. The change in revenue between quarters includes the following by type of freight: Change in Revenue Third Quarter 1996 vs. Third Quarter 1995 (millions of dollars) Intermodal $ 16 Logistics management 27 Dedicated contract 2 Other, net (21) ---- $ 24 ---- ---- Intermodal loads increased 13 percent during the third quarter of 1996. Operating revenues increased 5 percent in the van division, approximately 100 percent in logistics management and 5 percent in dedicated contract. The decrease in other above reflects the sale of the special commodities and parcel management businesses. Van division truck only rates were approximately 1.4 percent lower during the third quarter of 1996, while intermodal rates were unchanged. OPERATING EXPENSES Total operating expenses for the third quarter of 1996 increased approximately $16 million, or 5 percent over the comparable period of 1996. Operating income increased by $7.7 million to $17.4 million from $9.7 million. The significant increase in 1996 operating income, from an unusually low third quarter of 1995, was due primarily to higher tractor utilization and reduced operating expenses. In addition, a pretax gain of approximately $3 million was recognized during the current quarter, from the sale of the special commodities business. Gains on the disposition of revenue equipment, which had been significant in some prior reporting periods, were approximately $1.2 million in the third quarter of 1996 (excluding the special commodities gain), compared with $3.6 million in 1995. Gains are classified as a reduction of depreciation expense in the Consolidated Statements of Earnings. Salaries, wages and employee benefits increased 5 percent during the third quarter of 1996, due, in part, to $1.7 million paid to drivers in connection with a new safe driving bonus program. Purchased transportation expense increased 14 percent, reflecting payments to railroads and third-party companies that furnished intermodal and truck transportation services to the Company. Fuel and fuel tax expense increased 6 percent during the third quarter of 1996. This increase was primarily due to an 11 percent increase in cost per gallon partially offset by a nearly 5 percent increase in miles per gallon. The higher fuel cost was also partially recovered through additional fuel surcharge revenue billed to customers. Rapid changes in fuel costs can significantly impact earnings. 10 The 9 percent decline in depreciation expense was primarily due to the gain on sale of the special commodities business described above. The 8 percent decline in operating supplies and expenses was due, in part, to lower tractor and trailing equipment maintenance costs. Insurance and claims costs were flat when comparing the third quarter of 1996 to the same period in 1995. However, 1996 insurance and claims expense was down nearly $4 million from the second quarter of 1996 to the third quarter of 1996. The Company announced a decision in June, 1996 to limit the speed of its tractors to 59 miles per hour in order to improve safety. General and administrative expenses declined 16 percent, due, in part, to lower driver advertising and recruiting cost. 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 $91 million for the nine months ended September 30, 1996 compared with $119 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 settlements and payables for revenue equipment purchases. SELECTED BALANCE SHEET DATA As of ----------------------------------------------------------- September 30, 1996 December 31, 1995 September 30, 1995 ------------------ ----------------- ------------------ Working capital ratio .94 1.01 .91 Current maturities of long- term debt (millions) $ 65 $ 30 $ 75 Total debt (millions) $ 397 $ 369 $369 Total debt to equity 1.08 1.03 .99 Total debt as a percentage of total capital .52 .51 .50
Net additions to property and equipment during the nine months ended September 30, 1996 totaled $106 million compared with $107 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 October, 1996 Standard and Poor's lowered its ratings on the Company as follows: * corporate credit to BBB+ from A- * senior unsecured to BBB+ from A- * subordinated debt to BBB from BBB+ 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 None applicable. ITEM 5. OTHER INFORMATION On August 8, 1996 the Company announced an agreement to combine J.B. Hunt's special commodities business into Trism Secured. Trism acquired the business and certain other assets in exchange for cash and stock options. On October 17, 1996 the Company announced that its Board of Directors had authorized the repurchase of up to 2.0 million shares of outstanding common stock. This action was in addition to previous authorizations in 1994 and 1995. 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: November 11, 1996 BY: /s/ Kirk Thompson ------------------------- --------------------------------- Kirk Thompson President and Chief Executive Officer DATE: November 11, 1996 BY: /s/ Jerry W. Walton ------------------------- --------------------------------- Jerry W. Walton Executive Vice President, Finance and Chief Financial Officer 13 EX-27 2 EXHIBIT 27
5 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 6,000 0 171,007 0 0 199,000 1,223,443 400,346 1,048,948 211,361 0 0 0 390 0 1,048,948 726,587 1,105,326 0 1,060,025 0 0 18,283 27,018 10,267 16,751 0 0 0 16,751 .44 .44
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