Why did J.B. Hunt report a net loss in 1995?

The net loss of $2,170 thousand reflected $17,296 thousand of special charges recorded in the fourth quarter to reduce the carrying value of idle and under-performing assets, primarily related to the decision to exit the auto hauling business. The company also cited higher purchased transportation and insurance and claims costs and lower gains on equipment dispositions.

Which service lines drove revenue growth?

The filing attributes the $144.6 million revenue increase primarily to intermodal ($76.8 million), dedicated contract ($58.5 million) and logistics management ($17.8 million) services, partly offset by an $18.5 million decline in other revenue, including the conversion of dry van freight to intermodal. Intermodal revenue rose 19%, dedicated revenue rose approximately 110% and logistics revenue rose 22%.

What pressures on earnings does management identify?

Management cited lower gains on equipment dispositions ($8.1 million in 1995 versus $12.3 million in 1994), a softer used equipment market, and freight rate declines of approximately 1% for dry van and 3% for intermodal. Salaries, wages and benefits rose 13%, fuel and fuel taxes rose 9%, and interest expense increased about $5.0 million.

How is the company funding its operations and capital spending?

Net cash provided by operating activities was $175 million in 1995. Total debt was $369.3 million, and the company had $145 million of commercial paper outstanding under a $250 million program. It also had approximately $166 million of uncommitted lines of credit, none outstanding at year-end, and committed to purchase approximately $203 million of revenue and service equipment, net of $51 million in expected proceeds.

Is the company in compliance with its debt covenants and what is its dividend policy?

During January 1996, the company and its creditors amended certain terms of its credit and note agreements in consideration of the special charges, and the company stated it is in compliance with all financial covenants. The Board declared a quarterly dividend of $.05 per share payable February 16, 1996, and the company paid $.20 per share in both 1995 and 1994.

JBHT 10-K FY1995 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed April 1, 1996. Cited figures are marked; the original filing is the authoritative source.

J.B.

Hunt Transport Services, Inc. (NASDAQ: JBHT), an Arkansas holding company, reported a net loss of $2,170 thousand^a, or $(.06) per share, for fiscal 1995 on operating revenues of $1,352,225 thousand, up from $1,207,601 thousand in 1994. The result reflected $17,296 thousand of special charges recorded in the fourth quarter to reduce the carrying value of idle and under-performing assets, primarily associated with the company's decision to exit the auto hauling business. Excluding those charges, the operating ratio was 97.1%, compared with 93.0% in 1994, and the reported operating ratio was 98.4%.

Operating income fell to $21,345 thousand^b from $84,896 thousand in 1994. Growth came from intermodal, dedicated contract and logistics services. Intermodal revenue rose 19% in 1995, dedicated revenue rose approximately 110%, and logistics revenue rose 22%.

Purchased transportation expense increased 26%, and insurance and claims expense increased 34%, with management pointing to a small number of severe accidents in late 1995. Management also cited lower gains on equipment dispositions ($8.1 million^c versus $12.3 million) and softer dry van and intermodal freight rates as pressures on earnings. The balance sheet showed total assets of $1,016,782 thousand and stockholders' equity of $356,939 thousand, with total debt of $369.3 million.

Net cash provided by operating activities was $175 million^d. The company amended certain debt agreements in January 1996 and stated it was in compliance with all financial covenants. The board declared a $.05 quarterly dividend in January 1996.

02—Key points

Key Highlights

Operating revenues rose 12% to $1,352,225 thousand in 1995, led by intermodal, dedicated contract and logistics growth.
Net loss of $2,170 thousand, or $(.06) per share, compared with net earnings of $40,392 thousand, or $1.05 per share, in 1994.
Special charges of $17,296 thousand in the fourth quarter related primarily to exiting the auto hauling business.
Operating ratio was 98.4% in 1995 versus 93.0% in 1994; excluding special charges it was 97.1%.
Purchased transportation rose 26% and insurance and claims rose 34%, reflecting increased intermodal volume and severe accidents in late 1995.
Net cash provided by operating activities was $175 million; net capital expenditures declined to $155 million from $219 million.
Quarterly dividend of $.05 per share was declared in January 1996; debt covenants were amended and the company reported compliance.

03—Questions

Frequently Asked Questions

Why did J.B. Hunt report a net loss in 1995?
The net loss of $2,170 thousand reflected $17,296 thousand of special charges recorded in the fourth quarter to reduce the carrying value of idle and under-performing assets, primarily related to the decision to exit the auto hauling business. The company also cited higher purchased transportation and insurance and claims costs and lower gains on equipment dispositions.
Which service lines drove revenue growth?
The filing attributes the $144.6 million revenue increase primarily to intermodal ($76.8 million), dedicated contract ($58.5 million) and logistics management ($17.8 million) services, partly offset by an $18.5 million decline in other revenue, including the conversion of dry van freight to intermodal. Intermodal revenue rose 19%, dedicated revenue rose approximately 110% and logistics revenue rose 22%.
What pressures on earnings does management identify?
Management cited lower gains on equipment dispositions ($8.1 million in 1995 versus $12.3 million in 1994), a softer used equipment market, and freight rate declines of approximately 1% for dry van and 3% for intermodal. Salaries, wages and benefits rose 13%, fuel and fuel taxes rose 9%, and interest expense increased about $5.0 million.
How is the company funding its operations and capital spending?
Net cash provided by operating activities was $175 million in 1995. Total debt was $369.3 million, and the company had $145 million of commercial paper outstanding under a $250 million program. It also had approximately $166 million of uncommitted lines of credit, none outstanding at year-end, and committed to purchase approximately $203 million of revenue and service equipment, net of $51 million in expected proceeds.
Is the company in compliance with its debt covenants and what is its dividend policy?
During January 1996, the company and its creditors amended certain terms of its credit and note agreements in consideration of the special charges, and the company stated it is in compliance with all financial covenants. The Board declared a quarterly dividend of $.05 per share payable February 16, 1996, and the company paid $.20 per share in both 1995 and 1994.

04—Continue

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