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J.B. Hunt Transport Services Annual Report, Year Ended Dec 31, 1999

Filing Date
Filed March 2, 2000
Period End
December 31, 1999
Security
JBHT
In the record · 2016–202610-K1110-Q348-K102

JBHT filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 102 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Leadership change8-K · Feb ’20Feb ’20
  3. Leadership change8-K · Jan ’22Jan ’22
  4. Material agreement8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 2, 2000. Cited figures are marked; the original filing is the authoritative source.

J.B.

Hunt Transport Services, Inc. (Nasdaq: JBHT) reported fiscal 1999 operating revenues of $2.05 billiona, up from $1.84 billion in 1998, but net earnings fell to $31.9 million, or $.89 diluted earnings per share, from $46.8 million, or $1.28 per diluted share, in 1998. Operating income dropped to $77.4 million from $103.0 million, and the operating ratio rose to 96.2% from 94.4%. Management attributed the pressure to rail service delays that limited Van revenue growth to 3%, higher fuel costs (fuel and fuel taxes rose 23.1%), increased revenue equipment maintenance and tire costs, and a 24% increase in insurance and claims expense as collision severity rose.

Segment results were mixed: the Dedicated Contract Services segment grew revenue 51% to $320.2 million and operating income to $24.1 millionb, and the Logistics (JBHL) segment grew revenue 22%, while Van/Intermodal operating income fell to $44.4 million from $81.1 million. Balance sheet and capital allocation changes were significant. Total debt fell to $328 million from $433 million, largely after a fourth-quarter 1999 sale and leaseback of containers with net book value of approximately $175 million, and long-term debt declined to $267.6 million from $417.0 million.

Net cash provided by operating activities was $136 millionc in 1999. On February 16, 2000, the Board discontinued the quarterly cash dividend, which had been $.20 per share annually, and announced an intent to repurchase up to 500,000 shares with the funds previously used for dividends. The company also disclosed that it intends to report four segments (Intermodal, Truck, JBHL and DCS) beginning in the first quarter of 2000.

Management reported no material Year 2000 problems through the filing date, with total Year 2000 costs of approximately $1.7 milliond. The auditor, KPMG LLP, issued an unqualified opinion, and management believes pending litigation will not have a material adverse effect on the company.

02—Key points

Key Highlights

  1. Operating revenues rose to $2,045.1 million in 1999 from $1,841.6 million in 1998, while net earnings declined to $31.9 million from $46.8 million.
  2. Diluted EPS was $.89 versus $1.28 in 1998; operating ratio worsened to 96.2% from 94.4%.
  3. Fuel and fuel taxes increased 23.1% to $169.4 million, and insurance and claims expense rose about 24%, citing higher collision severity.
  4. Dedicated Contract Services revenue grew 51% to $320.2 million, while Van/Intermodal operating income fell to $44.4 million from $81.1 million.
  5. Total debt declined to $328 million from $433 million, aided by a fourth-quarter 1999 container sale and leaseback of approximately $175 million.
  6. The Board discontinued the quarterly dividend on February 16, 2000 and intends to repurchase up to 500,000 shares with the funds previously paid as dividends.
  7. Year 2000 remediation produced no material disruptions through the filing date, at a total cost of approximately $1.7 million.

03—Questions

Frequently Asked Questions

  1. Why did J.B. Hunt's earnings decline in 1999 despite higher revenue?

    Operating expenses grew 13% against 11% revenue growth. Key drivers included fuel and fuel taxes up 23.1%, higher revenue equipment maintenance and tire costs, a 24% rise in insurance and claims expense, and rail service delays that limited Van revenue growth to 3%. Operating income fell to $77.4 million from $103.0 million.

  2. Why did the company stop paying dividends?

    On February 16, 2000, the Board of Directors announced it would discontinue its policy of quarterly cash dividends. The Board indicated an intent to repurchase up to 500,000 shares of JBHT common stock with the cash previously used for dividends. The company paid $.20 per share in both 1999 and 1998.

  3. How did the 1999 container sale and leaseback affect the company's finances?

    The company sold containers with a net book value of approximately $175 million to third-party leasing companies at approximate net book value and leased them back under operating leases of four to ten years. Proceeds were used primarily to reduce debt, lowering total debt to $328 million. The filing notes that future rent expense will be higher while depreciation, interest and income tax expense will be lower than otherwise reported.

  4. Which business segments drove performance in 1999?

    Dedicated Contract Services revenue rose 51% to $320.2 million, with operating income of $24.1 million, up from $17.0 million. The JBHL logistics segment revenue grew 22% to $387.9 million, with operating income of $10.5 million. Van/Intermodal operating income declined to $44.4 million from $81.1 million on revenue growth of only 3%. The company plans to report four segments beginning in the first quarter of 2000.

  5. What are the company's principal risks cited in the filing?

    The forward-looking statements section cites general economic conditions, the cost and availability of diesel fuel, adverse weather, competitive rate fluctuations and driver availability. The filing states that fuel price changes could cause significant quarterly earnings fluctuations. Rail service delays affected Van revenue during the second and third quarters of 1999.

04—Continue

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