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J.B. Hunt Transport Services Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed March 11, 2005
Period End
December 31, 2004
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 11, 2005. Cited figures are marked; the original filing is the authoritative source.

J.B.

Hunt Transport Services, Inc. reported record results for calendar 2004, its third consecutive year of record revenues and earnings. Operating revenues were $2.79 billiona, up 14% from $2.43 billion in 2003, and net earnings were $146.3 million, or $1.75 per diluted share, compared with $95.5 million, or $1.17 per diluted share, in 2003. The operating ratio improved to 88.9% from 92.4%, the first full year below 90% in over ten years.

Management attributed the gains to capacity management, higher revenue per loaded mile excluding fuel surcharges in the JBT segment, lower insurance and claims costs, and growth in JBI intermodal loads. The company ended 2004 with no balance sheet debt or capital lease obligations, having repaid $105.0 millionb of senior and subordinated notes and $66.8 million of capital leases during the year. It re-initiated a quarterly dividend in April 2004, raised it from $.03 to $.12 per share in December 2004, and authorized repurchases of up to $100 million of common stock, with repurchases beginning in January 2005.

Cash provided by operating activities was $393.7 millionc. Key risks disclosed include an arbitration with Burlington Northern Santa Fe over the Joint Service Agreement, with formal proceedings scheduled for April and May 2005 and outcome not predictable; an IRS proposal to disallow tax benefits on 1999 sale-and-leaseback transactions, for which the company recorded a $33.6 million contingent tax liability; a 2004 effective tax rate of 51.6%, with a 38.5% rate expected for 2005; and continuing driver shortages and rising equipment and driver compensation costs.

02—Key points

Key Highlights

  1. Record 2004 operating revenues of $2.79 billion, up 14% from $2.43 billion in 2003, and record net earnings of $146.3 million, or $1.75 per diluted share.
  2. Operating ratio improved to 88.9% from 92.4% in 2003; the first full year below 90% in over ten years.
  3. JBT segment operating income rose to $103 million from $49 million; revenue per loaded mile excluding fuel surcharges rose 8.7%.
  4. JBI segment operating income increased to $131 million from $91 million, with total loads up 10.3%; JBI gross revenue was $1.12 billion.
  5. Balance sheet debt and capital lease obligations were fully repaid by December 31, 2004, versus $172 million at year-end 2003.
  6. Quarterly dividend raised to $.12 per share from $.03, and a $100 million share repurchase program was authorized, with repurchases starting January 2005.
  7. Contingent tax liability of $33.6 million, including accrued interest, recorded for IRS-disputed 1999 sale-and-leaseback transactions; BNSF arbitration over the Joint Service Agreement remains unresolved.

03—Questions

Frequently Asked Questions

  1. What drove the increase in J.B. Hunt's 2004 earnings?

    Management attributed the increase to capacity management, rate increases required to offset non-fuel cost increases, higher revenue per loaded mile in the JBT and JBI segments, and significantly lower insurance, claims and workers' compensation costs, which declined approximately $23 million from 2003 and added about $.13 to diluted earnings per share.

  2. Does J.B. Hunt have any debt after 2004?

    No. The company stated it closed 2004 with no balance sheet debt and no capital lease obligations, having paid off all remaining balance sheet debt and capital leases during the year. Its $150 million revolving line of credit had no balance outstanding at December 31, 2004, though management anticipated some borrowing in 2005.

  3. What are the main pending legal and tax risks?

    The company is in arbitration with Burlington Northern Santa Fe over its Joint Service Agreement, with formal proceedings scheduled for April and May 2005, and says it cannot predict the outcome. The IRS has proposed disallowing tax benefits from 1999 sale-and-leaseback transactions; the company reserved $33.6 million, including accrued interest, and estimates the total impact on liquidity could be approximately $44 million, excluding interest, if the IRS fully prevailed.

  4. What capital return actions did the company announce?

    The company re-initiated a quarterly cash dividend of $.03 per share in April 2004, increased it to $.12 per share in December 2004, with the first $.12 payment made February 18, 2005. The Board also authorized repurchases of up to $100 million of common stock over the following year, with repurchases beginning in January 2005.

  5. How concentrated is the company's customer base?

    The top 10 customers accounted for approximately 42% of 2004 revenue, and Wal-Mart Stores, Inc. was the largest at approximately 15% of total revenue. The company generally does not have long-term contracts with its customers.

04—Continue

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