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J.B. Hunt Transport Services Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed February 28, 2007
Period End
December 31, 2006
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 February 28, 2007. Cited figures are marked; the original filing is the authoritative source.

J.B.

Hunt Transport Services, Inc. reported record 2006 results in its Form 10-K for the year ended December 31, 2006. Total operating revenues rose to $3.33 billiona from $3.13 billion in 2005, and net earnings were $220.0 million, or $1.44 per diluted share, up from $207.3 million, or $1.28 per diluted share. The operating ratio improved slightly to 88.8% from 89.0%.

Fuel surcharge revenues reached $430 millionb, compared with $336 million in 2005, and the company said fuel costs were a challenge, with fuel cost per gallon averaging 13% above 2005 levels. Segment results diverged: intermodal (JBI) operating income rose to $182 million from $124 million, dedicated (DCS) rose to $104 million from $100 million, and dry-van truck (JBT) fell to $87 million from $119 million. The company generated $423 million in operating cash flow and spent $483 million on capital additions, mainly trailing equipment.

It purchased $257 millionc of its common stock and paid about $48 million in dividends. Total debt rose to $396.4 million from $124.0 million, and the working capital ratio fell to 0.98 from 1.72. The company also disclosed a pending IRS challenge to tax benefits from 1999 sale-and-leaseback transactions, with a contingent liability of $42.9 million including interest at December 31, 2006, and a potential total impact of approximately $44 million excluding interest if the IRS fully prevailed.

The filing also notes a dividend increase to $0.09d per quarter in January 2007, $104 million remaining under the stock repurchase authorization, and a $129.4 million commitment to acquire revenue equipment in 2007. Management highlighted driver shortages, insurance cost pressures, and reduced self-insured retention to $500,000 as ongoing risk factors.

02—Key points

Key Highlights

  1. Total operating revenues of $3.33 billion in 2006, up from $3.13 billion in 2005; fuel surcharge revenues were $430 million versus $336 million.
  2. Net earnings of $220.0 million, or $1.44 per diluted share, compared with $207.3 million, or $1.28 per diluted share, in 2005.
  3. Operating ratio improved to 88.8% from 89.0%, the third consecutive full year below 90%.
  4. Intermodal (JBI) operating income rose to $182 million from $124 million, while dry-van truck (JBT) operating income fell to $87 million from $119 million.
  5. Total debt increased to $396.4 million from $124.0 million, driven by revolving credit borrowings and a $100 million term loan used to buy trailers; the company repurchased $257 million of stock in 2006.
  6. Pending IRS challenge to 1999 sale-and-leaseback tax benefits carries a contingent liability of $42.9 million including interest at year-end 2006.
  7. Quarterly dividend increased to $0.09 per share in January 2007, from $0.08.

03—Questions

Frequently Asked Questions

  1. How did J.B. Hunt perform financially in 2006?

    Operating revenues rose to $3.33 billion from $3.13 billion, and net earnings reached $220.0 million, or $1.44 per diluted share, up from $207.3 million, or $1.28 per diluted share. The operating ratio improved slightly to 88.8% from 89.0%.

  2. Which business segments drove the results, and which weakened?

    The intermodal (JBI) segment's operating income increased to $182 million from $124 million, and dedicated (DCS) rose to $104 million from $100 million. The dry-van truck (JBT) segment's operating income declined to $87 million from $119 million, due in part to lower tractor utilization and higher driver compensation and insurance costs.

  3. What is the IRS matter and what could it cost the company?

    The IRS proposed to disallow tax benefits from certain 1999 sale-and-leaseback transactions. The company has recorded a contingent liability of $42.9 million, including $15.9 million of accrued interest, at December 31, 2006. The filing says that if the IRS fully succeeded, the total impact on liquidity could be approximately $44 million, excluding interest, and the company is vigorously defending its position.

  4. How is the company returning capital to shareholders?

    In 2006 the company purchased $257 million of its common stock and paid dividends of nearly $48 million. It is authorized to spend an additional $104 million on repurchases through 2010, and its quarterly dividend rose to $0.09 per share in February 2007.

  5. What are the main risks highlighted in the filing?

    The filing cites fuel price volatility, driver shortages, insurance and claims cost increases, dependence on a few major customers (Wal-Mart accounted for about 14% of 2006 revenue, and the top 10 customers for about 40%), reliance on railroads for intermodal service, and the pending IRS dispute.

04—Continue

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