HUNT J B TRANSPORT SERVICES INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures We maintain controls and procedures designed to ensure that the information we are required to disclose in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2024. The certifications of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report. Management ’ s Report on Internal Control Over Financial Reporting Management’s Report on Internal Control Over Financial Reporting is included herein (following Item 15) and is incorporated by reference herein. The effectiveness of internal control over financial reporting as of December 31, 2024, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm that also audited our Consolidated Financial Statements. PricewaterhouseCoopers LLP’s report on internal control over financial reporting is included herein (following Item 15). 25 Changes in Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting during the fourth quarter ended December 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION During the three months ended December 31, 2024, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 26 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required for Item 10 is hereby incorporated by reference from the Notice and Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2025. ITEM 11. EXECUTIVE COMPENSATION The information required for Item 11 is hereby incorporated by reference from the Notice and Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2025. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS Except as set forth below, the information required for Item 12 is hereby incorporated by reference from the Notice and Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2025. Securities Authorized For Issuance Under Equity Compensation Plans The following table summarizes, as of December 31, 2024, information about compensation plans under which equity securities of the Company are authorized for issuance. Plan Category (1) Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted- average Exercise Price of Outstanding Options, Warrants, and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A)) (A) (B) (C) Equity compensation plans approved by security holders 1,089,528 $ - (2) 3,531,582 (1) We have no equity compensation plans that are not approved by security holders. (2) Currently, only restricted share units remain outstanding under our equity compensation plan. Upon vesting, restricted share units are settled with shares of our common stock on a one-for-one basis and, accordingly, do not include an exercise price. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required for Item 13 is hereby incorporated by reference from the Notice and Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2025. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required for Item 14 is hereby incorporated by reference from the Notice and Proxy Statement for the Annual Meeting of Shareholders to be held April 24, 2025. 27 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (A) Financial Statements, Financial Statement Schedules and Exhibits: (1) Financial Statements The financial statements included in Item 8 above are filed as part of this annual report. (2) Financial Statement Schedules Schedule II – Valuation and Qualifying Accounts (in millions) Allowance for Doubtful Accounts and Other Receivables for the Years Ended: Balance at Beginning of Year Charged to Expense Write-Offs, Net of Recoveries Balance at End of Year December 31, 2022 $ 16.8 $ 9.0 $ ( 3.5 ) $ 22.3 December 31, 2023 22.3 9.0 ( 6.7 ) 24.6 December 31, 2024 24.6 11.8 ( 4.0 ) 32.4 The above schedule reports allowances related to trade accounts receivable and other receivables. All other schedules have been omitted either because they are not applicable or because the required information is included in our Consolidated Financial Statements or the notes thereto. (3) Exhibits 28 Exhibit Number Description 3.1 Amended and Restated Articles of Incorporation of J.B. Hunt Transport Services, Inc. dated May 19, 1988 (incorporated by reference from Exhibit 3.1 of the Company’s quarterly report on Form 10-Q for the period ended March 31, 2005, filed April 29, 2005) 3.2 Second Amended and Restated Bylaws of J.B. Hunt Transport Services, Inc. dated October 21, 2021 (incorporated by reference from Exhibit 3.1 of the Company’s current report on Form 8-K, filed October 27, 2021) 3.3 Amendment No. 1 to the Second Amended and Restated Bylaws J.B. Hunt Transport Services, Inc., dated July 20, 2022 (incorporated by reference from Exhibit 3.1 of the Company’s current report on Form 8-K filed July 26, 2022) 3.4 Amendment No. 2 to the Second Amended and Restated Bylaws of J.B. Hunt Transport Services, Inc. dated January 19, 2023 (incorporated by reference from Exhibit 3.1 of the Company’s current report on Form 8-K, filed January 24, 2023) 3.5 Amendment No. 3 to the Second Amended and Restated Bylaws of J.B. Hunt Transport Services, Inc., dated October 19, 2023 (incorporated by reference from Exhibit 3.1 of the Company’s current report on Form 8-K, filed October 24, 2023) 4.1 Description of Capital Stock of J.B. Hunt Transport Services, Inc. 4.2 Indenture (incorporated by reference from Exhibit 4.1 of the Company’s registration statement on Form S-3ASR (File No. 333-169365), filed September 14, 2010) 4.3 Third Supplemental Indenture (incorporated by reference from Exhibit 4.4 of the Company’s current report on Form 8-K, filed March 6, 2014) 4.4 Base Indenture, dated as of March 1, 2019 (incorporated by reference from Exhibit 4.1 of the Company’s current report on Form 8-K, filed March 1, 2019) 4.5 First Supplemental Indenture, dated as of March 1, 2019 (incorporated by reference from Exhibit 4.2 of the Company’s current report on Form 8-K, filed March 1, 2019) 10.1 Third Amended and Restated Management Incentive Plan (incorporated by reference from Appendix A of the Company’s definitive proxy statement on Schedule 14A, filed March 9, 2017) 10.2 Amendment to J.B. Hunt Transport Services, Inc. Third Amended and Restated Management Incentive Plan (incorporated by reference from Exhibit 10.2 of the Company’s current report on Form 8-K, filed April 22, 2019) 10.3 Amended and Restated Credit Agreement and related documents (incorporated by reference from Exhibit 10.1 of the Company’s current report on Form 8-K, filed October 3, 2022) 19.1 Insider Trading Policy of J.B. Hunt Transport Services, Inc. 21.1 Subsidiaries of J.B. Hunt Transport Services, Inc. 22.1 List of Guarantor Subsidiaries of J.B. Hunt Transport Services, Inc. 23.1 Consent of PricewaterhouseCoopers LLP 24.1 Powers of Attorney of Members of J.B. Hunt Transport Services, Inc. Board of Directors 31.1 Rule 13a-14(a)/15d-14(a) Certification 31.2 Rule 13a-14(a)/15d-14(a) Certification 29 32.1 Section 1350 Certification 97.1 Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 C.F.R. 240.10D-1. 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). 30 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) 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, in the City of Lowell, Arkansas, on the 21st day of February 2025. J.B. HUNT TRANSPORT SERVICES, INC. (Registrant) By: /s/ Shelley Simpson Shelley Simpson President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on the 21st day of February 2025, on behalf of the registrant and in the capacities indicated. /s/ Shelley Simpson President and Chief Executive Officer Shelley Simpson (Principal Executive Officer) /s/ John Kuhlow Chief Financial Officer, John Kuhlow Executive Vice President (Principal Financial and Accounting Officer) * Chairman of the Board of Directors John N. Roberts, III * Member of the Board of Directors James L. Robo (Independent Lead Director) * Member of the Board of Directors Francesca M. Edwardson * Member of the Board of Directors Sharilyn S. Gasaway * Member of the Board of Directors John B. Hill, III * Member of the Board of Directors J. Bryan Hunt, Jr. * Member of the Board of Directors Persio Lisboa * By /s/ Shelley Simpson Shelley Simpson As Attorney-in-Fact Pursuant to Powers of Attorney filed herewith 31 INDEX TO CONSOLIDATED FINANCIAL INFORMATION PAGE Management’s Report on Internal Control Over Financial Reporting 33 Report of Independent Registered Public Accounting Firm (PCAOB ID Number 238 ) 34 Consolidated Balance Sheets as of December 31, 2024 and 2023 36 Consolidated Statements of Earnings for years ended December 31, 2024, 2023, and 2022 37 Consolidated Statements of Shareholders’ Equity for years ended December 31, 2024, 2023, and 2022 38 Consolidated Statements of Cash Flows for years ended December 31, 2024, 2023, and 2022 39 Notes to Consolidated Financial Statements 40 32 MANAGEMENT ’ S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING We are responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, and effected by the Company’s Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Based on our assessment, our management has concluded that as of December 31, 2024, our internal control over financial reporting is effective based on those criteria. The effectiveness of our internal control over financial reporting as of December 31, 2024, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm that also audited our Consolidated Financial Statements. PricewaterhouseCoopers LLP’s report on internal control over financial reporting is included herein. /s/ Shelley Simpson /s/ John Kuhlow Shelley Simpson John Kuhlow President and Chief Executive Officer Chief Financial Officer, (Principal Executive Officer) Executive Vice President (Principal Financial and Accounting Officer) 33 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of J.B. Hunt Transport Services, Inc. and its subsidiaries Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of J.B. Hunt Transport Services, Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of earnings, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2024 appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 34 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Personal injury and property damage claims accruals As described in Note 2 to the consolidated financial statements, the Company maintains insurance coverage for a portion of expenses related to employee injuries, vehicular collisions, accidents and cargo damage which include a level of self-insurance coverage applicable to each claim. As of December 31, 2024, the Company’s current claims accrual balance was $232 million and long-term claims accrual balance was $369 million, of which a significant portion of claims related to personal injury and property damage. The Company recognizes a liability at the time of the incident based on an analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal, economic, and regulatory factors. Management uses an actuarial method to develop current claim information to derive an estimate of the ultimate personal injury and property damage claim liability, which involves the use of expected loss rates, loss-development factors based on historical claims experience, and claim frequencies and severity. The principal considerations for our determination that performing procedures relating to the personal injury and property damage claims accrual is a critical audit matter are (i) the significant judgment by management when developing the claims accrual estimate; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's significant assumptions related to the expected loss rates, loss-development factors based on historical claims experience, and claim frequencies and severity, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s personal injury and property damage claims accrual process, including controls over the development of expected loss rates, loss-development factors based on historical claims experience, and claim frequencies and severity. These procedures also included, among others, (i) testing management’s process for developing the claims accrual estimate; (ii) evaluating the appropriateness of the actuarial method; (iii) testing the completeness and accuracy of underlying data used in the personal injury and property damage claims accrual estimate; and (iv) evaluating the reasonableness of management’s significant assumptions related to the expected loss rates, loss-development factors based on historical claims experience, and claim frequencies and severity used in the calculation of the estimate. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s claims accrual process, (ii) the appropriateness of the actuarial method, and (iii) the reasonableness of the expected loss rate, loss-development factors, and claim frequencies and severity used in developing the estimate. /s/ PricewaterhouseCoopers LLP Springdale, Arkansas February 21, 2025 We have served as the Company’s auditor since 2021. 35 J.B. HUNT TRANSPORT SERVICES, INC. Consolidated Balance Sheets December 31, 2024 and 2023 (in thousands, except share data) 2024 2023 Assets Current assets: Cash and cash equivalents $ 46,983 $ 53,344 Trade accounts receivable, net 1,224,166 1,334,912 Other receivables 257,774 231,248 Inventories 41,662 42,186 Prepaid expenses and other current assets 200,398 299,502 Total current assets 1,770,983 1,961,192 Property and equipment, at cost: Revenue and service equipment 7,541,314 7,293,093 Land 269,222 258,144 Structures and improvements 533,425 462,536 Software, office equipment and furniture 804,967 754,099 Total property and equipment 9,148,928 8,767,872 Less accumulated depreciation 3,419,129 2,993,959 Net property and equipment 5,729,799 5,773,913 Goodwill 134,057 134,057 Other intangible assets, net 96,922 133,896 Other assets 580,509 585,090 Total assets $ 8,312,270 $ 8,588,148 Liabilities and Shareholders ’ Equity Current liabilities: Current portion of long-term debt $ 500,000 $ 249,961 Trade accounts payable 645,925 737,364 Claims accruals 257,121 220,357 Accrued payroll and payroll taxes 122,477 94,563 Other accrued expenses 152,517 150,255 Total current liabilities 1,678,040 1,452,500 Long-term debt 977,702 1,326,107 Long-term claims accruals 368,704 326,920 Other long-term liabilities 377,070 392,766 Deferred income taxes 896,249 986,097 Total liabilities 4,297,765 4,484,390 Commitments and contingencies (Note 9) Shareholders’ equity: Preferred stock, $ 100 par value. 10 million shares authorized; none outstanding - - Common stock, $ .01 par value. 1 billion shares authorized; ( 167,099,432 shares issued at December 31, 2024 and 2023, of which 100,555,126 and 103,220,027 shares were outstanding at December 31, 2024 and 2023, respectively) 1,671 1,671 Additional paid-in capital 583,945 549,132 Retained earnings 7,373,462 6,978,119 Treasury stock, at cost ( 66,544,306 shares at December 31, 2024, and 63,879,405 shares at December 31, 2023) ( 3,944,573 ) ( 3,425,164 ) Total shareholders’ equity 4,014,505 4,103,758 Total liabilities and shareholders' equity $ 8,312,270 $ 8,588,148 See Notes to Consolidated Financial Statements. 36 J.B. HUNT TRANSPORT SERVICES, INC. Consolidated Statements of Earnings Years Ended December 31, 2024, 2023 and 2022 (in thousands, except per share amounts) 2024 2023 2022 Operating revenues, excluding fuel surcharge revenues $ 10,557,709 $ 10,978,387 $ 12,381,359 Fuel surcharge revenues 1,529,495 1,851,278 2,432,640 Total operating revenues 12,087,204 12,829,665 14,813,999 Operating expenses: Rents and purchased transportation 5,378,336 5,872,591 7,392,179 Salaries, wages and employee benefits 3,232,440 3,257,484 3,373,063 Depreciation and amortization 761,141 737,954 644,520 Fuel and fuel taxes 652,129 751,497 931,710 Operating supplies and expenses 495,375 509,354 502,553 Insurance and claims 313,664 315,678 318,123 General and administrative expenses, net of asset dispositions 306,355 274,564 215,361 Operating taxes and licenses 72,547 74,996 68,230 Communication and utilities 43,992 42,351 36,707 Total operating expenses 11,255,979 11,836,469 13,482,446 Operating income 831,225 993,196 1,331,553 Interest income 7,311 7,624 1,069 Interest expense 79,020 65,933 51,249 Earnings before income taxes 759,516 934,887 1,281,373 Income taxes 188,630 206,600 312,022 Net earnings $ 570,886 $ 728,287 $ 969,351 Weighted average basic shares outstanding 101,947 103,440 104,141 Basic earnings per share $ 5.60 $ 7.04 $ 9.31 Weighted average diluted shares outstanding 102,754 104,451 105,276 Diluted earnings per share $ 5.56 $ 6.97 $ 9.21 See Notes to Consolidated Financial Statements. 37 J.B. HUNT TRANSPORT SERVICES, INC. Consolidated Statements of Shareholders' Equity Years Ended December 31, 2024, 2023 and 2022 (in thousands, except per share amounts) Additional Common Paid-in Retained Treasury Shareholders’ Stock Capital Earnings Stock Equity Balances at December 31, 2021 $ 1,671 $ 448,217 $ 5,621,103 $ ( 2,953,175 ) $ 3,117,816 Comprehensive income: Net earnings - - 969,351 - 969,351 Cash dividend declared and paid ($ 1.60 per share) - - ( 166,724 ) - ( 166,724 ) Purchase of treasury shares - - - ( 300,030 ) ( 300,030 ) Share-based compensation - 77,535 - - 77,535 Restricted share issuances, net of stock repurchased for payroll taxes and other - ( 25,855 ) - ( 5,325 ) ( 31,180 ) Balances at December 31, 2022 $ 1,671 $ 499,897 $ 6,423,730 $ ( 3,258,530 ) $ 3,666,768 Comprehensive income: Net earnings - - 728,287 - 728,287 Cash dividend declared and paid ($ 1.68 per share) - - ( 173,898 ) - ( 173,898 ) Purchase of treasury shares - - - ( 159,576 ) ( 159,576 ) Share-based compensation - 79,189 - - 79,189 Restricted share issuances, net of stock repurchased for payroll taxes and other - ( 29,954 ) - ( 7,058 ) ( 37,012 ) Balances at December 31, 2023 $ 1,671 $ 549,132 $ 6,978,119 $ ( 3,425,164 ) $ 4,103,758 Comprehensive income: Net earnings - - 570,886 - 570,886 Cash dividend declared and paid ($ 1.72 per share) - - ( 175,543 ) - ( 175,543 ) Purchase of treasury shares - - - ( 513,924 ) ( 513,924 ) Share-based compensation - 65,686 - - 65,686 Restricted share issuances, net of stock repurchased for payroll taxes and other - ( 30,873 ) - ( 5,485 ) ( 36,358 ) Balances at December 31, 2024 $ 1,671 $ 583,945 $ 7,373,462 $ ( 3,944,573 ) $ 4,014,505 See Notes to Consolidated Financial Statements. 38 J.B. HUNT TRANSPORT SERVICES, INC. Consolidated Statements of Cash Flows Years Ended December 31, 2024, 2023 and 2022 (in thousands) 2024 2023 2022 Cash flows from operating activities: Net earnings $ 570,886 $ 728,287 $ 969,351 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 761,141 737,954 644,520 Noncash lease expense 100,178 97,666 83,797 Share-based compensation 65,686 79,189 77,535 (Gain)/loss on sale of revenue equipment and other 14,557 27,806 ( 25,422 ) Deferred income taxes ( 89,848 ) 65,566 175,089 Changes in operating assets and liabilities: Trade accounts receivable 110,746 259,449 ( 13,950 ) Income taxes receivable or payable ( 26,182 ) 12,165 ( 69,025 ) Other current assets 94,639 ( 39,351 ) ( 83,892 ) Trade accounts payable ( 109,806 ) ( 48,346 ) ( 23,838 ) Claims accruals 48,137 18,429 117,887 Accrued payroll and other accrued expenses ( 56,978 ) ( 194,196 ) ( 75,170 ) Net cash provided by operating activities 1,483,156 1,744,618 1,776,882 Cash flows from investing activities: Additions to property and equipment ( 865,373 ) ( 1,862,431 ) ( 1,540,796 ) Proceeds from sale of equipment 190,967 262,216 108,901 Proceeds from sale of investment 6,929 - - Business acquisitions 3,785 ( 85,000 ) ( 118,175 ) Net cash used in investing activities ( 663,692 ) ( 1,685,215 ) ( 1,550,070 ) Cash flows from financing activities: Payments on long-term debt ( 250,000 ) - ( 350,000 ) Proceeds from revolving lines of credit and other 3,070,600 2,223,600 1,738,100 Payments on revolving lines of credit and other ( 2,920,600 ) ( 1,911,100 ) ( 1,420,600 ) Purchase of treasury stock ( 513,924 ) ( 159,576 ) ( 300,030 ) Stock repurchased for payroll taxes and other ( 36,358 ) ( 37,012 ) ( 31,180 ) Dividends paid ( 175,543 ) ( 173,898 ) ( 166,724 ) Net cash used in financing activities ( 825,825 ) ( 57,986 ) ( 530,434 ) Net (decrease)/increase in cash and cash equivalents ( 6,361 ) 1,417 ( 303,622 ) Cash and cash equivalents at beginning of year 53,344 51,927 355,549 Cash and cash equivalents at end of year $ 46,983 $ 53,344 $ 51,927 Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ 80,861 $ 65,561 $ 50,433 Income taxes $ 305,103 $ 135,385 $ 195,827 Noncash investing activities Accruals for equipment received $ 73,906 $ 44,692 $ 107,474 See Notes to Consolidated Financial Statements. 39 Notes to Consolidated Financial Statements 1. Business J.B. Hunt Transport Services, Inc. is one of the largest surface transportation and delivery service companies in North America. We operate five distinct, but complementary, business segments and provide a wide range of general and specifically tailored freight and logistics services to our customers. We generate revenues from the actual movement of freight from shippers to consignees, customized labor and delivery services, and serving as a logistics provider by offering or arranging for others to provide the transportation service. Unless otherwise indicated by the context, “we,” “us,” “our” and “JBHT” refer to J.B. Hunt Transport Services, Inc. and its consolidated subsidiaries. 2. Summary of Significant Accounting Policies Basis of Consolidation Our Consolidated Financial Statements include all of our wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. J.B. Hunt Transport Services, Inc. is a parent-level holding company with no significant assets or operations. J.B. Hunt Transport, Inc. is a wholly owned subsidiary of J.B. Hunt Transport Services, Inc. and is the primary operating subsidiary. All other subsidiaries of J.B. Hunt Transport Services, Inc. are insignificant. Use of Estimates The Consolidated Financial Statements contained in this report have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these statements requires us to make estimates and assumptions that directly affect the amounts reported in such statements and accompanying notes. We evaluate these estimates on an ongoing basis utilizing historical experience, consulting with experts and using other methods we consider reasonable in the particular circumstances. Nevertheless, our actual results may differ significantly from our estimates. We believe certain accounting policies and estimates are of more significance in our financial statement preparation process than others. We believe the most critical accounting policies and estimates include the economic useful lives and salvage values of our assets, provisions for uncollectible accounts receivable, estimates of exposures under our insurance and claims policies, and estimates for taxes. To the extent that actual, final outcomes are different from our estimates, or that additional facts and circumstances cause us to revise our estimates, our earnings during that accounting period will be affected. Revision to Previously Issued Financial Statements We revised our Consolidated Balance Sheet at December 31, 2023 to correct an error in the classification of our claims accruals and corresponding insurance receivables for claims in excess of self-insurance levels, which are included in other receivables. This revision resulted in $ 326.9 million of claims accruals previously reported as current liabilities and $ 173.6 million of insurance receivables previously reported in current assets, being classified in long-term claims accruals and other assets, respectively, based on our expectations of the timing of payments and receipt of insurance recoveries. We also revised our Consolidated Balance Sheet at December 31, 2023 to correct an error in the calculation of our insurance accruals deferred tax asset and correct the associated impacts of this adjustment in the Consolidated Statement of Cash Flows. This revision resulted in a $ 49.9 million increase in deferred income taxes and other receivables on the Consolidated Balance Sheet at December 31, 2023 as well as corresponding revisions to deferred income taxes and income taxes receivable or payable in our Consolidated Statement of Cash Flows for the year ended December 31, 2023, with no effect on previously reported net cash provided by operating activities. 40 We evaluated the impact of these items under the guidance of the SEC Staff Accounting Bulletin No. 99, "Materiality," and determined that these errors are not material to our previously issued financial statements. Accordingly, we have revised the Consolidated Balance Sheet and Consolidated Statement of Cash Flows for the year ended December 31, 2023 included in the accompanying financial statements. Cash and Cash Equivalents Cash in excess of current operating requirements is invested in short-term, highly liquid investments. We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Accounts Receivable and Allowance Our trade accounts receivable includes accounts receivable reduced by an allowance for uncollectible accounts. Receivables are recorded at amounts billed to customers when loads are delivered or services are performed. The allowance for uncollectible accounts is calculated over the life of the underlying receivable and is based on historical experience; any known trends or uncertainties related to customer billing and account collectability; current economic conditions; and reasonable and supportable economic forecasts, each applied to segregated risk pools based on the business segment that generated the receivable. The adequacy of our allowance is reviewed quarterly. Balances are charged against the allowance when it is determined the receivable will not be recovered. The allowance for uncollectible accounts for our trade accounts receivable was $ 32.4 million at December 31, 2024 and $ 24.6 million at December 31, 2023. During 2024, the allowance for uncollectible accounts increased by $ 11.8 million and was reduced $ 4.0 million by write-offs. During 2023, the allowance for uncollectible accounts increased by $ 9.0 million and was reduced $ 6.7 million by write-offs. Inventory Our inventories consist primarily of revenue equipment parts, tires, supplies, and fuel and are valued using the lower of average cost or net realizable value. Investments in Marketable Equity Securities Our investments consist of marketable equity securities stated at fair value and are designated as either trading securities or available-for-sale securities at the time of purchase based upon the intended holding period. Changes in the fair value of our trading securities are recognized currently in “general and administrative expenses, net of asset dispositions” in our Consolidated Statements of Earnings. Changes in the fair value of our available-for-sale securities are recognized in “accumulated other comprehensive income” on our Consolidated Balance Sheets, unless we determine that an unrealized loss is other-than-temporary. If we determine that an unrealized loss is other-than-temporary, we recognize the loss in earnings. Cost basis is determined using average cost. At December 31, 2024 and 2023, we had no available-for-sale securities. See Note 7, Employee Benefit Plans, for a discussion of our trading securities. Property and Equipment Depreciation of property and equipment is calculated on the straight-line method over the estimated useful lives of 4 to 10 years for tractors, 7 to 25 years for trailing equipment, 10 to 40 years for structures and improvements, 3 to 10 years for computer hardware and software, and 3 to 10 years for furniture and other office equipment. Salvage values are typically 10 % to 30 % of original cost for tractors and trailing equipment and reflect any agreements with tractor suppliers for residual or trade-in values for certain new equipment. We periodically review these useful lives and salvage values. We capitalize tires placed in service on new revenue equipment as a part of the equipment cost. Replacement tires and costs for recapping tires are expensed at the time the tires are placed in service. Gains and losses on the sale or other disposition of equipment are recognized at the time of the disposition and are classified in general and administrative expenses, net of asset dispositions in the Consolidated Statements of Earnings. 41 We continually evaluate the carrying value of our assets for events or changes in circumstances that indicate the carrying value may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. Leases We recognize a right-of-use asset and a lease liability on the effective date of a lease agreement. Right-of-use assets represent our right to use an underlying asset over the lease term and lease liabilities represent the obligation to make lease payments resulting from the lease agreement. We initially record these assets and liabilities based on the present value of lease payments over the lease term calculated using our incremental borrowing rate applicable to the leased asset or the implicit rate within the agreement if it is readily determinable. Lease agreements with lease and non-lease components are combined as a single lease component. Right-of-use assets additionally include net prepaid lease expenses. Options to extend or terminate an agreement are included in the lease term when it becomes reasonably certain the option will be exercised. Leases with an initial term of 12 months or less, short-term leases, are not recorded on the balance sheet. Lease expense for short-term and long-term operating leases is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Revenue Recognition We record revenues on the gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of promised services. Accordingly, we serve as a principal in the transaction. We invoice our customers, and we maintain discretion over pricing. Additionally, we are responsible for selection of third-party transportation providers to the extent used to satisfy customer freight requirements. Our revenue is earned through the service offerings of our five reportable business segments. See Note 13, Segment Information, for revenue reported by segment. All revenue transactions between reporting segments are eliminated in consolidation. Intermodal (JBI) - JBI segment includes freight that is transported by rail over at least some portion of the movement and also includes certain repositioning truck freight moved by JBI equipment or third-party carriers, when such highway movement is intended to direct JBI equipment back toward intermodal operations. JBI performs these services primarily through contractual rate quotes with customers that are held static for a period of time, usually one year. Dedicated Contract Services ® (DCS ® ) - DCS segment business includes company-owned and customer-owned, DCS-operated revenue equipment and employee drivers assigned to a specific customer, traffic lane, or service. DCS operations usually include formal, written longer-term agreements or contracts that govern services performed and applicable rates. Integrated Capacity Solutions (ICS) - ICS provides non-asset and asset-light transportation solutions to customers through relationships with third-party carriers and integration with company-owned equipment. ICS services include flatbed, refrigerated, and expedited, as well as a variety of dry-van and intermodal solutions. ICS performs these services through customer contractual rate quotes as well as spot quotes that are one-time rate quotes issued for a single transaction or group of transactions. ICS further offers these services through an online multimodal marketplace via J.B. Hunt 360°® that matches the right load with the right carrier and the best mode. 42 Final Mile Services ® (FMS) - FMS provides last-mile delivery services to customers through a nationwide network of cross-dock and other delivery system network locations. FMS provides both asset and non-asset big and bulky delivery and installation services, as well as fulfillment, retail-pooling distributions, and less-than-truckload (LTL) services. FMS operations usually include formal, written long-term agreements or contracts that govern services performed and applicable rates. Truckload (JBT) - JBT business includes full-load, dry-van freight that is typically transported utilizing company-owned or company-controlled revenue equipment as well as services through our J.B. Hunt 360box® program which utilizes our J.B. Hunt 360 platform to access capacity and offer efficient drop trailer solutions to our customers. This freight is typically transported over roads and highways and does not move by rail. JBT utilizes both contractual rate quotes and spot rate quotes with customers. We recognize revenue from customer contracts based on relative transit time in each reporting period and as other performance obligations are provided, with related expenses recognized as incurred. Accordingly, a portion of the total revenue that will be billed to the customer is recognized in each reporting period based on the percentage of the freight pickup and delivery performance obligation that has been completed at the end of the reporting period. Derivative Instruments We periodically utilize derivative instruments to manage exposure to changes in interest rates. At inception of a derivative contract, we document relationships between derivative instruments and hedged items, as well as our risk-management objective and strategy for undertaking various derivative transactions, and assess hedge effectiveness. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, we discontinue hedge accounting prospectively. At December 31, 2024 and 2024, we had no derivative instruments. Income Taxes Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. We record valuation allowances for deferred tax assets to the extent we believe these assets are not more likely than not to be realized through the reversal of existing taxable temporary differences, projected future taxable income, or tax-planning strategies. We record a liability for unrecognized tax benefits when the benefits of tax positions taken on a tax return are not more likely than not to be sustained upon audit. Interest and penalties related to uncertain tax positions are classified as interest expense in the Consolidated Statements of Earnings. 43 Earnings Per Share We compute basic earnings per share by dividing net earnings available to common shareholders by the actual weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflect the potential dilution that could occur if holders of unvested restricted and performance share units converted their holdings into common stock. Outstanding unvested restricted share units represent the dilutive effects on weighted average shares. A reconciliation of the number of shares used in computing basic and diluted earnings per share is shown below (in thousands): Years ended December 31, 2024 2023 2022 Weighted average shares outstanding – basic 101,947 103,440 104,141 Effect of common stock equivalents 807 1,011 1,135 Weighted average shares outstanding – diluted 102,754 104,451 105,276 Concentrations of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, include trade receivables. For each of the years ended December 31, 2024, 2023, and 2022, our top 10 customers, based on revenue, accounted for approximately 35 %, 36 %, and 38 % of our total revenue. Our top 10 customers, based on revenue, accounted for approximately 29 % and 34 % of our total trade accounts receivable at December 31, 2024 and 2023, respectively. One customer accounted for approximately 11 %, 13 %, and 14 % of our total revenue for the years ended December 31, 2024, 2023, and 2022, respectively. Each of our five business segments conduct business with this customer. Share-based Compensation We have a share-based compensation plan covering certain employees, including officers and directors. We account for share-based compensation utilizing the fair value recognition provisions of current accounting standards for share-based payments. We currently utilize restricted share units and performance share units. Issuances of our stock upon restricted share unit and performance share unit vesting are made from treasury stock. Our restricted share unit and performance share unit awards may include both graded-vesting and cliff-vesting awards and therefore vest in increments during the requisite service period or at the end of the requisite service period, as appropriate for each type of vesting. We recognize compensation expense on a straight-line basis over the requisite service periods within each award. The benefit for the forfeiture of an award is recorded in the period in which it occurs. Claims Accruals We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular collisions, accidents, and cargo damage. We are substantially self-insured for loss of and damage to our owned and leased revenue equipment. Certain insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim. We have umbrella policies to limit our exposure to catastrophic claim costs which may include certain coverage-layer-specific, aggregated reimbursement limits of covered excess claims. The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, and claim type. For 2022 through 2024, we were self-insured for $ 500,000 per occurrence as well as subject to coverage-layer-specific, aggregated reimbursement limits of covered excess claims for personal injury and property damage. We were fully insured for workers’ compensation claims for nearly all states. We have policies in place for 2025 with substantially the same terms as our 2024 policies for personal injury, property damage, workers’ compensation, and cargo loss or damage. Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal, economic, and regulatory factors. Our safety and claims personnel work directly with representatives from the insurance companies to continually update the estimated cost of each claim. The ultimate cost of a claim develops over time as additional information regarding the nature, timing, and extent of damages claimed becomes available. Accordingly, we use an actuarial method to develop current claim information to derive an estimate of our ultimate personal injury and property damage claim liability. This process involves the use of expected loss rates, loss-development factors based on our historical claims experience, claim frequencies and severity, and contractual premium adjustment factors, if applicable. In doing so, the recorded liability considers future claims growth and provides a reserve for incurred-but-not-reported claims. We do not discount our estimated losses. At December 31, 2024 and 2023, we had current accruals of approximately $ 232 million and $ 196 million, respectively, and long-term accruals of approximately $ 369 million and $ 327 million, respectively, for estimated claims, which are recorded in claims accruals and long-term claims accruals in our Consolidated Balance Sheets. A significant increase in the volume of claims or amount of settlements exceeding our coverage-layer specific, aggregated reimbursement limits could result in significant increase in our estimated liability for claims in future periods. In addition, we record receivables for amounts expected to be reimbursed for payments made in excess of self-insurance levels on covered claims. At December 31, 2024 and 2023, we have recorded $ 429 million and $ 493 million, respectively, of expected reimbursement for covered excess claims, other insurance deposits, and prepaid insurance premiums. Of these total asset balances, $ 116 million and $ 102 million have been included in other receivables, $ 121 million and $ 217 million in prepaid expenses and other current assets, and $ 192 million and $ 174 million in other assets in our Consolidated Balance Sheets at December 31, 2024 and 2023, respectively. 44 Business Combinations The purchase price of our acquisitions is the aggregate of the consideration transferred, including liabilities incurred, measured at the acquisition date. We allocate the purchase price of acquisitions to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. This assignment of fair values to the assets acquired and liabilities assumed requires the use of estimates, judgments, inputs, and assumptions. The excess of the purchase price over those estimated fair values is recorded as goodwill. Changes to the acquisition date provisional fair values prior to the end of the measurement period are recorded as adjustments to the associated goodwill. Acquisition-related expenses and restructuring costs, if any, are expensed as incurred. Goodwill and Other Intangible Assets Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired in a business combination. Goodwill and intangible assets with indefinite lives are not amortized. Goodwill is reviewed, using a weighted market and income based approach, for potential impairment as of October 1 st on an annual basis or, more frequently, if circumstances indicate a potential impairment is present. Intangible assets with finite lives are amortized on the straight-line method over the estimated useful lives of 2 to 15 years. Accounting Pronouncements Adopted in 2024 In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures, which requires disclosure of significant segment expense categories and amounts for each of our reportable segments. The new standard was effective retrospectively for us on January 1, 2024, for annual periods, and January 1, 2025, for interim periods, with early adoption permitted. We adopted ASU 2023-07 retrospectively in the fourth quarter 2024. See Note 13, Segment Information in our Consolidated Financial Statements. Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which enhances income tax disclosures to provide more transparency about income tax information, primarily related to the rate reconciliation and income taxes paid by jurisdiction information. These disclosures will include consistent categories and greater disaggregation of information in the rate reconciliation and require income taxes paid to be disaggregated by jurisdiction as well as additional amendments to improve the effectiveness of income tax disclosures. The new standard is effective prospectively for us on January 1, 2025, with retrospective adoption permitted. We are currently evaluating the impact of the adoption of this accounting pronouncement on our Consolidated Financial Statements. 45 In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, which requires public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in the notes to the financial statements. The new standard is effective prospectively for us on January 1, 2027, for annual periods, and January 1, 2028, for interim periods, with retrospective adoption permitted. We are currently evaluating the impact of the adoption of this accounting pronouncement on our Consolidated Financial Statements. 3. Financing Arrangements Outstanding borrowings, net of unamortized discount and unamortized debt issuance cost under our current financing arrangements consist of the following (in millions): December 31, 2024 2023 Senior credit facility $ 778.7 $ 627.9 Senior notes 699.0 948.2 Less current portion of long-term debt ( 500.0 ) ( 250.0 ) Total long-term debt $ 977.7 $ 1,326.1 Aggregate maturities of long-term debt subsequent to December 31, 2024, are as follows: $ 500.0 million in 2025, $ 699.0 million in 2026, and $ 278.7 million in 2027. Senior Credit Facility At December 31, 2024, we were authorized to borrow up to $ 1.5 billion through a revolving line of credit and committed term loans, which is supported by a credit agreement with a group of banks. The revolving line of credit authorizes us to borrow up to $ 1.0 billion under a five -year term expiring September 2027, and allows us to request an increase in the revolving line of credit total commitment by up to $ 300 million and to request two one -year extensions of the maturity date. The committed term loans authorized us to borrow up to an additional $ 500 million during the nine-month period beginning September 27, 2022, due September 2025, which we exercised in June 2023. The applicable interest rates under this agreement are based on either the Secured Overnight Financing Rate (SOFR), or a Base Rate, depending upon the specific type of borrowing, plus an applicable margin and other fees. At December 31, 2024, we had $ 280.0 million outstanding on the revolving line of credit and a $ 500.0 million outstanding balance of term loans, at an average interest rate of 5.48 %, under this agreement. Senior Notes Our senior notes consist of $ 700 million of 3.875 % senior notes due March 2026, issued in March 2019. Interest payments under these notes are due semiannually in March and September of each year, beginning September 2019. These senior notes were issued by J.B. Hunt Transport Services, Inc., a parent-level holding company with no significant assets or operations. The notes are guaranteed on a full and unconditional basis by a wholly-owned subsidiary. All other subsidiaries of the parent are minor. We registered these offerings and the sale of the notes under the Securities Act of 1933, pursuant to a shelf registration statement filed in January 2019. These notes are unsecured obligations and rank equally with our existing and future senior unsecured debt. We may redeem for cash some or all of the notes based on a redemption price set forth in the note indenture. Our $ 250 million of 3.85 % senior notes matured in March 2024. The entire outstanding balance was paid in full at maturity. Our financing arrangements require us to maintain certain financial covenants and ratios. We were in compliance with all financial covenants and ratios at December 31, 2024. 46 4. Capital Stock We have one class of preferred stock and one class of common stock. We had no outstanding shares of preferred stock at December 31, 2024 or 2023. Holders of shares of common stock are entitled to receive dividends when and if declared by the Board of Directors and are entitled to one vote per share on all matters submitted to a vote of the shareholders. On January 23, 2025, we announced an increase in our quarterly cash dividend from $ 0.43 to $ 0.44 per share, which was paid February 21, 2025, to shareholders of record on February 7, 2025. At December 31, 2024, we had 1.1 million shares of common stock to be issued upon the vesting of equity awards and 3.5 million shares reserved for future issuance pursuant to share-based payment plans. During calendar year 2024, we purchased approximately 3,040,000 shares, or $ 513.9 million, of our common stock in accordance with plans authorized by our Board. At December 31, 2024, we had $ 882.1 million available under an authorized plan to purchase our common stock. 5. Share-based Compensation We maintain a Management Incentive Plan (the “Plan”) that provides various share-based financial methods to compensate our key employees with shares of our common stock or common stock equivalents. Under the Plan, as amended, we have, from time to time, utilized restricted share units, performance share units, restricted shares, and non-statutory stock options to compensate our employees and directors. We currently are utilizing restricted and performance share units. Our restricted share units have various vesting schedules generally ranging from 4 to 10 years when awarded. These restricted share units do not contain rights to vote or receive dividends until the vesting date. Unvested restricted share units are forfeited if the employee terminates for any reason other than death, disability, or special circumstances as determined by the Compensation Committee. Restricted share units are valued based on the fair value of the award on the grant date, adjusted for dividend estimates based on grant date dividend rates. Our performance share units vest based on the passage of time (generally 3 to 10 years) and achievement of performance criteria. Performance share units do not contain rights to vote or receive dividends until the vesting date. Unvested performance share units are forfeited if the employee terminates for any reason other than death, disability, or special circumstances as determined by the Compensation Committee. Performance shares are valued based on the fair value of the award on the grant date, adjusted for dividend estimates based on grant date dividend rates. An employee is allowed to surrender shares of common stock received upon vesting to satisfy tax withholding obligations incident to the vesting of restricted share units and performance share units. 47 We account for our restricted share units and performance share units in accordance with current accounting standards for share-based payments. These standards require that the cost of all share-based payments to employees be recognized in our Consolidated Financial Statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award, subject to the attainment of performance metrics established for performance share units. The quantity of performance share units for which it is probable that the performance conditions will be achieved is estimated each reporting period, with any necessary adjustments recorded as a cumulative cost adjustment in the current period. Share-based compensation expense is recorded in salaries, wages, and employee benefits in our Consolidated Statements of Earnings, along with other compensation expenses to employees. The following table summarizes the components of our share-based compensation program expense (in thousands): Years ended December 31, 2024 2023 2022 Restricted share units Pretax compensation expense $ 49,172 $ 56,837 $ 54,276 Tax benefit 12,214 12,561 13,216 Restricted share units, net of tax $ 36,958 $ 44,276 $ 41,060 Performance share units Pretax compensation expense $ 16,514 $ 22,352 $ 23,259 Tax benefit 4,102 4,940 5,664 Performance share awards, net of tax $ 12,412 $ 17,412 $ 17,595 A summary of our restricted share units and performance share units is as follows: Restricted Share Units Number of Shares Weighted Average Grant Date Fair Value Unvested at December 31, 2023 936,492 $ 147.02 Granted 269,322 192.98 Vested ( 430,890 ) 146.06 Forfeited ( 37,687 ) 171.81 Unvested at December 31, 2024 737,237 $ 163.83 Performance Share Units Number of Shares Weighted Average Grant Date Fair Value Unvested at December 31, 2023 386,723 $ 163.87 Granted 140,469 195.24 Vested ( 138,115 ) 150.73 Forfeited ( 36,786 ) 186.85 Unvested at December 31, 2024 352,291 $ 179.14 At December 31, 2024, we had $ 57.6 million and $ 27.6 million of total unrecognized compensation expense related to restricted share units and performance share units, respectively, that is expected to be recognized over the remaining weighted average vesting period of approximately 3.0 years for restricted share units and 2.1 years for performance share units. The aggregate intrinsic value of restricted and performance share units vested during the years ended December 31, 2024, 2023, and 2022, was $ 105.4 million, $ 104.0 million, and $ 94.0 million, respectively. The aggregate intrinsic value of unvested restricted and performance share units was $ 185.9 million at December 31, 2024, with a remaining weighted average vesting period of approximately 2.9 years. The total fair value of shares vested for restricted share and performance share units during the years ended December 31, 2024, 2023, and 2022, was $ 83.8 million, $ 73.8 million, and $ 63.1 million, respectively. 48 6. Income Taxes Income tax expense attributable to earnings before income taxes consists of (in thousands): Years ended December 31, 2024 2023 2022 Current: Federal $ 244,770 $ 106,004 $ 85,855 State and local 25,328 35,030 51,078 Foreign 8,380 - - 278,478 141,034 136,933 Deferred: Federal ( 88,016 ) 66,000 172,334 State and local ( 1,832 ) ( 434 ) 2,755 ( 89,848 ) 65,566 175,089 Total tax expense/(benefit) $ 188,630 $ 206,600 $ 312,022 Income tax expense attributable to earnings before income taxes differed from the amounts computed using the statutory federal income tax rate of 21 % as follows (in thousands): Years ended December 31, 2024 2023 2022 Income tax at federal statutory rate $ 159,498 $ 196,326 $ 269,088 State tax, net of federal effect 21,051 28,997 41,624 Federal 1341 Claim - ( 14,616 ) - Other, net 8,081 ( 4,107 ) 1,310 Total tax expense $ 188,630 $ 206,600 $ 312,022 Income taxes receivable was $ 116.7 million and $ 90.5 million at December 31, 2024 and 2023, respectively. These amounts have been included in other receivables in our Consolidated Balance Sheets. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023, are presented below (in thousands): December 31, 2024 2023 Deferred tax assets: Insurance accruals $ 69,168 $ 58,614 Allowance for doubtful accounts 12,584 10,766 Compensation accrual 9,882 8,003 Deferred compensation accrual 26,805 36,309 Federal benefit of state uncertain tax positions 17,693 17,491 Lease liabilities 74,858 82,048 State NOL carry-forward 4,235 5,478 Other 3,815 3,890 Total gross deferred tax assets 219,040 222,599 Valuation allowance ( 4,235 ) ( 5,478 ) Total deferred tax assets, net of valuation allowance 214,805 217,121 Deferred tax liabilities: Plant and equipment, principally due to differences in depreciation 1,001,537 1,057,922 Prepaid permits and insurance, principally due to expensing for income tax purposes 35,592 63,880 Lease right-of-use assets 73,925 81,416 Total gross deferred tax liabilities 1,111,054 1,203,218 Net deferred tax liability $ 896,249 $ 986,097 49 Guidance on accounting for uncertainty in income taxes prescribes recognition and measurement criteria and requires that we assess whether the benefits of our tax positions taken are more likely than not of being sustained under tax audits. We have made adjustments to the balance of unrecognized tax benefits, a component of other long-term liabilities on our Consolidated Balance Sheets, as follows (in millions): December 31, 2024 2023 2022 Beginning balance $ 80.9 $ 89.1 $ 78.5 Additions based on tax positions related to the current year 13.3 16.2 25.8 Additions/(reductions) based on tax positions taken in prior years ( 2.9 ) 0.5 2.8 Reductions due to settlements ( 1.4 ) ( 14.6 ) ( 8.0 ) Reductions due to lapse of applicable statute of limitations ( 11.9 ) ( 10.3 ) ( 10.0 ) Ending balance $ 78.0 $ 80.9 $ 89.1 At December 31, 2024 and 2023, we had a total of $ 78.0 million and $ 80.9 million, respectively, in gross unrecognized tax benefits. Of these amounts, $ 63.4 million and $ 65.6 million represent the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate in 2024 and 2023, respectively. Interest and penalties related to income taxes are classified as interest expense in our Consolidated Statements of Earnings. The amount of accrued interest and penalties recognized during the years ended December 31, 2024, 2023, and 2022, was $ 7.8 million, $ 5.3 million, and $ 4.3 million, respectively. Future changes to unrecognized tax benefits will be recognized as income tax expense and interest expense, as appropriate. The total amount of accrued interest and penalties for such unrecognized tax benefits at December 31, 2024 and 2023, was $ 13.1 million and $ 9.0 million, respectively. No material change in unrecognized tax benefits is expected in the next 12 months. Tax years 2017 and forward remain subject to examination by federal tax jurisdictions, while tax years 2014 and forward remain open for state jurisdictions. 7. Employee Benefit Plans We maintain a defined contribution employee retirement plan, which includes a 401(k) option, under which all employees are eligible to participate. We match a specified percentage of employee contributions, subject to certain limitations. For the years ended December 31, 2024, 2023, and 2022, our matching contributions to the plan were $ 35.2 million, $ 34.3 million, and $ 32.5 million, respectively. We have a nonqualified deferred compensation plan that allows eligible employees to defer a portion of their compensation. The compensation deferred under this plan is credited with earnings or losses on investments elected by plan participants. Each participant is fully vested in all deferred compensation and earnings; however, these amounts are subject to general creditor claims until actually distributed to the employee. A participant may elect to receive deferred amounts in one payment or in quarterly installments payable over a period of 2 to 25 years upon reaching age 55 , having 15 years of service, or becoming disabled. Our total liability under this plan was $ 33.9 million as of December 31, 2024, and $ 31.6 million as of December 31, 2023. These amounts are included in other long-term liabilities in our Consolidated Balance Sheets. Participant withholdings are held by a trustee and invested in equity securities as directed by participants. These investments are classified as trading securities and recorded at fair value. Realized and unrealized gains and losses are recognized currently in earnings. The investments are included in other assets in our Consolidated Balance Sheets and totaled $ 33.9 million as of December 31, 2024, and $ 31.6 million as of December 31, 2023. 50 8. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis Our assets and liabilities measured at fair value are based on valuation techniques which consider prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. These valuation methods are based on either quoted market prices (Level 1) or inputs, other than quoted prices in active markets, that are observable either directly or indirectly (Level 2). The following are assets and liabilities measured at fair value on a recurring basis (in millions): Asset/(Liability) Balance December 31, 2024 2023 Input Level Trading investments $ 33.9 $ 31.6 1 The fair value of trading investments has been measured using the market approach (Level 1) and reflect quoted market prices. Trading investments are classified in other assets in our Consolidated Balance Sheets. Financial Instruments The carrying amount of our senior credit facility and senior notes not measured at fair value on a recurring basis was $ 1.48 billion and $ 1.58 billion at December 31, 2024 and 2023, respectively. The estimated fair value of these liabilities using the income approach (Level 2), based on their net present value, discounted at our current borrowing rate, was $ 1.48 billion and $ 1.57 billion at December 31, 2024 and 2023, respectively. The carrying amounts of all other instruments at December 31, 2024 and 2023, approximate their fair value due to the short maturity of these instruments. 9. Commitments and Contingencies At December 31, 2024, we had outstanding commitments of approximately $ 677 million, net of proceeds from sales or trade-ins, during the years 2025 and 2026, as well as an additional $ 89 million thereafter, which is primarily related to the acquisition of tractors, containers, chassis, and other trailing equipment. During 2024, we issued financial standby letters of credit as a guaranty of our performance under certain operating agreements and self-insurance arrangements. If we default on our commitments under the agreements or other arrangements, we are required to perform under these guaranties. The undiscounted maximum amount of our obligation to make future payments in the event of defaults is approximately $ 5.9 million as of December 31, 2024. As the result of state use tax audits, we have been assessed amounts owed from which we are vigorously appealing. We have recorded a liability for the estimated probable exposure under these audits and await resolution of the matter. We purchase insurance coverage for a portion of expenses related to vehicular collisions and accidents. These policies include a level of self-insurance (deductible) coverage applicable to each claim as well as certain coverage-layer-specific, aggregated reimbursement limits of covered excess claims. Our claims from time to time exceed some of these existing coverage layer aggregate reimbursement limits. We have recorded liabilities to reflect our estimate of exposure for excess claims which have developed in maturity and severity, which are included in our total claims accrual, discussed further in Note 2, Summary of Significant Accounting Policies. 51 We are involved in certain other claims and pending litigation arising from the normal conduct of business. Based on present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution of these claims and pending litigation will not have a material adverse effect on our financial condition, results of operations or liquidity. 10. Leases As of December 31, 2024, we had various obligations remaining under operating lease arrangements related primarily to the rental of maintenance and support facilities, cross-dock and delivery system facilities, office space, parking yards and equipment. Many of these leases include one or more options, at our discretion, to renew and extend the agreement beyond the current lease expiration date or to terminate the agreement prior to the lease expiration date. These options are included in the calculation of our operating lease right-of-use asset and liability when it becomes reasonably certain the option will be exercised. Our lease obligations typically do not include options to purchase the leased property, nor do they contain residual value guarantees or material restrictive covenants. Operating leases with an initial term of more than 12 months are included in our Consolidated Balance Sheets as discounted liabilities and corresponding right-of-use assets consisting of the following (in millions): Asset/(Liability) Balance December 31, 2024 2023 Right-of-use assets $ 308.2 $ 350.2 Lease liabilities, current ( 98.1 ) ( 99.9 ) Lease liabilities, long-term ( 214.0 ) ( 252.9 ) Right-of-use assets are classified in other assets in our Consolidated Balance Sheets. Operating lease liability, current is classified in other accrued expenses, while operating lease liability, long-term is classified in other long-term liabilities in our Consolidated Balance Sheets. As of December 31, 2024 and 2023, the weighted-average remaining lease term for our outstanding operating lease obligations was 4.9 years and 5.0 years, respectively. As of December 31, 2024 and 2023, the weighted-average discount rate was 4.22 % and 3.73 %, respectively. Future minimum lease payments under these operating leases as of December 31, 2024, are as follows (in millions): 2025 $ 101.6 2026 78.0 2027 56.6 2028 36.8 2029 22.6 Thereafter 50.4 Total lease payments 346.0 Less interest ( 33.9 ) Present value of lease liabilities $ 312.1 During the years ended December 31, 2024, 2023, and 2022, cash paid for amounts included in the measurement of operating lease liabilities was $ 109.9 million, $ 106.2 million, and $ 87.6 million, while $ 110.8 million, $ 106.8 million, and $ 87.7 million of operating lease expense was recognized on a straight-line basis, respectively. Operating lease expense is recorded in general and administrative expenses, net of asset dispositions in our Consolidated Statements of Earnings. During the years ended December 31, 2024, 2023, and 2022, a total of $ 78.9 million, $ 159.7 million, and $ 213.9 million of right-of-use assets were obtained in exchange for new operating lease liabilities, of which, $ 9.1 million was obtained through business combinations in 2023. 52 11. Acquisitions On September 14, 2023, we entered into an asset purchase agreement to acquire substantially all of the brokerage assets and assume certain specified liabilities of BNSF Logistics, LLC (BNSFL), an affiliate of Burlington Northern Santa Fe, LLC, subject to customary closing conditions. The closing of the transaction was effective on September 30, 2023, with a purchase price of $ 85.0 million. Total consideration paid in cash under the BNSFL agreement was $ 81.2 million and consisted of the agreed upon purchase price paid in 2023, reduced for estimated working capital adjustments received in 2024. Transaction costs incurred were not material. The BNSFL acquisition was accounted for as a business combination and operates within our ICS business segment. Assets acquired and liabilities assumed were recorded in our Consolidated Balance Sheet at their estimated fair values, as of the closing date, using cost, market data and valuation techniques that reflect management’s judgment and estimates. As a result of the acquisition, we recorded approximately $ 38.5 million of definite-lived intangible assets and approximately $ 13.6 million of goodwill. Goodwill consists of acquiring and retaining the BNSFL existing brokerage network and expected synergies from the combination of operations. On September 14, 2022, we entered into purchase agreements to acquire substantially all of the assets and assume certain specified liabilities of Alterri Distribution Center, LLC and to acquire all the real property and other assets of related entities (Alterri), subject to customary closing conditions. The closing of the transaction was effective on September 14, 2022, with a purchase price and total consideration paid in cash of $ 31.0 million. Total consideration paid in cash under the Alterri agreement was $ 31.1 million and consisted of the agreed upon purchase price adjusted for estimated working capital adjustments. Transaction costs incurred were not material. The Alterri acquisition was accounted for as a business combination and will operate within our JBI business segment. Assets acquired and liabilities assumed were recorded in our Consolidated Balance Sheet at their estimated fair values, as of the closing date, using cost, market data and valuation techniques that reflect management’s judgment and estimates. As a result of the acquisition, we recorded approximately $ 0.9 million of definite-lived intangible assets and approximately $ 8.8 million of goodwill in 2022. Goodwill consists of acquiring and retaining Alterri’s existing operating model and strategic geographic location as well as expected synergies from the combination of operations. On January 31, 2022, we entered into an asset purchase agreement to acquire substantially all of the assets and assume certain specified liabilities of Zenith Freight Lines, LLC (Zenith), a wholly-owned subsidiary of Bassett Furniture Industries, Inc., subject to customary closing conditions. The closing of the transaction was effective on February 28, 2022, with a purchase price of $ 86.9 million. Total consideration paid in cash under the Zenith agreement was $ 87.1 million and consisted of the agreed upon purchase price adjusted for estimated working capital adjustments. Transaction costs incurred were not material. The Zenith acquisition was accounted for as a business combination and will operate within our FMS business segment. Assets acquired and liabilities assumed were recorded in our Consolidated Balance Sheet at their estimated fair values, as of the closing date, using cost, market data and valuation techniques that reflect management’s judgment and estimates. As a result of the acquisition, we recorded approximately $ 42.7 million of definite-lived intangible assets and approximately $ 11.1 million of goodwill. Goodwill consists of acquiring and retaining the Zenith existing network and expected synergies from the combination of operations. 53 12. Goodwill and Other Intangible Assets Total goodwill was $ 134.0 million and $ 134.0 million at December 31, 2024 and 2023, respectively. At December 31, 2024, $ 111.6 million, $ 13.6 million and $ 8.8 million of our goodwill was assigned to our FMS, ICS, and JBI business segments, respectively. No impairment losses have been recorded for goodwill as of December 31, 2024. Our intangible assets consisted of those arising from previous business acquisitions within our FMS, ICS, and JBI segments. Identifiable intangible assets consist of the following (in millions): Weighted Average December 31, Amortization 2024 2023 Period Finite-lived intangibles: Customer relationships $ 189.8 $ 206.3 10.7 Non-competition agreements 10.6 10.8 6.0 Trade names - 6.5 Total finite-lived intangibles 200.4 223.6 Less accumulated amortization ( 103.4 ) ( 89.7 ) Total identifiable intangible assets, net $ 97.0 $ 133.9 Our finite-lived intangible assets have no assigned residual values. During the years ending December 31, 2024, 2023, and 2022, intangible asset amortization expense was $ 37.0 million, $ 20.5 million and $ 18.2 million, respectively. During the year ending December 31, 2024, we recorded expense of $ 14.4 million for the impairment of certain customer relationships intangible assets related to the BNSFL acquisition. Estimated amortization expense for our finite-lived intangible assets is expected to be approximately $ 20.6 million for 2025, $ 19.8 million for 2026, $ 15.5 million for 2027, $ 9.7 million for 2028, and $ 9.5 million for 2029. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, impairment or accelerated amortization of intangible assets, and other events. 13. Segment Information We have five reportable business segments which are based primarily on the services each segment provides. The JBI segment includes freight that is transported by rail over at least some portion of the movement and also includes certain repositioning truck freight moved by JBI equipment or third-party carriers, when such highway movement is intended to direct JBI equipment back toward intermodal operations. DCS segment business includes company-owned and customer-owned, DCS-operated revenue equipment and employee drivers assigned to a specific customer, traffic lane, or service. DCS operations usually include formal, written longer-term agreements or contracts that govern services performed and applicable rates. ICS provides non-asset and asset-light transportation solutions to customers through relationships with third-party carriers and integration with company-owned equipment. ICS services include flatbed, refrigerated, and expedited, as well as a variety of dry-van and intermodal solutions. ICS further offers these services through an online multimodal marketplace via J.B. Hunt 360 that matches the right load with the right carrier and the best mode. FMS provides last-mile delivery services to customers through a nationwide network of cross-dock and other delivery system network locations. FMS provides both asset and non-asset big and bulky delivery and installation services, as well as fulfillment, retail-pooling distributions, and LTL services. JBT business includes full-load, dry-van freight that is transported using independent contractors or third-party carriers utilizing company-owned trailing equipment as well as services through our J.B. Hunt 360box program which utilizes the J.B. Hunt 360 platform to access capacity and offer efficient drop trailer solutions to customers. This freight is typically transported over roads and highways and does not move by rail. All transactions between reporting segments are eliminated in consolidation. Our President and Chief Executive Officer serves as our Chief Operating Decision Maker (CODM) and is responsible for reviewing segment performance and making decisions regarding capital and personnel allocations. Our measure of profit or loss for segment reporting purposes provided to the CODM is operating income. The CODM considers operating income budget-to-actual variances on a monthly basis to assess the performance for each of our segments. Effectively all corporate support expenses are allocated to our operating segments within various expense line items presented. Assets reported by our corporate support group are not allocated. Intersegment revenues and corresponding expenses included in our segment reporting are eliminated upon consolidation. 54 Our customers are geographically dispersed across the United States. A summary of certain segment information is presented below (in millions): Assets (Excludes intercompany accounts) December 31, 2024 2023 2022 JBI $ 3,507 $ 3,391 $ 3,270 DCS 2,195 2,355 1,989 ICS 288 350 311 FMS 544 634 620 JBT 389 419 437 Total segment assets 6,923 7,149 6,627 Other (includes corporate) 1,389 1,439 1,160 Total $ 8,312 $ 8,588 $ 7,787 Net Capital Expenditures (1) Years ended December 31, 2024 2023 2022 JBI $ 322 $ 536 $ 622 DCS 153 716 494 ICS 20 2 14 FMS 15 36 46 JBT 14 30 167 Total segment net capital expenditures 524 1,320 1,343 Other (includes corporate) 150 280 89 Total $ 674 $ 1,600 $ 1,432 Revenues and Operating Income/(Loss) Year ended December 31, 2024 JBI DCS ICS FMS JBT Intersegment Eliminations Consolidated Total operating revenues $ 5,956 $ 3,396 $ 1,141 $ 910 $ 702 $ ( 18 ) $ 12,087 Operating expenses: Rents, purchased transportation, and fuel 3,791 451 967 330 509 Salaries, wages and employee benefits 844 1,528 79 310 43 Depreciation and amortization 249 330 35 46 36 Operating supplies and expenses 244 276 8 41 27 Insurance and claims 106 173 21 14 20 General and administrative expenses, net of asset dispositions 260 202 86 101 44 Other segment items (2) 32 60 1 8 2 Total operating expenses 5,526 3,020 1,197 850 681 ( 18 ) 11,256 Operating Income (3) $ 430 $ 376 $ ( 56 ) $ 60 $ 21 $ - $ 831 Revenues and Operating Income/(Loss) Year ended December 31, 2023 JBI DCS ICS FMS JBT Intersegment Eliminations Consolidated Total operating revenues $ 6,208 $ 3,543 $ 1,390 $ 918 $ 789 $ ( 18 ) $ 12,830 Operating expenses: Rents, purchased transportation, and fuel 3,986 538 1,225 319 574 Salaries, wages and employee benefits 808 1,552 87 325 50 Depreciation and amortization 256 327 6 48 44 Operating supplies and expenses 228 285 8 45 31 Insurance and claims 100 161 30 23 23 General and administrative expenses, net of asset dispositions 230 214 77 101 48 Other segment items (2) 31 61 1 10 3 Total operating expenses 5,639 3,138 1,434 871 773 ( 18 ) 11,837 Operating Income (3) $ 569 $ 405 $ ( 44 ) $ 47 $ 16 $ - $ 993 55 Revenues and Operating Income Year ended December 31, 2022 JBI DCS ICS FMS JBT Intersegment Eliminations Consolidated Total operating revenues $ 7,022 $ 3,524 $ 2,323 $ 1,042 $ 937 $ ( 34 ) $ 14,814 Operating expenses: Rents, purchased transportation, and fuel 4,616 660 2,002 397 683 Salaries, wages and employee benefits 827 1,527 109 372 61 Depreciation and amortization 226 280 3 44 35 Operating supplies and expenses 205 289 7 53 26 Insurance and claims 101 149 42 26 19 General and administrative expenses, net of asset dispositions 218 207 102 103 33 Other segment items (2) 29 51 1 10 3 Total operating expenses 6,222 3,163 2,266 1,005 860 ( 34 ) 13,482 Operating Income (3) $ 800 $ 361 $ 57 $ 37 $ 77 $ - $ 1,332 (1) Net capital expenditures report the additions to property and equipment, net of proceeds from the sale of property and equipment. (2) Other segment items include communication, utilities, and operating taxes and licenses expense items. (3) Refer to the Consolidated Statements of Earnings for the reconciliation of consolidated operating income to earnings before income taxes. 56