SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the year ended		Commission file number
December 31, 2005		0-11757

J.B. HUNT TRANSPORT SERVICES, INC.

(Exact name of registrant as specified in its charter)

Arkansas		71-0335111
(State or other jurisdiction of		(I.R.S. employer
incorporation or organization)		identification no.)

615 J.B. Hunt Corporate Drive
Lowell, Arkansas		72745-0130
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (479) 820-0000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 Par Value

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ý No o

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

The aggregate market value of 113,451,907 shares of the registrant’s $.01 par value common stock held by non-affiliates as of June 30, 2005, was $2.18 billion (based upon $19.23 per share).

As of February 28, 2006, the number of outstanding shares of the registrant’s common stock was 154,244,994.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the Notice and Proxy Statement for the Annual Meeting of the Stockholders, to be held April 20, 2006, are incorporated by reference in Part III of this Form 10-K.

FORWARD-LOOKING STATEMENTS

This report, including documents which are incorporated by reference, and other documents which we file periodically with the Securities and Exchange Commission (SEC), contains statements that may be considered to be “forward-looking statements.” Such statements relate to our predictions concerning future events or operations and are within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are inherently uncertain, subject to risks, and should be viewed with caution. These statements are based on our belief or interpretation of information currently available. Stockholders and prospective investors are cautioned that actual results and future events may differ materially from the forward-looking statements as a result of many factors. Some of the factors and events that are not within our control and that could have a material impact on future operating results include: general economic and business conditions, competition and competitive rate fluctuations, cost and availability of diesel fuel, ability to attract and retain qualified drivers, a loss of one or more major customers, interference with or termination of our relationships with certain railroads, insurance costs and availability, claims expense, retention of key employees, terrorist attacks or actions, acts of war, adverse weather conditions, new or different environmental or other laws and regulations, increased costs for new revenue equipment or decreases in the value of used equipment and the ability of revenue equipment manufacturers to perform in accordance with agreements for guaranteed equipment trade-in values. Current and future changes in fuel prices could result in significant fluctuations of quarterly earnings.

You should understand that many important factors, in addition to those listed above, could impact us financially. Our operating results may fluctuate as a result of these and other risk factors or events as described in our filings with the SEC. Some important factors that could cause our actual results to differ from estimates or projections contained in the forward-looking statements are described under “Risk Factors” in Item 1A. We assume no obligation to update any forward-looking statement to the extent we become aware that it will not be achieved for any reason.

PART I

ITEM 1. BUSINESS

OVERVIEW

We are one of the largest surface transportation companies in North America. J.B. Hunt Transport Services, Inc. (JBHT) is a publicly held holding company that, together with our wholly owned subsidiaries and associated companies, provides a wide range of transportation services to a diverse group of customers throughout the continental United States, Canada and Mexico. We were incorporated in Arkansas on August 10, 1961, and have been a publicly held company since our initial public offering in 1983. Our service offerings include transportation of full truckload containerizable freight, which we directly transport utilizing our company-controlled revenue equipment and company drivers or independent contractors. This full truckload freight may be transported entirely by truck over roads and highways, or may be moved, in part, by rail. We have arrangements with most of the major North American rail carriers to transport truckload freight in containers and trailers. We also provide customized freight movement, revenue equipment, labor and systems services that are tailored to meet individual customers’ requirements and typically involve long-term contracts. These arrangements are known as dedicated services and may include multiple pickups and drops, home deliveries, freight handling, specialized equipment and network design. We also have a 37% ownership interest in a global transportation logistics company, Transplace, Inc. (TPI). TPI is co-owned by five large transportation companies and provides supplemental sales, management and freight movement services through arrangements with a large number of common carriers.

Our business operations are primarily organized through three distinct, but complementary, business segments. These segments include full truckload dry-van (JBT), intermodal (JBI) and dedicated contract services (DCS). In addition, we operated a logistics business segment from 1992 until mid-2000. In 2000, we, along with a number of other publicly held transportation companies,

contributed our existing logistics business to a new, commonly owned company, Transplace, Inc. (TPI). Our business is somewhat seasonal with slightly higher freight volumes typically experienced during the months of August through early November. Our DCS segment is subject to less seasonal variation than our JBT and JBI segments. For the calendar year ended December 31, 2005, our consolidated revenue totaled $3.13 billion, after the elimination of inter-segment business. Of the total, $1.28 billion, or 41%, was generated by our JBI business segment. Our JBT segment generated $1.02 billion, or 32%, of total revenue and DCS represented $844 million, or 27%.

Additional general information about us is available from our Internet website at www.jbhunt.com. We make a number of reports and other information available free of charge on our website including our annual report on Form 10-K, our proxy statement and our earnings releases. Our website also contains corporate governance guidelines, our code of ethics, our whistleblower policy, committee charters for our Board of Directors and other corporate policies.

OUR MISSION AND STRATEGY

We forge long-term partnerships with key customers that include supply-chain management as an integral part of their strategy. Working in concert, we drive out cost, add value and function as an extension of our customers’ enterprise. We believe that our operating strategy can add value to customers and increase our profits and returns to stockholders.

RECENT FOCUS

During the past five years, we have taken significant steps to re-establish a primary focus on the profitability of our three business segments. In each segment we have implemented capacity management decision making processes that result in the deployment of our assets where we believe they will generate more profit. We continually focus on replacing less-profitable freight with higher-margin freight and lanes. Selective pricing actions and ensuring that we properly charge for all services provided have also been areas of major focus. We have also worked to ingrain safety into our corporate culture, which has reduced our accident and injury costs during the past several years.

OPERATING SEGMENTS

Segment information is included in Note 11 to our Consolidated Financial Statements.

JBT Segment

Our primary transportation service offerings classified in this segment include full truckload, dry-van freight, which is predominantly transported utilizing company-controlled tractors operating over roads and highways. We pick up our freight at the dock or specified location of the shipper and transport the load directly to the location of the consignee. Most of our loads are transported entirely by our company-owned tractors and employee drivers, or by independent contractors (ICs) who agree to transport freight in our trailers. We also assign freight to be handled by third-party motor carriers other than ICs. This type of freight movement typically results in our billing the customer for all applicable freight charges and, in turn, paying the third party for their portion of the transportation services provided. This type of service usually results in our recognition of revenue for the entire billing and the payment to the third-party being classified as purchased transportation expense.

We operate utilizing certain Canadian authorities, allowing us to transport freight to and from all points in the continental United States to Quebec, British Columbia and Ontario. We have authorization to operate directly in all the Canadian provinces, but to date we have served limited points in Canada, primarily through interchange operations with Canadian motor carriers. In late 2000, we began utilizing ICs in the JBT segment and at December 31, 2005, we had 1,142 ICs operating in the JBT segment. JBT revenue for calendar year 2005 was $1.02 billion, compared with $928 million in 2004. At December 31, 2005, the JBT segment operated 4,368 company-controlled tractors and employed 5,882

people, 4,895 of whom were drivers. A portion of our JBT segment non-driver employees provide freight solicitation, order entry and other operational support services to our other two segments. We record inter-segment credits and charges to properly reflect these inter-segment support services.

JBI Segment

The transportation service offerings of our JBI segment utilize arrangements with most major North American rail carriers to provide intermodal freight solutions for our customers throughout the continental United States, Canada and Mexico. Our JBI segment began operations in 1989 with a unique partnership with the former Santa Fe Railway (now the BNSF Railway Company), a watershed event in the industry and the first agreement that linked major rail and truckload carriers in a joint marketing environment. Essentially, JBI draws on the intermodal (also known as “container on flatcar”) services of rail carriers for the underlying linehaul movement of its equipment and performs the pickups and deliveries (“drayage”) for customers at the origin and destination rail terminal locations. We may directly provide the drayage service at either the origin or destination rail ramp utilizing our company-controlled tractors, or we may purchase these services from third parties. JBI provides seamless coordination of the rail and over-the-road transport movements for our customers and delivers a single billing for the complete door-to-door service.

Our intermodal program has grown from 20 loads in late 1989 to nearly 600,000 in 2005. JBI operates 23,755 company-controlled containers systemwide. The entire fleet is comprised of 53-foot, high-cube containers and is designed to take advantage of intermodal double-stack economics and superior ride quality. JBI also manages a fleet of 1,341 company-owned tractors and 1,719 company drivers in support of intermodal operations. We also began utilizing ICs in our intermodal segment during 2005. We had 16 ICs operating in our JBI business segment at December 31, 2005. At December 31, 2005, the total JBI employee count was 1,951, including the 1,719 drivers. Revenue for the JBI segment in calendar year 2005 was $1.28 billion, compared with $1.12 billion in 2004. As previously announced, an arbitration process with the BNSF Railway Company (BNI) was concluded during the third quarter of 2005. In accordance with the settlement terms, we paid BNI $25.8 million in the third quarter of 2005. Normal commercial business activity continued between the parties during the approximate 15-month arbitration process, and normal business operations have continued since the final settlement.

DCS Segment

Since 1992, we have offered dedicated contract carriage as a service option. DCS segment operations specialize in the design, development and execution of customer-specific fleet solutions. Capitalizing on advanced systems and technologies, DCS offers transportation engineering solutions that support private fleet conversion, dedicated fleet creation and transportation system augmentation. DCS operations typically provide customized services that are governed by long-term contracts and currently include dry-van, flatbed, temperature-controlled, dump trailers and local inner-city operations.

DCS operations focus on delivering recognizable customer value through best-in-class service, cost control and guaranteed dedicated capacity. DCS utilizes a proprietary methodology known as Customer Value Delivery™ (CVD) to create, measure and communicate value created for each customer. DCS leverages the JBHT freight network to reposition equipment near outbound domiciles, thereby reducing inefficient empty miles and system cost. DCS also frequently finds synergy in shared resources with the JBT and JBI segments, including terminals, drivers, maintenance shops, bulk fuel locations and trailer pools providing further economies of scale. DCS revenue for calendar year 2005 was $844 million, compared with $760 million in 2004. In early 2004, we began utilizing ICs in the DCS segment and at December 31, 2005, we had 152 ICs operating in the DCS segment. At December 31, 2005, the DCS segment operated 4,771 company-controlled and 87 customer-owned tractors, and employed 5,834 people, 5,144 of whom were drivers.

Logistics Business and Associated Company

We officially began offering transportation logistics services in 1992 through a wholly owned subsidiary, J.B. Hunt Logistics, Inc. (JBL). JBL services frequently included an arrangement whereby a shipper might outsource a substantial portion of its entire distribution and transportation process to one organization. The JBL segment business included a wide range of comprehensive transportation and management services, including experienced professional managers, information and optimization technology, and the actual design or redesign of system solutions. A new logistics customer or service arrangement frequently required a significant amount of up-front analysis and design time, during which alternatives were considered and custom systems and software were developed. Effective July 1, 2000, we contributed our existing JBL segment business to a newly formed company, TPI. TPI provides supplemental logistics sales and management support and also has arrangements with approximately 2,800 motor carriers to provide capacity to transport freight. Our share of TPI’s financial results are included on a one-line, non-operating item included on our Consolidated Statements of Earnings entitled “equity in loss of associated company.”

Operations in Mexico

We have provided transportation services to and from Mexico since 1989. These services typically involve equipment interchange operations with various Mexican motor carriers. As previously reported, we sold a joint venture interest with a Mexican transportation company in 2002. We received all remaining funds due in connection with this sale during 2005. This transaction had no significant impact on our earnings. We continue to provide transportation services to and from Mexico primarily by utilizing the services of a variety of Mexican carriers.

Marketing and Operations

We transport, or arrange for the transportation of, a wide range of freight, including forest and paper products, building materials, general merchandise, food and beverages, chemicals and automotive parts. Our customer base is extremely diverse and includes a large number of Fortune 500 companies. Our ability to offer multiple services, utilizing our three business segments and a full complement of logistics services through third parties, represents a competitive advantage. We provide a broad range of transportation services to larger shippers that seek to use a limited number of “core” carriers. Our largest customer in 2005 was Wal-Mart Stores, Inc., which accounted for approximately 15% of our total revenue.

We generally market all of our service offerings through a nationwide sales and marketing network. We do have some sales and marketing functions managed at the business-unit level, particularly for our DCS segment. In accordance with our typical arrangements, we bill the customer for all services and we, in turn, pay all third parties for their portion of transportation services provided. In recent years, we have re-established a primary focus on improving the profitability of each of our business segments and charging a fair price for all services provided.

People

We believe that one of the factors differentiating us from our competitors is our service-oriented people. As of December 31, 2005, we had approximately 16,370 employees, including 11,758 company drivers. We also had arrangements with 1,310 ICs to transport freight in our trailing equipment. In addition, we employed 1,170 mechanics and 3,439 office personnel at the end of 2005. None of our employees is represented by unions or covered by collective bargaining agreements.

Our industry has periodically had a difficult time attracting and retaining enough qualified truck drivers. It is also common for the driver turnover rate of individual carriers to exceed 100%. It has been our practice during the past few years to compensate our drivers at an above-average level in order to attract a higher caliber of experience and minimize turnover. During 2005, we increased company driver and IC compensation in order to attract and retain an adequate supply of qualified drivers. While we have not, to date, experienced significant operational disruptions due to driver shortages, we expect

the costs to recruit, train and retain company drivers and ICs will continue to rise in the foreseeable future.

Revenue Equipment

As of December 31, 2005, we operated 10,480 company-controlled tractors. In addition, our 1,310 ICs operate their own tractors, but transport freight in our trailing equipment. We operate with standardized tractors in as many fleets as possible, particularly in our JBT and JBI fleets. Based on our customers’ preferences and the actual business application, our DCS fleet is more diversified. We believe operating with relatively newer revenue equipment provides better customer service, attracts quality drivers and lowers maintenance expense. At December 31, 2005, the average age of our combined tractor fleet was 2.2 years, our trailers averaged 5.0 years of age and our containers averaged 6.8 years. We perform routine servicing and preventative maintenance of our equipment at most of our regional terminal facilities.

We typically operate newer revenue equipment in our JBT segment to minimize downtime and maximize utilization. Our JBI segment utilizes high-cube containers, which can be separated from the chassis and double-stacked on rail cars. We are currently in the process of expanding our container fleet and reconditioning our chassis fleet. The composition of our DCS trailing fleet varies with specific customer requirements and may include dry-vans, flatbeds, temperature-controlled, curtain-side vans, and even straight or dump trucks.

Effective October 1, 2002, the Environmental Protection Agency (EPA) required that most newly manufactured heavy-duty tractor engines comply with certain new emission standards. We initially limited our new tractor purchases while we tested these new 2002 EPA-compliant engines. At December 31, 2005, we were operating approximately 5,900 tractors with these 2002 rule-compliant engines. These engines experience an approximate 4% to 5% lower fuel efficiency and are also expected to require higher annual maintenance costs.

Effective with model-year 2007 tractors, the EPA has mandated even lower emission standards for newly manufactured heavy-duty tractor engines. We once again are planning our new equipment purchases to accommodate these new standards, but allow adequate testing of the new engines. The 2007 EPA-compliant engines will be equipped with a particulate trap and will require more costly ultra-low-sulfur diesel (ULSD) fuel. The EPA estimates that ULSD fuel will cost approximately $.04 to $.05 more per gallon. We are unable at this time to determine the increase in acquisition and operating costs of these new 2007 EPA-compliant engines.

Competition and the Industry

According to the most recently available study conducted by the American Trucking Associations (ATA), all modes of domestic freight carriers in the United States generated approximately $610 billion of revenue in 2003. Of this total, truck transportation represented about 87%, or $531 billion. ATA also estimated that approximately 54% of the nation’s 2003 truck revenue related to for-hire carriers, while 46% related to private carriers. As of July 2004, there were more than 573,000 private, for-hire, U.S. Mail and other U.S. interstate motor carriers on file with the Federal Motor Carrier Safety Administration (FMCSA). The top 10 for-hire truckload carriers only generate about 3% of the total revenue in this segment, and we represent approximately 1% of this segment’s revenue. The market in which we compete is frequently referred to as highly fragmented and includes thousands of carriers, many of which are very small. While we compete with a number of smaller carriers on a regional basis, only a limited number of companies represent competition in all markets across the country. We compete with other freight transportation carriers primarily in terms of on-time pickup and delivery service, availability of drivers, and revenue equipment and price.

Regulation

Our operations as a for-hire motor carrier are subject to regulation by the U.S. Department of Transportation (DOT) and the Federal Motor Carrier Safety Administration, and certain business is also subject to state rules and regulations. The DOT periodically conducts reviews and audits to ensure our

compliance with all federal safety requirements, and we report certain accident and other information to the DOT. Our operations into and out of Canada and Mexico are also subject to regulation by those countries.

Effective October 1, 2005, driver hours-of-service regulations (HOS) were revised. The majority of these rule changes had initially been effective January 4, 2004. These collective changes were the most significant changes to driver HOS in more than 40 years. In general, the new rules require a driver to take at least eight consecutive hours in the sleeper berth during a ten-hour off-duty period. These new rules primarily affect short-haul and multiple-stop freight operations and had a minor negative impact on our overall operations and financial results.

ITEM 1A. RISK FACTORS

In addition to the forward-looking statements outlined previously in this Form 10-K and other comments regarding risks and uncertainties, the following risk factors should be carefully considered when evaluating our business. Our business, financial condition or financial results could be materially and adversely affected by any of these risks. Also note that additional risks not currently identified or known to us could also negatively impact our business or financial results.

Our business is subject to general economic and business factors that are largely out of our control, any of which could have a material adverse effect on our results of operations.

Our business is dependent upon a number of factors that may have a material adverse effect on the results of our operations, many of which are beyond our control. These factors include significant increases or rapid fluctuations in fuel prices, excess capacity in the trucking industry, surpluses in the market for used equipment, interest rates, fuel taxes, license and registration fees, insurance premiums, self-insurance levels, and difficulty in attracting and retaining qualified drivers and independent contractors.

We are also affected by recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries such as retail and manufacturing, where we have a significant concentration of customers. Economic conditions represent a greater potential for loss, and we may be required to increase our reserve for bad-debt losses. In addition, our results of operations may be affected by seasonal factors. Customers tend to reduce shipments after the winter holiday season, and our operating expenses tend to be higher in the winter months primarily due to colder weather, which causes higher fuel consumption from increased idle time and higher maintenance costs.

We operate in a competitive and somewhat fragmented industry. Numerous factors could impair our ability to maintain our current profitability and to compete with other carriers and private fleets.

Some of these factors include:

• We compete with many other truckload carriers of varying sizes and, to a lesser extent, with less-than-truckload carriers and railroads, some of which have more equipment and greater capital resources than we do.

• Some of our competitors periodically reduce their freight rates to gain business, especially during times of reduced growth rates in the economy, which may limit our ability to maintain or increase freight rates or maintain our profit margins.

• Many customers reduce the number of carriers they use by selecting so-called “core carriers” as approved transportation service providers, and in some instances we may not be selected.

• Many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in the loss of some business to competitors.

• Certain of our customers that operate private fleets to transport their own freight could decide to expand their operations.

• The trend toward consolidation in the trucking industry may create other large carriers with greater financial resources and other competitive advantages relating to their size.

• Advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher freight rates to cover the cost of these investments.

We derive a significant portion of our revenue from a few major customers, the loss of one or more of which could have a material adverse effect on our business.

For the calendar year ended December 31, 2005, our top 10 customers, based on revenue, accounted for approximately 40% of our revenue. Our largest customer is Wal-Mart Stores, Inc., which accounted for approximately 15% of our total revenue in 2005. Our JBT and JBI segments typically do not have long-term contracts with their customers. While our DCS segment business may involve a written contract, those contracts may contain cancellation clauses, and there is no assurance that our current customers will continue to utilize our services or that they will continue at the same levels. A reduction in or termination of our services by one or more of our major customers could have a material adverse effect on our business and operating results.

We depend on third parties in the operation of our business.

Our Intermodal business segment utilizes railroads in the performance of its transportation services. These services are provided pursuant to contractual relationships with the railroads. While we have agreements with various Class I railroads, the majority of our business travels on the Burlington Northern Santa Fe and the Norfolk Southern Railroad. The inability to utilize one or more of these railroads could have a material adverse effect on our business and operating results. We also utilize the services of a number of third-party dray carriers to perform a significant number of our origin and destination pickups and deliveries. In addition, a portion of the freight we deliver is imported to the United States through ports of call that are subject to labor union contracts.

Difficulty in attracting and retaining drivers could affect our profitability and ability to grow.

Periodically, the trucking industry experiences substantial difficulty in attracting and retaining qualified drivers, including ICs. A shortage of qualified company drivers and ICs has proven to be particularly severe during the past few years. In spite of continued increases in driver compensation and recruiting costs, the industry is currently experiencing a significant shortage of drivers. If we are unable to continue attracting an adequate number of drivers or contract with enough independent contractors, we could be required to significantly increase our driver compensation package or let trucks sit idle, which could adversely affect our growth and profitability.

Ongoing insurance and claims expenses could significantly reduce our earnings.

Our future insurance and claims expenses might exceed historical levels, which could reduce our earnings. During 2005, we self-insured a portion of our claims exposure resulting from cargo loss, personal injury, property damage and health claims for amounts up to the first $2 million for auto accidents and $1 million for workers’ compensation. Effective January 1, 2006, the self-insured portion of our claims exposure for personal injury and workers’ compensation was reduced to $500,000. If the number or severity of claims for which we are self-insured increases, our operating results could be adversely affected. Also, we maintain insurance above the amounts for which we self-insure with licensed insurance companies. Insurance carriers have recently raised premiums for most trucking

companies. As a result, our insurance and claims expenses could increase when some of our current coverages expire on July 31, 2006. If these expenses increase, and we are unable to offset the increase with higher freight rates, our earnings could be materially and adversely affected.

The Internal Revenue Service (IRS) has proposed to disallow the tax benefits associated with certain sale-and-leaseback transactions.

As previously disclosed, the Internal Revenue Service (IRS) has proposed to disallow the tax benefits associated with certain sale-and-leaseback transactions, which we entered into in 1999. Based on events occurring subsequent to December 31, 2004, we established a reserve for a contingent tax liability of $33.6 million at December 31, 2004. The liability for this contingency, which included estimated interest expense, was included on our consolidated balance sheet at December 31, 2004, as a long-term liability. We accrued approximately $2.7 million of interest expense during 2005 related to this contingency. We continue to believe our tax positions comply with applicable tax law for which we received advice and opinions from our then external public accountants and attorneys prior to entering into these transactions, and we continue to vigorously defend against the IRS position using all administrative and legal processes available. If the IRS were successful in disallowing 100% of the tax benefit from this transaction, the total ultimate impact on liquidity could be approximately $44 million, excluding interest.

Our operations are subject to various environmental laws and regulations, the violation of which could result in substantial fines or penalties.

We are subject to various environmental laws and regulations dealing with the handling of hazardous materials, underground fuel storage tanks, and discharge and retention of storm water. We operate in industrial areas, where truck terminals and other industrial activities are located, and where groundwater or other forms of environmental contamination have occurred. Our operations involve the risks of fuel spillage or seepage, environmental damage and hazardous wastes disposal, among others. We also maintain bulk fuel storage and fuel islands at several of our facilities. If we are involved in a spill or other accident involving hazardous substances, or if we are found to be in violation of applicable laws or regulations, it could have a material adverse effect on our business and operating results. If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

We operate in a regulated industry, and increased direct and indirect costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business.

The DOT and various state agencies exercise broad powers over our business, generally governing matters including authorization to engage in motor carrier service, equipment operation, safety and financial reporting. We are audited periodically by the DOT to ensure that we are in compliance with various safety, hours-of-service, and other rules and regulations. If we were found to be out of compliance, the DOT could restrict or otherwise impact our operations.

Effective October 1, 2005, driver HOS regulations were revised. The majority of these rule changes had initially been effective January 4, 2004. These collective changes were the most significant changes to driver HOS in more than 40 years. In general, the new rules require a driver to take at least eight consecutive hours in the sleeper berth during a 10-hour off-duty period. These new rules primarily affect short-haul and multiple-stop freight operations and had a minor negative impact on our overall operations and financial results.

Effective October 1, 2002, the EPA required that most newly manufactured heavy-duty tractor engines comply with certain new emission standards. At December 31, 2005, we were operating approximately 5,900 tractors with these 2002 rule-complaint engines. In addition to higher initial purchase prices, these tractors have also experienced an average 4% to 5% reduction in fuel efficiency. Effective with model-year 2007 tractors, the EPA has mandated even lower emission standards for newly manufactured heavy-duty tractor engines. We are planning our new equipment purchases to

A summary of our principal facilities follows:

		Maintenance Shop	Office Space
Location	Acreage	(square feet)	(square feet)
Atlanta, Georgia	28	29,800	10,400
Cedar Rapids, Iowa	12	28,500	4,500
Chicago, Illinois	27	50,000	14,000
Columbus, Ohio	10	28,100	8,500
Dallas, Texas	14	24,000	7,800
East Brunswick, New Jersey	19	20,000	3,200
Houston, Texas	21	24,700	7,200
Kansas City, Missouri	10	31,000	6,700
Louisville, Kentucky	14	40,000	10,000
Little Rock, Arkansas	24	29,200	7,200
Lowell, Arkansas (corporate headquarters)	59	—	261,000
Lowell, Arkansas	42	50,200	14,000
Lowell, Arkansas (office and data center)	2	—	20,000
Memphis, Tennessee	10	26,700	8,000
Phoenix, Arizona	15	15,200	5,300
Portland, Oregon	8	20,000	3,300
San Bernardino, California	9	18,300	9,300
South Gate, California	12	25,000	5,500
St. Louis, Missouri	7	18,600	1,500
Syracuse, New York	13	19,000	8,000
Tifton, Georgia	10	21,300	—
Wayne, Michigan	23	11,800	8,800

ITEM 3. LEGAL PROCEEDINGS

We are involved in certain claims and pending litigation arising from the normal conduct of business. Based on the present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution of claims and pending litigation will not have a material adverse effect on our financial condition, results of operations or liquidity.

As previously reported, an arbitration process with BNI was concluded during September 2005. In accordance with the settlement terms, we paid BNI $25.8 million. This payment was recorded in the third quarter of 2005. We also increased, effective October 1, 2005, the amounts that we pay BNI for moving freight on certain intermodal movements.

The Internal Revenue Service (IRS) has proposed to disallow the tax benefits associated with certain sale-and-leaseback transactions. See “Risk Factors” in Item 1A of this Form 10-K.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of 2005 to a vote of security holders.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

Our common stock is traded in the over-the-counter market under the symbol “JBHT.” At December 31, 2005, we were authorized to issue up to one billion shares of our common stock and 167.1 million shares were issued. The high and low sales prices of our common stock as reported by the National Association of Securities Dealers Automated Quotations National Market system (NASDAQ) and our quarterly dividends paid per share on our common shares were:

Period	Dividends Paid		High		Low
2005
First Quarter	$	.060	$	25.03	$	20.33
Second Quarter	.060		22.41		18.18
Third Quarter	.060		21.11		17.38
Fourth Quarter	.060		24.00		18.24
2004
First Quarter	$	—	$	14.73	$	12.65
Second Quarter	.015		19.49		14.06
Third Quarter	.015		19.83		15.88
Fourth Quarter	.015		22.65		17.92

On January 31, 2006, the high and low sales prices for our common stock as reported by the NASDAQ were $24.10 and $23.46, respectively. As of January 31, 2006, we had 1,338 stockholders of record.

From time to time, our Board of Directors authorizes the repurchase of our common stock. We did not repurchase any of our common stock during the years 2002 through 2004. On December 14, 2004, our Board authorized the purchase of up to $100 million worth of our common stock. We commenced repurchases of our common stock in January 2005. On April 21, 2005, our Board authorized the purchase of an additional $500 million of our common stock over the next five years.

Dividend Policy

We paid quarterly dividends during calendar year 1999 and in a number of years prior to 1999. In early 2000, we announced a decision to discontinue dividend payments. In April 2004, we re-initiated a quarterly cash dividend of $.015 per share. This re-initiation was based on our lower debt levels and improving cash flows. We also paid a cash dividend of $.015 per share in July and October 2004. In December 2004, we announced an increase in our quarterly cash dividend from $.015 to $.06. Our first $.06 per share dividend was paid on February 18, 2005. We paid a $.06 per share dividend in April, July and October 2005. In January 2006, we announced an increase in our quarterly cash dividend from $.06 to $.08, effective with our payment in February 2006. We currently intend to continue paying cash dividends on a quarterly basis. However, no assurance can be given that future dividends will be paid, since such payments are dependent on earnings, cash flows and other factors.

Purchases of Equity Securities

The following table summarizes our purchases of treasury stock during the three months ended December 31, 2005:

				Total Number of	Maximum Dollar Amount
	Number of	Average Price		Shares Purchased	of Shares That May
	Common Shares	Paid Per		as Part of a Publicly	Yet Be Purchased
Period	Purchased	Common Share		Announced Plan	Under the Plan
October 2005	512,434	$	18.90	512,434	$	389,750,671
November 2005	—	—		—	389,750,671
December 2005	1,285,911	22.54		1,285,911	360,766,237
Total	1,798,345	$	21.50	1,798,345	$	360,766,237

Securities Authorized For Issuance Under Equity Compensation Plans

		Number of Securities		Number of Securities
	To Be Issued	Weighted-average		Remaining Available for Future
	Upon Exercise of	Exercise Price of		Issuance Under Equity
	Outstanding Options,	Outstanding Options,		Compensation Plans (Excluding
	Warrants and Rights	Warrants and Rights		Securities Reflected in Column (A))
Plan Category	(A)	(B)		(C)
Equity compensation plans approved by security holders	11,459,739	$	7.57	12,605,454

We have no equity compensation plans that are not approved by security holders.

ITEM 6. SELECTED FINANCIAL DATA

(Dollars in millions, except per-share amounts)

Years Ended December 31	2005		2004		2003		2002		2001
Operating revenues	$	3,127.9	$	2,786.2	$	2,433.5	$	2,247.9	$	2,100.3
Operating income (2)	343.9		310.2		185.6		101.0		72.2
Net earnings (1) (2)	207.3		146.3		95.5		51.8		32.9
Basic earnings per share (1) (2)	1.32		.91		.60		.34		.23
Diluted earnings per share (1) (2)	1.28		.88		.58		.33		.23
Cash dividends per share	.240		.045		—		—		—
Total assets	1,548.9		1,502.6		1,356.2		1,322.7		1,261.2
Long-term debt and lease obligations	124.0		—		—		219.0		353.6
Stockholders’ equity	817.0		860.9		703.1		590.5		458.3

(1) Reflects a $33.6 million reserve, including accrued interest expense in 2004, and $7.7 million reversal of non-cash tax benefit in 2003. See Note 5 of our Notes to Consolidated Financial Statements.

(2) Reflects a $25.8 million pretax, or a $16.5 million after-tax, charge in 2005 for a BNI arbitration settlement. See Note 9 of our Notes to Consolidated Financial Statements.

Percentage of Operating Revenue

Years Ended December 31	2005		2004		2003		2002		2001
Operating revenues	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Operating expenses:
Salaries, wages and employee benefits	27.3		29.8		32.5		36.4		37.6
Rents and purchased transportation	33.8		33.5		32.8		31.1		28.8
Fuel and fuel taxes	12.4		10.4		9.6		9.4		10.8
Depreciation and amortization	5.2		5.4		6.2		6.5		6.8
Operating supplies and expenses	4.3		4.5		4.9		5.8		6.9
Insurance and claims	1.8		2.0		2.6		2.5		2.0
Operating taxes and licenses	1.2		1.3		1.4		1.4		1.6
General and administrative expenses,
net of gains	1.5		1.4		1.4		1.3		0.9
Communication and utilities	0.7		0.8		1.0		1.1		1.2
Arbitration settlement (2)	0.8		—		—		—		—
Total operating expenses	89.0		88.9		92.4		95.5		96.6
Operating income	11.0		11.1		7.6		4.5		3.4
Interest income	—		0.1		0.1		0.1		0.1
Interest expense	0.2		0.3		0.8		1.2		1.4
Equity in loss of associated companies	0.2		0.1		—		0.1		—
Earnings before income taxes	10.6		10.8		6.9		3.3		2.1
Income taxes (1)	4.0		5.6		3.0		1.0		0.5
Net earnings	6.6	%	5.2	%	3.9	%	2.3	%	1.6	%

(2) Reflects a $25.8 million pretax, or a $16.5 million after-tax, charge in 2005 for a BNI arbitration settlement. See Note 9 of our Notes to Consolidated Financial Statements.

The following table sets forth certain operating data.

Years Ended December 31	2005	2004	2003	2002	2001
Total loads	2,866,043	2,883,504	2,857,176	2,847,377	2,565,915
Average number of company-operated tractors during the year	10,316	10,042	10,293	10,712	10,710
Company tractors operated (at year end)	10,480	10,151	9,932	10,653	10,770
Independent contractors (at year end)	1,310	1,301	994	679	336
Trailers/containers (at year end)	49,733	48,317	46,747	45,759	44,318
Company tractor miles (in thousands)	952,545	943,064	943,054	981,818	1,022,677	2

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following discussion of our results of operations and financial condition should be read in conjunction with our financial statements and related notes in Item 8. This discussion contains forward-looking statements. Please see “Forward-looking Statements” and “Risk Factors” for a discussion of items, uncertainties, assumptions and risks associated with these statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that impact the amounts reported in our consolidated financial statements and accompanying notes. Therefore, the reported amounts of assets, liabilities, revenues, expenses and associated disclosures of contingent liabilities are affected by these estimates. We evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with third parties and other methods considered reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recognized in the accounting period in which the facts that give rise to the revision become known.

We consider our critical accounting policies and estimates to be those that require us to make more significant judgments and estimates when we prepare our financial statements and include the following:

Workers’ Compensation and Accident Costs

We purchase insurance coverage for a portion of expenses related to employee injuries (workers’ compensation), vehicular collisions, and accidents and cargo claims. Most insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim, but provide an umbrella policy to limit our exposure to catastrophic claim costs that are completely insured. The amounts of self-insurance change from time to time based on certain measurement dates and policy expiration dates. During 2005, we were self-insured for essentially $2 million of our claims for personal injury and property damage and $1 million for workers’ compensation claims. Effective January 1, 2006, the self-insured portion of our claims exposure for personal injury, property damage and workers’ compensation was reduced to $500,000.

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 claim liability. This process involves the use of loss-development factors based on our historical claims experience. In doing so, the recorded liability considers future claims growth and provides an allowance for incurred-but-not-reported claims. We do not discount our estimated losses. At December 31, 2005, we had an accrual of approximately $16 million for estimated net claims. In addition, we are required to pay certain advanced deposits and monthly premiums. At December 31, 2005, we had a prepaid insurance asset of approximately $76 million, which represented pre-funded claims and premiums. We are also substantially self-insured for loss of and damage to our owned and leased revenue equipment.

Revenue Equipment

We operate a significant number of tractors, trailers and containers in connection with our business. This equipment may be purchased or acquired under capital or operating lease agreements. In addition, we may rent revenue equipment from third parties and various railroads under short-term rental arrangements. Revenue equipment which is purchased is depreciated on the straight-line

method over the estimated useful life down to an estimated salvage or trade-in value. We had no revenue equipment under capital lease arrangements at December 31, 2005.

We have an agreement with our primary tractor supplier for residual or trade-in values for certain new equipment. We have utilized these trade-in values as well as other operational information, such as anticipated annual miles, in accounting for depreciation expense. If our tractor supplier were unable to perform under the terms of our agreement for trade-in values, it could have a material negative impact on our financial results. We periodically review the useful lives and salvage values of our revenue equipment and evaluate our long-lived assets for impairment. We have not identified any impairments to our existing assets.

Revenue Recognition

We recognize revenue based on the relative transit time of the freight transported. Accordingly, a portion of the total revenue which will be billed to the customer once a load is delivered is recognized in each reporting period based on the percentage of the freight pickup and delivery service that has been completed at the end of the reporting period.

YEAR IN REVIEW

Our financial results for calendar year 2005 represented the fourth consecutive year of record revenues and earnings driven by good to excellent performance from each of our segments. Our 2005 net earnings of $207.3 million, or $1.28 per diluted share, were up 42% over the $146.3 million, or $.88 per diluted share, earned in 2004. Fuel costs continued to represent a challenge for the transportation industry during 2005. Our 2005 fuel cost per gallon averaged 33% above 2004 levels. However, due to our fuel surcharge programs and the support and understanding of our customers, we were able to recover the majority of our higher fuel costs.

Freight demand during the first half of 2005 was not as strong as the comparable period of 2004, but volume levels improved during the last half of 2005. Our DCS and JBT segments contributed most significantly to our higher level of profitability in 2005. While increases in the size of the DCS and JBT tractor fleets accounted for a portion of the increases in operating income, our continued focus on capacity management and revenue per tractor was the primary factor driving 2005 improved net earnings. Capacity management is a continuous process of reviewing our freight and individual dedicated arrangements to determine whether business that is generating low or negative margins can be replaced by different business with better margins. We also continually analyze our business to ensure we are charging a fair price for all services that we provide. Primarily due to our capacity-management actions and rate increases which offset non-fuel cost increases, our 2005 revenue per tractor (excluding fuel surcharges) increased 5.3% and 4.3% in our DCS and JBT segments, respectively. Our JBI segment revenue per loaded mile, excluding FSC, also increased 5.0% in 2005. While these rate increases were the best our intermodal segment has experienced in several years, we did start to incur higher railroad purchased transportation expense. Our JBI operating income was clearly reduced by the BNI arbitration charge. The third quarter 2005 arbitration charge of $25.8 million included $8.3 million that related to 2004 freight movements. We also incurred significant legal fees in 2004 and 2005 associated with this arbitration process. Excluding the effects of the $8.3 million arbitration charge that related to 2004 freight movements, our JBI segment would have reported an increase in 2005 operating income, compared with the decrease of 5%.

We continued our focus on safety during 2005. Although our 2005 actual insurance and safety costs were slightly higher than 2004, we were able to duplicate the fine performance we saw in 2004 in terms of DOT accidents per million miles and DOT preventable accidents per million miles. One significant result of our industry-leading safety results over the past several years was the establishment of a multi-year $500,000 deductible limit in our primary casualty and workers’ compensation insurance coverage. This new deductible limit was effective January 1, 2006, and compares with $2 million for casualty and $1 million for workers’ compensation in 2005.

Our 2005 consolidated operating ratio (operating expenses divided by total operating revenues) was 89.0%, compared with 88.9% in 2004 and 92.4% in 2003. The current year was the second consecutive time in over 10 years that we have achieved an operating ratio for a full year below 90%. We re-initiated paying a quarterly cash dividend of $.015 in early 2004 and increased our dividend to $.06 in December 2004 and to $.08 in December 2005. We also announced plans in December 2004 to repurchase up to $100 million of our common stock and announced an additional $500 million repurchase program in April 2005.

RESULTS OF OPERATIONS

The following table sets forth items in our Consolidated Statements of Earnings as a percentage of operating revenues and the percentage increase or decrease of those items as compared with the prior year.

	Percentage of						Percentage Change
	Operating Revenues						Between Years
							2005 vs.		2004 vs.
	2005		2004		2003		2004		2003
Operating revenues	100.0	%	100.0	%	100.0	%	12.3	%	14.5	%

Operating expenses:
Salaries, wages and employee benefits	27.3	%	29.8	%	32.5	%	3.0	%	4.8	%
Rents and purchased transportation	33.8		33.5		32.8		13.5		16.6
Fuel and fuel taxes	12.4		10.4		9.6		34.8		24.2
Depreciation and amortization	5.2		5.4		6.2		8.9		(0.3	)
Operating supplies and expenses	4.3		4.5		4.9		7.0		4.0
Insurance and claims	1.8		2.0		2.6		0.9		(13.8	)
Operating taxes and licenses	1.2		1.3		1.4		2.3		5.4
General and administrative expenses, net of gains	1.5		1.4		1.4		19.4		10.7
Communication and utilities	0.7		0.8		1.0		(1.9	)	(1.8	)
Arbitration settlement	0.8		—		—		—		—
Total operating expenses	89.0		88.9		92.4		12.4		10.1
Operating income	11.0		11.1		7.6		10.9		67.1
Interest income	—		0.1		0.1		(48.8	)	(30.9	)
Interest expense	0.2		0.3		0.8		(11.3	)	(63.1	)
Equity in loss of associated company	0.2		0.1		—		90.6		255.9
Earnings before income taxes	10.6		10.8		6.9		10.4		80.2
Income taxes	4.0		5.6		3.0		(19.0	)	115.9
Net earnings	6.6	%	5.2	%

PART I

Item 1.	Business

Item 1A.	Risk Factors

Item 1B.	Unresolved Staff Comments

Item 2.	Properties

Item 3.	Legal Proceedings

Item 4.	Submission of Matters to a Vote of Security Holders

PART II

Item 5.	Market for Registrant’s Common Stock and Related Security Holder Matters

Item 6.	Selected Financial Data

Item 7.	Management’s Discussion and Analysis of Results of Operations and Financial Condition

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk

Item 8.	Financial Statements and Supplementary Data

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.	Controls and Procedures

Item 9B.	Other Information

PART III

Item 10.	Directors and Executive Officers of Registrant

Item 11.	Executive Compensation

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Security Holder Matters

Item 13.	Certain Relationships and Related Transactions

Item 14.	Principal Accountant Fees and Services

PART IV

Item 15.	Exhibits and Financial Statement Schedules

Signatures

Index to Consolidated Financial Statements