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, Revenue Adjustments and Other for the Years Ended:		Balance at Beginning of Year				Charged to Expense/ Against Revenue				Write-Offs, Net of Recoveries				Balance at End of Year
December 31, 2016			9.9				19.5				(16.0	)			13.4
December 31, 2017			13.4				29.3				(18.7	)			24.0
December 31, 2018			24.0				35.7				(23.9	)			35.8

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

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			Amended and Restated Bylaws of J.B. Hunt Transport Services, Inc. dated April 23, 2015 (incorporated by reference from Exhibit 3.1 of the Company’s current report on Form 8-K, filed April 27, 2015)
10.1			Amended and Restated Employee Retirement Plan (incorporated by reference from Exhibit 99 of the Company’s registration statement on Form S-8 (File No. 033-57127), filed December 30, 1994)
10.2			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)
10.3			Summary of Compensation Arrangements with Named Executive Officers for 2018 (incorporated by reference from Exhibit 99.1 of the Company’s current report on Form 8-K, filed January 25, 2018)
10.4			Summary of Compensation Arrangements with Named Executive Officers for 2019 (incorporated by reference from Exhibit 99.1 of the Company’s current report on Form 8-K, filed January 25, 2019)
10.5			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)
10.6			Second Supplemental Indenture (incorporated by reference from Exhibit 4.2 of the Company’s current report on Form 8-K, filed March 6, 2014)
10.7			Third Supplemental Indenture (incorporated by reference from Exhibit 4.4 of the Company’s current report on Form 8-K, filed March 6, 2014)

10.8			Fourth Supplemental Indenture (incorporated by reference from Exhibit 4.3 of the Company’s current report on Form 8-K, filed August 6, 2015)
10.9			Credit Agreement and related documents (incorporated by reference from Exhibit 10.1 of the Company’s current report on Form 8-K, filed September 28, 2018)
21.1			Subsidiaries of J.B. Hunt Transport Services, Inc.
23.1			Consent of Ernst & Young LLP
31.1			Rule 13a-14(a)/15d-14(a) Certification
31.2			Rule 13a-14(a)/15d-14(a) Certification
32.1			Section 1350 Certification
99.1			Equity Interests Purchase Agreement dated July 20, 2017 (incorporated by reference from Exhibit 99.1 of the Company’s current report on Form 8-K, filed July 25, 2017)
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

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 22nd day of February 2019.

		J.B. HUNT TRANSPORT SERVICES, INC.
			(Registrant)
	By:		/s/ John N. Roberts, III
			John N. Roberts, III
			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 22nd day of February 2019, on behalf of the registrant and in the capacities indicated.

	/s/ John N. Roberts, III		President and Chief Executive Officer, Member
	John N. Roberts, III		of the Board of Directors
			(Principal Executive Officer)
	/s/ David G. Mee		Executive Vice President, Finance and
	David G. Mee		Administration, Chief Financial Officer
			(Principal Financial Officer)
	/s/ John Kuhlow		Senior Vice President Finance, Controller,
	John Kuhlow		Chief Accounting Officer
	/s/ Kirk Thompson		Chairman of the Board of Directors
	Kirk Thompson
	/s/ James L. Robo		Member of the Board of Directors
	James L. Robo		(Lead Director)
	/s/ Douglas G. Duncan		Member of the Board of Directors
	Douglas G. Duncan
	/s/ Francesca M. Edwardson		Member of the Board of Directors
	Francesca M. Edwardson
	/s/ Wayne Garrison		Member of the Board of Directors
	Wayne Garrison
	/s/ Sharilyn S. Gasaway		Member of the Board of Directors
	Sharilyn S. Gasaway
	/s/ Gary C. George		Member of the Board of Directors
	Gary C. George
	/s/ J. Bryan Hunt, Jr.		Member of the Board of Directors
	J. Bryan Hunt, Jr.
	/s/ Coleman H. Peterson		Member of the Board of Directors
	Coleman H. Peterson

INDEX TO CONSOLIDATED FINANCIAL INFORMATION

	PAGE
Management’s Report on Internal Control Over Financial Reporting	33
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements	34
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	35
Consolidated Balance Sheets as of December 31, 2018 and 2017	36
Consolidated Statements of Earnings for years ended December 31, 2018, 2017, and 2016	37
Consolidated Statements of Stockholders’ Equity for years ended December 31, 2018, 2017, and 2016	38
Consolidated Statements of Cash Flows for years ended December 31, 2018, 2017, and 2016	39
Notes to Consolidated Financial Statements	40

Management’s Report on Internal Control Over Financial Reporting

We are responsible for the preparation, integrity, and fair presentation of our Consolidated Financial Statements and related information appearing in this report. We take these responsibilities very seriously and are committed to maintaining controls and procedures that are designed to ensure that we collect the information we are required to disclose in our reports to the SEC and to process, summarize, and disclose this information within the time periods specified by the SEC.

Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this report, conducted by our management and with the participation of our Chief Executive Officer and Chief Financial Officer, we believe our controls and procedures are effective to ensure that we are able to collect, process, and disclose the information we are required to disclose in our reports filed with the SEC within the required time periods.

We are responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. We assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. 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, we believe that as of December 31, 2018, our internal control over financial reporting is effective based on those criteria.

The effectiveness of internal control over financial reporting as of December 31, 2018, has been audited by Ernst & Young LLP, an independent registered public accounting firm that also audited our Consolidated Financial Statements. Ernst & Young LLP’s report on internal control over financial reporting is included herein.

/s/ John N. Roberts, III		/s/ David G. Mee
John N. Roberts, III		David G. Mee
President and Chief Executive Officer		Executive Vice President, Finance and
(Principal Executive Officer)		Administration, Chief Financial Officer
		(Principal Financial Officer)

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of J.B. Hunt Transport Services, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of J.B. Hunt Transport Services, Inc. (the Company) as of December 31, 2018 and 2017, the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2019, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2005.

Rogers, Arkansas

February 22, 2019

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of J.B. Hunt Transport Services, Inc.

Opinion on Internal Control over Financial Reporting

We have audited J.B. Hunt Transport Services, Inc.’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, J.B. Hunt Transport Services, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2018 and 2017, the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”) of the Company and our report dated February 22, 2019, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible 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 an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 (3) 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.

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.

/s/ Ernst & Young LLP

Rogers, Arkansas

February 22, 2019

J.B. HUNT TRANSPORT SERVICES, INC.
Consolidated Balance Sheets
December 31, 2018 and 2017
(in thousands, except share data)

		2018				2017
Assets
Current assets:
Cash and cash equivalents		$	7,600			$	14,612
Trade accounts receivable, net			1,051,698				920,767
Other receivables, net			274,511				283,499
Inventories			21,977				20,688
Prepaid expenses			147,195				99,162
Total current assets			1,502,981				1,338,728
Property and equipment, at cost:
Revenue and service equipment			4,716,860				4,158,878
Land			49,486				47,231
Structures and improvements			238,202				202,730
Furniture and office equipment			324,695				261,625
Total property and equipment			5,329,243				4,670,464
Less accumulated depreciation			1,884,132				1,687,133
Net property and equipment			3,445,111				2,983,331
Goodwill			40,087				39,764
Other intangible assets, net			65,070				73,691
Other assets			38,398				29,835
Total assets		$	5,091,647			$	4,465,349
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt		$	250,706			$	-
Trade accounts payable			709,736				598,594
Claims accruals			275,139				251,980
Accrued payroll			80,922				42,382
Other accrued expenses			35,845				28,888
Total current liabilities			1,352,348				921,844
Long-term debt			898,398				1,085,649
Other long-term liabilities			96,056				76,661
Deferred income taxes			643,461				541,870
Total liabilities			2,990,263				2,626,024
Commitments and contingencies (Note 10)
Stockholders’ 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, 2018 and 2017, of which 108,710,825 shares and 109,753,008 shares were outstanding at December 31, 2018 and 2017, respectively)			1,671				1,671
Additional paid-in capital			340,457				310,811
Retained earnings			4,188,435				3,803,844
Treasury stock, at cost (58,388,607 shares at December 31, 2018, and 57,346,424 shares at December 31, 2017)			(2,429,179	)			(2,277,001	)
Total stockholders’ equity			2,101,384				1,839,325
Total liabilities and stockholders' equity		$	5,091,647			$	4,465,349

See Notes to Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.
Consolidated Statements of Earnings
Years Ended December 31, 2018, 2017 and 2016
(in thousands, except per share amounts)

		2018				2017				2016
Operating revenues, excluding fuel surcharge revenues		$	7,557,648			$	6,435,858			$	6,007,347
Fuel surcharge revenues			1,057,226				753,710				548,112
Total operating revenues			8,614,874				7,189,568				6,555,459
Operating expenses:
Rents and purchased transportation			4,434,540				3,650,806				3,255,692
Salaries, wages and employee benefits			1,926,213				1,608,378				1,469,187
Fuel and fuel taxes			459,011				347,573				283,437
Depreciation and amortization			435,893				383,518				361,510
Operating supplies and expenses			303,529				257,239				233,223
General and administrative expenses, net of asset dispositions			163,270				125,878				87,053
Insurance and claims			129,406				123,579				78,410
Operating taxes and licenses			51,080				44,825				45,954
Communication and utilities			30,911				23,983				19,973
Total operating expenses			7,933,853				6,565,779				5,834,439
Operating income			681,021				623,789				721,020
Interest income			224				235				71
Interest expense			40,427				28,785				25,294
Earnings before income taxes			640,818				595,239				695,797
Income taxes			151,233				(91,024	)			263,707
Net earnings		$	489,585			$	686,263			$	432,090
Weighted average basic shares outstanding			109,375				109,987				112,474
Basic earnings per share		$	4.48			$	6.24			$	3.84
Weighted average diluted shares outstanding			110,428				111,049				113,361
Diluted earnings per share		$	4.43			$	6.18			$	3.81
Dividends declared per common share		$	0.96			$	0.92			$	0.88

See Notes to Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 2018, 2017 and 2016
(in thousands, except per share amounts)

						Additional
		Common				Paid-in				Retained				Treasury				Stockholders’
		Stock				Capital				Earnings				Stock				Equity
Balances at December 31, 2015		$	1,671			$	268,728			$	2,885,843			$	(1,855,890	)		$	1,300,352
Comprehensive income:
Net earnings			-				-				432,090				-				432,090
Cash dividend declared and paid ($0.88 per share)			-				-				(98,990	)			-				(98,990	)
Tax benefit of stock options exercised and restricted shares issued			-				7,044				-				-				7,044
Purchase of treasury shares			-				-				-				(249,760	)			(249,760	)
Share-based compensation			-				40,625				-				-				40,625
Stock option exercises and restricted share issuances, net of stock repurchased for payroll taxes			-				(23,310	)			-				6,010				(17,300	)
Balances at December 31, 2016		$	1,671			$	293,087			$	3,218,943			$	(2,099,640	)		$	1,414,061
Comprehensive income:
Net earnings			-				-				686,263				-				686,263
Cash dividend declared and paid ($0.92 per share)			-				-				(101,362	)			-				(101,362	)
Purchase of treasury shares			-				-				-				(179,813	)			(179,813	)
Share-based compensation			-				38,291				-				-				38,291
Restricted share issuances, net of stock repurchased for payroll taxes			-				(20,567	)			-				2,452				(18,115	)
Balances at December 31, 2017		$	1,671			$	310,811			$	3,803,844			$	(2,277,001	)		$	1,839,325
Comprehensive income:
Net earnings			-				-				489,585				-				489,585
Cash dividend declared and paid ($0.96 per share)			-				-				(104,994	)			-				(104,994	)
Purchase of treasury shares			-				-				-				(150,338	)			(150,338	)
Share-based compensation			-				47,369				-				-				47,369
Restricted share issuances, net of stock repurchased for payroll taxes			-				(17,723	)			-				(1,840	)			(19,563	)
Balances at December 31, 2018		$	1,671			$	340,457			$	4,188,435			$	(2,429,179	)		$	2,101,384

See Notes to Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2018, 2017 and 2016
(in thousands)

		2018				2017				2016
Cash flows from operating activities:
Net earnings		$	489,585			$	686,263			$	432,090
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			435,893				383,518				361,510
Share-based compensation			47,369				38,291				40,625
Loss on sale of revenue equipment and other			12,107				7,370				5,490
Advance deposit impairment			-				20,240				-
Deferred income taxes			101,591				(248,764	)			50,414
Changes in operating assets and liabilities:
Trade accounts receivable			(130,931	)			(166,111	)			(120,994	)
Income taxes receivable or payable			(41,071	)			(45,542	)			60,956
Other current assets			(6,133	)			69,462				(37,101	)
Trade accounts payable			98,037				85,237				60,818
Claims accruals			21,580				25,021				5,524
Accrued payroll and other accrued expenses			59,814				168				(5,189	)
Net cash provided by operating activities			1,087,841				855,153				854,143
Cash flows from investing activities:
Additions to property and equipment			(995,650	)			(526,928	)			(638,430	)
Proceeds from sale of equipment			110,165				16,413				153,174
Business acquisition			-				(136,879	)			-
Change in other assets			(1,288	)			(3,888	)			(132	)
Net cash used in investing activities			(886,773	)			(651,282	)			(485,388	)
Cash flows from financing activities:
Proceeds from revolving lines of credit and other			3,204,715				2,716,155				1,715,427
Payments on revolving lines of credit and other			(3,137,900	)			(2,612,501	)			(1,724,365	)
Purchase of treasury stock			(150,338	)			(179,813	)			(249,760	)
Stock option exercises and other			967				1,100				1,341
Stock repurchased for payroll taxes			(20,530	)			(19,215	)			(18,641	)
Tax benefit of stock options exercised and restricted shares issued			-				-				7,044
Dividends paid			(104,994	)			(101,362	)			(98,990	)
Net cash used in financing activities			(208,080	)			(195,636	)			(367,944	)
Net increase/(decrease) in cash and cash equivalents			(7,012	)			8,235				811
Cash and cash equivalents at beginning of year			14,612				6,377				5,566
Cash and cash equivalents at end of year		$	7,600			$	14,612			$	6,377
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest		$	39,901			$	28,785			$	24,800
Income taxes		$	83,822			$	190,783			$	143,634
Noncash investing activities
Accruals for equipment received		$	49,390			$	53,026			$	13,522

See Notes to Consolidated Financial Statements.

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 four 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 minor.

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.

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 and revenue adjustments. Receivables are recorded at amounts billed to customers when loads are delivered or services are performed. The allowance for uncollectible accounts and revenue adjustments is based on historical experience, as well as any known trends or uncertainties related to customer billing and account collectability. 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 and revenue adjustments for our trade accounts receivable was $23.6 million and $15.4 million at December 31, 2018 and 2017, respectively. The allowance for uncollectible accounts for our other receivables was $12.2 million and $8.6 million at December 31, 2018 and 2017, respectively.

Inventory

Our inventories consist primarily of revenue equipment parts, tires, supplies, and fuel, and are valued using the lower of average cost or market.

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, 2018 and 2017, we had no available-for-sale securities. See Note 8, 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 20 years for trailing equipment, 10 to 40 years for structures and improvements, and 3 to 10 years for furniture and 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 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.

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.

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 four reportable business segments. See Note 13, Business Segments, 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 customer 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 less-than-truckload (LTL), 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.

Truckload (JBT) - JBT business includes full-load, dry-van freight that is typically transported utilizing company-owned or company-controlled revenue equipment. 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.

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.

Earnings Per Share

We compute basic earnings per share by dividing net earnings available to common stockholders 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 or options exercised or converted their holdings into common stock. Outstanding unvested restricted share units and stock options 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,
		2018				2017				2016
Weighted average shares outstanding – basic			109,375				109,987				112,474
Effect of common stock equivalents			1,053				1,062				887
Weighted average shares outstanding – diluted			110,428				111,049				113,361

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, 2018, 2017, and 2016, our top 10 customers, based on revenue, accounted for approximately 30%, 29%, and 29% of our total revenue. Our top 10 customers, based on revenue, accounted for approximately 32% and 31% of our total trade accounts receivable at December 31, 2018 and 2017, respectively. We had no individual customers with revenues greater than 10% of total revenues.

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 and in the past have also utilized nonstatutory stock options. Issuances of our stock upon restricted share unit and performance share unit vesting or share option exercise 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.

The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, and claim type. For 2016 through 2018, we were self-insured for $500,000 per occurrence for personal injury and property damage and self-insured for $100,000 per workers’ compensation claim. We have policies in place for 2019 with substantially the same terms as our 2018 policies for personal injury, property damage, workers’ compensation, and cargo loss or damage, with the exception of decreasing our self-insured portion of workers’ compensation claims to zero for nearly all states.

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 and includes a contractual premium adjustment factor, if applicable. 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, 2018 and 2017, we had an accrual of approximately $260 million and $238 million, respectively, for estimated claims. 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, 2018 and 2017, we have recorded $261 million and $256 million, respectively, of expected reimbursement for covered excess claims, other insurance deposits, and prepaid insurance premiums. Of these total asset balances, $158 million and $193 million have been included in other receivables in our Consolidated Balance Sheets at December 31, 2018 and 2017, respectively.

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 market based approach, for potential impairment as of October 1st 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 5 to 10 years.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, which requires lessees to recognize a right-of-use asset and a lease liability for most leases on the balance sheet as well as other qualitative and quantitative disclosures. ASU 2016-02 is to be applied using a modified retrospective method and is effective for us on January 1, 2019. In July 2018, the FASB issued ASU 2018-11, Leases, which provides an optional transition method allowing entities to recognize a cumulative-effect adjustment to the opening balance of stockholders’ equity in the period of adoption, with no restatement of comparative prior periods required. We will adopt the standard using this optional transition method.

The FASB has provided certain practical expedients in applying the standard. Of the allowed practical expedients within the standard applicable to our operations, we will elect the package of practical expedients, which among other things, allows us to carry forward the historical lease classification upon adoption of the standard. We will not elect the hindsight practical expedient when determining the lease term for existing leases. In addition, we will not separate nonlease components from lease components by class of underlying assets where appropriate and we will not apply the recognition requirements of the standard to short-term leases, as allowed by the standard.

Upon adoption of the standard we will record offsetting lease assets and lease liabilities on our Consolidated Balance Sheet in the amount of $102.4 million, as of January 1, 2019. We do not expect the adoption of the standard to have a material impact on our earnings or debt covenant compliance and no impact on our cash flows.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard is effective for us on January 1, 2020, but early adoption is permitted. ASU 2018-15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The adoption of the new guidance is not expected to have a material impact on our financial statements.

Accounting Pronouncements Adopted in 201****8

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes virtually all existing revenue recognition guidance. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. We adopted ASU 2014-09 in the first quarter 2018, using the modified retrospective transition approach, which did not have a material impact on how we recognize revenue or to our financial statements or disclosures.

3.	Financing Arrangements

Outstanding borrowings, net of unamortized discount, unamortized debt issuance cost, and fair value swap, under our current financing arrangements consist of the following (in millions):

		December 31,
		2018				2017
Senior revolving line of credit		$	307.1			$	241.4
Senior notes			842.0				844.2
Less current portion of long-term debt			(250.7	)			-
Total long-term debt		$	898.4			$	1,085.6

Aggregate maturities of long-term debt subsequent to December 31, 2018, are as follows: $250.7 million in 2019, $342.5 million in 2022, $307.1 in 2023, and $248.8 million thereafter.

Senior Revolving Line of Credit

In September 2018, we replaced our $500 million senior revolving credit facility dated September 2015 with a new credit facility authorizing us to borrow up to $750 million under a senior revolving line of credit, which is supported by a credit agreement with a group of banks. This new senior credit facility has a five year term expiring September 2023, and allows us to request an increase in the total commitment by up to $250 million and to request a one year extension of the maturity date. The applicable interest rate under this agreement is based on the Prime Rate, the Federal Funds Rate, or LIBOR, depending upon the specific type of borrowing, plus an applicable margin and other fees. At December 31, 2018, we had $309.0 million outstanding at an average interest rate of 3.47% under this agreement.

Senior Notes

Our senior notes consist of three separate issuances. The first and second issuances are $250 million of 2.40% senior notes due March 2019 and $250 million of 3.85% senior notes due March 2024, respectively, both of which were issued in March 2014. Interest payments under both notes are due semiannually in March and September of each year. The third issuance is $350 million of 3.30% senior notes due August 2022, issued in August 2015. Interest payments under this note are due semiannually in February and August of each year, beginning February 2016. All three 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 February 2014. All 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. See Note 4, Derivative Financial Instruments, for terms of interest rate swaps entered into on the $250 million of 2.40% senior notes due March 2019 and the $350 million of 3.30% senior notes due August 2022.

Our financing arrangements require us to maintain certain covenants and financial ratios. We were in compliance with all covenants and financial ratios at December 31, 2018. For our senior notes maturing in 2019, it is our intent to pay the entire outstanding balances in full, on or before the maturity dates, using our existing senior revolving line of credit or other sources of long-term financing. In addition, we have a shelf registration filed with the SEC and may draw upon it as warranted.

4.	Derivative Financial Instruments

We periodically utilize derivative instruments for hedging and non-trading purposes to manage exposure to changes in interest rates and to maintain an appropriate mix of fixed and variable-rate debt. 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.

We entered into receive fixed-rate and pay variable-rate interest rate swap agreements simultaneously with the issuance of our $250 million of 2.40% senior notes due March 2019 and $350 million of 3.30% senior notes due August 2022, to effectively convert this fixed-rate debt to variable-rate. The notional amounts of these interest rate swap agreements equal those of the corresponding fixed-rate debt. The applicable interest rates under these agreements is based on LIBOR plus an established margin, resulting in an interest rate of 3.63% for our $250 million of 2.40% senior notes and 3.97% for our $350 million of 3.30% senior notes at December 31, 2018. The swaps expire when the corresponding senior notes are due. The fair values of these swaps are recorded in other assets and other long-term liabilities in our Consolidated Balance Sheet at December 31, 2018. See Note 9, Fair Value Measurements, for disclosure of fair value. These derivatives meet the required criteria to be designated as fair value hedges and as the specific terms and notional amounts of these derivative instruments match those of the fixed-rate debt being hedged, these derivative instruments are assumed to perfectly hedge the related debt against changes in fair value due to changes in the benchmark interest rate. Accordingly, any change in the fair value of these interest rate swaps recorded in earnings is offset by a corresponding change in the fair value of the related debt.

5.	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, 2018 or 2017. 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 stockholders. On January 23, 2019, we announced an increase in our quarterly cash dividend from $0.24 to $0.26 per share, which will be paid February 22, 2019, to stockholders of record on February 8, 2019. At December 31, 2018, we had 1.6 million shares of common stock to be issued upon the vesting of equity awards and 6.3 million shares reserved for future issuance pursuant to share-based payment plans. During calendar year 2018, we purchased approximately 1.3 million shares, or $150.3 million, of our common stock in accordance with plans authorized by our Board. At December 31, 2018, we had $371 million available under an authorized plan to purchase our common stock.

6.	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 nonstatutory 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 3 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.

In the past, nonstatutory stock options have been granted to key employees for the purchase of our common stock for 100% of the fair market value of the common stock at the grant date as awarded by the Compensation Committee. These options generally vested over a 10-year period and were forfeited immediately if the employee terminated for any reason other than death, disability or retirement after age 55. We did not grant any stock options during the years ended December 31, 2018, 2017, and 2016.

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.

We account for our restricted share units, performance share units, and stock options in accordance with current accounting standards for share-based payments. These standards require that the cost of all share-based payments to employees, including grants of employee stock options, 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. 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,
		2018				2017				2016
Restricted share units
Pretax compensation expense		$	32,797			$	28,679			$	29,938
Tax benefit			7,740				(4,385	)			11,347
Restricted share units, net of tax		$	25,057			$	33,064			$	18,591
Performance share units
Pretax compensation expense		$	14,572			$	9,612			$	10,687
Tax benefit			3,439				(1,470	)			4,050
Performance share awards, net of tax		$	11,133			$	11,082			$	6,637

A summary of our restricted share units, performance share units, and nonstatutory stock options is as follows:

Restricted Share Units		Number of Shares				Weighted Average Grant Date Fair Value
Unvested at December 31, 2015			1,516,750			$	63.96
Granted			540,746				75.03
Vested			(520,619	)			54.78
Forfeited			(34,221	)			69.14
Unvested at December 31, 2016			1,502,656			$	71.16
Granted			158,319				90.06
Vested			(380,702	)			67.29
Forfeited			(37,745	)			75.13
Unvested at December 31, 2017			1,242,528			$	74.71
Granted			370,669				119.82
Vested			(337,512	)			79.02
Forfeited			(29,850	)			83.69
Unvested at December 31, 2018			1,245,835			$	86.80

Performance Share Units		Number of Shares				Weighted Average Grant Date Fair Value
Unvested at December 31, 2015			490,673			$	67.04
Granted			142,114				74.71
Vested			(148,733	)			62.84
Forfeited			-				-
Unvested at December 31, 2016			484,054			$	70.58
Granted			-				-
Vested			(155,867	)			68.27
Forfeited			-				-
Unvested at December 31, 2017			328,187			$	71.68
Granted			150,763				122.57
Vested			(118,438	)			69.29
Forfeited			-				-
Unvested at December 31, 2018			360,512			$	93.74

At December 31, 2018, we had $59.1 million and $13.7 million of total unrecognized compensation expense related to restricted share units and performance share units, respectively, that is expected to be recognized on a straight-line basis over the remaining weighted average vesting period of approximately 3.6 years for restricted share units and 2.6 years for performance share units.

The aggregate intrinsic value of restricted and performance share units vested and options exercised during the years ended December 31, 2018, 2017, and 2016, was $55.1 million, $49.3 million, and $56.7 million, respectively. The aggregate intrinsic value of unvested restricted and performance share units was $149.5 million at December 31, 2018. The total fair value of shares vested for restricted share, performance share, and stock option awards during the years ended December 31, 2018, 2017, and 2016, was $35.0 million, $36.4 million, and $38.1 million, respectively.

7.	Income Taxes

Income tax expense attributable to earnings before income taxes consists of (in thousands):

		Years ended December 31,
		2018				2017				2016
Current:
Federal		$	22,904			$	134,284			$	191,422
State and local			26,738				23,456				21,871
			49,642				157,740				213,293
Deferred:
Federal			97,670				(261,592	)			45,846
State and local			3,921				12,828				4,568
			101,591				(248,764	)			50,414
Total tax expense/(benefit)		$	151,233			$	(91,024	)		$	263,707

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,
		2018				2017				2016
Income tax at federal statutory rate		$	134,572			$	208,334			$	243,529
State tax, net of federal effect			24,627				18,334				19,165
Federal tax reform			(3,219	)			(309,223	)			-
Benefit of stock compensation			(4,919	)			(4,907	)			-
199/R&D credit			1,000				(7,056	)			-
Nondeductible meals and entertainment			1,071				1,374				1,419
Change in effective state tax rate, net of federal benefit			(1,469	)			3,403				(1,055	)
Other, net			(430	)			(1,283	)			649
Total tax expense		$	151,233			$	(91,024	)		$	263,707

The Tax Cuts and Jobs Act (the Act) was enacted in December 2017. Beginning in 2018, the Act reduced the U.S. federal corporate tax rate from 35% to 21%. At December 31, 2017, we had not completed our accounting for the tax effects of enactment of the Act. However, we made a reasonable estimate of the effects on our existing deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future, which was generally 21%. The provisional amount recorded resulting from the remeasurement of our deferred tax balance was $309.2 million, which was included as a component of 2017 income tax from continuing operations. During 2018, we finalized our calculations for our 2017 federal income tax return, which was filed based on the law prior to the Act, resulting in no significant change to the initial measurement of these balances. Remaining aspects of the Act were not relevant to our operations.

Income taxes receivable was $102.4 million and $61.3 million at December 31, 2018 and 2017, 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, 2018 and 2017, are presented below (in thousands):

		December 31,
		2018				2017
Deferred tax assets:
Insurance accruals		$	34,889			$	27,700
Allowance for doubtful accounts			7,649				6,605
Compensation accrual			10,461				3,661
Deferred compensation accrual			20,396				17,620
Federal benefit of state uncertain tax positions			10,364				8,681
State NOL carry-forward			6,041				4,944
Other			4,626				3,134
Total gross deferred tax assets			94,426				72,345
Valuation allowance			(6,041	)			(4,944	)
Total deferred tax assets, net of valuation allowance			88,385				67,401
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation			696,913				566,396
Prepaid permits and insurance, principally due to expensing for income tax purposes			33,594				28,089
Other			1,339				14,786
Total gross deferred tax liabilities			731,846				609,271
Net deferred tax liability		$	643,461			$	541,870

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,
		2018				2017				2016
Beginning balance		$	45.3			$	35.4			$	32.0
Additions based on tax positions related to the current year			13.9				11.6				10.3
Additions/(reductions) based on tax positions taken in prior years			(2.4	)			5.4				(3.2	)
Reductions due to settlements			-				(2.4	)			(0.4	)
Reductions due to lapse of applicable statute of limitations			(4.6	)			(4.7	)			(3.3	)
Ending balance		$	52.2			$	45.3			$	35.4

At December 31, 2018 and 2017, we had a total of $52.2 million and $45.3 million, respectively, in gross unrecognized tax benefits. Of these amounts, $43.1 million and $37.5 million represent the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate in 2018 and 2017, 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, 2018, 2017, and 2016, was $2.4 million, $2.1 million, and $1.9 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, 2018 and 2017, was $4.6 million and $3.6 million, respectively.

Tax years 2015 and forward remain subject to examination by federal tax jurisdictions, while tax years 2008 and forward remain open for state jurisdictions.

8. 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, 2018, 2017, and 2016, our matching contributions to the plan were $19.7 million, $16.7 million, and $15.6 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 $15.7 million as of December 31, 2018, and $16.4 million as of December 31, 2017. 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 $15.7 million as of December 31, 2018, and $16.4 million as of December 31, 2017.

9. 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,
		2018				2017				Input Level
Trading investments		$	15.7			$	16.4				1
Interest rate swaps		$	(4.8	)		$	(1.4	)			2
Senior notes, net of unamortized discount and debt issuance costs		$	(591.3	)		$	(595.6	)			2

The fair value of trading investments has been measured using the market approach (Level 1) and reflect quoted market prices. The fair values of interest rate swaps and corresponding senior notes have been measured using the income approach (Level 2), which include relevant interest rate curve inputs. Trading investments are classified in other assets in our Consolidated Balance Sheets. Depending on their period end fair value, interest rate swaps are classified in other assets or other long-term liabilities in our Consolidated Balance Sheets. The senior notes are classified in long-term debt in our Consolidated Balance Sheets.

Financial Instruments

The carrying amount of our senior revolving line of credit and remaining senior notes not measured at fair value on a recurring basis was $555.9 million and $490.0 million at December 31, 2018 and 2017, 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 $564.9 million and $506.3 million at December 31, 2018 and 2017, respectively.

In 2017, we remeasured an advance deposit previously made for the purchase of new trailing equipment from a carrying amount of $20.2 million to a fair value of zero, due the manufacturer not being able to meet delivery. The resulting charge was included in general and administrative expenses, net of asset dispositions in our Consolidated Statements of Earnings. The carrying amounts of all other instruments at December 31, 2018 and 2017, approximate their fair value due to the short maturity of these instruments.

10.	Commitments and Contingencies

As of December 31, 2018, we had approximately $117.8 million of obligations remaining under operating lease arrangements related primarily to terminal and support facilities. Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2018, are approximately $117.8 million, with payment streams as follows (in millions): 2019 - $34.9; 2020 - $29.9; 2021 - $20.7; 2022 - $13.7; and thereafter - $18.6.

Total rent expense was $98.7 million in 2018, $64.3 million in 2017, and $44.1 million in 2016. At December 31, 2018, we had outstanding commitments of approximately $381.6 million, net of proceeds from sales or trade-ins during 2019 and 2020, which is primarily related to the acquisition of containers, chassis, and tractors.

During 2018, 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 $1.3 million as of December 31, 2018.

We are a defendant in certain alleged class-action lawsuits in which the plaintiffs are current and former California-based drivers who allege claims for unpaid wages, failure to provide meal and rest periods, and other items. In the lead class-action, we reached an agreement and recorded a reserve in September 2018 to resolve all pending claims for a class settlement payment of $15 million, subject to Court approval. The Court granted preliminary settlement approval in November 2018. Notice of the settlement has been mailed to all settlement class members and the deadline for objections to the settlement passed without any objections filed. We expect the Court’s order granting final approval to be issued in April 2019. The overlapping claims in the other alleged class-action lawsuits remain stayed pending final approval of the settlement in the lead class-action case.

In January 2017, we exercised our right to utilize the arbitration process to review the division of revenue collected beginning May 1, 2016, as well as to clarify other issues, under our Joint Service Agreement with BNSF Railway Company (BNSF). BNSF requested the same, and the arbitration process is on-going. On October 5, 2018, we received the arbitrators’ Interim Award. The details of the Interim Award are confidential and require the parties to submit additional information requested by the arbitrators to decide certain unresolved matters. For the determined components of the Interim Award, we recorded an $18.3 million pre-tax charge in the third quarter 2018, related to certain charges claimed by BNSF for specific services requested for customers from April 2014 through May 2018. On December 7, 2018 the arbitrators’ issued their Clarified Interim Award of October 5, 2018 resulting from some of the parties’ additional submissions to the Panel regarding certain issues related to determining the revenue division between the parties. On January 11, 2019, the Panel issued its Second Interim Award ordering that $89.4 million is due from the Company to BNSF resulting from the adjusted revenue divisions relating to the 2016 period at issue ($52.1 million) and for calendar year 2017 ($37.3 million). The parties have been instructed to make further submissions on the revenue divisions for calendar year 2018 and going forward, as well as other confidential issues raised during the arbitration process so that the panel can issue an appropriate interim and/or final award regarding all issues raised during the proceeding. We recorded pretax charges for contingent liabilities in the fourth quarter 2018 of $89.4 million claimed by the BNSF for the period May 1, 2016 through December 31, 2017 and $44.6 million for the period January 1, 2018 through December 31, 2018, for a total of $134 million.

The other financial implications from the Interim Award and the Clarified Interim Award will not be fully determined until the arbitrators issue additional award(s) following their review of each party’s requested additional submissions. At this time, we are unable to reasonably predict the final outcome of the arbitration, and, as such, no further gain or loss contingency can be determined or recorded. If decided adversely, this matter could result in a liability material to our financial condition or results of operations. BNSF provides a significant amount of rail transportation services to our JBI business segment. Normal commercial business activity between the parties, including load tendering, load tracing, billing and payments, is expected to continue on a timely basis.

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.

11. Acquisitions

On January 7, 2019, we entered into an agreement to acquire substantially all of the assets and assume certain specified liabilities of the affiliated entities of Cory 1st Choice Home Delivery (Cory), subject to customary closing conditions. The closing of the transaction was effective on February 15, 2019. The purchase price was $100 million. Upon closing of this acquisition, we acquired customer contracts, net working capital and assumed various facility leases. We used our existing revolving credit facility to finance this transaction. The final calculation of net working capital and the purchase price allocation are currently in process. The Cory acquisition was accounted for as a business combination and will operate within our Dedicated Contract Services® business segment.

In July 2017, we entered into an agreement to acquire Special Logistics Dedicated, LLC (SLD), and its affiliated entities, subject to customary closing conditions. The purchase price was $136.0 million with no assumption of debt. The closing of the transaction was effective on July 31, 2017. Total consideration paid in cash under the SLD agreement was $137.6 million and consisted of the agreed upon purchase price adjusted for an estimated working capital adjustment and cash acquired. In addition, we incurred approximately $3.1 million in transaction costs which are recorded in general and administrative expenses, net of asset dispositions in our Consolidated Statements of Earnings. The SLD acquisition was accounted for as a business combination. 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 $76 million of finite-lived intangible assets and approximately $40 million of goodwill. Goodwill consists of acquiring and retaining the SLD existing network and expected synergies from the combination of operations. The results of the acquired operations after the respective acquisition date have been included in our Consolidated Statements of Earnings.

12. Goodwill and Other Intangible Assets

As discussed in Note 11, Acquisitions, in 2017, we recorded goodwill of approximately $40 million and additional finite-lived intangible assets of approximately $76 million in connection with the SLD acquisition. All goodwill was assigned to our Dedicated Contract Services® business segment. No impairment losses have been recorded for goodwill as of December 31, 2018. Prior to the SLD acquisition, our only intangible asset consisted of our purchased LDC network access within our Dedicated Contract Services® segment. Identifiable intangible assets consist of the following (in millions):

										Weighted Average
		December 31,								Amortization
		2018				2017				Period
Finite-lived intangibles:
Non-competition agreements		$	0.2			$	0.2				5
Customer relationships			75.3				75.3				10
LDC Network			10.5				10.5				10
Total finite-lived intangibles			86.0				86.0
Less accumulated amortization			(20.9	)			(12.3	)
Total identifiable intangible assets, net		$	65.1			$	73.7

Our finite-lived intangible assets have no assigned residual values.

During the years ending December 31, 2018, 2017, and 2016, intangible asset amortization expense was $8.6 million, $4.2 million and $1.0 million, respectively. Estimated amortization expense for our finite-lived intangible assets is expected to be approximately $7.8 million for 2019 and $7.6 million for 2020 through 2023. 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 four reportable business segments – Intermodal (JBI), Dedicated Contract Services® (DCS), Integrated Capacity Solutions (ICS), and Truckload (JBT) – 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 JBHT-owned equipment. ICS services include flatbed, refrigerated, and LTL, as well as a variety of dry-van and intermodal solutions. JBT business includes full-load, dry-van freight that is typically transported utilizing company-owned or company-controlled revenue equipment. 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 customers are geographically dispersed across the United States. A summary of certain segment information as of December 31 is presented below (in millions):

		Assets (Excludes intercompany accounts)
		December 31,
		2018				2017
JBI		$	2,221			$	2,108
DCS			1,595				1,182
ICS			212				204
JBT			307				283
Other (includes corporate)			757				688
Total		$	5,092			$	4,465

		Revenues
		Years ended December 31,
		2018				2017				2016
JBI		$	4,717			$	4,084			$	3,796
DCS			2,163				1,719				1,533
ICS			1,335				1,025				852
JBT			417				378				388
Total segment revenues			8,632				7,206				6,569
Intersegment eliminations			(17	)			(16	)			(14	)
Total		$	8,615			$	7,190			$	6,555

		Operating Income
		Years ended December 31,
		2018				2017				2016
JBI		$	401			$	407			$	450
DCS			193				171				205
ICS			50				23				36
JBT			37				23				30
Total		$	681			$	624			$	721

		Depreciation and Amortization Expense
		Years ended December 31,
		2018				2017				2016
JBI		$	173			$	163			$	160
DCS			200				158				143
JBT			38				41				41
Other			25				22				18
Total		$	436			$	384			$	362

14. Quarterly Financial Information (Unaudited)

As further discussed in Note 10, Commitments and Contingencies, our fourth quarter 2018 operating income, net earnings and earnings per share included the impact of pretax charges for contingent liabilities. As further discussed in Note 7, Income Taxes, our fourth quarter 2017, net earnings and earnings per share included the effect of a $309.2 million provisional amount recorded as a component of income tax expense from continuing operations resulting from the remeasurement of our deferred tax balance due to the enactment of the Tax Cuts and Jobs Act. Operating results by quarter for the years ended December 31, 2018 and 2017 are as follows (in thousands, except per share data):

		Quarter
		First				Second				Third				Fourth
2018:
Operating revenues		$	1,948,245			$	2,139,027			$	2,209,760			$	2,317,842
Operating income		$	168,781			$	214,812			$	174,688			$	122,740
Net earnings		$	118,142			$	151,652			$	131,110			$	88,681
Basic earnings per share		$	1.08			$	1.39			$	1.20			$	0.81
Diluted earnings per share		$	1.07			$	1.37			$	1.19			$	0.81
2017:
Operating revenues		$	1,629,158			$	1,726,915			$	1,843,334			$	1,990,160
Operating income		$	149,389			$	163,615			$	164,972			$	145,814
Net earnings		$	102,702			$	97,869			$	100,385			$	385,308
Basic earnings per share		$	0.93			$	0.89			$	0.92			$	3.51
Diluted earnings per share		$	0.92			$	0.88			$	0.91			$	3.48