Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

	(A)	Financial Statements, Financial Statement Schedules and Exhibits:

	(1)	Financial Statements
		The financial statements included in Item 8 above are filed as part of this annual report.

	(2)	Financial Statement Schedules
		Schedule II – Valuation and Qualifying Accounts (in millions)

Allowance for Doubtful Accounts and Other Receivables for the Years Ended:		Balance at Beginning of Year				Charged to Expense				Write-Offs, Net of Recoveries				Balance at End of Year
December 31, 2018			15.9				8.9				(0.9	)			23.9
December 31, 2019			23.9				2.8				(13.4	)			13.3
December 31, 2020			13.3				5.6				(0.5	)			18.4

	The above schedule reports allowances related to trade accounts receivable and other receivables.

	All other schedules have been omitted either because they are not applicable or because the required information is included in our Consolidated Financial Statements or the notes thereto.

	(3)	Exhibits

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)
4.1		Description of Capital Stock of J.B. Hunt Transport Services, Inc.
4.2		Indenture (incorporated by reference from Exhibit 4.1 of the Company’s registration statement on Form S-3ASR (File No. 333-169365), filed September 14, 2010)
4.3		Third Supplemental Indenture (incorporated by reference from Exhibit 4.4 of the Company’s current report on Form 8-K, filed March 6, 2014)
4.4		Fourth Supplemental Indenture (incorporated by reference from Exhibit 4.3 of the Company’s current report on Form 8-K, filed August 6, 2015)
4.5		Base Indenture, dated as of March 1, 2019 (incorporated by reference from Exhibit 4.1 of the Company’s current report on Form 8-K, filed March 1, 2019)
4.5		First Supplemental Indenture, dated as of March 1, 2019 (incorporated by reference from Exhibit 4.2 of the Company’s current report on Form 8-K, filed March 1, 2019)
10.1		Third Amended and Restated Management Incentive Plan (incorporated by reference from Appendix A of the Company’s definitive proxy statement on Schedule 14A, filed March 9, 2017)
10.2		Amendment to J.B. Hunt Transport Services, Inc. Third Amended and Restated Management Incentive Plan (incorporated by reference from Exhibit 10.2 of the Company’s current report on Form 8-K, filed April 22, 2019)
10.3		Summary of Compensation Arrangements with Named Executive Officers for 2020 (incorporated by reference from Exhibit 99.1 of the Company’s current report on Form 8-K/A, filed February 3, 2020)
10.4		Summary of Compensation Arrangements with Named Executive Officers for 2021 (incorporated by reference from Exhibit 99.1 of the Company’s current report on Form 8-K, filed January 25, 2021)
10.5*		Executive Retirement Agreement with David G. Mee, dated February 6, 2020 (incorporated by reference from Exhibit 10.1 of the Company’s current report on Form 8-K, filed February 10, 2020)
10.6*		Executive Retirement Agreement with Terrance D. Matthews, dated February 6, 2020 (incorporated by reference from Exhibit 10.2 of the Company’s current report on Form 8-K, filed February 10, 2020)
10.7		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)
10.8		First Amendment to Credit Agreement, dated as of March 1, 2019 (incorporated by reference from Exhibit 10.2 of the Company’s current report on Form 8-K, filed March 1, 2019)
21.1		Subsidiaries of J.B. Hunt Transport Services, Inc.
22.1		List of Guarantor Subsidiaries of J.B. Hunt Transport Services, Inc.
23.1		Consent of 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
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document)

	*	Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

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 2021.

	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 2021, 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/ John Kuhlow		Chief Financial Officer,
	John Kuhlow		Executive Vice President
			(Principal Financial and 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/ Gale V. King		Member of the Board of Directors
	Gale V. King

INDEX TO CONSOLIDATED FINANCIAL INFORMATION

	PAGE
Management’s Report on Internal Control Over Financial Reporting	36
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements	37
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	39
Consolidated Balance Sheets as of December 31, 2020 and 2019	40
Consolidated Statements of Earnings for years ended December 31, 2020, 2019, and 2018	41
Consolidated Statements of Stockholders’ Equity for years ended December 31, 2020, 2019, and 2018	42
Consolidated Statements of Cash Flows for years ended December 31, 2020, 2019, and 2018	43
Notes to Consolidated Financial Statements	44

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, 2020. 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, 2020, our internal control over financial reporting is effective based on those criteria.

The effectiveness of internal control over financial reporting as of December 31, 2020, 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/ John Kuhlow
John N. Roberts, III		John Kuhlow
President and Chief Executive Officer		Chief Financial Officer,
(Principal Executive Officer)		Executive Vice President
		(Principal Financial and Accounting 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, 2020 and 2019, the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, 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, 2020, 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, 2021, 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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Claims Accruals

Description of the Matter

At December 31, 2020, the Company’s aggregate claims accrual was $257 million, which is primarily related to casualty and workers’ compensation claims, inclusive of amounts expected to be paid by the Company’s insurers above its self-insured retention limits. As explained in Note 2 of the financial statements, the Company recognizes a liability at the time of the incident based upon the nature and severity of the claim and analyses provided by third-party claims administrators. The Company uses an actuarial method to develop currently known claim information to derive an estimate of the ultimate claim liability to account for estimated incurred but not reported losses (“IBNR”). Auditing the Company's claims accruals is complex and involves significant measurement uncertainty associated with the estimate, the application of significant management judgment, and the use of various actuarial methods. In addition, the estimate for claims accruals is sensitive to significant management assumptions, including the frequency and severity assumptions used to derive the computation of the IBNR, and the case reserves and loss development factors for reported claims.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the claims accrual process, including management’s assessment of the assumptions and data underlying the IBNR reserve. To evaluate the claims accruals, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims by performing a test of details over a representative sample. Furthermore, we involved our actuarial specialist to assist in our evaluation of the methodologies applied by management in determining the calculated reserve. We compared the Company’s reserved amount to a range which our actuarial specialist developed based on independently selected assumptions.

	/s/ Ernst & Young LLP

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

Rogers, Arkansas

February 22, 2021

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, 2020, 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, 2020, 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, 2020 and 2019, the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, 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, 2021, 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, 2021

J.B. HUNT TRANSPORT SERVICES, INC.
Consolidated Balance Sheets
December 31, 2020 and 2019
(in thousands, except share data)

			2020				2019
Assets
Current assets:
Cash and cash equivalents			$	313,302			$	35,000
Trade accounts receivable, net				1,124,403				1,011,829
Other receivables				185,849				230,331
Inventories				23,804				21,106
Prepaid expenses				194,759				183,033
Total current assets				1,842,117				1,481,299
Property and equipment, at cost:
Revenue and service equipment				4,991,662				4,837,747
Land				62,145				58,692
Structures and improvements				307,869				302,184
Software, office equipment and furniture				547,034				442,183
Total property and equipment				5,908,710				5,640,806
Less accumulated depreciation				2,219,816				2,019,940
Net property and equipment				3,688,894				3,620,866
Goodwill				105,367				96,326
Other intangible assets, net				106,755				106,506
Other assets				185,215				165,857
Total assets			$	5,928,348			$	5,470,854
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable			$	587,510			$	602,601
Claims accruals				276,056				279,590
Accrued payroll and payroll taxes				130,943				68,220
Other accrued expenses				90,294				85,355
Total current liabilities				1,084,803				1,035,766
Long-term debt				1,305,424				1,295,740
Other long-term liabilities				245,961				173,241
Deferred income taxes				692,022				699,078
Total liabilities				3,328,210				3,203,825
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, 2020 and 2019, of which 105,653,644 and 106,212,908 shares were outstanding at December 31, 2020 and 2019, respectively)				1,671				1,671
Additional paid-in capital				408,244				374,049
Retained earnings				4,984,739				4,592,938
Treasury stock, at cost (61,445,788 shares at December 31, 2020, and 60,886,524 shares at December 31, 2019)				(2,794,516	)			(2,701,629	)
Total stockholders’ equity				2,600,138				2,267,029
Total liabilities and stockholders' equity			$	5,928,348			$	5,470,854

See Notes to Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.
Consolidated Statements of Earnings
Years Ended December 31, 2020, 2019 and 2018
(in thousands, except per share amounts)

		2020				2019				2018
Operating revenues, excluding fuel surcharge revenues		$	8,879,653			$	8,122,600			$	7,557,648
Fuel surcharge revenues			756,920				1,042,658				1,057,226
Total operating revenues			9,636,573				9,165,258				8,614,874
Operating expenses:
Rents and purchased transportation			4,954,123				4,528,812				4,434,540
Salaries, wages and employee benefits			2,347,716				2,167,851				1,926,213
Depreciation and amortization			527,375				499,145				435,893
Fuel and fuel taxes			357,483				463,195				459,011
Operating supplies and expenses			334,350				333,113				303,529
General and administrative expenses, net of asset dispositions			180,083				191,933				163,270
Insurance and claims			134,482				157,251				129,406
Operating taxes and licenses			54,331				55,336				51,080
Communication and utilities			33,511				34,797				30,911
Total operating expenses			8,923,454				8,431,433				7,933,853
Operating income			713,119				733,825				681,021
Interest income			486				1,754				224
Interest expense			47,580				54,684				40,427
Earnings before income taxes			666,025				680,895				640,818
Income taxes			159,990				164,575				151,233
Net earnings		$	506,035			$	516,320			$	489,585
Weighted average basic shares outstanding			105,700				107,329				109,375
Basic earnings per share		$	4.79			$	4.81			$	4.48
Weighted average diluted shares outstanding			106,766				108,307				110,428
Diluted earnings per share		$	4.74			$	4.77			$	4.43
Dividends declared per common share		$	1.08			$	1.04			$	0.96

See Notes to Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 2020, 2019 and 2018
(in thousands, except per share amounts)

						Additional
		Common				Paid-in				Retained				Treasury				Stockholders’
		Stock				Capital				Earnings				Stock				Equity
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 and other			-				(17,723	)			-				(1,840	)			(19,563	)
Balances at December 31, 2018		$	1,671			$	340,457			$	4,188,435			$	(2,429,179	)		$	2,101,384
Comprehensive income:
Net earnings			-				-				516,320				-				516,320
Cash dividend declared and paid ($1.04 per share)			-				-				(111,817	)			-				(111,817	)
Purchase of treasury shares			-				-				-				(275,657	)			(275,657	)
Share-based compensation			-				53,324				-				-				53,324
Restricted share issuances, net of stock repurchased for payroll taxes and other			-				(19,732	)			-				3,207				(16,525	)
Balances at December 31, 2019		$	1,671			$	374,049			$	4,592,938			$	(2,701,629	)		$	2,267,029
Comprehensive income:
Net earnings			-				-				506,035				-				506,035
Cash dividend declared and paid ($1.08 per share)			-				-				(114,234	)			-				(114,234	)
Purchase of treasury shares			-				-				-				(92,548	)			(92,548	)
Share-based compensation			-				60,698				-				-				60,698
Restricted share issuances, net of stock repurchased for payroll taxes and other			-				(26,503	)			-				(339	)			(26,842	)
Balances at December 31, 2020		$	1,671			$	408,244			$	4,984,739			$	(2,794,516	)		$	2,600,138

See Notes to Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2020, 2019 and 2018
(in thousands)

		2020				2019				2018
Cash flows from operating activities:
Net earnings		$	506,035			$	516,320			$	489,585
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			527,375				499,145				435,893
Noncash lease expense			45,985				39,517				-
Share-based compensation			60,698				53,324				47,369
Loss on sale of revenue equipment and other			4,389				13,057				12,107
Deferred income taxes			(7,056	)			55,617				101,591
Changes in operating assets and liabilities:
Trade accounts receivable			(109,758	)			50,310				(130,931	)
Income taxes receivable or payable			57,851				41,447				(41,071	)
Other current assets			(18,038	)			(4,975	)			(6,133	)
Trade accounts payable			(5,482	)			(85,327	)			98,037
Claims accruals			(9,072	)			(20,727	)			21,580
Accrued payroll and other accrued expenses			69,932				(59,361	)			59,814
Net cash provided by operating activities			1,122,859				1,098,347				1,087,841
Cash flows from investing activities:
Additions to property and equipment			(738,545	)			(854,115	)			(995,650	)
Proceeds from sale of equipment			137,776				165,918				110,165
Business acquisition			(12,136	)			(115,654	)			-
Change in other assets			(52	)			(111	)			(1,288	)
Net cash used in investing activities			(612,957	)			(803,962	)			(886,773	)
Cash flows from financing activities:
Proceeds from long-term debt			-				700,000				-
Payments on long-term debt			-				(250,000	)			-
Proceeds from revolving lines of credit and other			222,124				1,591,014				3,204,715
Payments on revolving lines of credit and other			(220,100	)			(1,904,000	)			(3,137,900	)
Purchase of treasury stock			(92,548	)			(275,657	)			(150,338	)
Stock repurchased for payroll taxes and other			(26,842	)			(16,525	)			(19,563	)
Dividends paid			(114,234	)			(111,817	)			(104,994	)
Net cash used in financing activities			(231,600	)			(266,985	)			(208,080	)
Net increase/(decrease) in cash and cash equivalents			278,302				27,400				(7,012	)
Cash and cash equivalents at beginning of year			35,000				7,600				14,612
Cash and cash equivalents at end of year		$	313,302			$	35,000			$	7,600
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest		$	48,351			$	46,721			$	39,901
Income taxes		$	95,454			$	71,681			$	83,822
Noncash investing activities
Accruals for equipment received		$	12,533			$	25,505			$	49,390

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 five distinct, but complementary, business segments and provide a wide range of general and specifically tailored freight and logistics services to our customers. We generate revenues from the actual movement of freight from shippers to consignees, customized labor and delivery services, and serving as a logistics provider by offering or arranging for others to provide the transportation service. Unless otherwise indicated by the context, “we,” “us,” “our” and “JBHT” refer to J.B. Hunt Transport Services, Inc. and its consolidated subsidiaries.

2.	Summary of Significant Accounting Policies

Basis of Consolidation

Our Consolidated Financial Statements include all of our wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. J.B. Hunt Transport Services, Inc. is a parent-level holding company with no significant assets or operations. J.B. Hunt Transport, Inc. is a wholly owned subsidiary of J.B. Hunt Transport Services, Inc. and is the primary operating subsidiary. All other subsidiaries of J.B. Hunt Transport Services, Inc. are insignificant.

Use of Estimates

The Consolidated Financial Statements contained in this report have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these statements requires us to make estimates and assumptions that directly affect the amounts reported in such statements and accompanying notes. We evaluate these estimates on an ongoing basis utilizing historical experience, consulting with experts and using other methods we consider reasonable in the particular circumstances. Nevertheless, our actual results may differ significantly from our estimates.

We believe certain accounting policies and estimates are of more significance in our financial statement preparation process than others. We believe the most critical accounting policies and estimates include the economic useful lives and salvage values of our assets, provisions for uncollectible accounts receivable, estimates of exposures under our insurance and claims policies, and estimates for taxes. To the extent that actual, final outcomes are different from our estimates, or that additional facts and circumstances cause us to revise our estimates, our earnings during that accounting period will be affected.

The novel coronavirus (COVID-19) pandemic has created and may continue to create significant uncertainty in macro-economic conditions, which may cause a global economic recession, business slowdowns or shutdowns, depressed demand for our transportation and logistics businesses, and adversely impact our results of operations. We expect uncertainties around our key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Our estimates may change, as new events occur and additional information is obtained, which are recognized or disclosed in our Consolidated Financial Statements as soon as they become known and may have a material impact on our financial statements.

Cash and Cash Equivalents

Cash in excess of current operating requirements is invested in short-term, highly liquid investments. We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable and Allowance

Our trade accounts receivable includes accounts receivable reduced by an allowance for uncollectible accounts. Receivables are recorded at amounts billed to customers when loads are delivered or services are performed. The allowance for uncollectible accounts is calculated over the life of the underlying receivable and is based on historical experience; any known trends or uncertainties related to customer billing and account collectability; current economic conditions; and reasonable and supportable economic forecasts, each applied to segregated risk pools based on the business segment that generated the receivable. The adequacy of our allowance is reviewed quarterly. Balances are charged against the allowance when it is determined the receivable will not be recovered. The allowance for uncollectible accounts for our trade accounts receivable was $18.4 million at December 31, 2020 and $13.3 million at December 31, 2019. During 2020, the allowance for uncollectible accounts increased by $5.6 million and was reduced $0.5 million by write-offs.

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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, 2020 and 2019, 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, 3 to 7 years for computer hardware and software, and 3 to 10 years for furniture and other office equipment. Salvage values are typically 10% to 30% of original cost for tractors and trailing equipment and reflect any agreements with tractor suppliers for residual or trade-in values for certain new equipment. We periodically review these useful lives and salvage values. We capitalize tires placed in service on new revenue equipment as a part of the equipment cost. Replacement tires and costs for recapping tires are expensed at the time the tires are placed in service. Gains and losses on the sale or other disposition of equipment are recognized at the time of the disposition and are classified in general and administrative expenses, net of asset dispositions in the Consolidated Statements of Earnings.

We continually evaluate the carrying value of our assets for events or changes in circumstances that indicate the carrying value may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.

Leases

We recognize a right-of-use asset and a lease liability on the effective date of a lease agreement. Right-of-use assets represent our right to use an underlying asset over the lease term and lease liabilities represent the obligation to make lease payments resulting from the lease agreement. We initially record these assets and liabilities based on the present value of lease payments over the lease term calculated using our incremental borrowing rate applicable to the leased asset or the implicit rate within the agreement if it is readily determinable. Lease agreements with lease and non-lease components are combined as a single lease component. Right-of-use assets additionally include net prepaid lease expenses. Options to extend or terminate an agreement are included in the lease term when it becomes reasonably certain the option will be exercised. Leases with an initial term of 12 months or less, short-term leases, are not recorded on the balance sheet. Lease expense for short-term and long-term operating leases is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

Revenue Recognition

We record revenues on the gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of promised services. Accordingly, we serve as a principal in the transaction. We invoice our customers, and we maintain discretion over pricing. Additionally, we are responsible for selection of third-party transportation providers to the extent used to satisfy customer freight requirements.

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Our revenue is earned through the service offerings of our five reportable business segments. See Note 14, 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 agreements or contracts that govern services performed and applicable rates.

Integrated Capacity Solutions_™_ (ICS) - ICS provides non-asset and asset-light transportation solutions to customers through relationships with third-party carriers and integration with company-owned equipment. ICS services include flatbed, refrigerated, and 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.

Final Mile Services_®_ (FMS) - FMS provides final-mile delivery services to customers through a nationwide network of cross-dock and other delivery system network locations. FMS provides both asset and non-asset big and bulky delivery and installation services, as well as fulfilment and retail-pooling distributions services. FMS operations usually include formal, written agreements or contracts that govern services performed and applicable rates.

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

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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 converted their holdings into common stock. Outstanding unvested restricted share units represent the dilutive effects on weighted average shares. A reconciliation of the number of shares used in computing basic and diluted earnings per share is shown below (in thousands):

		Years ended December 31,
		2020				2019				2018
Weighted average shares outstanding – basic			105,700				107,329				109,375
Effect of common stock equivalents			1,066				978				1,053
Weighted average shares outstanding – diluted			106,766				108,307				110,428

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, 2020, 2019, and 2018, our top 10 customers, based on revenue, accounted for approximately 37%, 32%, and 30% of our total revenue. Our top 10 customers, based on revenue, accounted for approximately 37% and 34% of our total trade accounts receivable at December 31, 2020 and 2019, respectively. One customer accounted for approximately 10%, 8%, and 6% of our total revenue for the years ended December 31, 2020, 2019, and 2018, respectively. With the exception of FMS and JBT, each of our three remaining business segments conducts business with this customer.

Share-based Compensation

We have a share-based compensation plan covering certain employees, including officers and directors. We account for share-based compensation utilizing the fair value recognition provisions of current accounting standards for share-based payments. We currently utilize restricted share units and performance share units. Issuances of our stock upon restricted share unit and performance share unit vesting are made from treasury stock. Our restricted share unit and performance share unit awards may include both graded-vesting and cliff-vesting awards and therefore vest in increments during the requisite service period or at the end of the requisite service period, as appropriate for each type of vesting. We recognize compensation expense on a straight-line basis over the requisite service periods within each award. The benefit for the forfeiture of an award is recorded in the period in which it occurs.

Claims Accruals

We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular collisions, accidents, and cargo damage. We are substantially self-insured for loss of and damage to our owned and leased revenue equipment. Certain insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim. We have umbrella policies to limit our exposure to catastrophic claim costs.

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The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, and claim type. For 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. For 2019 and 2020, we were self-insured for $500,000 per occurrence for personal injury and property damage and fully insured for workers’ compensation claims for nearly all states. We have policies in place for 2021 with substantially the same terms as our 2020 policies for personal injury, property damage, workers’ compensation, and cargo loss or damage.

Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal, economic, and regulatory factors. Our safety and claims personnel work directly with representatives from the insurance companies to continually update the estimated cost of each claim. The ultimate cost of a claim develops over time as additional information regarding the nature, timing, and extent of damages claimed becomes available. Accordingly, we use an actuarial method to develop current claim information to derive an estimate of our ultimate 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 a reserve for incurred-but-not-reported claims. We do not discount our estimated losses. At December 31, 2020 and 2019, we had an accrual of approximately $257 million and $263 million, respectively, for estimated claims, which are recorded in claims accruals in our Consolidated Balance Sheets. 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, 2020 and 2019, we have recorded $304 million and $281 million, respectively, of expected reimbursement for covered excess claims, other insurance deposits, and prepaid insurance premiums. Of these total asset balances, $167 million and $157 million have been included in other receivables, with the remaining balance included in prepaid expenses in our Consolidated Balance Sheets at December 31, 2020 and 2019, respectively.

Business Combinations

The purchase price of our acquisitions is the aggregate of the consideration transferred, including liabilities incurred, measured at the acquisition date. We allocate the purchase price of acquisitions to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. This assignment of fair values to the assets acquired and liabilities assumed requires the use of estimates, judgments, inputs, and assumptions. The excess of the purchase price over those estimated fair values is recorded as goodwill. Changes to the acquisition date provisional fair values prior to the end of the measurement period are recorded as adjustments to the associated goodwill. Acquisition-related expenses and restructuring costs, if any, are expensed as incurred.

Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired in a business combination. Goodwill and intangible assets with indefinite lives are not amortized. Goodwill is reviewed, using a market based approach, for potential impairment as of _October 1_st on an annual basis or, more frequently, if circumstances indicate a potential impairment is present. Intangible assets with finite lives are amortized on the straight-line method over the estimated useful lives of 2 to 15 years.

Accounting Pronouncements Adopted in 20****20

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses, which replaced the existing incurred loss methodology used for establishing a provision against financial assets, including accounts receivable, with a forward-looking expected loss methodology for accounts receivable, loans and other financial instruments. We adopted the new standard on January 1, 2020, using the cumulative-effect method. The adoption of the new guidance did not have a material impact on our financial statements.

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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,
		2020				2019
Senior notes			1,305.4				1,295.7

Aggregate maturities of long-term debt subsequent to December 31, 2020, are as follows: $361.3 million in 2022, $249.1 in 2024, and $695.0 million thereafter.

Senior Revolving Line of Credit

At December 31, 2020, we were authorized 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 and expires in September 2023. This senior credit facility 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 either the Prime Rate, the Federal Funds Rate or LIBOR, depending upon the specific type of borrowing, plus an applicable margin based on our credit rating and other fees. At December 31, 2020, we had no outstanding borrowings under this agreement.

Senior Notes

Our senior notes consist of three separate issuances. The first is $250 million of 3.85% senior notes due March 2024, which was issued in March 2014. Interest payments under this note are due semiannually in March and September of each year, beginning September 2014. The second 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. The third is $700 million of 3.875% senior notes due March 2026, issued in March 2019. Interest payments under this note are due semiannually in March and September of each year, beginning September 2019. 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 shelf registration statements filed in February 2014 and January 2019. 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 an interest rate swap entered into on 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, 2020.

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.

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We entered into a receive fixed-rate and pay variable-rate interest rate swap agreement simultaneously with the issuance of our $350 million of 3.30% senior notes due August 2022, to effectively convert this fixed-rate debt to variable-rate. The notional amount of this interest rate swap agreement equals that of the corresponding fixed-rate debt. The applicable interest rate under this agreement is based on LIBOR plus an established margin, resulting in an interest rate of 1.58% for our $350 million of 3.30% senior notes at December 31, 2020. The swap expires when the corresponding senior notes are due. The fair value of this swap is recorded in other assets in our Consolidated Balance Sheet at December 31, 2020. See Note 9, Fair Value Measurements, for disclosure of fair value. This derivative meets the required criteria to be designated as a fair value hedge, and as the specific terms and notional amount of this derivative instrument match those of the fixed-rate debt being hedged, this derivative instrument is 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 this interest rate swap 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, 2020 or 2019. 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 21, 2021, we announced an increase in our quarterly cash dividend from $0.27 to $0.28 per share, which was paid February 19, 2021, to stockholders of record on February 5, 2021. At December 31, 2020, we had 1.7 million shares of common stock to be issued upon the vesting of equity awards and 5.1 million shares reserved for future issuance pursuant to share-based payment plans. During calendar year 2020, we purchased approximately 942,000 shares, or $92.5 million, of our common stock in accordance with plans authorized by our Board. At December 31, 2020, we had $503 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 non-statutory stock options to compensate our employees and directors. We currently are utilizing restricted and performance share units.

Our restricted share units have various vesting schedules generally ranging from 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 2 to 10 years) and achievement of performance criteria. Performance share units do not contain rights to vote or receive dividends until the vesting date. Unvested performance share units are forfeited if the employee terminates for any reason other than death, disability, or special circumstances as determined by the Compensation Committee. Performance shares are valued based on the fair value of the award on the grant date, adjusted for dividend estimates based on grant date dividend rates.

An employee is allowed to surrender shares of common stock received upon vesting to satisfy tax withholding obligations incident to the vesting of restricted share units and performance share units.

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We account for our restricted share units and performance share units in accordance with current accounting standards for share-based payments. These standards require that the cost of all share-based payments to employees be recognized in our Consolidated Financial Statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award, subject to the attainment of performance metrics established for performance share units. The quantity of performance share units for which it is probable that the performance conditions will be achieved is estimated each reporting period, with any necessary adjustments recorded as a cumulative cost adjustment in the current period. Share-based compensation expense is recorded in salaries, wages, and employee benefits in our Consolidated Statements of Earnings, along with other compensation expenses to employees. The following table summarizes the components of our share-based compensation program expense (in thousands):

		Years ended December 31,
		2020				2019				2018
Restricted share units
Pretax compensation expense		$	47,044			$	38,632			$	32,797
Tax benefit			11,300				9,337				7,740
Restricted share units, net of tax		$	35,744			$	29,295			$	25,057
Performance share units
Pretax compensation expense		$	13,654			$	14,692			$	14,572
Tax benefit			3,280				3,551				3,439
Performance share awards, net of tax		$	10,374			$	11,141			$	11,133

A summary of our restricted share units and performance share units is as follows:

Restricted Share Units		Number of Shares				Weighted Average Grant Date Fair Value
Unvested at December 31, 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
Granted			440,255				99.60
Vested			(341,218	)			85.61
Forfeited			(31,454	)			93.91
Unvested at December 31, 2019			1,313,418			$	91.22
Granted			511,859				110.49
Vested			(457,437	)			93.78
Forfeited			(22,694	)			102.03
Unvested at December 31, 2020			1,345,146			$	97.22

Performance Share Units		Number of Shares				Weighted Average Grant Date Fair Value
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
Granted			142,156				98.58
Vested			(127,140	)			93.46
Forfeited			-				-
Unvested at December 31, 2019			375,528			$	95.67
Granted			202,023				112.87
Vested			(145,038	)			89.75
Forfeited			(98,588	)			110.19
Unvested at December 31, 2020			333,925			$	109.57

At December 31, 2020, we had $64.5 million and $17.1 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 3.0 years for restricted share units and 2.9 years for performance share units.

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The aggregate intrinsic value of restricted and performance share units vested during the years ended December 31, 2020, 2019, and 2018, was $73.0 million, $47.0 million, and $55.1 million, respectively. The aggregate intrinsic value of unvested restricted and performance share units was $229.4 million at December 31, 2020. The total fair value of shares vested for restricted and performance share units during the years ended December 31, 2020, 2019, and 2018, was $56.3 million, $41.1 million, and $35.0 million, respectively.

7.	Income Taxes

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

		Years ended December 31,
		2020				2019				2018
Current:
Federal		$	138,952			$	87,977			$	22,904
State and local			28,094				20,981				26,738
			167,046				108,958				49,642
Deferred:
Federal			(2,392	)			51,229				97,670
State and local			(4,664	)			4,388				3,921
			(7,056	)			55,617				101,591
Total tax expense/(benefit)		$	159,990			$	164,575			$	151,233

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,
		2020				2019				2018
Income tax at federal statutory rate		$	139,865			$	142,988			$	134,572
State tax, net of federal effect			20,071				19,293				24,627
Federal tax reform			-				-				(3,219	)
Benefit of stock compensation			(3,503	)			(1,238	)			(4,919	)
199/R&D credit			-				(200	)			1,000
Nondeductible meals and entertainment			1,344				1,688				1,071
Change in effective state tax rate, net of federal benefit			98				1,562				(1,469	)
Other, net			2,115				482				(430	)
Total tax expense		$	159,990			$	164,575			$	151,233

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Income taxes receivable was $3.1 million and $60.9 million at December 31, 2020 and 2019, 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, 2020 and 2019, are presented below (in thousands):

		December 31,
		2020				2019
Deferred tax assets:
Insurance accruals		$	24,304			$	27,180
Allowance for doubtful accounts			9,270				8,052
Compensation accrual			10,809				4,925
CARES Act payroll tax deferral			19,931				-
Deferred compensation accrual			25,702				24,521
Federal benefit of state uncertain tax positions			10,312				9,867
Lease liabilities			32,625				30,251
State NOL carry-forward			8,460				7,495
Other			4,237				6,357
Total gross deferred tax assets			145,650				118,648
Valuation allowance			(8,460	)			(7,495	)
Total deferred tax assets, net of valuation allowance			137,190				111,153
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation			748,883				729,016
Prepaid permits and insurance, principally due to expensing for income tax purposes			42,126				39,285
Lease right-of-use assets			32,952				30,014
Other			5,251				11,916
Total gross deferred tax liabilities			829,212				810,231
Net deferred tax liability		$	692,022			$	699,078

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,
		2020				2019				2018
Beginning balance		$	50.6			$	52.2			$	45.3
Additions based on tax positions related to the current year			9.8				11.0				13.9
Additions/(reductions) based on tax positions taken in prior years			13.9				(6.5	)			(2.4	)
Reductions due to settlements			(1.0	)			-				-
Reductions due to lapse of applicable statute of limitations			(7.2	)			(6.1	)			(4.6	)
Ending balance		$	66.1			$	50.6			$	52.2

At December 31, 2020 and 2019, we had a total of $66.1 million and $50.6 million, respectively, in gross unrecognized tax benefits.  Of these amounts, $57.1 million and $41.8 million represent the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate in 2020 and 2019, 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, 2020, 2019, and 2018, was $2.9 million, $3.2 million, and $2.4 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, 2020 and 2019, was $5.6 million and $4.8 million, respectively.

Tax years 2017 and forward remain subject to examination by federal tax jurisdictions, while tax years 2010 and forward remain open for state jurisdictions.

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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, 2020, 2019, and 2018, our matching contributions to the plan were $24.5 million, $20.8 million, and $19.7 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 $23.1 million as of December 31, 2020, and $20.4 million as of December 31, 2019. 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 $23.1 million as of December 31, 2020, and $20.4 million as of December 31, 2019.

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,
		2020				2019				Input Level
Trading investments		$	23.1			$	20.4				1
Interest rate swap		$	12.5			$	4.8				2
Senior notes, net of unamortized discount and debt issuance costs		$	(361.3	)		$	(353.1	)			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 swap and corresponding senior notes have been measured using the income approach (Level 2), which include relevant interest rate curve inputs. Trading investments and the interest rate swap are classified in other assets 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 $944.1 million and $942.6 million at December 31, 2020 and 2019, respectively. The estimated fair value of these liabilities using the income approach (Level 2), based on their net present value, discounted at our current borrowing rate, was $1.09 billion and $1.03 billion at December 31, 2020 and 2019, respectively.

The carrying amounts of all other instruments at December 31, 2020 and 2019, approximate their fair value due to the short maturity of these instruments.

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10.	Commitments and Contingencies

At December 31, 2020, we had outstanding commitments of approximately $1.12 billion, net of proceeds from sales or trade-ins during 2021 and 2022, which is primarily related to the acquisition of tractors, containers, chassis, and other trailing equipment.

During 2020, 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 $3.8 million as of December 31, 2020.

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. In October 2019 the arbitrators issued a Final Award and we recorded pretax charges in the third quarter 2019 of $26.8 million related to certain charges claimed by BNSF and $17.4 million for legal fees, cost and interest claimed by BNSF, for a total of $44.2 million. On January 17, 2020, we filed under seal in the United States District Court for the Western District of Arkansas (the Arkansas Federal Court) a motion to confirm and enforce the Final Award, seeking the Court’s specific enforcement of certain confidential contractual rights the arbitrators decided in our favor. BNSF moved to confirm the Final Award in the United States District Court for the District of Columbia, but that requested relief was ultimately denied and dismissed as moot. During the first quarter 2020, we recorded an $8.2 million pretax charge resulting from an adjusted calculation of the revenue divisions owed to BNSF under the Final Award. On July 21, 2020, the Arkansas Federal Court granted our motion in part, entering a judgment confirming the arbitration awards. In a sealed opinion, the Court denied our request for additional enforcement relief but did not foreclose our right to pursue post-confirmation enforcement in court or in arbitration if warranted. We have filed an appeal with the United States Court of Appeals for the Eighth Circuit seeking review of the Arkansas Federal Court’s denial.

As the result of state use tax audits, we have been assessed amounts owed for which we are vigorously appealing. If our appeals fail, we could be forced to settle these assessments for a material amount.

In June 2019, we recorded pre-tax charges of $20 million for the settlement of a casualty claim within our DCS segment.

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. 

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11.	Leases

As of December 31, 2020, we had various obligations remaining under operating lease arrangements related primarily to the rental of maintenance and support facilities, cross-dock and delivery system facilities, office space, parking yards and equipment. Many of these leases include one or more options, at our discretion, to renew and extend the agreement beyond the current lease expiration date or to terminate the agreement prior to the lease expiration date. These options are included in the calculation of our operating lease right-of-use asset and liability when it becomes reasonably certain the option will be exercised. Our lease obligations typically do not include options to purchase the leased property, nor do they contain residual value guarantees or material restrictive covenants. Operating leases with an initial term of more than 12 months are included in our Consolidated Balance Sheets as discounted liabilities and corresponding right-of-use assets consisting of the following (in millions):

		Asset/(Liability) Balance
		December 31,
		2020				2019
Right-of-use assets		$	136.8			$	125.5
Lease liabilities, current		$	(48.3	)		$	(44.4	)
Lease liabilities, long-term		$	(87.2	)		$	(80.1	)

Right-of-use assets are classified in other assets in our Consolidated Balance Sheets. Operating lease liability, current is classified in other accrued expenses, while operating lease liability, long-term is classified in other long-term liabilities in our Consolidated Balance Sheets.

As of December 31, 2020, the weighted-average remaining lease term for our outstanding operating lease obligations was 4.3 years and the weighted-average discount rate was 3.05%. Future minimum lease payments under these operating leases as of December 31, 2020, are as follows (in millions):

Year one		$	49.1
Year two			37.6
Year three			23.9
Year four			12.4
Year five			6.4
Thereafter			15.5
Total lease payments			144.9
Less interest			(9.4	)
Present value of lease liabilities		$	135.5

During the years ended December 31, 2020 and 2019, cash paid for amounts included in the measurement of operating lease liabilities was $49.7 million and $44.5 million, while $50.2 million and $43.5 million of operating lease expense was recognized on a straight-line basis, respectively. Operating lease expense is recorded in general and administrative expenses, net of asset dispositions in our Consolidated Statements of Earnings. During the years ended December 31, 2020 and 2019, a total of $57.0 million and $61.6 million of right-of-use assets were obtained in exchange for new operating lease liabilities, of which, $4.4 million and $19.1 million were obtained through business combinations.

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12.	Acquisition

On November 20, 2020, we entered into an asset purchase agreement to acquire substantially all of the assets and assume certain specified liabilities of Mass Movement, Inc. (Mass Movement), subject to customary closing conditions.  The closing of the transaction was effective on November 30, 2020, with a purchase price of $25.5 million. Of this total purchase price, $13.5 million was deferred and is subject to an agreed-upon future earn-out calculation based on established cumulative earnings before interest, taxes, depreciation, and amortization (EBITDA) targets reported for the acquired operations in 2021 through 2023. This deferred portion of the purchase price is classified in trade accounts payable and other long-term liabilities in our Consolidated Balance Sheets. Total consideration paid in cash under the Mass Movement agreement at closing was $12.1 million and consisted of the remaining agreed upon purchase price of $12.0 million adjusted for estimated working capital adjustments and other employee related liabilities. Accordingly, total consideration given under the Mass Movement agreement was $25.6 million. Transaction costs incurred were not material. The Mass Movement acquisition was accounted for as a business combination and operates within our FMS business segment. Assets acquired and liabilities assumed were recorded in our Consolidated Balance Sheet at their estimated fair values, as of the closing date, using cost, market data and valuation techniques that reflect management’s judgment and estimates. As a result of the acquisition, we recorded approximately $14.0 million of finite-lived intangible assets and approximately $8.8 million of goodwill. Goodwill consists of acquiring and retaining the Mass Movement existing network and expected synergies from the combination of operations. The following table outlines the consideration transferred and preliminary purchase price allocation at their respective estimated fair values as of _November 30, 2020 (_in millions):

Consideration		$	25.6
Accounts receivable			2.8
Property and equipment			0.3
Right-of-use assets			4.4
Intangibles			14.0
Accounts payable and accrued liabilities			(0.4	)
Lease liabilities			(4.4	)
Goodwill		$	8.8

On January 7, 2019, we entered into an asset purchase 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, with a purchase price of $100 million. Total consideration paid in cash under the Cory agreement was $98.2 million and consisted of the agreed upon purchase price adjusted for estimated working capital adjustments. In addition, we incurred approximately $2.9 million in transaction costs which are recorded in general and administrative expenses, net of asset dispositions in our Consolidated Statements of Earnings. The Cory acquisition was accounted for as a business combination and operates within our FMS business segment. Assets acquired and liabilities assumed were recorded in our Consolidated Balance Sheet at their estimated fair values, as of the closing date, using cost, market data and valuation techniques that reflect management’s judgment and estimates. As a result of the acquisition, we recorded approximately $45.8 million of finite-lived intangible assets and approximately $48.2 million of goodwill. Goodwill consists of acquiring and retaining the Cory existing network and expected synergies from the combination of operations.

On November 26, 2019, we entered into an asset purchase agreement to acquire substantially all of the assets and assume certain specified liabilities of the affiliated entities of RDI Last Mile Co. (RDI), subject to customary closing conditions.  The closing of the transaction was effective on December 31, 2019, with a purchase price of $17.5 million. Total consideration paid in cash under the RDI agreement was $17.4 million and consisted of the agreed upon purchase price adjusted for estimated working capital adjustments. In addition, we incurred approximately $0.5 million in transaction costs which are recorded in general and administrative expenses, net of asset dispositions in our Consolidated Statements of Earnings. The RDI acquisition was accounted for as a business combination and operates within our FMS business segment. Assets acquired and liabilities assumed were recorded in our Consolidated Balance Sheet at their estimated fair values, as of the closing date, using cost, market data and valuation techniques that reflect management’s judgment and estimates. As a result of the acquisition, we recorded approximately $8.1 million of finite-lived intangible assets and approximately $8.4 million of goodwill, $0.3 million of which was recorded in 2020 as a result of the finalization of our purchase price allocation. Goodwill consists of acquiring and retaining the RDI existing network and expected synergies from the combination of operations.

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13.	Goodwill and Other Intangible Assets

As discussed in Note 12, Acquisitions, in 2020, we recorded additional goodwill totaling approximately $9.1 million and additional finite-lived intangible assets of approximately $14.0 million. We recorded additional goodwill of approximately $56.2 million in 2019. Total goodwill was $105.4 million, $96.3 million, and $40.1 million at December 31, 2020, 2019, and 2018 respectively. All goodwill is assigned to our FMS business segment. No impairment losses have been recorded for goodwill as of December 31, 2020. Prior to the Mass Movement acquisition, our intangible assets consisted of those arising from previous business acquisitions and our purchased local distribution center (LDC) network access, both within our FMS segment. Identifiable intangible assets consist of the following (in millions):

										Weighted Average
		December 31,								Amortization
		2020				2019				Period
Finite-lived intangibles:
Customer relationships		$	131.7			$	118.6				11.0
Non-competition agreements			7.9				6.9				6.6
Trade names			3.8				3.8				2.0
LDC Network			10.5				10.5				10.0
Total finite-lived intangibles			153.9				139.8
Less accumulated amortization			(47.1	)			(33.3	)
Total identifiable intangible assets, net		$	106.8			$	106.5

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

During the years ending December 31, 2020, 2019, and 2018, intangible asset amortization expense was $13.8 million, $12.4 million and $8.6 million, respectively. Estimated amortization expense for our finite-lived intangible assets is expected to be approximately $14.0 million for 2021 and $13.7 million for 2022 through 2024, and $13.6 million for 2025. 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.

14.	Segment Information

In March 2020, we changed the way we internally evaluate the operating performance of our business units and adopted a new segment reporting structure. As part of this new structure, we separated our DCS segment into two reportable segments: DCS and FMS. Accordingly, we are reporting five distinct business segments for the years ended December 31, 2020, 2019, and 2018, which are based primarily on the services each segment provides. The JBI segment includes freight that is transported by rail over at least some portion of the movement and also includes certain repositioning truck freight moved by JBI equipment or third-party carriers, when such highway movement is intended to direct JBI equipment back toward intermodal operations. DCS segment business includes company-owned and customer-owned, DCS-operated revenue equipment and employee drivers assigned to a specific customer, traffic lane, or service. DCS operations usually include formal, written longer-term agreements or contracts that govern services performed and applicable rates. ICS provides non-asset and asset-light transportation solutions to customers through relationships with third-party carriers and integration with company-owned equipment. ICS services include flatbed, refrigerated, and LTL, as well as a variety of dry-van and intermodal solutions. FMS provides final-mile delivery services to customers through a nationwide network of cross-dock and other delivery system network locations. FMS provides both asset and non-asset big and bulky delivery and installation services, as well as fulfilment and retail-pooling distributions services. JBT business includes full-load, dry-van freight that is transported utilizing company-owned revenue equipment or third-party carriers utilizing company-owned trailing 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.

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Our customers are geographically dispersed across the United States. A summary of certain segment information as of December 31, which has been reclassified to reflect our new segment reporting structure, is presented below (in millions):

		Assets (Excludes intercompany accounts)
		December 31,
		2020				2019
JBI		$	2,426			$	2,217
DCS			1,482				1,445
ICS			301				208
FMS			486				432
JBT			286				241
Other (includes corporate)			947				928
Total		$	5,928			$	5,471

		Revenues
		Years ended December 31,
		2020				2019				2018
JBI		$	4,675			$	4,745			$	4,717
DCS			2,196				2,128				1,788
ICS			1,658				1,348				1,335
FMS			689				567				375
JBT			463				389				417
Total segment revenues			9,681				9,177				8,632
Intersegment eliminations			(44	)			(12	)			(17	)
Total		$	9,637			$	9,165			$	8,615

		Operating Income
		Years ended December 31,
		2020				2019				2018
JBI		$	428			$	447			$	401
DCS			314				278				195
ICS			(45	)			(11	)			50
FMS			(1	)			(9	)			(2	)
JBT			17				29				37
Total		$	713			$	734			$	681

		Depreciation and Amortization Expense
		Years ended December 31,
		2020				2019				2018
JBI		$	189			$	181			$	173
DCS			224				216				176
FMS			33				30				24
JBT			34				33				38
Other			47				39				25
Total		$	527			$	499			$	436

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15.	Quarterly Financial Information (Unaudited)

As further discussed in Note 10, Commitments and Contingencies, our first quarter 2020 and third quarter 2019 operating income, net earnings and earnings per share included the impact of pretax charges for contingent liabilities. Operating results by quarter for the years ended December 31, 2020 and 2019 are as follows (in thousands, except per share data):

		Quarter
		First				Second				Third				Fourth
2020:
Operating revenues		$	2,280,826			$	2,145,573			$	2,472,523			$	2,737,652
Operating income		$	154,741			$	175,183			$	175,503			$	207,691
Net earnings		$	104,834			$	121,698			$	125,496			$	154,007
Basic earnings per share		$	0.99			$	1.15			$	1.19			$	1.46
Diluted earnings per share		$	0.98			$	1.14			$	1.18			$	1.44
2019:
Operating revenues		$	2,089,627			$	2,261,647			$	2,363,660			$	2,450,323
Operating income		$	167,795			$	193,093			$	167,862			$	205,074
Net earnings		$	119,601			$	133,633			$	118,410			$	144,676
Basic earnings per share		$	1.10			$	1.24			$	1.11			$	1.36
Diluted earnings per share		$	1.09			$	1.23			$	1.10			$	1.35