HUNT J B TRANSPORT SERVICES INC - Quarter Report: 2016 September (Form 10-Q)

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2016

OR

Commission File Number: 0-11757

J.B. HUNT TRANSPORT SERVICES, INC.

(Exact name of registrant as specified in its charter)

615 J.B. Hunt Corporate Drive, Lowell, Arkansas 72745

(Address of principal executive offices)

479-820-0000

(Registrant's telephone number, including area code)

www.jbhunt.com

(Registrant's web site)

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

Yes    X             No____

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes    X             No____

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

Large accelerated filer    X      Accelerated filer _____    Non-accelerated filer _____     Smaller reporting company _____

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

            Yes____       No    X              

The number of shares of the registrant’s $0.01 par value common stock outstanding on September 30, 2016 was 112,185,072.

J.B. HUNT TRANSPORT SERVICES, INC.

Form 10-Q

For The Quarterly Period Ended September 30, 2016

Table of Contents 

Part I. Financial Information

ITEM 1. FINANCIAL STATEMENTS

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share amounts)

(unaudited)

See Notes to Condensed Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Balance Sheets

(in thousands)

See Notes to Condensed Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

See Notes to Condensed Consolidated Financial Statements.

J.B. HUNT TRANSPORT SERVICES, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited) 

ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should refer to the attached interim Condensed Consolidated Financial Statements and related notes and also to our Annual Report (Form 10-K) for the year ended December 31, 2015, as you read the following discussion. We may make statements in this report that reflect our current expectation regarding future results of operations, performance, and achievements. These are “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995, and are based on our belief or interpretation of information currently available. You should realize there are many risks and uncertainties that could cause actual results to differ materially from those described. Some of the factors and events that are not within our control and could have a significant impact on future operating results are general economic conditions, interference with or termination of our relationships with certain railroads, cost and availability of fuel, accidents, adverse weather conditions, disruption or failure of information technology systems, competitive rate fluctuations, availability of drivers, adverse legal decisions and audits or tax assessments of various federal, state, or local taxing authorities. Additionally, our business is somewhat seasonal with slightly higher freight volumes typically experienced during August through early November in our full-load transportation business. You should also refer to Item 1A of our Annual Report (Form 10-K) for the year ended December 31, 2015, for additional information on risk factors and other events that are not within our control. Our future financial and operating results may fluctuate as a result of these and other risk factors as described from time to time in our filings with the SEC.

GENERAL

We are one of the largest surface transportation, delivery, and logistics companies in North America. We operate four distinct, but complementary, business segments and provide a wide range of transportation and delivery services to a diverse group of customers throughout the continental United States, Canada, and Mexico. Our service offerings include transportation of full-truckload containerized freight, which we directly transport utilizing our company-controlled revenue equipment and company drivers or independent contractors. We have arrangements with most of the major North American rail carriers to transport freight in containers or trailers, while we perform the majority of the pickup and delivery services. We also provide customized freight movement, revenue equipment, labor, systems, and delivery services that are tailored to meet individual customers’ requirements and typically involve long-term contracts. These arrangements are generally referred to as dedicated services and may include multiple pickups and drops, local and home deliveries, freight handling, specialized equipment, and freight network design. Our local and home delivery services typically are provided through a network of cross-dock service centers throughout the continental United States. Utilizing a network of thousands of reliable third-party carriers, we also provide comprehensive transportation and logistics services. In addition to dry-van, full-load operations, these unrelated outside carriers also provide flatbed, refrigerated, less-than-truckload (LTL), and other specialized equipment, drivers, and services. Also, we utilize a combination of company-owned and contracted power units to provide traditional over-the-road full truckload delivery services. We account for our business on a calendar year basis, with our full year ending on December 31 and our quarterly reporting periods ending on March 31, June 30, and September 30. The operation of each of our four business segments is described in Note 11, Segment Information, of our Annual Report (Form 10-K) for the year ended December 31, 2015. 

Critical Accounting Policies and Estimates

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

Information regarding our Critical Accounting Policies and Estimates can be found in our Annual Report (Form 10-K). The critical accounting policies that we believe require us to make more significant judgments and estimates when we prepare our financial statements include those relating to self-insurance accruals, revenue equipment, revenue recognition, and income taxes. We have discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors. In addition, Note 2, Summary of Significant Accounting Policies, to the financial statements in our Annual Report (Form 10-K) for the year ended December 31, 2015, contains a summary of our critical accounting policies. There have been no material changes to the methodology we apply for critical accounting estimates as previously disclosed in our Annual Report on Form 10-K.

RESULTS OF OPERATIONS

Comparison of Three Months Ended September 30, 2016 to Three Months Ended September 30, 2015

Total consolidated operating revenues were $1.69 billion for the third quarter 2016, compared to $1.59 billion for the third quarter 2015. Current quarter total operating revenue, excluding fuel surcharges, increased 8% versus the comparable quarter in 2015. This increase was primarily due to load growth of 7% in JBI, improved asset productivity and a 3% increase in revenue producing trucks in DCS, load growth of 88% in ICS, and a 4% increase in truck count in JBT, partially offset by lower customer rates in JBI, ICS, and JBT and tepid customer demand.

JBI segment revenue increased 2% to $970 million during the third quarter 2016, compared with $949 million in 2015. This increase in segment revenue was primarily a result of a 7% increase in load volume, partially offset by a 4% decrease in revenue per load, which is the combination of changes in freight mix, customer rates, and fuel surcharge revenue, compared to a year ago. Revenue per load excluding fuel surcharges decreased 2% compared to third quarter 2015. Load volume in our eastern network increased 5%, and transcontinental loads grew 8% over the third quarter 2015. Operating income of our JBI segment decreased 7% to $116.9 million in 2016, from $126.1 million in 2015. Benefits from volume growth, improved operating efficiencies from network balance and reduced reliance on third party dray carriers, were offset by lower customer rates, increased rail purchased transportation rates, equipment ownership costs, lower box utilization, increased insurance and claims costs and higher driver wage and retention expenses.

DCS segment revenue increased 6% to $394 million in 2016, from $370 million in 2015. Productivity, defined as revenue per truck per week, increased 3% in the third quarter 2016, when compared to the same period in 2015. Productivity excluding fuel surcharge increased 4% from a year ago primarily from improved overall operational efficiencies, including better integration of assets between customer accounts, fewer unseated trucks, increased customer supply chain fluidity, load counts and customer rate increases. A net additional 205 revenue producing trucks were in the fleet by the end of the current quarter compared to prior year, primarily from private fleet conversions in the current and prior periods. Customer retention rates remain above 98%. Operating income of our DCS segment increased 16% to $52.5 million in 2016, from $45.1 million in 2015. The increase is primarily due to increased revenue and improved asset utilization. These benefits were partially offset by higher driver wage and recruiting costs, increased salaries and benefits expenses, and higher equipment ownership costs.

ICS segment revenue increased 35% to $233 million in the third quarter 2016, from $173 million in the third quarter 2015. Overall volumes increased 88%. Contractual business represented approximately 75% of total load volume and 64% of total revenue in the current period compared to 66% and 60%, respectively, in third quarter 2015. Revenue per load decreased 29%, primarily from lower fuel prices, freight mix changes driven by customer demand, and lower customer rates on contractual business versus third quarter 2015. Operating income of our ICS segment decreased 26% to $8.5 million from $11.5 million in 2015, primarily due to a decrease in gross profit margin. Gross profit margin decreased to 12.8% in the current quarter compared to 15.9% in the third quarter 2015, primarily due to rate decreases on contractual business and lower customer spot rates. Personnel costs increased as the total branch count grew to 40 compared to 33 at the end of the comparable period last year. ICS’s carrier base increased 14% and employee count increased 18% compared to third quarter 2015.

JBT segment revenue of $97 million for the third quarter 2016 was flat when compared to the third quarter 2015. Revenue excluding fuel surcharges increased 2%, primarily from a 4% increase in truck count and a 2% increase in utilization, partially offset by a 4% decrease in revenue per loaded mile excluding fuel surcharge, primarily from changes in customer driven freight mix. Core customer rates were flat compared to the same period in 2015. At the end of the current quarter, JBT operated 2,183 tractors compared to 2,100 in 2015. JBT segment operating income decreased 55% to $5.1 million in 2016, compared with $11.2 million in 2015. The decrease in operating income was driven primarily by lower rates per loaded mile, increased driver recruiting costs, higher safety and insurance costs, and increased tractor maintenance costs compared to third quarter 2015.

Consolidated Operating Expenses

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

Total operating expenses increased 8.3%, while operating revenues increased 6.6% during the third quarter 2016, from the comparable period 2015. Operating income decreased to $183.0 million during the third quarter 2016 from $193.8 million in 2015.

Rents and purchased transportation costs increased 9.9% in 2016. This increase was primarily the result of increased rail purchased transportation rates and the increase in load volume, which increased services provided by third-party rail and truck carriers within JBI and ICS segments.

Salaries, wages and employee benefits costs increased 6.5% during the third quarter 2016, compared with 2015. This increase was primarily related to increases in driver pay and office personnel compensation due to a tighter supply of qualified drivers and an increase in the number of employees.

Depreciation and amortization expense increased 5.6% in 2016, primarily due to additions to our JBI segment tractor, container and chassis fleets to support additional business demand, equipment purchased related to new DCS long-term customer contracts, and replacement equipment in JBT. Fuel costs decreased 3.4% in 2016, compared with 2015, due to decreases in the price of fuel, partially offset by increased road miles.

Operating supplies and expenses increased 8.5%, driven primarily by increases in toll activity and tire expense. General and administrative expenses increased 41.1% for the current quarter from the comparable period in 2015, primarily due to higher professional fees expenses and the absence of net gains from asset sales and disposals. Net loss from sale or disposal of assets was $1.3 million in 2016, compared to a net gain of $1.4 million in 2015. Insurance and claims expense increased 8.9% in 2016 compared with 2015, primarily due to higher incident volume.

Net interest expense decreased 17.3% in 2016 due primarily to a decrease in average debt levels during the current period, resulting from the overlap of refinanced maturing debt in 2015. Our effective income tax rate was 38.0% for the three months ended September 30, 2016, compared with 38.1% for the three months ended September 30, 2015. In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.

Comparison of Nine Months Ended September 30, 2016 to Nine Months Ended September 30, 2016

Total consolidated operating revenues were $4.83 billion for the first nine months 2016, a 6% increase from $4.57 billion for the comparable period 2015. Fuel surcharge revenues were $385.7 million during the first nine months 2016, compared with $522.6 million in 2015. If fuel surcharge revenues were excluded from both periods, the increase of 2016 revenue from 2015 was 10%.

JBI segment revenue increased 4%, to $2.80 billion during the first nine months of 2016, compared with $2.70 billion in 2015. This increase in revenue was primarily a result of a 9% increase in load volume, offset by a 5% decrease in revenue per load, which is the combination of changes in freight mix, customer rates, and fuel surcharge revenue, compared to a year ago. Operating income of the JBI segment decreased to $325.6 million in the first nine months of 2016, from $349.0 million in 2015. Benefits from volume growth, improved network efficiency and improved rail service, were offset by increased rail purchased transportation costs, higher equipment ownership costs, increased insurance and cargo claim expense and higher driver wage and retention costs. The first nine months of 2015 included approximately $6.4 million in corporate wide streamlining and technology redevelopment costs.

DCS segment revenue increased 5%, to $1.14 billion during the first nine months of 2016, from $1.08 billion in 2015. Productivity, defined as revenue per truck per week, remained flat during the first nine months of 2016, when compared to a year ago. Productivity excluding fuel surcharge for the first nine months of 2016 increased 2% from a year ago primarily from improved overall operational efficiencies, including better integration of assets between customer accounts, fewer unseated trucks, increased customer supply chain fluidity, load counts and customer rate increases. Operating income of our DCS segment increased to $147.7 million in 2016, from $121.5 million in 2015. The increase is primarily due to increased revenue and improved asset utilization, partially offset by higher driver wage and recruiting costs, increased salaries and benefits expenses, and higher equipment ownership costs. The first nine months of 2015 included approximately $2.6 million in corporate wide streamlining and technology redevelopment costs.

ICS revenue increased 22% to $620 million during the first nine months of 2016, from $510 million in 2015. Overall volumes increased 66%. Revenue per load decreased 27% primarily due to lower fuel prices and freight mix changes driven by customer demand. ICS segment operating income increased to $30.2 million, from $23.0 million in 2015, primarily from increased revenue. Gross profit margin of 14.9% during the first nine months of 2016 remained relatively flat when compared to 15.0% in 2015. The first nine months of 2015 included approximately $4.4 million in corporate wide streamlining and technology redevelopment costs.

JBT segment revenue increased 2% to $291 million for the first nine months 2016, from $286 million in 2015. Revenue excluding fuel surcharges increased 6%, primarily from increased average truck count. Our JBT segment operating income decreased to $23.1 million during the first nine months 2016, from $29.4 million in 2015. The decrease in operating income was driven primarily by lower rates per loaded mile, increased driver recruiting costs, higher independent contractor cost per mile, higher safety and insurance costs, and increased tractor maintenance costs compared to 2015. The first nine months of 2015 included approximately $700,000 in corporate wide streamlining and technology redevelopment costs.

Consolidated Operating Expenses

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

Total operating expenses increased 6.5%, while operating revenues increased 5.9%, during the first nine months 2016, from the comparable period of 2015. Operating income increased to $526.7 million during the first nine months 2016, from $522.8 million in 2015.

Rents and purchased transportation costs increased 8.5% in 2016. This increase was primarily the result of increased rail purchased transportation rates and the increase in load volume, which increased services provided by third-party rail and truck carriers within JBI and ICS segments.

Salaries, wages and employee benefits costs increased 7.6% in 2016 from 2015. This increase was primarily related to increases in driver pay and office personnel compensation due to a tighter supply of qualified drivers and an increase in the number of employees.

Depreciation and amortization expense increased 7.4% in 2016 primarily due to additions to our JBI segment tractor, container and chassis fleets to support additional business demand, equipment purchased related to new DCS long-term customer contracts, and replacement equipment in JBT. Fuel costs decreased 15.8% in 2016, compared with 2015, due to decreases in the price of fuel, partially offset by increased road miles.

Operating supplies and expenses increased 5.3% driven primarily by increases in toll activity and tire expense. General and administrative expenses increased 9.0% from the comparable period in 2015, primarily due to increased charitable contributions in 2016 and the absence of net gains from asset sales and disposals, partially offset by the costs related to corporate wide streamlining and technology redevelopment efforts in 2015, which were not present in 2016. Net loss from sale or disposal of assets was $2.4 million in 2016, compared to a net gain of $1.3 million in 2015. Insurance and claims expense increased 4.8% in 2016 compared with 2015, primarily due to higher incident volume.

Net interest expense decreased 8.7% in 2016, due primarily to a decrease in average debt levels during the current period, resulting from the overlap of refinanced maturing debt in 2015. Our effective income tax rate was 38.0% for the nine months ended September 30, 2016, compared with 38.1% for the nine months ended September 30, 2015. In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.

Liquidity and Capital Resources

Cash Flow

Net cash provided by operating activities totaled $684.0 million during the first nine months of 2016, compared with $697.0 million for the same period 2015. Operating cash flows decreased due primarily to the timing of trade receivables, partially offset by increased earnings and the fluctuation of other working capital. Net cash used in investing activities totaled $358.8 million in 2016, compared with $450.8 million in 2015. The decrease resulted from a decrease in equipment purchases in 2016 combined with an increase in proceeds from the sale of equipment during the same period. Net cash used in financing activities was $325.3 million in 2016, compared with $246.6 million in 2015. This change resulted primarily from higher long-term debt repayments, net of proceeds from long-term debt issuances, in 2016, partially offset by a reduction in treasury stock purchases.

Debt and Liquidity Data

Liquidity

Our need for capital has typically resulted from the acquisition of containers, chassis, trucks, tractors, and trailers required to support our growth and the replacement of older equipment. We are frequently able to accelerate or postpone a portion of equipment replacements depending on market conditions. We have, during the past few years, obtained capital through cash generated from operations, revolving lines of credit, and long-term debt issuances. We have also periodically utilized operating leases to acquire revenue equipment.

We believe our liquid assets, cash generated from operations and revolving line of credit will provide sufficient funds for our operating and capital requirements for the foreseeable future. The following table summarizes our expected obligations and commitments as of September 30, 2016 (in millions):

(1)      Interest payments on debt are based on the debt balance and applicable rate at September 30, 2016.     

Our net capital expenditures were approximately $359 million during the first nine months of 2016, compared with $431 million for the same period 2015. Our net capital expenditures include net additions to revenue equipment and non-revenue producing assets that are necessary to contribute to and support the future growth of our various business segments. Capital expenditures in 2016 were primarily for tractors, additional intermodal containers and chassis, and other trailing equipment. We are currently committed to spend approximately $366 million during the remainder of 2016 and 2017. We expect to spend in the range of $500 million to $525 million for net capital expenditures during calendar year 2016. The table above excludes $39.6 million of potential liabilities for uncertain tax positions, including interest and penalties, which are recorded on our Condensed Consolidated Balance Sheets. However, we are unable to reasonably estimate the ultimate timing of any settlements.

Off-Balance Sheet Arrangements

Our only off-balance sheet arrangements as of September 30, 2016, were operating leases related primarily to facility lease obligations.

Risk Factors

You should refer to Item 1A of our Annual Report (Form 10-K) for the year ended December 31, 2015, under the caption “Risk Factors” for specific details on the following factors and events that are not within our control and could affect our financial results.

ITEM 3.     Quantitative And Qualitative Disclosures AbouT Market Risk

Our outstanding debt at September 30, 2016 includes our senior revolving line of credit and senior notes issuances. Our senior notes have fixed interest rates ranging from 2.40% to 3.85%. Our senior revolving line of credit has variable interest rates, which are based on the Prime Rate, the Federal Funds Rate, or LIBOR, depending upon the specific type of borrowing, plus any applicable margins. We currently have interest rate swap agreements which effectively convert our $250 million of 2.40% and $350 million of 3.30% fixed rate senior notes due March 2019 and August 2022, respectfully, to variable rates, to allow us to maintain a desired mix of variable and fixed rate debt. The applicable interest rates under these agreements are based on LIBOR plus an established margin. Risk can be quantified by measuring the financial impact of a near-term adverse increase in short-term interest rates. Our earnings would be affected by changes in these short-term variable interest rates. At our current level of borrowing, a one percentage point increase in our applicable rate would reduce annual pretax earnings by $6.8 million.

Although we conduct business in foreign countries, international operations are not material to our consolidated financial position, results of operations, or cash flows. Additionally, foreign currency transaction gains and losses were not material to our results of operations for the three or nine months ended September 30, 2016. Accordingly, we are not currently subject to material foreign currency exchange rate risks from the effects that exchange rate movements of foreign currencies would have on our future costs or on future cash flows we would receive from our foreign investment. As of September 30, 2016, we had no foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.

The price and availability of diesel fuel are subject to fluctuations due to changes in the level of global oil production, seasonality, weather, and other market factors. Historically, we have been able to recover a majority of fuel price increases from our customers in the form of fuel surcharges. We cannot predict the extent to which high fuel price levels may occur in the future or the extent to which fuel surcharges could be collected to offset such increases. As of September 30, 2016, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.

ITEM 4.     CONTROLS AND PROCEDURES

We maintain controls and procedures designed to ensure that the information we are required to disclose in the reports we file with the SEC is recorded, processed, summarized and reported, within the time periods specified in the SEC rules, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2016.

There were no changes in our internal control over financial reporting during the third quarter of 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II.     Other Information

ITEM 1.     LEGAL PROCEEDINGS

We are a defendant in certain 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. During the first half of 2014, the court in the lead class-action granted judgment in our favor with regard to all claims. The plaintiffs have appealed the case to the Ninth Circuit Court of Appeals where it is currently pending. The overlapping claims in the remaining action have been stayed pending a decision in the lead class-action case. We cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from these lawsuits.

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.

ITEM 1A.  RISK FACTORS

Information regarding risk factors appears in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report on Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 

Purchases of Equity Securities

The following table summarizes purchases of our common stock during the three months ended September 30, 2016:

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.     MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.     OTHER INFORMATION

Not applicable.

ITEM 6.     EXHIBITS

Index to Exhibits

SIGNATURES

Pursuant to the requirements 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 28th day of October, 2016.

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