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

The preparation of our financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and assumptions that impact the amounts reported in our Consolidated Financial Statements and accompanying notes. Therefore, the reported amounts of assets, liabilities, revenues, expenses and associated disclosures of contingent liabilities are affected by these estimates. We evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with third parties and other methods considered reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recognized in the accounting period in which the facts that give rise to the revision become known. We consider our critical accounting policies and estimates to be those that require us to make more significant judgments and estimates when we prepare our financial statements and include the following:

Workers' Compensation and Accident Costs

We purchase insurance coverage for a portion of expenses related to employee injuries (workers' compensation), vehicular collisions, accidents and cargo claims. Most of our insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim, but provide an umbrella policy to limit our exposure to catastrophic claim costs that are completely insured. Our policies also include a contractual premium adjustment factor to be applied to incurred loss amounts at the end of 48 months from each policy period inception. This contractual premium adjustment factor is used to convert

the self-insured losses to fully insured losses and relieves us of any further liability on those claims. Our estimated accrual of ultimate losses includes these premium adjustment factors as part of the liability we recognize when the accidents occur.

The amounts of self-insurance change from time to time based on certain measurement dates and policy expiration dates. During 2006 and 2007, we were self-insured for $500,000 per occurrence for personal injury, property damage and workers' compensation. For 2008, we were self-insured for $500,000 per occurrence for personal injury and property damage and $1 million for workers' compensation. We have renewed our policies for 2009 with substantially the same terms as our 2008 policies.

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 the contractual premium adjustment factor mentioned above. In doing so, the recorded liability considers future claims growth and conversion to fully insured status and provides an allowance for incurred-but-not-reported claims. We do not discount our estimated losses. At December 31, 2008, we had an accrual of approximately $18 million for estimated net claims. In addition, we are required to pay certain advanced deposits and monthly premiums. At December 31, 2008, we had a prepaid insurance asset of approximately $50 million, which represented prefunded claims and premiums. We are also substantially self-insured for loss of and damage to our owned and leased revenue equipment.

Revenue Equipment

We operate a significant number of tractors, trucks, containers and trailers in connection with our business. This equipment may be purchased or acquired under operating lease agreements. In addition, we may rent revenue equipment from third parties and various railroads under short-term rental arrangements. Revenue equipment that is purchased is depreciated on the straight-line method over the estimated useful life down to an estimated salvage or trade-in value. We periodically review the useful lives and salvage values of our revenue equipment and evaluate our long-lived assets for impairment. See Note 2, Summary of Significant Accounting Policies, in our Consolidated Financial Statements, for a discussion of our plan to sell certain revenue equipment. We have not identified any impairment to our remaining assets at December 31, 2008.

We have an agreement with our primary tractor supplier for residual or trade-in values for certain new equipment. We have utilized these trade-in values, as well as other operational information such as anticipated annual miles, in accounting for depreciation expense. If our tractor supplier were unable to perform under the terms of our agreement for trade-in values, it could have a material adverse effect on our financial results.

Revenue Recognition

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

We record revenues on the gross basis at amounts charged to our customers because we are the primary obligor, we are a principal in the transaction, we invoice our customers and retain all credit risks and we maintain discretion over pricing. Additionally, we are responsible for carrier selection with respect to our ICS business.

Our trade accounts receivable includes accounts receivable reduced by an allowance for uncollectible accounts and revenue adjustments. The allowance for uncollectible accounts and revenue adjustments is based on historical experience as well as any known trends or uncertainties related to customer billing and account collectibility. The adequacy of our allowance is reviewed quarterly.

Income Taxes

We account for income taxes under the asset-and-liability method in accordance with current accounting standards. Our deferred tax assets and liabilities represent items that will result in taxable income or a tax deduction in future years for which we have already recorded the related tax expense or benefit in our statement of earnings. Deferred tax accounts arise as a result of timing differences between when items are recognized in our Consolidated Financial Statements compared with when they are recognized in our tax returns. We assess the likelihood that deferred tax assets will be recovered from future taxable income. To the extent we believe recovery does not meet the more-likely-than-not threshold, a valuation allowance is established. To the extent we establish a valuation allowance, we include an expense as part of our income tax provision. We have not recorded a valuation allowance at December 31, 2008, as all deferred tax assets are more likely than not to be realized.

Significant judgment is required in determining and assessing the impact of complex tax laws and certain tax-related contingencies on our provision for income taxes. As part of our calculation of the provision for income taxes, we assess whether the benefits of our tax positions are at least more likely than not of being sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not of being sustained upon audit, we accrue the largest amount of the benefit that is more likely than not of being sustained in our Consolidated Financial Statements. Such accruals require us to make estimates and judgments, whereby actual results could vary materially from these estimates. Further, a number of years may elapse before a particular matter, for which we have established an accrual, is audited and resolved. See Note 6, Income Taxes, in our Consolidated Financial Statements, for a discussion of our current tax contingencies.

Significant events for calendar year 2008 include:

† Reported seventh consecutive year of record revenues

† Reduced our total debt by approximately $280 million or 31%

† Continued strategy of transitioning our economic model from that of a primarily asset-based truckload carrier to an asset-light transportation company

† Designated approximately 1,100 trailers in our JBT segment to be sold or traded in 2009 in connection with our strategy to reduce the JBT segment fleet size to the appropriate level

† Increased our quarterly dividend to $0.10 per share in January 2008 from $0.09 in 2007, and announced an increase to $0.11 per share effective February 2009

Our 2008 net earnings of $200.6 million, or $1.56 per diluted share, were down 6% from the $213.1 million, or $1.55 per diluted share, earned in 2007. A slowing freight environment and increased fuel costs were our major challenges for 2008. Despite decreasing fuel prices in the second half of 2008, compared with the first half, fuel costs continued to represent a challenge for the transportation industry during 2008. Our 2008 fuel cost per gallon averaged 30% above 2007 levels. However, due to our fuel surcharge programs, we were able to recover the majority of our higher fuel costs.

Freight demand during 2008 was up for our JBI and ICS segments. Demand for dry-van truck capacity was softer, particularly during the fourth quarter 2008. Our JBI and ICS segments grew operating income by 6% and 146%, respectively. DCS showed a small decline in operating income of 2%

while JBT declined 96% from 2007. In response to changing market conditions and a continued focus on growing segments that produce the greatest return on invested capital, we increased our JBI tractor and container counts by 18% and 15%, respectively, as well as increased our DCS trailer count by 11%. We reduced our JBT company-owned tractor fleet by 27%, excluding tractors designated as held for sale. We were able to effect some of these changes by transferring revenue equipment among our fleets.

Our 2008 consolidated operating ratio (operating expenses divided by total operating revenues) was 90.4%, compared with 89.4% in 2007. Our 2008 operating income reflected $3.9 million of pretax charges to write down the value of certain assets held for sale. Operating income in 2007 reflected $8.4 million of pretax charges related to assets held for sale.

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

                                         Percentage of               Percentage Change
                                       Operating Revenues              Between Years
                                                                    2008 vs.    2007 vs.
                                  2008        2007        2006        2007        2006

Operating revenues                 100.0 %     100.0 %     100.0 %       6.9 %       4.9 %

Operating expenses:
Rents and purchased
transportation                      39.6        35.3        33.8        19.7         9.8
Salaries, wages and employee
benefits                            23.0        25.4        26.8        (3.3 )      (0.4 )
Fuel and fuel taxes                 14.0        13.3        13.4        12.3         3.6
Depreciation and
amortization                         5.4         5.9         5.5        (1.4 )      11.7
Operating supplies and
expenses                             4.2         4.5         4.4         1.5         6.9
Insurance and claims                 1.6         2.0         2.2       (12.8 )      (2.7 )
General and administrative
expenses, net of asset
dispositions                         1.1         1.4         1.0       (14.2 )      45.1
Operating taxes and licenses         0.9         1.0         1.0        (4.1 )      (2.6 )
Communication and utilities          0.6         0.6         0.7        (8.9 )      (6.2 )
Total operating expenses            90.4        89.4        88.8         8.1         5.6
Operating income                     9.6        10.6        11.2        (2.8 )      (1.0 )
Net interest expense                 0.9         1.3         0.5       (18.9 )     180.4
Equity in loss of affiliated
company                              0.0         0.0         0.1        41.1       (61.3 )
Earnings before income taxes         8.7         9.3        10.6        (0.9 )      (8.3 )
Income taxes                         3.3         3.2         4.0         8.7       (16.7 )
Net earnings                         5.4 %       6.1 %       6.6 %      (5.9 )%     (3.1 )%

2008 Compared With 2007

Consolidated Operating Revenues

Our total consolidated operating revenues rose to $3.7 billion in 2008, a 6.9% increase over 2007. Significantly higher fuel prices resulted in fuel surcharge (FSC) revenues of $730 million in 2008, compared with $480 million in 2007. This FSC revenue impacted our year-to-year comparison. If FSC revenues were excluded from both years, our 2008 revenue decreased less than 1% from 2007. A 13.5% and 117.3% increase in 2008 JBI and ICS load volume, respectively, contributed to our higher levels of revenue. The increases in revenue of our JBI and ICS segments were partially offset by decreases in our DCS segment as a result of decreased activity for delivery service accounts due to the overall economic slowdown and weak housing market. Our JBT segment revenue decreased as a result of rate declines and reduced tractor utilization, as a result of decreasing freight demand in the JBT segment.

Consolidated Operating Expenses

Our total 2008 consolidated operating expenses increased 8.1% over 2007 and offset the impact of the 6.9% increase in 2008 revenue over 2007 that resulted in a slight increase in our operating ratio to 90.4% from 89.4% in 2007. Rents and purchased transportation costs rose 19.7% in 2008, primarily due to additional funds paid to railroads, drayage companies and third-party carriers servicing ICS. The total cost of salaries, wages and employee benefits decreased 3.3% in 2008 from 2007, primarily due to decreases in total driver pay. This reduction in total driver pay was primarily the result of a 24% decrease in the number of drivers in the JBT segment.

Fuel and fuel taxes expense increased 12.3% in 2008, primarily due to 29.7% higher fuel cost per gallon and slightly lower fuel miles per gallon. We have fuel surcharge programs in place with the majority of our customers. These programs typically involve a specified computation based on the change in national, regional or local fuel prices. While these programs may incorporate fuel cost increases as frequently as weekly, most also reflect a specified miles-per-gallon factor and require a certain minimum change in fuel costs (e.g., $0.05 per gallon) to trigger an increase in fuel surcharge revenue. As a result, some of these programs have a timing lag between when the cost is incurred and when it is recovered. This lag negatively impacts operating income in times of rapidly increasing fuel costs and positively impacts operating income when fuel costs decrease rapidly.

It is not meaningful to compare the amount of fuel surcharge revenue or the change in fuel surcharge revenue between reporting periods to fuel and fuel taxes expense, or the change of fuel expense between periods, as a significant portion of fuel costs is included in our payments to railroads, dray carriers and other third parties. These payments are classified as purchased transportation expense. While we are not always able to recover all fuel cost increases, partly due to empty miles run and engine-idling time, we are typically able to recover the majority of our increased fuel costs.

Two additional factors related to fuel costs and fuel surcharge revenue primarily impact JBT operating income when fuel costs change rapidly. Some freight services incur empty miles and we may be unable to charge fuel surcharge revenue on those miles. In addition, most systems and software applications utilized in the truckload industry for measuring miles and billing revenue result in computations that average 10% to 12% fewer miles than what is actually traveled (hub miles). The combination of these two factors frequently results in no fuel surcharge revenue billed for approximately 20% to 25% of the applicable miles actually traveled. During times of rapidly changing fuel costs, operating income from these services can be significantly impacted.

The 1.4% decrease in depreciation and amortization expense was due to fewer tractors owned in our JBT and DCS segments. Operating supplies and expenses rose 1.5% in 2008, primarily as a result of increased costs in airfare and travel expenses. Insurance and claims expense decreased 12.8% due to fewer accidents and lower claims costs. The 14.2% decrease in general and administrative expenses was primarily due to a decrease in other driving expenses due to a decrease in the number of drivers, and a decrease in the charge to write down to estimated fair value certain assets held for sale compared with the 2007 write-down. In addition, gains on asset sales were $1.2 million in 2008 compared with losses on asset sales of $0.4 million in 2007.

Net interest expense for 2008 decreased by 18.9% compared with 2007. This decrease was due to reduced outstanding debt balances as well as reduced interest rates on our variable rate debt. Interest expense was further reduced by a refund of interest previously paid to the Internal Revenue Service (IRS) from the 1999 tax case settlement and lower accrued interest on uncertain tax positions.

Our effective income tax rate was 37.8% in 2008 and 34.4% in 2007. The increase in 2008 was primarily due to the 2007 rate being reduced by our 1999 tax case settlement in 2007. See the section comparing 2007 with 2006 operating results for further details of this settlement. We expect our effective income tax rate to approximate 38% for calendar year 2009. The "equity in loss of affiliated company" item on our Consolidated Statement of Earnings reflects our share of the operating results of TPI.

Segments

We operated four business segments during calendar year 2008. The operation of each of these businesses is described in our notes to the Consolidated Financial Statements. The following tables summarize financial and operating data by segment:

                          Operating Revenue by Segment



                                 Years Ended December 31 (in millions)
                                2008             2007             2006
JBI                         $       1,952    $       1,653    $       1,430
DCS                                   927              937              915
JBT                                   676              842              966
ICS                                   209               92               42
Subtotal                            3,764            3,524            3,353
Intersegment eliminations             (32 )            (34 )            (25 )
Total                       $       3,732    $       3,490    $       3,328

                          Operating Income by Segment



              Years Ended December 31 (in millions)
              2008             2007             2006
JBI       $        254     $        239     $        182
DCS                 92               94              104
JBT (1)              1               32               84
ICS                 11                4                3
Total     $        358     $        369     $        373

                           Operating Data by Segment



                                                        Years Ended December 31
                                                   2008          2007          2006
JBI

Loads                                              837,575        738,207       629,533
Average length of haul (miles)                       1,843          1,925         1,989
Revenue per load                                $    2,330    $     2,239   $     2,272
Average tractors (during the period)(1)              2,020          1,689         1,485
Tractors (end of period)
Company-owned                                        2,124          1,795         1,551
Independent contractor                                   4              6            23
Total Tractors                                       2,128          1,801         1,574
Containers (end of period)                          39,161         34,019        27,622
Average effective trailing equipment usage(2)       35,678         30,069        25,269

DCS

Loads                                            1,321,473      1,398,892     1,376,538
Average length of haul (miles)                         227            249           264
Revenue per truck per week(3)                   $    3,842    $     3,515   $     3,466
Average trucks (during the period)(1)                4,716          5,224         5,176
Trucks (end of period)
Company-owned                                        4,454          4,941         5,177
Independent contractor                                  67            100           122
Customer-owned (DCS-operated)                          101             92            59
Total Trucks                                         4,622          5,133         5,358
Trailers (end of period)                             9,106          8,233         6,519
Average effective trailing equipment usage(2)       12,762         13,321        12,457

JBT

Loads                                              622,002        785,860       864,622
Average length of haul (miles)                         465            513           533
Loaded miles (000)                                 292,430        408,486       465,366
Total miles (000)                                  334,931        466,293       524,565
Average nonpaid empty miles per load                  68.7           73.2          66.6
Revenue per tractor per week(3)                 $    3,522    $     3,763   $     3,704
Average tractors (during the period)(1)              3,752          4,872         5,347
Tractors (end of period)
Company-owned                                        2,612          3,572         4,233
Independent contractor                                 841            978           962
Tractors held for sale                                (123 )         (570 )           -
Total Tractors                                       3,330          3,980         5,195
Trailers (end of period)                            15,470         18,345        18,740
Trailers held for sale                              (2,121 )       (2,500 )           -
Total Trailers                                      13,349         15,845        18,740
Average effective trailing equipment usage(2)       11,758         13,074        13,474

ICS

Loads                                              140,481         64,663        26,032

JBI Segment

JBI segment revenue grew by 18.1% to $1.95 billion in 2008, from $1.65 billion in 2007. A significant portion of this revenue growth was driven by a 13.5% increase in load volume. The remaining portion of revenue growth was primarily the result of a 4.1% increase in revenue per load, including fuel surcharges, partially offset by a 4.3% decrease in the average length of haul.

Operating income in our JBI segment rose to $254 million in 2008, from $239 million in 2007. While increased volumes contributed to higher operating margins, we were able to increase our driver productivity and significantly reduce our reliance on third-party equipment and drayage. All of these factors contributed to our operating income increasing by 6.3% in 2008.

DCS Segment

DCS segment revenue declined 1.0% to $927 million in 2008, from $937 million in 2007. This decrease in revenue was primarily due to an 8.8% decrease in average length of haul and lower load counts as we worked with our customers to reach the optimum fleet size for their businesses.

Operating income decreased to $92 million in 2008, compared with $94 million in 2007. This decrease in operating income was due to decreased revenue and higher fuel and operating costs. These higher operating expenses, relative to 2007, were offset by decreases in equipment rental costs and lower insurance and claim costs.

JBT Segment

JBT segment revenue declined 19.6% to $676 million in 2008, from $842 million in 2007. The decrease in revenue was primarily the result of a 20.9% decrease in load count due to much softer demand in 2008 than in 2007.

Operating income in our JBT segment declined to $1.4 million in 2008, from $32 million in 2007, mainly due to reduced revenue and higher fuel costs.

ICS Segment

ICS segment revenue grew 128.5% to $209 million in 2008, from $92 million in 2007. This increase in revenue was primarily due to a 117.3% increase in load volume from both new and existing customers.

Operating income increased nearly 146% to $11 million in 2008, compared with $4 million in 2007. The large revenue growth was partially offset by increased . . .