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, 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 that are completely insured. For periods prior to January 1, 2010, certain policies 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. For periods beginning January 1, 2010, our personal injury and property damage policies no longer include these premium adjustment factors, and the claim liability remains with us for the life of the claim.

The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates and claim type. During 2009, we were self-insured for $500,000 per occurrence for personal injury and property damage and $1 million for workers' compensation. For 2010 and 2011, we were self-insured for $500,000 per occurrence for personal injury and property damage and fully insured for substantially all workers' compensation claims. We have renewed our policies for 2012 with substantially the same terms as our 2011 policies for personal injury, property damage and workers' compensation.

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, if applicable. In doing so, the recorded liability considers future claims growth and, if applicable, 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, 2011, we had an accrual of approximately $42 million for estimated claims. In addition, we are required to pay certain advanced deposits and monthly premiums. At December 31, 2011, we had a prepaid insurance asset of approximately $30 million, which represented prefunded premiums.

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 lease agreements. In addition, we may rent revenue equipment from various third parties under short-term rental arrangements. Revenue equipment that is purchased is depreciated on the straight-line method over the estimated useful life 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. We have not identified any impairment to our assets at December 31, 2011.

We have agreements with our primary tractor suppliers 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 suppliers were unable to perform under the terms of our agreements 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 the selection of third-party transportation providers.

Our trade accounts receivable includes amounts due from customers that have been 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 liability method. Our deferred tax assets and liabilities represent items that will result in a tax deduction or taxable income 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.

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.

Our 2011 net earnings of $257.0 million, or $2.11 per diluted share, were up 29% from the $199.6 million, or $1.56 per diluted share, earned in 2010. The increase in earnings was due to all four business segments reporting increased operating income compared with 2010. Our JBI and DCS segments, combined, represented 88% of the $96.6 million increase in consolidated operating income, to $444.2 million in 2011 from $347.6 million in 2010. Higher load count, improved pricing and continued focus on cost reduction practices provided benefit throughout 2011. Our response to changing market conditions and a continued focus on growing segments that produce the greatest return on invested capital enabled us to take advantage of load volume recovery in 2011. Our 2011 consolidated operating ratio (operating expenses divided by total operating revenues) was 90.2%, compared with 90.8% in 2010.

Significant events for calendar year 2011 include:

· Reported record revenue of $4.5 billion, record net earnings of $257 million, and record earnings per share of $2.11

· Purchased 6 million shares of our outstanding common stock, and our Board of Directors authorized an additional purchase of up to $500 million of our common stock

· Replaced our $350 million senior revolving credit facility with a new $500 million credit agreement to provide a revolving line of credit for a five-year term, with proceeds used for equipment purchases, repurchase of our common stock and other working capital purposes

· Issued a $200 million Variable-Rate Senior Term Loan maturing in 2014, with proceeds used for existing indebtedness payments and general working capital purposes

· Increased our quarterly dividend to $0.13 per share in January 2011 from $0.12 in 2010, and announced an increase to $0.14 per share effective February 2012

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
                                                                             2011 vs.       2010 vs.
                                    2011          2010          2009           2010           2009
Operating revenues                    100.0 %       100.0 %       100.0 %         19.3 %         18.4 %

Operating expenses:
Rents and purchased
transportation                         46.9          45.1          43.6           24.1           22.4
Salaries, wages and employee
benefits                               22.1          24.0          24.9           10.0           14.1
Fuel and fuel taxes                    10.2           9.1           8.5           34.9           25.7
Depreciation and amortization           4.7           5.2           5.9            8.6            4.2
Operating supplies and expenses         3.6           4.0           4.7            5.2            0.4
Insurance and claims                    1.0           1.3           1.6           (6.9 )         (5.0 )
General and administrative
expenses, net of asset
dispositions                            0.7           1.0           1.6          (21.9 )        (21.9 )
Operating taxes and licenses            0.6           0.7           0.9            3.6           (4.0 )
Communication and utilities             0.4           0.4           0.6            0.0           (0.7 )
Total operating expenses               90.2          90.8          92.3           18.5           16.6
Operating income                        9.8           9.2           7.7           27.8           40.2
Net interest expense                    0.6           0.8           0.8            2.0            2.1
Equity in operations of
affiliated company                       --            --          (0.1 )           --         (100.0 )
Earnings before income taxes            9.2           8.4           7.0           30.0           42.7
Income taxes                            3.5           3.1           2.7           32.2           37.0
Net earnings                            5.7 %         5.3 %        4.3%           28.7 %         46.3 %

2011 Compared With 2010

Consolidated Operating Revenues

Our total consolidated operating revenues were $4.5 billion in 2011, a 19.3% increase over 2010. Significantly higher fuel prices and increased load volume resulted in fuel surcharge (FSC) revenues of $849 million in 2011, compared with $516 million in 2010. If FSC revenues were excluded from both years, our 2011 revenue increased 12% over 2010. Revenue in all operating segments increased over 2010, with consolidated load growth and rate improvements contributing to the increase in revenues.

Consolidated Operating Expenses

Our 2011 consolidated operating expenses increased 18.5% from 2010, compared to the 19.3% increase in revenue year over year. This combination resulted in an improvement in our operating ratio to 90.2% from 90.8% in 2010. Rents and purchased transportation costs increased 24.1% in 2011. This increase was the result of higher rates paid and the higher price of fuel, since fuel costs of third-party rail and truck carriers are included in purchased transportation expense, as well as an increase in load volume that increased services from these third-party rail and truck carriers. The total cost of salaries, wages and employee benefits increased 10.0% in 2011 from 2010. This increase primarily related to increases in driver and other labor pay due to increased business demand. Additionally, we previously reactivated and increased certain compensation and benefit programs, which contributed to the increase over the prior year.

Fuel and fuel taxes expense increased 34.9% in 2011, primarily due to a 30% higher fuel cost per gallon and higher load volume. 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 to trigger a change in fuel surcharge revenue. As a result, some of these programs have a time lag between when fuel costs change and when this change is reflected in revenues. Due to these programs, 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.

Depreciation and amortization expense increased 8.6% in 2011, primarily due to additions to our container and chassis fleet to support additional business demand, as well as truck and tractor growth and trades. Operating supplies and expenses increased 5.2%, primarily due to toll and tire expenses related to increased activity and increased miles. Insurance and claims expense decreased 6.9% for 2011, primarily due to reduced accident severity. The 21.9% decrease in general and administrative expenses was primarily the result of a decrease in charitable contributions and an increase in gains from asset dispositions, partially offset by an increase in bad debt expense due to a customer bankruptcy and additional expense related to severance agreements for executive retirees. Net gains from sale of revenue equipment were $14 million in 2011, compared with $4 million in 2010.

Net interest expense for 2011 increased by 2.0% compared with 2010. This increase was primarily due to an increase in debt levels, partially offset by lower interest rates.

Our effective income tax rate was 38.2% in 2011 and 37.6% in 2010. The increase in 2011 was primarily related to an increase in state tax rates. We expect our effective income tax rate to be in the range of 38.0% to 38.5% for calendar year 2012.

Segments

We operated four business segments during calendar year 2011. 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)
                                 2011                 2010           2009
JBI                         $        2,673         $     2,141      $ 1,764
DCS                                  1,031                 907          757
JBT                                    504                 479          447
ICS                                    356                 291          259
Total segment revenues               4,564               3,818        3,227
Intersegment eliminations              (37 )               (25 )        (24 )
Total                       $        4,527         $     3,793      $ 3,203

                Operating Income (Loss) by Segment
              Years Ended December 31, (in millions)
              2011                   2010           2009
JBI (1)   $         301           $       237       $ 183
DCS (1)             103                    83          63
JBT                  27                    19         (11 )
ICS                  13                     9          13
Total     $         444           $       348       $ 248

(1) Includes pretax charges to write down the value of certain assets held for sale as follows:
$6.6 million for JBI in 2009, $3.7 million for DCS in 2009.

                           Operating Data by Segment

                                                     Years Ended December 31,
                                                2011            2010           2009
JBI
Loads                                          1,248,302       1,075,027       915,413
Average length of haul (miles)                     1,726           1,777         1,796
Revenue per load                             $     2,141     $     1,992     $   1,927
Average tractors during the period(1)              2,924           2,531         2,206
Tractors (end of period)
Company-owned                                      2,901           2,592         2,303
Independent contractor                               213              81             5
Total tractors                                     3,114           2,673         2,308
Trailing equipment (end of period)                54,506          45,666        40,170
Average effective trailing equipment usage        49,482          41,434        37,182

DCS
Loads                                          1,444,518       1,383,565       1,209,055
Average length of haul (miles)                       205             197             207
Revenue per truck per week(2)                $     4,175     $     3,956     $     3,384
Average trucks during the period(3)                4,811           4,468           4,382
Trucks (end of period)
Company-owned                                      4,571           4,259           3,969
Independent contractor                                17              23              31
Customer-owned (Dedicated-operated)                  330             357             358
Total trucks                                       4,918           4,639           4,358
Trailing equipment (end of period)                11,211          10,688           9,739
Average effective trailing equipment usage        12,711          12,297          12,136

JBT
Loads                                          444,851       465,493       498,426
Average length of haul (miles)                     514           522           486
Loaded miles (000)                             225,997       240,088       241,281
Total miles (000)                              259,144       274,857       279,589
Average nonpaid empty miles per load              72.7          68.7          73.8
Revenue per tractor per week(2)              $   3,869     $   3,370     $   2,809
Average tractors during the period(1)            2,557         2,788         3,120
Tractors (end of period)
Company-owned                                    1,637         1,697         1,698
Independent contractor                             948           891         1,163
Total tractors                                   2,585         2,588         2,861
Trailing equipment (end of period)               9,302        10,115        12,550
Average effective trailing equipment usage       8,089         9,329        10,177

ICS
Loads                                                  253,575       230,726       237,378
Revenue per load                                     $   1,403     $   1,261     $   1,091
Gross profit margin                                       13.5 %        14.2 %        17.9 %
Employee count (end of period)                             384           329           323
Approximate number of third-party carriers (end of
period)                                                 28,800        25,600        22,400

(1) Includes company-owned and independent contractor tractors
(2) Using weighted workdays
(3) Includes company-owned, independent contractor, and customer-owned trucks

JBI Segment

JBI segment revenue increased 24.8% to $2.67 billion in 2011, from $2.14 billion in 2010, primarily due to a 16.1% increase in load volume and a 4.3% increase in rates.

Operating income in our JBI segment increased to $301 million in 2011, from $237 million in 2010, primarily due to volume growth and price increases.

DCS Segment

DCS segment revenue increased 13.7% to $1.03 billion in 2011, from $907 million in 2010. Revenue, excluding fuel surcharges, increased 8.6% in 2011 compared to 2010, primarily due to an increase in productivity and truck count as a result of new contracts awarded.

Operating income increased to $103 million in 2011, compared with $83 million in 2010. This increase was due to reductions in insurance and claims costs, the transfer of assets to more profitable accounts, improved cost controls and new contracts awarded.

JBT Segment

JBT segment revenue increased 5.1% to $504 million in 2011, from $479 million in 2010. Revenue, excluding fuel surcharges, remained relatively flat in 2011 compared to 2010. Increases in rates were offset by a reduction in average tractor count and reduced load volume.

JBT segment had operating income of $27 million in 2011, compared with $19 million in 2010. This was mainly a result of increased rates, and gains on equipment disposals, partially offset by increases in driver compensation during 2011.

ICS Segment

ICS segment revenue grew 22.3% to $356 million in 2011, from $291 million in 2010. This increase in revenue was primarily due to an increase in load volume and higher pricing in both contractual and transactional business and an increase in the cost of fuel.

Operating income increased to $13 million in 2011, compared with $9 million in 2010. The increase was primarily due to increased revenues, lower overhead costs, and operating leverage gained from a more experienced workforce.

2010 Compared With 2009

Consolidated Operating Revenues

Our total consolidated operating revenues were $3.8 billion in 2010, an 18.4% increase over 2009. Significantly higher fuel prices resulted in FSC revenues of $516 million in 2010, compared with $326 million in 2009. If FSC revenues were excluded from both years, our 2010 revenue increased 14% over 2009. Revenue in all operating segments increased over 2009, with consolidated load growth and rate improvements contributing to the increase in revenues.

Consolidated Operating Expenses

Our 2010 consolidated operating expenses increased 16.6% from 2009. The impact of this increase, and the 18.4% increase in 2010 revenue from 2009, resulted in an improvement in our operating ratio to 90.8% from 92.3% in 2009. Rents and purchased transportation costs increased 22.4% in 2010, as a result of higher load volume, which increased services from these third-party rail and truck carriers. In addition, the higher price of fuel contributed to the increase in rents and purchased transportation costs, since fuel costs of third-party rail and truck carriers are included in purchased transportation expense. The total cost of salaries, wages and employee benefits increased 14.1% in 2010 from 2009. This increase was related to increases in driver and other labor pay due to increased business demand and the increase in final-mile delivery service business compared with a year ago. In addition, we were able to reactivate and increase certain compensation and benefit programs for all of our employees in 2010.

Fuel and fuel taxes expense increased 25.7% in 2010, primarily due to a 23% 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 to trigger a change in fuel surcharge revenue. As a result, some of these programs have a time lag between when fuel costs change and when this change is reflected in revenues. Due to these programs, 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 . . .