-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lsMESMeHLN8AfiB8Cqdy+ZRxKOt2Odq9MNnLO15Wtes6cu9YdWDM5G8n2D6/5N8J CmrXdHzBXAnTP4HQnkSihA== 0000793074-94-000003.txt : 19940118 0000793074-94-000003.hdr.sgml : 19940118 ACCESSION NUMBER: 0000793074-94-000003 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931130 FILED AS OF DATE: 19940114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WERNER ENTERPRISES INC CENTRAL INDEX KEY: 0000793074 STANDARD INDUSTRIAL CLASSIFICATION: 4213 IRS NUMBER: 470648386 STATE OF INCORPORATION: NE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 000-14690 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: P O BOX 37308 CITY: OMAHA STATE: NE ZIP: 68137 BUSINESS PHONE: 4028956640 10-Q 1 WERNER ENTERPRISES TEST DOCUMENT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended November 30, 1993 Commission file Number 0-14690 WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter.) NEBRASKA 47-0648386 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) INTERSTATE 80 & HIGHWAY 50 POST OFFICE BOX 37308 OMAHA, NEBRASKA 68137 (Address of principal executive offices (Zip Code) Registrant's telephone number, including area code: (402) 895-6640 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 such filing requirements for the past 90 days. YES [X] NO [ ] As of December 31, 1993, 25,322,716 shares of the registrant's common stock, par value $.01 per share, were outstanding. PART I FINANCIAL INFORMATION Item 1. Financial Statements. The interim consolidated financial statements contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the financial condition and results of operations for the periods presented. They have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three-month period and nine-month period ended November 30, 1993 are not necessarily indicative of the results that may be expected for the year ending February 28, 1994. In the opinion of management, the information set forth in the accompanying consolidated condensed balance sheets is fairly stated in all material respects in relation to the consolidated balance sheets from which it has been derived. These interim consolidated financial statements should be read in conjunction with the Company's latest annual report (which is incorporated by reference in the Form 10-K for the fiscal year ended February 28, 1993). Consolidated Statements of Income for the Three Months Ended November 30, 1993 and 1992 .................. Page 3 Consolidated Statements of Income for the Nine Months Ended November 30, 1993 and 1992 ................... Page 4 Consolidated Condensed Balance Sheets as of November 30, 1993 and February 28, 1993 ........................ Page 5 Consolidated Statements of Cash Flows for the Nine Months Ended November 30, 1993 and 1992 ................... Page 6 Notes to Consolidated Financial Statements as of November 30, 1993 ........................................ Page 7 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended (Amounts in thousands, except per share data) November 30 1993 1992 (Unaudited) Operating revenues $111,932 $ 94,024 Operating expenses: Salaries, wages and benefits 37,905 36,377 Fuel 11,324 10,591 Supplies and maintenance 10,119 7,836 Taxes and licenses 10,039 8,709 Insurance and claims 4,713 3,964 Depreciation 11,494 9,980 Rent and purchased transportation 11,086 4,516 Communications and utilities 2,181 1,142 Other (781) (60) Total operating expenses 98,080 83,055 Operating income 13,852 10,969 Other expense (income): Interest expense 322 308 Interest income (199) (123) Other 32 62 Total other expense 155 247 Income before income taxes 13,697 10,722 Income taxes (Note 2) 5,205 4,236 Net income $ 8,492 $ 6,486 Average common shares outstanding 24,195 22,822 Earnings per share $ .35 $.28
WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended (Amounts in thousands, except per share data) November 30 1993 1992 (Unaudited) Operating revenues $321,919 $276,695 Operating expenses: Salaries, wages and benefits 112,356 107,389 Fuel 31,393 30,271 Supplies and maintenance 28,613 23,884 Taxes and licenses 28,259 26,168 Insurance and claims 11,946 11,006 Depreciation 33,226 29,928 Rent and purchased transportation 28,377 11,763 Communications and utilities 6,108 3,309 Other (1,268) 64 Total operating expenses 279,010 243,782 Operating income 42,909 32,913 Other expense (income): Interest expense 1,257 957 Interest income (355) (495) Other 107 182 Total other expense 1,009 644 Income before income taxes 41,900 32,269 Income taxes (Note 2) 16,712 12,747 Net income $ 25,188 $ 19,522 Average common shares outstanding 23,330 22,811 Earnings per share $1.08 $.86
WERNER ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) November 30 February 28 1993 1993 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 25,997 $ 6,441 Accounts receivable, net 44,715 37,420 Prepaid expenses and other current assets 16,462 20,332 Total current assets 87,174 64,193 Property and equipment 373,004 329,139 Less - accumulated depreciation 91,794 87,460 Property and equipment, net 281,210 241,679 $368,384 $305,872 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 9,511 $ 21,363 Accrued payroll 9,374 6,876 Current maturities of long-term debt and capitalized lease obligations (Note 1) 4,672 4,493 Other current liabilities 28,429 18,157 Total current liabilities 51,986 50,889 Long-term debt and capitalized lease obligations, net of current maturities (Note 1) - 16,652 Insurance and claims accruals 20,300 20,800 Other long-term liabilities 5,090 3,611 Deferred income taxes (Note 2) 47,247 48,033 Stockholders' equity (Note 1) 243,761 165,887 $368,384 $305,872
WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended (In thousands) November 30 1993 1992 (Unaudited) Cash flows from operating activities: Net income $25,188 $19,522 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 33,226 29,928 Deferred income taxes 3,514 (105) Tax benefit from exercise of stock options 900 326 Other long-term liabilities (1,475) 4,835 Changes in certain working capital items: Accounts receivable, net (7,295) (5,110) Prepaid expenses and other current assets 4,024 (1,172) Accounts payable (11,852) (3,095) Accrued payroll 2,498 2,942 Other current liabilities 8,272 3,430 Net cash provided by operating activities 57,000 51,501 Cash flows from investing activities: Additions to property and equipment (85,411) (54,790) Retirements of property and equipment 12,655 1,774 Net cash used in investing activities (72,756) (53,016) Cash flows from financing activities: Short-term borrowing 20,000 - Repayments of short-term borrowing (20,000) - Repayments of long-term debt and capitalized lease obligations (16,473) (2,534) Proceeds from issuance of common stock, net of related expenses 52,182 - Dividends on common stock (1,375) (1,368) Stock options exercised 978 450 Net cash provided by (used in) financing activities 35,312 (3,452) Net increase (decrease) in cash and cash equivalents 19,556 (4,967) Cash and cash equivalents, beginning of period 6,441 12,655 Cash and cash equivalents, end of period $25,997 $ 7,688
Supplemental disclosures of cash flow information:
Cash paid during the period for: Interest $ 1,288 $ 1,351 Income taxes 5,855 12,194
WERNER ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Common Stock Offering On September 29, 1993, a special meeting of stockholders was held to vote on the Board of Directors' resolution to amend the Company's Articles of Incorporation and increase the number of authorized shares of common stock from 25,000,000 shares to 60,000,000 shares. The resolution was approved by the necessary affirmative vote of over two-thirds of the outstanding common stock. During October 1993, a public offering of the Company's common stock was successfully completed. The Company sold a total of 2,300,000 shares and 1,150,000 shares were sold by Clarence L. Werner, Chairman and Chief Executive Officer, and members of his family. The Company used the net proceeds from the offering of $52,200,000 to repay short-term borrowings, retire long-term debt and purchase revenue equipment. (2) Accounting for Income Taxes In accordance with the Financial Accounting Standards Board's Statement No. 109, "Accounting for Income Taxes," (Statement No. 109) the Company began recognizing deferred income taxes using the asset and liability method beginning March 1, 1993. Under this method, deferred income taxes are recorded based upon the difference between the book and tax basis of the Company's assets and liabilities at the enacted tax rates in effect when these differences reverse. Prior to the adoption of Statement No. 109, deferred income taxes were recognized for timing differences between financial and income tax reporting at the tax rates in effect when these differences originated. The cumulative effect of this accounting change as of March 1, 1993, of $200,000 or $.01 per share, was not material and was reflected as a reduction of income tax expense for the quarter ended May 31, 1993. On August 10, 1993, legislation was enacted which increased the Federal income tax rate on corporations, retroactive to January 1, 1993. This legislation resulted in the Company's statutory income tax rate increasing by one percent for the fiscal year ending February 28, 1994. In addition, Statement No. 109 requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax rates. The effect of the rate change is to be included in income tax expense for the period that includes the enactment date. The quarter ended August 31, 1993, included an increase in income tax expense of $1,106,000, or $.05 per share, for the effect of the tax rate change on current and deferred income taxes, retroactive to January 1, 1993. After recognizing the effect of Statement No. 109 and the enacted tax rate change, the Company has recorded the following deferred tax liabilities (assets) related to book and tax basis differences of the Company's assets and liabilities as of March 1, 1993: Deferred tax liabilities: Property and equipment $54,410,000 Prepaids 2,252,000 Other 303,000 Total deferred tax liabilities 56,965,000 Deferred tax assets: Insurance and claims accruals (13,006,000) Other (3,862,000) Total deferred tax assets (16,868,000) Net deferred tax liability $40,097,000 (3) Commitments As of November 30, 1993, the Company has committed to capital expenditures of approximately $40,000,000 (net cost, after revenue equipment trade-in allowances of approximately $33,000,000). Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition: During the nine months ended November 30, 1993, cash flow from operations generated $57.0 million and the Company had net proceeds from the sale of common stock of $52.2 million, which enabled the Company to make net property additions of $72.8 million, repay long-term debt and capitalized lease obligations of $16.5 million and pay common stock dividends of $1.4 million. The Company's long-term debt obligations to equity ratio decreased to 0% at November 30, 1993, compared to 10% at February 28, 1993. This decrease was due primarily to the repayment of long-term debt and capitalized lease obligations from the net proceeds from the sale of common stock. Results of Operations: Three Months Ended November 30, 1993 and 1992 Operating revenues increased 19% in the three months ended November 30, 1993, compared to the same period in the prior year. The average number of tractors increased by 18%. Revenue per mile increased about 1.5% while tractor utilization (miles per tractor) decreased about 1%. These changes were due to the Company's continued expansion into markets where the average revenue per mile is higher and the average miles per trip are less and as a result of rate increases obtained by the Company to offset higher fuel costs and the increase in fuel taxes which became effective October 1, 1993. Operating expenses, expressed as a percentage of operating revenues, were 87.6% for the three months ended November 30, 1993, compared to 88.3% for the three months ended November 30, 1992. Salaries, wages and benefits decreased from 38.7% of revenues to 33.9% of revenues due to favorable workers' compensation claims experience and an increase in the percentage of owner-operator tractors compared to company-owned or controlled tractors, offset partially by an increase in driver pay due to the retention of more experienced drivers who earn a higher pay rate. Fuel decreased from 11.3% of revenues to 10.1% of revenues as a result of improved fuel efficiency of approximately 2% and an increase in the percentage of owner-operator tractors, offset partially by an increase in fuel prices of over 3% due to the new federally mandated low sulphur fuel requirements which became effective October 1, 1993. Supplies and maintenance increased from 8.3% of revenues to 9.0% of revenues due to the Company's conversion from less expensive recapped tires to new or newer tires for its trailer fleet during the quarter ended November 30, 1993, offset partially by the increase in the percentage of owner-operator tractors. The purpose of the tire conversion is to reduce the number and cost of trailer tire failures. Taxes and licenses decreased from 9.3% of revenues to 9.0% of revenues due to an increase in the percentage of owner-operator tractors, offset by an increase in the Federal diesel fuel tax of 4.3 cents per gallon which became effective October 1, 1993. Depreciation decreased from 10.6% of revenues to 10.3% of revenues due to the increase in the percentage of owner-operator tractors, offset partially by an increase in the trailer to tractor ratio. The increase in the trailer to tractor ratio provides additional trailers and improved service for customers. Communications and utilities increased from 1.2% of revenues to 1.9% of revenues due to the installation of a satellite communications system in the Company's entire fleet. Installation of this system began in October 1992 and was substantially completed at May 31, 1993. Other operating expenses decreased from (.1)% of revenues to (.7)% of revenues due to an increase in gains recognized on the sale of revenue equipment. Rent and purchased transportation increased from 4.8% of revenues to 9.9% of revenues due to an increase in the percentage of owner-operator tractors as compared to company-owned or controlled tractors. The average number of owner-operator tractors for the quarter ended November 30, 1993 was 423 compared to an average of 183 for the quarter ended November 30, 1992. By adding owner-operators, who pay their own salaries, fuel and fuel taxes, maintenance, depreciation and insurance, these other operating expense categories experienced a decrease as a percentage of total revenues. The Company's effective income tax rate (income tax expense divided by income before income taxes) decreased to 38.0% for the three months ended November 30, 1993, compared to 39.5% for the three months ended November 30, 1992. Nine Months Ended November 30, 1993 and 1992 Operating revenues increased 16% in the nine months ended November 30, 1993, compared to the same period in the prior year. The average number of tractors increased by 17%. Revenue per mile increased by about 1% while tractor utilization decreased by about 1%. Operating expenses, expressed as a percentage of operating revenues, were 86.7% for the nine months ended November 30, 1993, compared to 88.1% for the nine months ended November 30, 1992. Salaries, wages and benefits decreased from 38.8% of revenues to 34.9% of revenues due to favorable workers' compensation claims experience and an increase in the percentage of owner-operator tractors, offset partially by an increase in driver pay due to the retention of more experienced drivers who earn a higher pay rate. Fuel decreased from 10.9% of revenues to 9.8% of revenues as a result of improved fuel efficiency of 1.5% and an increase in the percentage of owner-operator tractors. Supplies and maintenance increased from 8.6% of revenues to 8.9% of revenues due to the Company's conversion from less expensive recapped tires to new or newer tires for its trailer fleet during the quarter ended November 30, 1993, offset partially by the increase in the percentage of owner-operator tractors. Taxes and licenses decreased from 9.5% of revenues to 8.8% of revenues due to the increase in the percentage of owner-operator tractors, offset somewhat by an increase in the federal diesel fuel tax of 4.3 cents per gallon which became effective October 1, 1993. Insurance and claims decreased from 4.0% of revenues to 3.7% of revenues as a result of better claims experience. Depreciation decreased from 10.8% of revenues to 10.3% of revenues due to the increase in the percentage of owner-operator tractors, offset partially by an increase in the trailer to tractor ratio. Communication and utilities increased from 1.2% of revenues to 1.9% of revenues due to the installation of a satellite communications system in the Company's entire fleet. Other operating expenses decreased to (.4)% of revenues due to an increase in gains recognized on the sale of revenue equipment. Rent and purchased transportation increased from 4.3% of revenues to 8.8% of revenues due to an increase in the percentage of owner-operator tractors as compared to company-owned or controlled tractors. By adding owner-operators, who pay their own salaries, fuel and fuel taxes, maintenance, depreciation and insurance, these other operating expense categories experienced a decrease as a percentage of total revenues. Interest expense increased from $1.0 million for the nine months ended November 30, 1992 to $1.3 million for the nine months ended November 30, 1993 due primarily to the temporary short-term borrowings made during 1993 that were repaid as of November 30, 1993. The Company's effective income tax rate increased to 39.9% for the nine months ended November 30, 1993, compared to 39.5% for the nine months ended November 30, 1992 (see Note 2 of Notes to Consolidated Financial Statements). PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits - None. (b) Reports on Form 8-K - There were no reports on Form 8-K filed for the quarter ended November 30, 1993. 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. WERNER ENTERPRISES, INC. Date: January 14, 1994 By: /s/ Robert E. Synowicki, Jr. Robert E. Synowicki, Jr., Vice President of Finance, Treasurer and Chief Financial Officer Date: January 14, 1994 By: /s/ John J. Steele John J. Steele Secretary and Controller -----END PRIVACY-ENHANCED MESSAGE-----