-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NJeXirPXZ4L9Ssml52LcSyCzVEL+Ioy9V9xS1OOw2fYc/IHGcKsAfii5OF+IuQr7 T9DfP8DUUreDHc4iNFlfdQ== 0000793074-97-000014.txt : 19971110 0000793074-97-000014.hdr.sgml : 19971110 ACCESSION NUMBER: 0000793074-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WERNER ENTERPRISES INC CENTRAL INDEX KEY: 0000793074 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 470648386 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14690 FILM NUMBER: 97710158 BUSINESS ADDRESS: STREET 1: INTERSTATE 80 & HIGHWAY 50 STREET 2: P O BOX 45308 CITY: OMAHA STATE: NE ZIP: 68145 BUSINESS PHONE: 4028956640 10-Q 1 WERNER ENTERPRISES, INC. 10-Q 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 quarter ended Commission file number September 30, 1997 0-14690 WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter) NEBRASKA 47-0648386 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 14507 FRONTIER ROAD POST OFFICE BOX 45308 OMAHA, NEBRASKA 68145-0308 (402)895-6640 (Address of principal (Zip Code) (Registrant's telephone number) executive offices) -------------------------------------- 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 October 31, 1997, 38,338,587 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 and nine-month periods ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. 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 year ended December 31, 1996). Consolidated Statements of Income for the Three Months Ended September 30, 1997 and 1996.....................Page 3 Consolidated Statements of Income for the Nine Months Ended September 30, 1997 and 1996......................Page 4 Consolidated Condensed Balance Sheets as of September 30, 1997 and December 31, 1996...........................Page 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1997 and 1996......................Page 6 Notes to Consolidated Financial Statements as of September 30, 1997...........................................Page 7 2 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME Three Months Ended (Amounts in thousands, except per share data) September 30 - --------------------------------------------------------------------------- 1997 1996 - --------------------------------------------------------------------------- (Unaudited) Operating revenues $200,237 $167,155 --------------------- Operating expenses: Salaries, wages and benefits 71,326 58,543 Fuel 16,060 15,515 Supplies and maintenance 16,588 14,289 Taxes and licenses 14,511 13,158 Insurance and claims 4,994 4,682 Depreciation 18,338 16,591 Rent and purchased transportation 35,399 24,227 Communications and utilities 2,123 2,087 Other (2,129) (1,175) --------------------- Total operating expenses 177,210 147,917 --------------------- Operating income 23,027 19,238 --------------------- Other expense (income): Interest expense 926 486 Interest income (385) (431) Other 24 21 --------------------- Total other expense 565 76 --------------------- Income before income taxes 22,462 19,162 Income taxes 8,263 7,430 --------------------- Net income $ 14,199 $ 11,732 ===================== Average common shares outstanding 38,301 37,936 ===================== Earnings per share $ .37 $ .31 ===================== Dividends declared per share $ .025 $ .025 ===================== 3 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended (Amounts in thousands, except per share data) September 30 - --------------------------------------------------------------------------- 1997 1996 - --------------------------------------------------------------------------- (Unaudited) Operating revenues $565,921 $474,698 --------------------- Operating expenses: Salaries, wages and benefits 205,234 167,701 Fuel 50,044 43,943 Supplies and maintenance 47,081 40,189 Taxes and licenses 42,438 38,587 Insurance and claims 16,245 14,579 Depreciation 53,562 48,056 Rent and purchased transportation 96,051 70,542 Communications and utilities 6,244 5,976 Other (5,507) (2,993) --------------------- Total operating expenses 511,392 426,580 --------------------- Operating income 54,529 48,118 --------------------- Other expense (income): Interest expense 1,961 1,610 Interest income (1,099) (1,198) Other 89 94 --------------------- Total other expense 951 506 --------------------- Income before income taxes 53,578 47,612 Income taxes 19,398 18,569 --------------------- Net income $ 34,180 $ 29,043 ===================== Average common shares outstanding 38,159 37,836 ===================== Earnings per share $ .90 $ .77 ===================== Dividends declared per share $ .075 $ .068 ===================== 4 WERNER ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) September 30 December 31 - ---------------------------------------------------------------------------- 1997 1996 - ---------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 21,577 $ 22,136 Accounts receivable, net 92,439 67,928 Prepaid taxes, licenses and permits 2,606 7,753 Other current assets 21,666 18,347 ---------------------- Total current assets 138,288 116,164 ---------------------- Property and equipment 673,688 579,075 Less - accumulated depreciation 171,893 146,028 ---------------------- Property and equipment, net 501,795 433,047 ---------------------- $640,083 $549,211 ====================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 26,959 $ 19,025 Insurance and claims accruals 22,791 19,758 Accrued payroll 12,096 8,970 Income taxes payable 5,560 3,752 Other current liabilities 8,900 7,560 ---------------------- Total current liabilities 76,306 59,065 ---------------------- Long-term debt 60,000 30,000 Insurance, claims and other long-term accruals 29,333 29,275 Deferred income taxes 90,434 82,500 Stockholders' equity 384,010 348,371 ---------------------- $640,083 $549,211 ====================== 5 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended (In thousands) September 30 - ---------------------------------------------------------------------------- 1997 1996 - ---------------------------------------------------------------------------- (Unaudited) Cash flows from operating activities: Net income $ 34,180 $ 29,043 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 53,562 48,056 Deferred income taxes 7,934 8,249 Gain on disposal of operating equipment (6,006) (3,971) Tax benefit from exercise of stock options 1,540 782 Insurance, claims and other long-term accruals 58 1,046 Changes in certain working capital items: Accounts receivable, net (24,511) (13,079) Prepaid expenses and other current assets 1,828 5,188 Accounts payable 7,934 8,047 Other current liabilities 9,298 6,178 ---------------------- Net cash provided by operating activities 85,817 89,539 ---------------------- Cash flows from investing activities: Additions to property and equipment (151,993) (89,011) Retirements of property and equipment 35,689 24,362 ---------------------- Net cash used in investing activities (116,304) (64,649) ---------------------- Cash flows from financing activities: Proceeds from issuance of long-term debt 30,000 - Repayments of long-term debt - (10,000) Dividends on common stock (2,856) (2,394) Stock options exercised 2,784 1,441 ---------------------- Net cash provided by (used in) financing activities 29,928 (10,953) ---------------------- Net increase(decrease) in cash and cash equivalents (559) 13,937 Cash and cash equivalents, beginning of period 22,136 16,227 ---------------------- Cash and cash equivalents, end of period $ 21,577 $ 30,164 ====================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 1,872 $ 1,686 Income taxes 8,043 7,756 6 WERNER ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Commitments As of September 30, 1997, the Company has commitments for capital expenditures of approximately $33,000,000 (net cost, after revenue equipment trade-in allowances of approximately $2,000,000). 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This report contains forward-looking statements which are based on information currently available to the Company's management. Actual results could differ materially from those anticipated in forward-looking statements as a result of a number of factors, including, but not limited to, those discussed in Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition", of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Financial Condition: During the nine months ended September 30, 1997, the Company generated cash flow from operations of $85.8 million and made long-term borrowings of $30.0 million, which enabled the Company to make net property additions, primarily revenue equipment, of $116.3 million, and pay common stock dividends of $2.9 million. If the Company continues to grow at its current rate (as described below), additional debt borrowings may occur. Based on the Company's strong financial position, management foresees no significant barriers to obtaining sufficient financing, if necessary, to continue with its growth plans. The Company's long-term debt to equity ratio at September 30, 1997 was 15.6%, compared with 8.6% at December 31, 1996. Results of Operations: Three Months Ended September 30, 1997 and 1996 - ---------------------------------------------- Operating revenues increased 20% for the three months ended September 30, 1997, compared to the same period of the prior year. A two cent per mile driver pay increase, effective January 1, 1997, helped the Company add and retain experienced drivers and owner-operators and contributed to a 16% increase in the average number of tractors compared to the same period of the prior year. Revenue per mile, excluding fuel surcharges, increased 2% compared to third quarter of 1996. A $7.6 million increase in revenues from logistics transportation services also contributed to the overall increase in operating revenues. Operating expenses, expressed as a percentage of operating revenues, were 88.5% for the three months ended September 30, 1997 and 1996. The Company's increase in logistics transportation services contributed to a shift in costs to the rent and purchased transportation expense category from several other expense categories, as described below. 8 Salaries, wages and benefits increased from 35.0% to 35.6% of revenues due primarily to the impact of a two cent per mile driver pay increase effective January 1, 1997, partially offset by favorable workers compensation claim experience and increased revenues from logistics transportation services. At times, there have been shortages of drivers in the trucking industry, particularly the medium-to-long haul segment. The Company anticipates that the competition for qualified drivers will continue to be high, and cannot predict whether it will experience shortages in the future. If such a shortage were to occur and increases in driver pay rates became necessary to attract and retain drivers, the Company's results of operations would be negatively impacted to the extent that corresponding freight rate increases were not obtained. Fuel decreased from 9.3% to 8.0% of revenues, due mainly to lower average fuel prices during the quarter compared to the same quarter of the prior year, and increased revenues from logistics transportation services. Supplies and maintenance decreased from 8.5% to 8.3% of revenues, and taxes and licenses decreased from 7.9% to 7.2% of revenues due primarily to increased revenues from logistics transportation services. Refunds and state sales tax incentives also contributed to the decrease in taxes and licenses. Insurance and claims decreased from 2.8% to 2.5% of revenues due to favorable claims experience during the quarter and increased revenues from logistics transportation services. Depreciation decreased from 9.9% to 9.2% of revenues due primarily to the increase in logistics transportation revenues. Rent and purchased transportation increased from 14.5% to 17.7% of revenues due primarily to the Company's increase in logistics transportation services. Other operating expenses changed from (.7%) to (1.1%) of revenues due to an increase in gains on sales of revenue equipment to third parties resulting from an increase in the number of units sold. The Company's effective income tax rate (income taxes as a percentage of income before income taxes) was 36.8% and 38.8% for the three month periods ended September 30, 1997 and 1996, respectively. The decrease was due to favorable settlement of income tax issues. Nine Months Ended September 30, 1997 and 1996 - --------------------------------------------- Operating revenues increased by 19% for the nine months ended September 30, 1997, compared to the same period of the previous year. A two cent per mile driver pay increase, effective January 1, 1997, helped the Company add and retain experienced drivers and owner-operators and contributed to a 15% increase in the average number of tractors. Revenue per mile, excluding fuel surcharges, increased 1% compared to the first nine months of 1996. A $17.2 million increase in revenues from logistics transportation services also contributed to the overall increase in operating revenues. 9 Operating expenses, expressed as a percentage of operating revenues, increased to 90.4% for the nine months ended September 30, 1997, compared to 89.9% for the same period of 1996. Salaries, wages and benefits increased from 35.3% to 36.3% of revenues due primarily to the impact of a two cent per mile driver pay increase effective January 1, 1997. Fuel costs decreased from 9.3% to 8.8% of revenues due mainly to lower average fuel prices during most of 1997 compared to the same period of 1996 and the increased revenues from logistics transportation services. Fuel prices began rising at the end of first quarter 1996 and, for the most part, remained at elevated price levels during much of 1996 and the beginning of first quarter 1997. During April 1996, the Company began recovering the increased cost of fuel from customers via a temporary fuel surcharge. The amount of fuel surcharge recovered from customers typically varies as the price of fuel fluctuates on a weekly or monthly basis. The Company cannot predict whether the higher fuel prices will return or the extent to which fuel surcharges would be collected to offset such increases if fuel prices were to return to higher levels. Taxes and licenses decreased from 8.1% to 7.5% of revenues due primarily to the increased revenues from logistics transportation services, and refunds and favorable development of state tax issues. Depreciation decreased from 10.1% to 9.5% of revenues due principally to increased revenues from logistics transportation services. Rent and purchased transportation increased from 14.9% to 17.0% of revenues due primarily to the Company's increase in logistics transportation services. Other operating expenses changed from (.6%) to (1.0%) of revenues mainly due to an increase in gains on sales of revenue equipment to third parties resulting from an increase in the number of units sold. The Company's effective income tax rate was 36.2% and 39.0% for the nine month periods ended September 30, 1997 and 1996, respectively. The decrease was due to favorable settlement of income tax issues. New Accounting Standards: In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share." This statement establishes standards for computing and presenting earnings per share (EPS). It requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures. Currently, the Company presents a single disclosure of EPS. The standard is effective for financial statements for both interim and annual periods ending after December 15, 1997. Based on information currently available to management, the Company expects its diluted EPS will not differ materially from basic EPS. 10 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Page Number or Incorporated Number Description by Reference to 27 Financial Data Schedule Page 13 of sequentially numbered pages (b) Reports on Form 8-K. A report on Form 8-K, filed July 18, 1997, regarding a news release on July 16, 1997, announcing the Company's operating revenues and earnings for the second quarter ended June 30, 1997. 11 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: November 7, 1997 By: /s/John J. Steele John J. Steele Vice President, Treasurer and Chief Financial Officer Date: November 7, 1997 By: /s/James L. Johnson James L. Johnson Corporate Secretary and Controller 12 EX-27 2
5 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 21,577 0 92,439 0 0 138,288 673,688 171,893 640,083 76,306 0 0 0 387 383,623 640,083 565,921 565,921 0 511,392 (1,010) 0 1,961 53,578 19,398 34,180 0 0 0 34,180 .90 .90
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