-----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, S+vU04F75WD9LFPcSER2R+riBjdoZjfIU5HbO3nj00cDs0X5DgaYBiU0ckjo7Wm9 5wGjmMcjLGi/yuiL4YOUbA== 0000793074-00-000007.txt : 20000516 0000793074-00-000007.hdr.sgml : 20000516 ACCESSION NUMBER: 0000793074-00-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 633511 BUSINESS ADDRESS: STREET 1: 14507 FRONTIER ROAD STREET 2: P O BOX 45308 CITY: OMAHA STATE: NE ZIP: 68145 BUSINESS PHONE: 4028956640 10-Q 1 UNITED STATES 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 March 31, 2000 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 April 30, 2000, 47,057,862 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 ended March 31, 2000, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. 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 Annual Report on Form 10-K for the year ended December 31, 1999. Consolidated Statements of Income for the Three Months Ended March 31, 2000 and 1999 Page 3 Consolidated Condensed Balance Sheets as of March 31, 2000 and December 31, 1999 Page 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 Page 5 Notes to Consolidated Financial Statements as of March 31, 2000 Page 6 2 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended (In thousands, except per share amounts) March 31 - -------------------------------------------------------------------------- 2000 1999 - -------------------------------------------------------------------------- (Unaudited) Operating revenues $ 291,379 $ 240,980 ------------------------- Operating expenses: Salaries, wages and benefits 103,312 89,321 Fuel 31,209 14,008 Supplies and maintenance 25,312 20,138 Taxes and licenses 21,462 19,766 Insurance and claims 6,980 9,390 Depreciation 26,321 23,535 Rent and purchased transportation 57,027 42,327 Communications and utilities 3,686 3,099 Other (2,465) (1,847) ------------------------- Total operating expenses 272,844 219,737 ------------------------- Operating income 18,535 21,243 ------------------------- Other expense (income): Interest expense 2,235 1,198 Interest income (447) (330) Other 105 17 ------------------------- Total other expense 1,893 885 ------------------------- Income before income taxes 16,642 20,358 Income taxes 6,324 7,736 ------------------------- Net income $ 10,318 $ 12,622 ========================= Average common shares outstanding 47,092 47,327 ========================= Basic earnings per share $ .22 $ .27 ========================= Diluted shares outstanding 47,251 47,570 ========================= Diluted earnings per share $ .22 $ .27 ========================= Dividends declared per share $ .025 $ .025 =========================
3 WERNER ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) March 31 December 31 - -------------------------------------------------------------------------- 2000 1999 - -------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 16,409 $ 15,368 Accounts receivable, net 130,733 127,211 Other receivables 14,852 11,217 Prepaid taxes, licenses and permits 10,283 12,423 Other current assets 23,861 22,608 ------------------------- Total current assets 196,138 188,827 ------------------------- Property and equipment 957,087 970,609 Less - accumulated depreciation 266,735 262,557 ------------------------- Property and equipment, net 690,352 708,052 ------------------------- Notes receivable 1,423 - ------------------------- $ 887,913 $ 896,879 ========================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 30,901 $ 35,686 Short-term debt 5,000 25,000 Insurance and claims accruals 33,197 32,993 Accrued payroll 13,925 11,846 Other current liabilities 19,609 15,681 ------------------------- Total current liabilities 102,632 121,206 ------------------------- Long-term debt 120,000 120,000 Insurance, claims and other long-term accruals 30,301 30,301 Deferred income taxes 133,180 130,600 Stockholders' equity 501,800 494,772 ------------------------- $ 887,913 $ 896,879 =========================
4 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended (In thousands) March 31 - -------------------------------------------------------------------------- 2000 1999 - -------------------------------------------------------------------------- (Unaudited) Cash flows from operating activities: Net income $ 10,318 $ 12,622 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 26,321 23,535 Deferred income taxes 2,580 3,155 Gain on disposal of operating equipment (2,787) (2,191) Tax benefit from exercise of stock options 3 77 Changes in certain working capital items: Accounts receivable, net (3,522) (12,929) Prepaid expenses and other current assets (2,748) 1,993 Accounts payable (4,785) 4,064 Other current liabilities 6,208 9,220 ------------------------- Net cash provided by operating activities 31,588 39,546 ------------------------- Cash flows from investing activities: Additions to property and equipment (32,563) (75,943) Proceeds from sales of property and equipment 25,306 15,761 ------------------------- Net cash used in investing activities (7,257) (60,182) ------------------------- Cash flows from financing activities: Proceeds from issuance of short-term debt - 20,000 Repayments of short-term debt (20,000) - Dividends on common stock (1,180) (1,183) Repurchases of common stock (2,113) - Stock options exercised 3 273 ------------------------- Net cash provided by (used in) financing activities (23,290) 19,090 ------------------------- Net increase (decrease) in cash and cash equivalents 1,041 (1,546) Cash and cash equivalents, beginning of period 15,368 15,913 ------------------------- Cash and cash equivalents, end of period $ 16,409 $ 14,367 ========================= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 1,844 $ 1,589 Income taxes $ 1,323 $ 752 Supplemental schedule of non-cash investing activities: Notes receivable issued upon sale of revenue equipment $ 1,423 $ -
5 WERNER ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Long-Term Debt Long-term debt consists of the following (in thousands): 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, 1999. Financial Condition: During the three months ended March 31, 2000, the Company generated cash flow from operations of $31.6 million. The cash flow from operations enabled the Company to make net property additions, primarily revenue equipment, of $7.3 million, repay $20.0 million of debt, repurchase common stock of $2.1 million, and pay common stock dividends of $1.2 million. If the Company continues to grow at its current rate (as described below), additional financing activities 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 debt to equity ratio at March 31, 2000 was 24.9%, compared with 29.3% at December 31, 1999. The Company's debt to total capitalization ratio (total capitalization equals total debt plus total stockholders' equity) was 19.9% at March 31, 2000 compared to 22.7% at December 31, 1999. Results of Operations: Three Months Ended March 31, 2000 and 1999 - ------------------------------------------ Operating revenues increased 21% for the three months ended March 31, 2000, compared to the same period of the prior year, due in part to a 12% increase in the average number of tractors in service. Average tractors in service increased from 6,354 in first quarter 1999 to 7,127 in first quarter 2000. Over the past two quarters, the Company has focused its efforts more on obtaining rate increases and improving fuel surcharge reimbursements than on growth. As a result, revenue per mile, excluding fuel surcharges, increased 2.4% and revenue per mile, including fuel surcharges, increased 6.1% compared to first quarter of 1999. A shift in the mix of freight between fleets in the truckload division, which decreased the average trip length by 1.7%, also contributed to the increased revenue per mile. Revenue per mile tends to increase as length of haul decreases. A $3.5 million increase in revenues from logistics and other non-trucking transportation services also contributed to the overall increase in operating revenues. Operating expenses, expressed as a percentage of operating revenues, were 93.6% for the three months ended March 31, 2000, compared to 91.2% for the three months ended March 31, 1999. The Company's increase in logistics and other non-trucking transportation services, and an increase in owner- operator miles as a percentage of total miles (19.6% in first quarter 2000 compared to 16.8% in first quarter 1999), contributed to a shift in costs to the rent and purchased transportation expense category from several other expense categories, as described on the following page. Owner- operators are independent contractors who supply their own tractor and driver, and are responsible for their operating expenses including fuel, supplies and maintenance, and fuel taxes. On March 14, 2000, the Company announced that it had signed a letter of intent to join five other large transportation companies and merge their logistics business units into a commonly owned, Internet-based transportation logistics company, Transplace.com. Transplace.com will offer a Web-enabled transportation platform to bring together shippers and 7 carriers to collaborate on their transportation logistics planning and execution in the most efficient and effective manner. Transplace.com is developing programs for the cooperative purchasing of products, supplies and services with the goal of lowering the costs of member carriers. It is expected that Werner Enterprises will transfer its existing logistics business to Transplace.com during third quarter 2000. The transfer will result in a decrease in logistics and other non-trucking revenue and corresponding purchased transportation expense. This transfer is not expected to materially impact the earnings of Werner Enterprises during the year 2000. Salaries, wages and benefits decreased from 37.1% to 35.5% of revenues due primarily to the increase in logistics and other non-trucking revenues and more owner-operator miles. 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 was 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 increased from 5.8% to 10.7% of revenues due mainly to significantly higher average fuel prices during the quarter compared to the same quarter of the prior year. The average cost of fuel, excluding fuel taxes, was 118% higher in first quarter 2000 compared to first quarter 1999. The increase was partially offset by increases in non-trucking revenues and owner-operator miles. The Company's customer fuel surcharge reimbursement programs recovered approximately 60% of the increased fuel cost during first quarter 2000. A portion of the fuel expense increase was not recovered during first quarter 2000 due to several factors, including: the fuel price levels which determine when fuel surcharges are collected, unreimbursed empty miles between freight shipments, unreimbursed out-of- route miles caused in part by driver home time needs, and the unreimbursed costs of truck idling. Management has focused its efforts on improving the amount and percentage of fuel surcharge reimbursement. The Company cannot predict whether higher fuel price levels will continue or the extent to which fuel surcharges could be collected from customers to offset such increases. If fuel prices remain at elevated levels, the Company's operating results for 2000 and beyond will be adversely impacted to the extent the higher costs are not recovered from customers. Supplies and maintenance increased from 8.4% to 8.7% of revenues primarily due to higher tractor and trailer maintenance costs, partially offset by the increase in logistics and other non-trucking revenues and more owner-operator miles. Taxes and licenses decreased from 8.2% to 7.4% of revenues due in part to the increase in logistics and other non-trucking revenues and more owner-operator miles. Insurance and claims decreased from 3.9% to 2.4% of revenues due to favorable claims experience and from milder winter weather conditions during the first quarter of 2000 compared to the same quarter last year. Depreciation decreased from 9.8% to 9.0% of revenues due to increases in non-trucking revenues and owner-operator tractors as a percentage of total tractors and leased tractors. Rent and purchased transportation increased from 17.6% to 19.6% of revenues due primarily to the Company's increase in logistics and other non-trucking transportation services, owner- operator miles as a percentage of total miles, and rent expense associated with tractors under operating leases. Interest expense increased from .5% to .8% of revenues due to higher average debt outstanding and slightly higher interest rates on the Company's variable rate debt. 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to market risk from changes in interest rates and commodity prices. Interest Rate Risk The Company had $75 million of variable rate debt at March 31, 2000. The interest rates on the variable rate debt are based on the London Interbank Offered Rate (LIBOR). Assuming this level of borrowings, a hypothetical one-percentage point increase in the LIBOR interest rate would increase the Company's annual interest expense by $750,000. Commodity Price Risk The price and availability of diesel fuel are subject to fluctuations due to changes in the level of global oil production, seasonality, weather, and other market factors. Historically, the Company has been able to recover a portion of short-term fuel price increases from customers in the form of fuel surcharges. As of March 31, 2000, the Company has implemented customer fuel surcharges with a majority of its revenue base to offset a portion of the higher fuel cost per gallon. The Company cannot predict whether high fuel price levels will continue in the future or the extent to which fuel surcharges can be collected to offset such increases. As of March 31, 2000, the Company had no derivative financial instruments to reduce its exposure to fuel price fluctuations. 9 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Incorporated Number Description by Reference to ------- ----------- --------------- 11 Statement Re: Computation of Per Share Earnings Filed herewith 27 March 31, 2000 Financial Data Schedule Filed herewith (b) Reports on Form 8-K. A report on Form 8-K, filed January 25, 2000, regarding a news release on January 20, 2000, announcing the Company's operating revenues and earnings for the fourth quarter and year ended December 31, 1999. A report on Form 8-K, filed March 14, 2000, regarding a news release on March 14, 2000, announcing that six of the nation's largest transportation companies-Covenant Transport, Inc.; J. B. Hunt Transport Services, Inc.; M. S. Carriers, Inc.; Swift Transportation Co., Inc.; U.S. Xpress Enterprises, Inc.; and Werner Enterprises, Inc.-are merging their logistics businesses in a new Internet venture, Transplace.com. 10 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: May 15, 2000 By: /s/ John J. Steele --------------------- ---------------------------------- John J. Steele Vice President, Treasurer and Chief Financial Officer Date: May 15, 2000 By: /s/ James L. Johnson --------------------- ---------------------------------- James L. Johnson Corporate Secretary and Controller 11 EX-11 2 EXHIBIT 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS ------------------------------------------------ (in thousands, except per share amounts)
Three Months Ended March 31 ------------------ 2000 1999 ------------------ Net income $ 10,318 $ 12,622 ================== Average common shares outstanding 47,092 47,327 Common stock equivalents (1) 159 243 ------------------ Diluted shares outstanding 47,251 47,570 ================== Basic earnings per share $ .22 $ .27 ================== Diluted earnings per share $ .22 $ .27 ==================
(1) Common stock equivalents represent the dilutive effect of outstanding stock options for all periods presented. EX-27 3
5 1000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 16409 0 130733 0 0 196138 957087 266735 887913 102632 0 0 0 483 501317 887913 291379 291379 0 272844 (342) 0 2235 16642 6324 10318 0 0 0 10318 .22 .22
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