-----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, LBz/KVYbqBLuPcmQCKqiwyLU0hDy9Ek8WEkjr+3ORjT1e/Jc9SnRGr/Vyi7Js7tC dANJ7eCZn1SdiNdcbonrXA== 0000793074-06-000091.txt : 20061018 0000793074-06-000091.hdr.sgml : 20061018 20061018121322 ACCESSION NUMBER: 0000793074-06-000091 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061016 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061018 DATE AS OF CHANGE: 20061018 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14690 FILM NUMBER: 061150251 BUSINESS ADDRESS: STREET 1: 14507 FRONTIER ROAD STREET 2: P O BOX 45308 CITY: OMAHA STATE: NE ZIP: 68145 BUSINESS PHONE: 4028956640 8-K 1 wern8k101606.txt WERNER ENTERPRISES, INC. 8K 10/16/06 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 16, 2006 ----------------- WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter) NEBRASKA 0-14690 47-0648386 (State or other jurisdiction of (Commission File (IRS Employer incorporation) Number) Identification No.) 14507 FRONTIER ROAD POST OFFICE BOX 45308 OMAHA, NEBRASKA 68145 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (402) 895-6640 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On October 16, 2006, the registrant issued a news release announcing its operating revenues and earnings for the third quarter ended September 30, 2006. A copy of the news release is included as an exhibit to this Form 8-K. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibit 99.1 News release issued by the registrant on October 16, 2006. 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 hereunto duly authorized. WERNER ENTERPRISES, INC. Date: October 18, 2006 By: /s/ John J. Steele ------------------ ------------------------------ John J. Steele Executive Vice President, Treasurer and Chief Financial Officer Date: October 18, 2006 By: /s/ James L. Johnson ------------------ ------------------------------- James L. Johnson Senior Vice President, Controller and Corporate Secretary EX-99.1 2 wern3q06.txt WERNER ENTERPRISES, INC. 8K 10/16/06 WERNER ENTERPRISES, INC. 14507 Frontier Road P. O. Box 45308 Omaha, Nebraska 68145 FOR IMMEDIATE RELEASE Contact: Robert E. Synowicki, Jr. - --------------------- Executive Vice President and Chief Information Officer (402) 894-3000 John J. Steele Executive Vice President, Treasurer and Chief Financial Officer (402) 894-3036 WERNER ENTERPRISES REPORTS THIRD QUARTER 2006 REVENUES AND EARNINGS Omaha, Nebraska, October 16, 2006: - --------------------------------- Werner Enterprises, Inc. (Nasdaq: WERN-news), one of the nation's largest truckload transportation and logistics companies, reported operating revenues and earnings for the third quarter ended September 30, 2006. Operating revenues increased 7% to $541.3 million compared to $504.5 million in third quarter 2005. Net income increased to $24.6 million compared to $24.5 million in third quarter 2005. Earnings per share for third quarter 2006 were $.31 per share, or 3% higher than the $.30 per share earned in third quarter 2005. "Despite the significant challenges of a softer freight market compared to the normal pickup in freight demand that typically occurs during third quarter, and unusually high insurance and claims costs, Werner Enterprises produced good results. The strength and stability of our long-term customer partnerships combined with the outstanding contributions of our employees continue to be the keys to our success," said Chairman and Chief Executive Officer Clarence (C.L.) Werner. For the month of July 2006 freight demand was about the same as July 2005. However, the Company did not experience the normal seasonal improvement in freight demand from mid- August to the end of September 2006. One way Werner measures freight demand for its non-dedicated fleets (nearly 60% of the total truck fleet) is by comparing the number of available loads to available trucks on a daily basis. Freight demand comparisons in third quarter 2006 to third quarter 2005 were more difficult due to the strong freight demand that occurred beginning in September 2005, when truck capacity tightened after Hurricane Katrina, which occurred late August 2005. During third quarter 2006 compared to third quarter 2005, Werner experienced a significant reduction in freight demand for longer haul shipments. Freight demand for shorter haul shipments in its regional fleets remained at nearly the same level year over year. The Company believes that some large retailers may be tightly controlling inventory levels, which is causing fewer longer haul freight shipments into retail distribution centers. In addition, recent weakness in the housing and automotive sectors of the economy that are not significant freight markets for the Company, may be causing other truckload carriers to compete more aggressively for replacement freight in other freight markets served by the Company. For third quarter 2006 compared to third quarter 2005, the Company's average miles per tractor declined by 3.8%. This decline was caused by several factors including (1) the softer freight market, (2) the decrease in trucks in the Company's medium-to-long-haul van division which has a longer average length of haul and higher average miles per truck, (3) the revision to the hours of service rules in October 2005 which resulted in lower miles per tractor for some shorter haul shipments or multiple stop shipments, and (4) one less business day in third quarter 2006 (63 business days) compared to third quarter 2005 (64 business days). Freight demand in October 2006 through the date of this release continues to be significantly softer than freight demand compared to the same period in October 2005. To date, the Company has not experienced the normal seasonal improvement in freight demand that it would expect to see by mid-October. The driver recruiting market continues to be extremely challenging and very competitive among truckload carriers. The Company's ongoing, company-wide focus to lower driver turnover yielded meaningful positive results in third quarter 2006, as average tractors in service grew sequentially from second quarter 2006 by 224 tractors and grew by 37 tractors compared to third quarter 2005. Fuel costs averaged 28 cents a gallon higher in third quarter 2006 compared to third quarter 2005. By month, July 2006 fuel averaged 59 cents a gallon higher than July 2005, August 2006 averaged 50 cents a gallon higher than August 2005, and September 2006 averaged 26 cents a gallon lower than September 2005. Fuel prices increased in September 2005 due to the impact of Hurricanes Katrina and Rita and declined during September 2006 by 41 cents a gallon from the beginning of the month to the end of the month. For third quarter 2006 compared to third quarter 2005, net fuel costs had no impact on earnings per share. The Company includes all of the following items in the calculation of the impact of fuel on earnings for both periods: (1) average fuel price per gallon, (2) fuel reimbursements paid to owner-operator drivers, (3) lower miles per gallon ("mpg") due to the year-over-year increase in the percentage of the company-owned truck fleet with post-October 2002 engines and the mpg impact of ultra low sulfur diesel fuel, and (4) offsetting fuel surcharge revenues from customers. During third quarter 2006, truckload carriers transitioned a substantial portion of their diesel fuel consumption from low sulfur diesel fuel to ultra low sulfur diesel ("ULSD") fuel, as fuel refiners were required to meet the Environmental Protection Agency ("EPA")- mandated 80% ULSD threshold by the transition date of October 15, 2006. Preliminary estimates were that ULSD would result in a 1-3% degradation in mpg for all trucks, due to the lower energy content (btu) of ULSD. Based on the Company's fuel mpg experience to date, these preliminary mpg degradation estimates are accurate. The recent decline in diesel fuel prices is substantially reducing the Company's fuel expense and is substantially lowering fuel surcharge revenues. Most importantly, this fuel price reduction is lowering our customers' freight bills. For example, the Department of Energy ("DOE") survey price per gallon (which is used to calculate most customer fuel surcharge programs) was $3.15 per gallon a year ago on October 10, 2005 compared to the DOE fuel price of $2.51 per gallon on October 9, 2006. Using a 5-cent fuel surcharge bracket, the 64-cent per gallon reduction in year-over-year DOE fuel price would result in a nearly 13-cent per mile savings to our customers. Werner's standard fuel surcharge programs are designed to avoid including the changing cost of fuel in base per-mile rates, which means when fuel prices decline, our customers immediately benefit from lower fuel surcharge bills. As planned, the average age of the Company's truck fleet remained new relative to historical standards at 1.35 years as of September 30, 2006. The Company intends to keep its fleet as new as possible, to delay the cost impact of the federally mandated engine emission standards that are required for all newly-manufactured engines beginning in January 2007. During fourth quarter 2006, the Company will be taking delivery of a substantial number of new trucks, and those trucks are expected to be placed in service during the first half of 2007. The Company's wholly-owned subsidiary, Fleet Truck Sales, is one of the largest domestic class 8 late-model truck sales companies and has been in business since 1992. Gains on sales of assets, primarily trucks and trailers, increased to $5.6 million in third quarter 2006 compared to $2.5 million in third quarter 2005. Gains on sales are reflected as a reduction of Other Operating Expenses in the accompanying income statement data. The Company continued to sell its oldest van trailers that have already reached the end of their depreciable life. These trailer sales contributed to the improved equipment gains in third quarter 2006. The Company's truck sales were not as strong in third quarter 2006, as compared to first quarter 2006 and second quarter 2006. The Company believes there is a temporary increase in the supply of class 8 trucks currently available for sale, caused by some carriers attempting to sell more trucks while at the same time buying more new trucks in advance of the January 2007 truck engine change. The Company plans to sell fewer trucks in 2007 than in 2006 and plans to continue to sell and replace its oldest van trailers in 2007. To provide customers with additional sources of capacity and expand its portfolio of customer solutions, Werner is growing its non-asset based Value Added Services ("VAS") division. VAS includes truck brokerage, freight transportation management (single-source logistics), and intermodal, as well as a newly expanded international product line. Financial results for VAS for third quarter 2006 compared to third quarter 2005 are as follows:
Value Added Services (amounts in 000's) 3Q06 3Q05 - --------------------------------------- -------------- -------------- Revenues $71,405 100.0% $52,859 100.0% Gross margin 6,532 9.1 5,200 9.8 Operating income 1,850 2.6 1,859 3.5
Brokerage is performing very well by providing customers with truckload capacity solutions using a qualified carrier base that has grown to approximately 4,500 carriers. Brokerage continues to be on pace to surpass revenues of $100 million in 2006. Freight transportation management consists of managing customers' freight needs as the lead logistics provider at either the network, facility, or lane level. Freight transportation management continues to grow its revenues in 2006. Intermodal continued its revenue growth in the quarter by expanding its equipment fleet in support of the development of its customer base. As the intermodal product matures, we expect to see continued revenue growth with stronger margin returns. In July 2006, the Company announced the formation of Werner Global Logistics U.S., LLC ("WGL"), a separate company that operates within the VAS segment. After several months of researching and developing the Company's business plans, Werner announced its entrance into the Asian transportation market. During third quarter 2006, WGL began to generate a small amount of freight forwarding revenues to partially offset startup costs for salaries, legal/consulting, and travel expenses. The Company expects WGL to be a more meaningful revenue contributor in 2007. A comparison of the Company's truckload operating ratio, net of fuel surcharge revenues, and VAS operating ratio for third quarters 2006 and 2005 is shown below.
Operating Ratios 3Q06 3Q05 Difference - ---------------- -------- -------- ---------- Truckload Transportation Services 89.9% 89.9% 0.0% Value Added Services 97.4 96.5 0.9
Higher fuel prices and higher fuel surcharge collections have the effect of increasing the total company operating ratio and the Truckload Transportation Services segment's operating ratio. Eliminating this sometimes volatile source of revenue provides a more consistent basis for comparing the results of operations from period to period. The Truckload Transportation Services segment's operating ratio for third quarter 2006 and third quarter 2005 is 91.7% and 91.3%, respectively, if fuel surcharge revenues are included in revenues and not netted against operating expenses. In the first quarter of 2006, Werner adopted Statement of Financial Accounting Standards (SFAS) No. 123(R) for its share-based compensation plan on a modified prospective basis. Under SFAS No. 123(R), all share- based compensation cost is recognized as an expense in the income statement. In 2005 and prior years, the Company accounted for share- based compensation using the intrinsic value method prescribed in APB Opinion No. 25, under which the Company recorded no compensation expense since the exercise price of the options equaled the fair market value of the underlying common stock on the date of grant. The Company recorded expense of $0.5 million in Salaries, Wages and Benefits (or 0.4 cents per share, net of taxes) in third quarter 2006. The estimated impact of this new accounting standard for the full year of 2006 is approximately two cents per share, representing the expense to be recognized for the unvested portion of awards granted to date. The Company cannot predict the earnings impact of any awards that may be granted in the future. The Company's financial position remains strong. Werner Enterprises had $26.9 million of cash and $10.0 million of debt as of September 30, 2006. Due to significant truck purchases scheduled for fourth quarter 2006, the Company expects to have increased debt borrowings as of December 2006. Stockholders' equity grew to $876.5 million, or $11.41 per share. During third quarter 2006, the Company purchased one million shares of its common stock at an average share price of $17.91.
INCOME STATEMENT DATA (Unaudited) (In thousands, except per share amounts) Quarter Ended % of Operating Quarter Ended % of Operating 09/30/06 Revenues 09/30/05 Revenues ------------- -------------- ------------- -------------- Operating revenues $541,297 100.0 $504,520 100.0 ------------- -------------- ------------- -------------- Operating expenses: Salaries, wages and benefits 149,466 27.6 147,043 29.1 Fuel 106,946 19.8 92,904 18.4 Supplies and maintenance 41,427 7.7 40,450 8.0 Taxes and licenses 30,069 5.6 29,814 5.9 Insurance and claims 24,079 4.4 19,777 3.9 Depreciation 42,623 7.9 41,204 8.2 Rent and purchased transportation 105,150 19.4 88,596 17.6 Communications and utilities 5,117 0.9 5,080 1.0 Other (4,266) (0.8) (1,486) (0.3) ------------- -------------- ------------- -------------- Total operating expenses 500,611 92.5 463,382 91.8 ------------- -------------- ------------- -------------- Operating income 40,686 7.5 41,138 8.2 ------------- -------------- ------------- -------------- Other expense (income): Interest expense 65 0.0 250 0.0 Interest income (1,079) (0.2) (813) (0.1) Other 59 0.0 184 0.0 ------------- -------------- ------------- -------------- Total other expense (income) (955) (0.2) (379) (0.1) ------------- -------------- ------------- -------------- Income before income taxes 41,641 7.7 41,517 8.3 Income taxes 17,090 3.2 17,026 3.4 ------------- -------------- ------------- -------------- Net income $24,551 4.5 $24,491 4.9 ============= ============== ============= ============== Diluted shares outstanding 78,564 80,626 ============= ============= Diluted earnings per share $.31 $.30 ============= ============= OPERATING STATISTICS Quarter Ended Quarter Ended 09/30/06 % Change 09/30/05 ------------- -------------- ------------- Trucking revenues, net of fuel surcharge (1) $381,108 0.2% $380,320 Trucking fuel surcharge revenues (1) 82,088 25.3% 65,490 Non-trucking revenues, including VAS (1) 74,519 33.3% 55,906 Other operating revenues (1) 3,582 27.7% 2,804 ------------- ------------- Operating revenues (1) $541,297 7.3% $504,520 ============= ============= Average monthly miles per tractor 9,742 -3.8% 10,123 Average revenues per total mile (2) $1.475 3.7% $1.423 Average revenues per loaded mile (2) $1.696 4.6% $1.621 Average percentage of empty miles (3) 13.00% 6.5% 12.21% Average trip length in miles (loaded) 581 3.0% 564 Total miles (loaded and empty) (1) 258,329 -3.4% 267,305 Average tractors in service 8,839 0.4% 8,802 Average revenues per tractor per week (2) $3,317 -0.2% $3,324 Capital expenditures, net (1) $86,464 $69,606 Cash flow from operations (1) $79,674 $41,783 Return on assets (annualized) 7.2% 7.6% Total tractors (at quarter end) Company 8,050 7,960 Owner-operator 810 890 ------------- ------------- Total tractors 8,860 8,850 Total trailers (truck and intermodal, quarter end) 25,330 24,700 Managed containers (quarter end) 400 -
(1) Amounts in thousands. (2) Net of fuel surcharge revenues. (3) Miles without trailer cargo. Dedicated fleets have a higher empty mile percentage, which is priced in the dedicated business.
INCOME STATEMENT DATA (Unaudited) (In thousands, except per share amounts) Nine Months % of Nine Months % of Ended Operating Ended Operating 09/30/06 Revenues 09/30/05 Revenues ------------- -------------- ------------- -------------- Operating revenues $1,562,108 100.0 $1,445,571 100.0 ------------- -------------- ------------- -------------- Operating expenses: Salaries, wages and benefits 445,822 28.5 428,597 29.6 Fuel 298,404 19.1 238,596 16.5 Supplies and maintenance 118,201 7.6 117,125 8.1 Taxes and licenses 87,443 5.6 88,057 6.1 Insurance and claims 64,887 4.2 64,815 4.5 Depreciation 124,796 8.0 121,380 8.4 Rent and purchased transportation 294,504 18.9 261,505 18.1 Communications and utilities 14,839 0.9 15,656 1.1 Other (10,647) (0.7) (6,263) (0.4) ------------- -------------- ------------- -------------- Total operating expenses 1,438,249 92.1 1,329,468 92.0 ------------- -------------- ------------- -------------- Operating income 123,859 7.9 116,103 8.0 ------------- -------------- ------------- -------------- Other expense (income): Interest expense 342 0.0 256 0.0 Interest income (3,295) (0.2) (2,600) (0.2) Other 185 0.0 257 0.0 ------------- -------------- ------------- -------------- Total other expense (income) (2,768) (0.2) (2,087) (0.2) ------------- -------------- ------------- -------------- Income before income taxes 126,627 8.1 118,190 8.2 Income taxes 52,026 3.3 48,483 3.4 ------------- -------------- ------------- -------------- Net Income $74,601 4.8 $69,707 4.8 ============= ============== ============= ============== Diluted shares outstanding 79,728 80,713 ============= ============= Diluted earnings per share $.94 $.86 ============= ============= OPERATING STATISTICS YTD 06 % Change YTD 05 ------------- -------------- ------------- Trucking revenues, net of fuel surcharge (1) $1,125,261 1.4% $1,109,798 Trucking fuel surcharge revenues (1) 222,189 40.3% 158,393 Non-trucking revenues, including VAS (1) 205,068 21.6% 168,648 Other operating revenues (1) 9,590 9.8% 8,732 ------------- ------------- Operating revenues (1) $1,562,108 8.1% $1,445,571 ============= ============= Average monthly miles per tractor 9,837 -2.5% 10,085 Average revenues per total mile (2) $1.462 4.3% $1.402 Average revenues per loaded mile (2) $1.679 5.4% $1.593 Average percentage of empty miles (3) 12.92% 7.8% 11.99% Average trip length in miles (loaded) 583 2.8% 567 Total miles (loaded and empty) (1) 769,498 -2.8% 791,697 Average tractors in service 8,692 -0.3% 8,722 Average revenues per tractor per week (2) $3,320 1.7% $3,263 Capital expenditures, net (1) $128,299 $222,267 Cash flow from operations (1) $226,789 $138,054 Return on assets (annualized) 7.3% 7.4% Total tractors (at quarter end) Company 8,050 7,960 Owner-operator 810 890 ------------- ------------- Total tractors 8,860 8,850 Total trailers (truck and intermodal, quarter end) 25,330 24,700 Managed containers (quarter end) 400 -
(1) Amounts in thousands. (2) Net of fuel surcharge revenues. (3) Miles without trailer cargo. Dedicated fleets have a higher empty mile percentage, which is priced in the dedicated business.
BALANCE SHEET DATA (In thousands, except share amounts) 9/30/06 12/31/05 ----------- ----------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $26,945 $36,583 Accounts receivable, trade, less allowance of $8,752 and $8,357, respectively 241,711 240,224 Other receivables 19,406 19,914 Inventories and supplies 10,646 10,951 Prepaid taxes, licenses and permits 7,879 18,054 Current deferred income taxes 22,007 20,940 Other current assets 24,122 20,966 ----------- ----------- Total current assets 352,716 367,632 ----------- ----------- Property and equipment 1,601,962 1,555,764 Less - accumulated depreciation 580,744 553,157 ----------- ----------- Property and equipment, net 1,021,218 1,002,607 ----------- ----------- Other non-current assets 18,270 15,523 ----------- ----------- $1,392,204 $1,385,762 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $85,615 $52,387 Current portion of long-term debt - 60,000 Insurance and claims accruals 64,941 62,418 Accrued payroll 23,491 21,274 Other current liabilities 21,494 21,838 ----------- ----------- Total current liabilities 195,541 217,917 ----------- ----------- Long-term debt, net of current portion 10,000 - Other long-term liabilities 873 526 Insurance and claims accruals, net of current portion 99,000 95,000 Deferred income taxes 210,293 209,868 Stockholders' equity: Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536 shares issued; 76,825,922 and 79,420,443 shares outstanding, respectively 805 805 Paid-in capital 104,839 105,074 Retained earnings 841,751 777,260 Accumulated other comprehensive loss (551) (259) Treasury stock, at cost; 3,707,614 and 1,113,093 shares, respectively (70,347) (20,429) ----------- ----------- Total stockholders' equity 876,497 862,451 ----------- ----------- $1,392,204 $1,385,762 =========== ===========
Werner Enterprises, Inc. was founded in 1956 and is a premier transportation and logistics company, with coverage throughout the United States, Canada, Mexico and China. Werner maintains its global headquarters in Omaha, NE with offices throughout North America and China. Werner is among the five largest truckload carriers in the United States, with a portfolio of transportation services that includes medium-to-long-haul, regional and local van capacity, temperature- controlled, flatbed, dedicated and expedited. Werner's Value Added Services portfolio includes freight management, truck brokerage, intermodal, load/mode and network optimization and freight forwarding. Werner is a licensed NVOCC and provides U.S. customs brokerage services. Werner Enterprises' common stock is traded on The Nasdaq Stock Market under the symbol WERN. The Werner website address is www.werner.com. Note: This press release contains forward-looking statements, which are based on information currently available. Actual results could differ materially from those anticipated as a result of a number of factors, including, but not limited to, those discussed in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2005. The Company assumes no obligation to update any forward-looking statement to the extent it becomes aware that it will not be achieved for any reason. -----END PRIVACY-ENHANCED MESSAGE-----