10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[Mark	one]
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-14690

WERNER ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

NEBRASKA	47-0648386
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
14507 FRONTIER ROAD POST OFFICE BOX 45308 OMAHA, NEBRASKA	68145-0308
(Address of principal executive offices)	(Zip Code)

(402) 895-6640

(Registrant’s telephone number, including area code)

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  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	o
Non-accelerated filer	o  (Do not check if a smaller reporting company)	Smaller reporting company	o
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

As of April 28, 2017, 72,219,768 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

WERNER ENTERPRISES, INC.

INDEX

		PAGE
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements:	3
	Consolidated Statements of Income for the Three Months Ended March 31, 2017 and 2016	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2017 and 2016	5
	Consolidated Condensed Balance Sheets as of March 31, 2017 and December 31, 2016	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016	7
	Notes to Consolidated Financial Statements (Unaudited) as of March 31, 2017	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II – OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6.	Exhibits	27

2

PART I

FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements:

This Quarterly Report on Form 10-Q contains historical information and forward-looking statements based on information currently available to our management. The forward-looking statements in this report, including those made in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of Part I, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These safe harbor provisions encourage reporting companies to provide prospective information to investors. Forward-looking statements can be identified by the use of certain words, such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project” and other similar terms and language. We believe the forward-looking statements are reasonable based on currently available information. However, forward-looking statements involve risks, uncertainties and assumptions, whether known or unknown, that could cause our actual results, business, financial condition and cash flows to differ materially from those anticipated in the forward-looking statements. A discussion of important factors relating to forward-looking statements is included in Item 1A (Risk Factors) of Part I of our Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”). Readers should not unduly rely on the forward-looking statements included in this Form 10-Q because such statements speak only to the date they were made. Unless otherwise required by applicable securities laws, we undertake no obligation or duty to update or revise any forward-looking statements contained herein to reflect subsequent events or circumstances or the occurrence of unanticipated events.

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, results of operations and cash flows for the periods presented. The interim consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and were also prepared without audit. The interim consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements; although in management’s opinion, the disclosures are adequate so that the information presented is not misleading.

Operating results for the three-month period ended March 31, 2017, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. 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 and notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes contained in our 2016 Form 10-K.

3

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended March 31,
(In thousands, except per share amounts)	2017			2016
	(Unaudited)
Operating revenues	$	501,221		$	482,802
Operating expenses:
Salaries, wages and benefits	160,839			156,737
Fuel	45,156			32,060
Supplies and maintenance	38,232			47,115
Taxes and licenses	20,786			20,987
Insurance and claims	19,840			18,347
Depreciation	55,336			50,164
Rent and purchased transportation	126,425			117,976
Communications and utilities	4,072			3,909
Other	4,563			3,020
Total operating expenses	475,249			450,315
Operating income	25,972			32,487
Other expense (income):
Interest expense	776			494
Interest income	(914		)	(990		)
Other	53			45
Total other income	(85		)	(451		)
Income before income taxes	26,057			32,938
Income taxes	10,038			12,846
Net income	$	16,019		$	20,092
Earnings per share:
Basic	$	0.22		$	0.28
Diluted	$	0.22		$	0.28
Dividends declared per share	$	0.060		$	0.060
Weighted-average common shares outstanding:
Basic	72,191			72,025
Diluted	72,447			72,353

See Notes to Consolidated Financial Statements (Unaudited).

4

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended March 31,
(In thousands)	2017		2016
	(Unaudited)
Net income	$	16,019	$	20,092
Other comprehensive income (loss):
Foreign currency translation adjustments	2,447		56
Change in fair value of interest rate swap	214		(735		)
Other comprehensive income (loss)	2,661		(679		)
Comprehensive income	$	18,680	$	19,413

See Notes to Consolidated Financial Statements (Unaudited).

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WERNER ENTERPRISES, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts)	March 31, 2017			December 31, 2016
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	30,804		$	16,962
Accounts receivable, trade, less allowance of $9,301 and $9,183, respectively	247,035			261,372
Other receivables	15,604			15,168
Inventories and supplies	12,314			12,768
Prepaid taxes, licenses and permits	11,499			15,374
Income taxes receivable	15,300			21,497
Other current assets	37,261			29,987
Total current assets	369,817			373,128
Property and equipment	2,067,555			2,109,991
Less – accumulated depreciation	744,181			747,353
Property and equipment, net	1,323,374			1,362,638
Other non-current assets	52,477			57,237
Total assets	$	1,745,668		$	1,793,003
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	63,546		$	66,618
Current portion of long-term debt	25,000			20,000
Insurance and claims accruals	74,483			83,404
Accrued payroll	27,034			26,189
Other current liabilities	17,000			18,650
Total current liabilities	207,063			214,861
Long-term debt, net of current portion	105,000			160,000
Other long-term liabilities	16,064			16,711
Insurance and claims accruals, net of current portion	110,960			113,875
Deferred income taxes	296,197			292,769
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; 80,533,536 shares
issued; 72,219,768 and 72,166,969 shares outstanding, respectively	805			805
Paid-in capital	101,587			101,035
Retained earnings	1,096,190			1,084,796
Accumulated other comprehensive loss	(14,256		)	(16,917		)
Treasury stock, at cost; 8,313,768 and 8,366,567 shares, respectively	(173,942		)	(174,932		)
Total stockholders’ equity	1,010,384			994,787
Total liabilities and stockholders’ equity	$	1,745,668		$	1,793,003

See Notes to Consolidated Financial Statements (Unaudited).

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WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
(In thousands)	2017			2016
	(Unaudited)
Cash flows from operating activities:
Net income	$	16,019		$	20,092
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	55,336			50,164
Deferred income taxes	3,433			6,410
Gain on disposal of property and equipment	(1,392		)	(3,365		)
Non-cash equity compensation	896			(315		)
Insurance and claims accruals, net of current portion	(2,915		)	(4,250		)
Other	(3,897		)	(5,006		)
Changes in certain working capital items:
Accounts receivable, net	14,337			15,260
Other current assets	288			12,006
Accounts payable	(1,869		)	813
Other current liabilities	(5,289		)	(490		)
Net cash provided by operating activities	74,947			91,319
Cash flows from investing activities:
Additions to property and equipment	(42,659		)	(123,424		)
Proceeds from sales of property and equipment	28,065			21,821
Decrease in notes receivable	7,206			3,394
Net cash used in investing activities	(7,388		)	(98,209		)
Cash flows from financing activities:
Repayments of short-term debt	(20,000		)	—
Repayments of long-term debt	(30,000		)	—
Dividends on common stock	(4,330		)	(4,320		)
Tax withholding related to net share settlements of restricted stock awards	(341		)	(540		)
Stock options exercised	524			99
Excess tax benefits from equity compensation	—			(19		)
Net cash used in financing activities	(54,147		)	(4,780		)
Effect of exchange rate fluctuations on cash	430			247
Net increase (decrease) in cash and cash equivalents	13,842			(11,423		)
Cash and cash equivalents, beginning of period	16,962			31,833
Cash and cash equivalents, end of period	$	30,804		$	20,410
Supplemental disclosures of cash flow information:
Interest paid	$	876		$	494
Income taxes paid	378			1,088
Supplemental schedule of non-cash investing activities:
Notes receivable issued upon sale of property and equipment	$	872		$	14,051
Change in fair value of interest rate swap	214			(735		)
Property and equipment acquired included in accounts payable	671			7,240
Property and equipment disposed included in other receivables	11			476

See Notes to Consolidated Financial Statements (Unaudited).

7

WERNER ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) Accounting Policies

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory: Simplifying the Measurement of Inventory,” which requires inventory to be recorded at the lower of cost and net realizable value (instead of lower of cost or market). The Company adopted ASU No. 2015-11 as of January 1, 2017. Upon adoption, this update had no effect on our consolidated financial position, results of operations or cash flows.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” to simplify several aspects of the accounting for share-based payment transactions. The new update requires excess tax benefits and tax deficiencies to be recorded in the consolidated statements of income as a component of income tax expense when share-based awards vest or are settled. The update also eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur and now allows for withholding up to the maximum statutory tax rate on certain share-based awards without triggering liability accounting.

The Company adopted ASU No. 2016-09 as of January 1, 2017. Upon adoption, share-based payment excess tax benefits and tax deficiencies are recognized in the consolidated statements of income as a component of income tax expense, rather than additional paid-in capital as previously recognized. The Company elected to report excess tax benefits as operating activities in the consolidated statements of cash flows on a prospective basis, and prior period amounts have not been adjusted. The Company also elected to use actual forfeitures to determine the amount of share-based compensation expense to be recognized. This change was applied on a modified retrospective basis and resulted in a $0.3 million decrease to retained earnings in first quarter 2017.

(2) Credit Facilities

As of March 31, 2017, we had unsecured committed credit facilities with three banks as well as a term commitment with one of these banks. We had with Wells Fargo Bank, N.A., a $100.0 million credit facility which will expire on July 12, 2020, and a $75.0 million term commitment with principal due and payable on September 15, 2019. We had an unsecured line of credit of $75.0 million with U.S. Bank, N.A., which will expire on July 13, 2020. We also had a $75.0 million credit facility with BMO Harris Bank, N.A., which will expire on March 5, 2020. Borrowings under these credit facilities and term note bear variable interest based on the London Interbank Offered Rate (“LIBOR”).

As of March 31, 2017, and December 31, 2016, our outstanding debt totaled $130.0 million and $180.0 million, respectively. We had $75.0 million outstanding under the term commitment at a variable rate of 1.51% as of March 31, 2017, which is effectively fixed at 2.5% with an interest rate swap agreement, and we had an additional $55.0 million outstanding under the credit facilities at a weighted average interest rate of 1.53%. Subsequent to the end of the quarter, in April 2017, we repaid $25.0 million of debt, which we classified as current in the Consolidated Balance Sheets. The $325.0 million of borrowing capacity under our credit facilities at March 31, 2017, is further reduced by $25.8 million in stand-by letters of credit under which we are obligated. Each of the debt agreements includes, among other things, financial covenants requiring us (i) not to exceed a maximum ratio of total debt to total capitalization and/or (ii) not to exceed a maximum ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (as such terms are defined in each credit facility). At March 31, 2017, we were in compliance with these covenants.

At March 31, 2017, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2017	$	25,000
2018	—
2019	75,000
2020	30,000
2021	—
Total	$	130,000

The carrying amounts of our long-term debt approximate fair value due to the duration of the notes and the variable interest rates.

8

(3) Income Taxes

We accrued interest expense of $55 thousand and $52 thousand during the three-month periods ended March 31, 2017 and March 31, 2016, respectively, excluding the reversal of accrued interest related to adjustments for the remeasurement of uncertain tax positions. Our total gross liability for unrecognized tax benefits at March 31, 2017, is $6.0 million. If recognized, $3.9 million of unrecognized tax benefits would impact our effective tax rate. Interest of $1.1 million has been reflected as a component of the total liability. We expect no other significant increases or decreases for uncertain tax positions during the next twelve months.

We file U.S. federal income tax returns, as well as income tax returns in various states and several foreign jurisdictions. The years 2013 through 2016 are open for examination by the Internal Revenue Service (“IRS”), and various years are open for examination by state and foreign tax authorities. State and foreign jurisdictional statutes of limitations generally range from three to four years. 

(4) Commitments and Contingencies

As of March 31, 2017, we have committed to property and equipment purchases of approximately $99.9 million.

We are involved in certain claims and pending litigation arising in the ordinary course of business. The majority of these claims relate to bodily injury, property damage, cargo and workers’ compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements. Moreover, the results of complex legal proceedings are difficult to predict and our view of these matters may change in the future as the litigation and related events unfold.

We are involved in class action litigation in the U.S. District Court for the District of Nebraska, in which the plaintiffs allege that we owe drivers for unpaid wages under the Fair Labor Standards Act (FLSA) and the Nebraska Wage Payment and Collection Act and that we failed to pay minimum wage per hour for drivers in our student driver training program, related to short break time and sleeper berth time. The period covered by this class action suit dates back to 2008 through March 2014. In August 2015, the court denied our motion for summary judgment and granted the plaintiff’s motion for summary judgment, ruling in plaintiff’s favor on both theories of liability (short breaks and sleeper berth time). During second quarter 2016, the court issued two rulings, the first of which dismissed plaintiff’s claims under the Nebraska Wage Payment and Collection Act (but not the FLSA) and the second of which granted our motion to strike plaintiff’s untimely damages calculations. As a result, we reduced our accrual in second quarter 2016, and we had a $1.2 million estimated liability at March 31, 2017 related to the short break matter. In February 2017, the court revised the decision from August 2015 and denied summary judgment to the plaintiffs on the sleeper berth issue. In doing so, the court also ruled that the Company had not willfully violated the law on the sleeper berth claim and dismissed the liquidated damages portion of the case, related to the sleeper berth claim. Based on the knowledge of the facts related to the sleeper berth matter, management does not currently believe a loss is probable, thus we have not accrued for the sleeper berth matter. We are currently unable to determine the possible loss or range of loss. We intend to vigorously defend the merits of these claims and to appeal any adverse verdict in this case.

We are also involved in certain class action litigation in which the plaintiffs allege claims for failure to provide meal and rest breaks, unpaid wages, unauthorized deductions and other items. Based on the knowledge of the facts, management does not currently believe the outcome of these class actions is likely to have a material adverse effect on our financial position or results of operations. However, the final disposition of these matters and the impact of such final dispositions cannot be determined at this time. 

(5) Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and restricted stock awards. There are no differences in the numerators of our computations of basic and diluted earnings per share for any period presented. The computation of basic and diluted earnings per share is shown below (in thousands, except per share amounts).

9

	Three Months Ended March 31,
	2017		2016
Net income	$	16,019	$	20,092
Weighted average common shares outstanding	72,191		72,025
Dilutive effect of stock-based awards	256		328
Shares used in computing diluted earnings per share	72,447		72,353
Basic earnings per share	$	0.22	$	0.28
Diluted earnings per share	$	0.22	$	0.28

There were no options to purchase shares of common stock that were outstanding during the periods indicated above that were excluded from the computation of diluted earnings per share because the option purchase price was greater than the average market price of the common shares during the period. Performance awards are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied.

(6) Equity Compensation

The Werner Enterprises, Inc. Amended and Restated Equity Plan (the “Equity Plan”), approved by the Company’s shareholders, provides for grants to employees and non-employee directors of the Company in the form of nonqualified stock options, restricted stock and units (“restricted awards”), performance awards, and stock appreciation rights. The Board of Directors or the Compensation Committee of our Board of Directors determines the terms of each award, including the type, recipients, number of shares subject to and vesting conditions of each award. No awards of stock appreciation rights have been issued under the Equity Plan to date. The maximum number of shares of common stock that may be awarded under the Equity Plan is 20,000,000 shares. The maximum aggregate number of shares that may be awarded to any one person in any one calendar year under the Equity Plan is 500,000. As of March 31, 2017, there were 7,352,802 shares available for granting additional awards.

Equity compensation expense is included in salaries, wages and benefits within the Consolidated Statements of Income. As of March 31, 2017, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $8.1 million and is expected to be recognized over a weighted average period of 2.4 years. The following table summarizes the equity compensation expense and related income tax benefit recognized in the Consolidated Statements of Income (in thousands):

	Three Months Ended March 31,
	2017		2016
Stock options:
Pre-tax compensation expense	$	2	$	5
Tax benefit	1		2
Stock option expense, net of tax	$	1	$	3
Restricted awards:
Pre-tax compensation expense	$	633	$	130
Tax benefit	245		50
Restricted stock expense, net of tax	$	388	$	80
Performance awards:
Pre-tax compensation expense	$	283	$	(419	)
Tax benefit	110		(163		)
Performance award expense, net of tax	$	173	$	(256	)

During the three-month period ended March 31, 2016, we recorded a $1.8 million reduction in compensation expense and a $0.7 million reduction of tax benefit resulting from a change in forfeiture estimates for certain restricted and performance awards, most of which relate to a previously disclosed executive retirement that occurred in February 2016.

We do not have a formal policy for issuing shares upon an exercise of stock options or vesting of restricted and performance awards. Such shares are generally issued from treasury stock. From time to time, we repurchase shares of our common stock, the timing and amount of which depends on market and other factors. Historically, the shares acquired from such repurchases have provided us with sufficient quantities of stock to issue for equity compensation. Based on current treasury stock levels, we do not expect to repurchase additional shares specifically for equity compensation during 2017.

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Stock Options

Stock options are granted at prices equal to the market value of the common stock on the date the option award is granted. Option awards currently outstanding become exercisable in installments from 24 to 72 months after the date of grant. The options are exercisable over a period not to exceed ten years, one day from the date of grant. The following table summarizes stock option activity for the three months ended March 31, 2017:

	Number of Options (in thousands)		Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at beginning of period	171		$	18.19
Granted	—		—
Exercised	(30	)	17.61
Forfeited	—		—
Expired	—		—
Outstanding at end of period	141		18.31		1.74	$	1,113
Exercisable at end of period	136		18.17		1.64	$	1,095

We did not grant any stock options during the three-month periods ended March 31, 2017 and March 31, 2016. The fair value of stock option grants is estimated using a Black-Scholes valuation model. The total intrinsic value of stock options exercised was $307 thousand and $31 thousand for the three-month periods ended March 31, 2017 and March 31, 2016, respectively.

Restricted Awards

Restricted stock entitles the holder to shares of common stock when the award vests. Restricted stock units entitle the holder to a combination of cash or stock equal to the value of common stock when the unit vests. The value of these shares may fluctuate according to market conditions and other factors. Restricted awards currently outstanding vest over periods ranging from 12 to 84 months from the grant date of the award. The restricted awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions. The following table summarizes restricted award activity for the three months ended March 31, 2017:

	Number of Restricted Awards (in thousands)		Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	293		$	25.98
Granted	69		27.01
Vested	—		—
Forfeited	(8	)	26.61
Nonvested at end of period	354		26.17

We estimate the fair value of restricted awards based upon the market price of the underlying common stock on the date of grant, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate. Cash settled restricted stock units are recorded as a liability within the Consolidated Balance Sheets and are adjusted to fair value each reporting period.

No restricted awards vested during the three-month periods ended March 31, 2017 and March 31, 2016. When restricted awards vest, we withhold shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes. The shares withheld to satisfy the tax withholding obligations are recorded as treasury stock.

Performance Awards

Performance awards entitle the recipient to shares of common stock upon attainment of performance objectives as pre-established by the Compensation Committee. If the performance objectives are achieved, performance awards currently outstanding vest,

11

subject to continued employment, over periods ranging from 12 to 60 months from the grant date of the award. The performance awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions. The following table summarizes performance award activity for the three months ended March 31, 2017:

	Number of Performance Awards (in thousands)		Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	124		$	27.33
Granted	69		26.89
Vested	(35	)	27.07
Forfeited	—		—
Nonvested at end of period	158		27.20

The 2017 performance awards are earned based upon the level of attainment by the Company of specified performance objectives related to cumulative diluted earnings per share for the two-year period from January 1, 2017 to December 31, 2018. Shares earned based on cumulative diluted earnings per share may be capped based on absolute total shareholder return during the three-year period. The 2017 performance awards will cliff vest in one installment on the third anniversary from the grant date. In February 2017, the Compensation Committee determined the 2016 fiscal year results upon which the 2016 performance awards were based fell below the threshold level; thus, no shares of common stock were earned, and the shares not earned were included in the 2016 forfeited shares.

We estimate the fair value of performance awards based upon the market price of the underlying common stock on the date of grant, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate.

The vesting date fair value of performance awards that vested during the three-month periods ended March 31, 2017 and March 31, 2016 was $1.0 million and $1.6 million, respectively. We withhold shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes. The shares withheld to satisfy the tax withholding obligations are recorded as treasury stock.

(7) Segment Information

We have two reportable segments – Truckload Transportation Services (“Truckload”) and Werner Logistics.

The Truckload segment consists of three operating units, One-Way Truckload, Dedicated and Temperature Controlled. These units are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting. One-Way Truckload is comprised of the following operating fleets: (i) the medium-to-long-haul van (“Van”) fleet transports a variety of consumer nondurable products and other commodities in truckload quantities over irregular routes using dry van trailers; (ii) the expedited (“Expedited”) fleet provides time-sensitive truckload services utilizing driver teams; and (iii) the regional short-haul (“Regional”) fleet provides comparable truckload van service within geographic regions across the United States. Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, utilizing either dry van or specialized trailers. Temperature Controlled provides truckload services for temperature sensitive products over irregular routes utilizing temperature-controlled trailers. (We previously utilized the name “Specialized Services” to encompass the operations of both Dedicated and Temperature Controlled.) Revenues for the Truckload segment include a small amount of non-trucking revenues which consist primarily of the intra-Mexico portion of cross-border shipments delivered to or from Mexico where we utilize a third-party capacity provider.

The Werner Logistics segment generates the majority of our non-trucking revenues through four operating units that provide non-trucking services to our customers. These four Werner Logistics operating units are as follows: (i) truck brokerage (“Brokerage”) uses contracted carriers to complete customer shipments; (ii) freight management (“Freight Management”) offers a full range of single-source logistics management services and solutions; (iii) the intermodal (“Intermodal”) unit offers rail transportation through alliances with rail and drayage providers as an alternative to truck transportation; and (iv) Werner Global Logistics international (“WGL”) provides complete management of global shipments from origin to destination using a combination of air, ocean, truck and rail transportation modes.

We generate other revenues from our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities. None of these operations meets the quantitative reporting

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thresholds. As a result, these operations are grouped in “Other” in the table below. “Corporate” includes revenues and expenses that are incidental to our activities and are not attributable to any of our operating segments, including gains and losses on sales of assets not attributable to our operating segments. We do not prepare separate balance sheets by segment and, as a result, assets are not separately identifiable by segment. Inter-segment eliminations in the table below represent transactions between reporting segments that are eliminated in consolidation.

The following table summarizes our segment information (in thousands):

	Three Months Ended March 31,
	2017			2016
Revenues
Truckload Transportation Services	$	385,003		$	372,917
Werner Logistics	99,853			96,577
Other	16,110			13,178
Corporate	422			373
Subtotal	501,388			483,045
Inter-segment eliminations	(167		)	(243		)
Total	$	501,221		$	482,802
Operating Income
Truckload Transportation Services	$	23,466		$	32,359
Werner Logistics	3,049			5,035
Other	145			(1,934		)
Corporate	(688		)	(2,973		)
Total	$	25,972		$	32,487

(8) Derivative Financial Instrument

In the normal course of business we are subject to risk from adverse fluctuations in foreign exchange and interest rates and commodity prices. We manage our risks for interest rate changes through use of an interest rate swap. At March 31, 2017, we had one interest rate swap outstanding, which matures in September 2019, with a notional value of $75.0 million and a pre-tax fair value loss of $0.6 million. The counterparty to this contract is a major financial institution. We are exposed to credit loss in the event of non-performance by the counterparty. We do not use derivative instruments for trading or speculative purposes and have no derivative financial instruments to reduce our exposure to fuel price fluctuations.

Our objective in managing exposure to interest rate risk is to limit the impact on earnings and cash flow. The extent to which we use such instruments is dependent on our access to these contracts in the financial markets and our success using other methods.

Our outstanding derivative financial instrument is recognized as an other long-term liability in the Consolidated Balance Sheets at fair value. The interest rate swap is accounted for as a cash flow hedging instrument. At inception, we formally designated and documented the financial instrument as a hedge of a specific underlying exposure, the risk management objective, and the manner in which effectiveness of the hedge will be assessed. We formally assess, both at inception and at each reporting period thereafter, whether the derivative financial instrument is effective in offsetting changes in cash flows of the related underlying exposure. All changes in fair value of outstanding derivatives in cash flow hedges, except any ineffective portion, are recorded in other comprehensive income until earnings are impacted by the hedged transaction. Classification of the gain or loss in the Consolidated Statements of Income upon release from comprehensive income is the same as that of the underlying exposure. Any ineffective portion of the change in fair value of the instruments is recognized immediately in earnings.

We will discontinue the use of hedge accounting prospectively when (i) the derivative instrument is no longer effective in offsetting changes in fair value or cash flows of the underlying hedged item; (ii) the derivative instrument expires, is sold, terminated or exercised; or (iii) designating the derivative instrument as a hedge is no longer appropriate.

Should we discontinue hedge accounting because it is no longer probable that an anticipated transaction will occur in the originally expected period, or within an additional two-month period thereafter, changes to fair value accumulated in other comprehensive income would be recognized immediately in earnings.

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FASB ASC 815-10 requires companies to recognize the derivative instrument as an asset or a liability at fair value in the statement of financial position. Fair value of the derivative instrument is required to be measured under the FASB’s Fair Value Measurements and Disclosures guidance, which establishes a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. The fair value of our interest rate swap is based on Level 2 inputs.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) summarizes the financial statements from management’s perspective with respect to our financial condition, results of operations, liquidity and other factors that may affect actual results. The MD&A is organized in the following sections:

• Overview

• Results of Operations

• Liquidity and Capital Resources

• Contractual Obligations and Commercial Commitments

• Regulations

• Critical Accounting Policies and Estimates

• Accounting Standards

The MD&A should be read in conjunction with our 2016 Form 10-K.

Overview:

We have two reportable segments, Truckload Transportation Services (“Truckload”) and Werner Logistics, and we operate in the truckload and logistics sectors of the transportation industry. In the truckload sector, we focus on transporting consumer nondurable products that generally ship more consistently throughout the year. In the logistics sector, besides managing transportation requirements for individual customers, we provide additional sources of truck capacity, alternative modes of transportation, a global delivery network and systems analysis to optimize transportation needs. Our success depends on our ability to efficiently and effectively manage our resources in the delivery of truckload transportation and logistics services to our customers. Resource requirements vary with customer demand, which may be subject to seasonal or general economic conditions. Our ability to adapt to changes in customer transportation requirements is essential to efficiently deploy resources and make capital investments in tractors and trailers (with respect to our Truckload segment) or obtain qualified third-party capacity at a reasonable price (with respect to our Werner Logistics segment). Although our business volume is not highly concentrated, we may also be affected by our customers’ financial failures or loss of customer business.

Revenues for our Truckload segment operating units (One-Way Truckload, Dedicated and Temperature Controlled) are typically generated on a per-mile basis and also include revenues such as stop charges, loading and unloading charges, equipment detention charges and equipment repositioning charges. To mitigate our risk to fuel price increases, we recover from our customers additional fuel surcharges that generally recoup a majority of the increased fuel costs; however, we cannot assure that current recovery levels will continue in future periods. Because fuel surcharge revenues fluctuate in response to changes in fuel costs, we identify them separately and exclude them from the statistical calculations to provide a more meaningful comparison between periods. The key statistics used to evaluate trucking revenues, net of fuel surcharge, are (i) average revenues per tractor per week, (ii) average percentage of empty miles (miles without trailer cargo), (iii) average trip length (in loaded miles) and (iv) average number of tractors in service. General economic conditions, seasonal trucking industry freight patterns and industry capacity are important factors that impact these statistics. Our Truckload segment also generates a small amount of revenues categorized as non-trucking revenues, which consist primarily of the intra-Mexico portion of cross-border shipments delivered to or from Mexico where the Truckload segment utilizes a third-party capacity provider. We exclude such revenues from the statistical calculations.

Our most significant resource requirements are company drivers, independent contractors, tractors and trailers. Independent contractors supply their own tractors and drivers and are responsible for their operating expenses. Our financial results are affected by company driver and independent contractor availability and the markets for new and used revenue equipment. We are self-insured for a significant portion of bodily injury, property damage and cargo claims; workers’ compensation claims; and associate health claims (supplemented by premium-based insurance coverage above certain dollar levels). For that reason, our financial results may also be affected by driver safety, medical costs, weather, legal and regulatory environments and insurance coverage costs to protect against catastrophic losses.

The operating ratio is a common industry measure used to evaluate our profitability and that of our Truckload segment operating fleets. The operating ratio consists of operating expenses expressed as a percentage of operating revenues. The most significant variable expenses that impact the Truckload segment are driver salaries and benefits, fuel, fuel taxes (included in taxes and licenses expense), payments to independent contractors (included in rent and purchased transportation expense), supplies and maintenance and insurance and claims. As discussed further in the comparison of operating results for first quarter 2017 to first quarter 2016, several industry-wide issues have caused, and could continue to cause, costs to increase in future periods. These issues include shortages of drivers or independent contractors, changing fuel prices, higher new truck and trailer purchase prices and compliance with new or proposed regulations. Our main fixed costs include depreciation expense for tractors and trailers and equipment licensing fees (included in taxes and licenses expense). The Truckload segment requires substantial cash expenditures for tractor

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and trailer purchases. We fund these purchases with net cash from operations and financing available under our existing credit facilities, as management deems necessary.

We provide non-trucking services primarily through the four operating units within our Werner Logistics segment (Brokerage, Freight Management, Intermodal and Werner Global Logistics international). Unlike our Truckload segment, the Werner Logistics segment is less asset-intensive and is instead dependent upon qualified associates, information systems and qualified third-party capacity providers. The largest expense item related to the Werner Logistics segment is the cost of purchased transportation we pay to third-party capacity providers. This expense item is recorded as rent and purchased transportation expense. Other operating expenses consist primarily of salaries, wages and benefits. We evaluate the Werner Logistics segment’s financial performance by reviewing the gross margin percentage (revenues less rent and purchased transportation expenses expressed as a percentage of revenues) and the operating income percentage. The gross margin percentage can be impacted by the rates charged to customers and the costs of securing third-party capacity. We have a mix of contracted long-term rates and variable rates for the cost of third-party capacity, and we cannot assure that our operating results will not be adversely impacted in the future if our ability to obtain qualified third-party capacity providers changes or the rates of such providers increase.

Results of Operations:

The following table sets forth the Consolidated Statements of Income in dollars and as a percentage of total operating revenues and the percentage increase or decrease in the dollar amounts of those items compared to the prior year.

	Three Months Ended March 31,									Percentage Change in Dollar Amounts
	2017				2016					2017 to 2016
(Amounts in thousands)	$			%	$			%		%
Operating revenues	$	501,221		100.0	$	482,802		100.0		3.8	%
Operating expenses:
Salaries, wages and benefits	160,839			32.1	156,737			32.5		2.6	%
Fuel	45,156			9.0	32,060			6.6		40.8	%
Supplies and maintenance	38,232			7.6	47,115			9.8		(18.9	)%
Taxes and licenses	20,786			4.2	20,987			4.4		(1.0	)%
Insurance and claims	19,840			4.0	18,347			3.8		8.1	%
Depreciation	55,336			11.0	50,164			10.4		10.3	%
Rent and purchased transportation	126,425			25.2	117,976			24.4		7.2	%
Communications and utilities	4,072			0.8	3,909			0.8		4.2	%
Other	4,563			0.9	3,020			0.6		51.1	%
Total operating expenses	475,249			94.8	450,315			93.3		5.5	%
Operating income	25,972			5.2	32,487			6.7		(20.1	)%
Total other (income)	(85		)	—	(451		)	(0.1	)	81.2	%
Income before income taxes	26,057			5.2	32,938			6.8		(20.9	)%
Income taxes	10,038			2.0	12,846			2.6		(21.9	)%
Net income	$	16,019		3.2	$	20,092		4.2		(20.3	)%

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The following tables set forth the operating revenues, operating expenses and operating income for the Truckload segment, as well as certain statistical data regarding our Truckload segment operations for the periods indicated.

	Three Months Ended March 31,
	2017			2016
Truckload Transportation Services (amounts in thousands)	$		%	$		%
Trucking revenues, net of fuel surcharge	$	330,489		$	336,707
Trucking fuel surcharge revenues	47,981			30,697
Non-trucking and other operating revenues	6,533			5,513
Operating revenues	385,003		100.0	372,917		100.0
Operating expenses	361,537		93.9	340,558		91.3
Operating income	$	23,466	6.1	$	32,359	8.7

	Three Months Ended March 31,
Truckload Transportation Services	2017			2016			% Change
Operating ratio, net of fuel surcharge revenues (1)	93.0		%	90.5		%
Average revenues per tractor per week (2)	$	3,531		$	3,523		0.2	%
Average trip length in miles (loaded)	469			472			(0.6	)%
Average percentage of empty miles (3)	12.39		%	13.27		%	(6.6	)%
Average tractors in service	7,199			7,352			(2.1	)%
Total trailers (at quarter end)	22,035			22,335
Total tractors (at quarter end):
Company	6,455			6,430
Independent contractor	725			900
Total tractors	7,180			7,330

⁽¹⁾ Calculated as if fuel surcharge revenues are excluded from total revenues and instead reported as a reduction of operating expenses, which provides a more consistent basis for comparing results of operations from period to period.

⁽²⁾  Net of fuel surcharge revenues.

⁽³⁾  “Empty” refers to miles without trailer cargo.

The following tables set forth the Werner Logistics segment’s revenues, rent and purchased transportation expense, gross margin, other operating expenses (primarily salaries, wages and benefits expense) and operating income, as well as certain statistical data regarding the Werner Logistics segment.

	Three Months Ended March 31,
	2017			2016
Werner Logistics (amounts in thousands)	$		%	$		%
Operating revenues	$	99,853	100.0	$	96,577	100.0
Rent and purchased transportation expense	84,317		84.4	79,384		82.2
Gross margin	15,536		15.6	17,193		17.8
Other operating expenses	12,487		12.5	12,158		12.6
Operating income	$	3,049	3.1	$	5,035	5.2

	Three Months Ended March 31,
Werner Logistics	2017	2016	% Change
Average tractors in service	62	68	(8.8	)%
Total trailers (at quarter end)	1,780	1,605	10.9	%
Total tractors (at quarter end)	55	68	(19.1	)%

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Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Operating Revenues

Operating revenues increased3.8% for the three months ended March 31, 2017, compared to the same period of the prior year. When comparing first quarter 2017 to first quarter 2016, Truckload segment revenues increased$12.1 million or 3.2%, and Werner Logistics revenues increased$3.3 million or 3.4%.

Trucking revenues, net of fuel surcharge, decreased1.8% in first quarter 2017 compared to first quarter 2016 due to a 2.1% decrease in average tractors in service, partially offset by a 0.2% increase in average revenues per tractor per week. Our average miles per truck declined by 0.8% in first quarter 2017 compared to first quarter 2016, and average revenues per total mile, net of fuel surcharge, increased by 1.0%.

Freight demand in our One-Way Truckload fleet was seasonally softer in January with weaker trends from late January 2017 to late February 2017. In March 2017, our freight volume trend was more encouraging, as freight improved to more normal seasonal levels consistent with the same period in 2016. Freight volumes in April 2017 in One-Way Truckload have been better than the same period in April 2016.

The average number of tractors in service in the Truckload segment decreased2.1% to 7,199 in first quarter 2017 from 7,352 in first quarter 2016. We ended first quarter 2017 with 7,180 trucks in the Truckload segment, a year-over-year reduction of 150 trucks compared to the end of first quarter 2016, and a sequential increase of 80 trucks compared to the end of fourth quarter 2016. We cannot predict whether future driver shortages, if any, will adversely affect our ability to maintain our fleet size. If such a driver market shortage were to occur, it could result in a fleet size reduction, and our results of operations could be adversely affected.

Trucking fuel surcharge revenues represent collections from customers for the increase in fuel and fuel-related expenses, including the fuel component of our independent contractor cost (recorded as rent and purchased transportation expense) and fuel taxes (recorded in taxes and licenses expense), when diesel fuel prices rise. Conversely, when fuel prices decrease, fuel surcharge revenues decrease. These revenues increased56.3% to $48.0 million in first quarter 2017 from $30.7 million in first quarter 2016 due to higher average fuel prices in the 2017 quarter. To lessen the effect of fluctuating fuel prices on our margins, we collect fuel surcharge revenues from our customers for the cost of diesel fuel and taxes in excess of specified base fuel price levels according to terms in our customer contracts. Fuel surcharge rates generally adjust weekly based on an independent U.S. Department of Energy fuel price survey which is released every Monday. Our fuel surcharge programs are designed to (i) recoup higher fuel costs from customers when fuel prices rise and (ii) provide customers with the benefit of lower fuel costs when fuel prices decline. These programs generally enable us to recover a majority, but not all, of the fuel price increases. The remaining portion is generally not recoverable because it results from empty and out-of-route miles (which are not billable to customers) and truck idle time. Fuel prices that change rapidly in short time periods also impact our recovery because the surcharge rate in most programs only changes once per week.

Werner Logistics revenues are generated by its four operating units and exclude revenues for full truckload shipments transferred to the Truckload segment, which are recorded as trucking revenues by the Truckload segment. Werner Logistics also recorded revenue and brokered freight expense of $0.2 million in first quarter 2017 and $0.2 million in first quarter 2016 for Intermodal drayage movements performed by the Truckload segment (also recorded as trucking revenue by the Truckload segment), and these transactions between reporting segments are eliminated in consolidation. In first quarter 2017, Werner Logistics revenues increased$3.3 million or 3.4%, and operating income dollars decreased$2.0 million or 39.4%, compared to first quarter 2016. The Werner Logistics gross margin percentage in first quarter 2017 of 15.6% decreased from 17.8% in first quarter 2016. The Werner Logistics operating income percentage in first quarter 2017 of 3.1% declined from first quarter 2016 of 5.2%.

In first quarter 2017, Werner Logistics achieved solid growth in our truck brokerage solution, while our intermodal solution had lower revenues due to more challenging market conditions. As previously disclosed, a large Werner Logistics Freight Management customer that was acquired in 2015 transitioned to their parent company’s transportation platform mid-quarter during first quarter 2017. The loss of this customer will likely slow revenue and operating income growth for Werner Logistics in the near term.

Operating Expenses

Our operating ratio (operating expenses expressed as a percentage of operating revenues) was 94.8% for the three months ended March 31, 2017, compared to 93.3% for the three months ended March 31, 2016. Expense items that impacted the overall operating ratio are described on the following pages. The tables on pages 16 and 17 show the Consolidated Statements of Income in dollars and as a percentage of total operating revenues and the percentage increase or decrease in the dollar amounts of those items compared to the same quarter of the prior year, as well as the operating ratios, operating margins, and certain statistical information for our two reportable segments, Truckload and Werner Logistics.

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Salaries, wages and benefits increased$4.1 million or 2.6% in first quarter 2017 compared to first quarter 2016 but decreased0.4% as a percentage of operating revenues to 32.1%. The higher dollar amount of salaries, wages and benefits expense in the 2017 first quarter was due primarily to higher workers’ compensation expense and higher driver and student pay rates, partially offset by fewer company truck miles. When evaluated on a per-mile basis, driver salaries, wages and benefits also increased, which we primarily attribute to higher driver pay in first quarter 2017 compared to first quarter 2016. Non-driver salaries, wages and benefits in the non-trucking Werner Logistics segment increased 9.6%.

We renewed our workers’ compensation insurance coverage for the policy year beginning April 1, 2017. Our coverage levels are the same as the prior policy year. We continue to maintain a self-insurance retention of $1.0 million per claim. Our workers’ compensation insurance premiums for the policy year beginning April 2017 were similar to those for the previous policy year.

The driver recruiting market remains challenging. Several ongoing market factors persist including a declining number of, and increased competition for, driver training school graduates, a low national unemployment rate, aging truck driver demographics and increased truck safety regulations. We proactively took many significant actions in 2016 to strengthen our driver recruiting and retention to make Werner the preferred choice for the best drivers, including raising driver pay, lowering the age of our truck fleet, installing safety and training features on all new trucks and investing in our driver training schools. Our driver turnover rate once again improved, achieving the lowest first quarter percentage in 18 years. We are unable to predict whether we will experience future driver shortages. If such a shortage were to occur and additional driver pay rate increases became necessary to attract and retain drivers, our results of operations would be negatively impacted to the extent that we could not obtain corresponding freight rate increases.

Fuel increased$13.1 million or 40.8% in first quarter 2017 compared to first quarter 2016 and increased2.4% as a percentage of operating revenues due to higher average diesel fuel prices. Average diesel fuel prices were 53 cents per gallon higher in first quarter 2017 than in first quarter 2016 and were 5 cents per gallon higher than in fourth quarter 2016. The increase from higher prices was partially offset by fewer company truck miles and slightly improved miles per gallon (“mpg”).

We continue to employ measures to improve our fuel mpg such as (i) limiting truck engine idle time, (ii) optimizing the speed, weight and specifications of our equipment and (iii) implementing mpg-enhancing equipment changes to our fleet including new trucks with U.S. Environmental Protection Agency (the “EPA”) 2010 compliant engines, more aerodynamic truck features, idle reduction systems, trailer tire inflation systems, trailer skirts and automated manual transmissions to reduce our fuel gallons purchased. However, fuel savings from mpg improvement is offset by higher depreciation expense and the additional cost of diesel exhaust fluid (required in tractors with engines that meet the 2010 EPA emission standards). Although our fuel management programs require significant capital investment and research and development, we intend to continue these and other environmentally conscious initiatives, including our active participation as an EPA SmartWay Transport Partner. The SmartWay Transport Partnership is a national voluntary program developed by the EPA and freight industry representatives to reduce greenhouse gases and air pollution and promote cleaner, more efficient ground freight transportation.

For April 2017, the average diesel fuel price per gallon was approximately 37 cents higher than the average diesel fuel price per gallon in the same period of 2016 and approximately 22 cents higher than in second quarter 2016.

Shortages of fuel, increases in fuel prices and petroleum product rationing can have a materially adverse effect on our operations and profitability. We are unable to predict whether fuel price levels will increase or decrease in the future or the extent to which fuel surcharges will be collected from customers. As of March 31, 2017, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.

Supplies and maintenance decreased$8.9 million or 18.9% in first quarter 2017 compared to first quarter 2016 and decreased2.2% as a percentage of operating revenues. Repairs and maintenance decreased due to our younger tractor and trailer fleet and fewer company truck miles driven in the 2017 quarter. The average age of our company truck fleet was at 1.8 years as of March 31, 2017.

Taxes and licenses decreased$0.2 million or 1.0% in first quarter 2017 compared to first quarter 2016 and decreased0.2% as a percentage of operating revenues. The decrease was caused primarily by lower diesel fuel taxes in first quarter 2017 compared to first quarter 2016, the result of fewer company truck miles.

Insurance and claims increased$1.5 million or 8.1% in first quarter 2017 compared to first quarter 2016 and increased 0.2% as a percentage of operating revenues. The increase in first quarter 2017 compared to first quarter 2016 was primarily the result of higher premiums and higher new claims. The majority of our insurance and claims expense results from our claim experience and claim development under our self-insurance program; the remainder results from insurance premiums for claims in excess of our self-insured limits. We renewed our liability insurance policies on August 1, 2016 and continued to be responsible for the first

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$2.0 million per claim with an annual $8.0 million aggregate for claims between $2.0 million and $5.0 million and an annual aggregate of $5.0 million for claims in excess of $5.0 million and less than $10.0 million. We maintain liability insurance coverage with insurance carriers substantially in excess of the $10.0 million per claim. Our liability insurance premiums for the policy year that began August 1, 2016 are about $3.5 million higher than premiums for the previous policy year. The market for excess trucking liability coverage is difficult, as insurance carriers have either exited the market or increased premium rates due to increasing plaintiff awards in the industry.

Depreciation expense increased$5.2 million or 10.3% in first quarter 2017 compared to first quarter 2016 and increased0.6% as a percentage of operating revenues. This expense increase is due primarily to (i) a change during fourth quarter 2016 in the estimated life of certain trucks to more rapidly depreciate the trucks to their residual values due to the weak used truck market, (ii) the higher cost of new trucks purchased compared to the cost of used trucks that were sold over the past 12 months, and (iii) the purchase of new trailers over the past 12 months to replace older used trailers which were fully depreciated. The change in estimated useful life resulted in additional depreciation expense in first quarter 2017 of $2.6 million, a decrease from the $4.1 million recorded in the fourth quarter 2016. We expect depreciation expense for these trucks to continue to decline in second quarter 2017 as the remaining trucks are sold.

We are nearing completion of a significant reinvestment in our fleet over the last two years to reduce the average age of our trucks

and trailers. Our investment in newer trucks and trailers improves our driver experience, raises operational efficiency and helps us to better manage our maintenance, safety and fuel costs.

Rent and purchased transportation expense increased$8.4 million or 7.2% in first quarter 2017 compared to first quarter 2016 and increased0.8% as a percentage of operating revenues. Rent and purchased transportation expense consists mostly of payments to third-party capacity providers in the Werner Logistics segment and other non-trucking operations and payments to independent contractors in the Truckload segment. The payments to third-party capacity providers generally vary depending on changes in the volume of services generated by the Werner Logistics segment. Werner Logistics rent and purchased transportation expense increased $4.9 million, and as a percentage of Werner Logistics revenues increased to 84.4% in first quarter 2017 from 82.2% in first quarter 2016. This decreased gross margin percentage is the result of an extremely competitive customer rate environment and higher costs for third-party capacity.

Rent and purchased transportation for the Truckload segment increased $3.5 million in first quarter 2017 compared to first quarter 2016. This increase is due primarily to higher payments to independent contractors due to higher average fuel reimbursement during first quarter 2017 compared to first quarter 2016 in response to higher average diesel fuel prices. Independent contractor miles as a percentage of total miles were 13.0% in first quarter 2017 compared to 13.6% in first quarter 2016. Because independent contractors supply their own tractors and drivers and are responsible for their operating expenses, the decrease in independent contractor miles as a percentage of total miles shifted costs from the rent and purchased transportation category to other expense categories, including (i) salaries, wages and benefits, (ii) fuel, (iii) depreciation, (iv) supplies and maintenance and (v) taxes and licenses.

Challenging operating conditions continue to make independent contractor recruitment and retention difficult. Such conditions include inflationary cost increases that are the responsibility of independent contractors and a shortage of financing available to independent contractors for equipment purchases. Historically we have been able to add company tractors and recruit additional company drivers to offset any decrease in the number of independent contractors. If a shortage of independent contractors and company drivers occurs, further increases in per-mile settlement rates (for independent contractors) and driver pay rates (for company drivers) may become necessary to attract and retain these drivers. This could negatively affect our results of operations to the extent that we would not be able to obtain corresponding freight rate increases.

Communications and utilities increased$0.2 million or 4.2% in first quarter 2017 compared to first quarter 2016 and did not change as a percentage of operating revenues. This increase is primarily due to higher equipment tracking expenses in first quarter 2017 compared to first quarter 2016.

Other operating expenses increased$1.5 million or 51.1% in first quarter 2017 compared to first quarter 2016 and increased0.3% as a percentage of operating revenues. Gains on sales of assets (primarily used trucks and trailers) are reflected as a reduction of other operating expenses and are reported net of sales-related expenses (which include costs to prepare the equipment for sale). Gains on sales of assets were $1.4 million in first quarter 2017 compared to $3.4 million in first quarter 2016, which included a $0.6 million real estate gain. In first quarter 2017, we sold fewer trucks and more trailers than in first quarter 2016. We realized slightly higher average gains per truck and lower average gains per trailer in first quarter 2017 compared to first quarter 2016. The used truck pricing market remained difficult in first quarter 2017 due to a higher than normal supply of used trucks in the market and low buyer demand. Other operating expenses, primarily provision for doubtful accounts related to the driver training schools and professional and consulting fees, declined by $0.4 million in first quarter 2017 compared to in first quarter 2016.

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Other Expense (Income)

Other expense (income) increased $0.4 million and increased 0.1% as a percentage of operating revenues in first quarter 2017 compared to first quarter 2016. Interest expense was higher in the 2017 quarter due primarily to higher average outstanding debt.

Income Taxes

Our effective income tax rate (income taxes expressed as a percentage of income before income taxes) was 38.5% in first quarter 2017 and 39.0% in first quarter 2016. The lower income tax rate in first quarter 2017 is attributed primarily to recognizing excess tax benefits related to share-based awards as a component of income tax expense.

Liquidity and Capital Resources:

During the three months ended March 31, 2017, we generated cash flow from operations of $74.9 million, an 18% or $16.4 million decrease in cash flows compared to the same three-month period a year ago. The decrease in net cash provided by operating activities resulted primarily from a $20.1 million decrease from general working capital activities. We were able to repay debt, make net capital expenditures and pay dividends with the net cash provided by operating activities and existing cash balances.

Net cash used in investing activities decreased to $7.4 million for the three-month period ended March 31, 2017 from $98.2 million for the three-month period ended March 31, 2016. Net property additions (primarily revenue equipment) were $14.6 million for the three-month period ended March 31, 2017, compared to $101.6 million during the same period of 2016. This decrease occurred as we are nearing completion of a significant reinvestment in our fleet. As of March 31, 2017, we were committed to property and equipment purchases of approximately $99.9 million. We currently estimate net capital expenditures (primarily revenue equipment) in 2017 to be in the range of $200 million to $250 million, compared to net capital expenditures in 2016 of $429.6 million. We intend to fund these net capital expenditures through cash flow from operations and financing available under our existing credit facilities, if necessary.

Net financing activities used $54.1 million during the three months ended March 31, 2017, and used $4.8 million during the same period in 2016. During the three months ended March 31, 2017, we repaid $50.0 million of debt. Our outstanding debt at March 31, 2017 was $130.0 million. We paid dividends of $4.3 million in both the three-month periods ended March 31, 2017 and 2016. We did not repurchase any shares of common stock during the three months ended March 31, 2017 or 2016. From time to time, the Company has repurchased, and may continue to repurchase, shares of the Company’s common stock. The timing and amount of such purchases depend upon stock market conditions and other factors. As of March 31, 2017, the Company had purchased 3,287,291 shares pursuant to our current Board of Directors repurchase authorization and had 4,712,709 shares remaining available for repurchase.

Management believes our financial position at March 31, 2017 is strong. As of March 31, 2017, we had $30.8 million of cash and cash equivalents and over $1 billion of stockholders’ equity. Cash is invested primarily in government portfolio money market funds. As of March 31, 2017, we had a total of $325.0 million of credit pursuant to three credit facilities (see Note 2 in the Notes to Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q), of which we had borrowed $130.0 million. Subsequent to the end of quarter, in April 2017, we repaid $25.0 million of debt. The remaining $195.0 million of credit available under these facilities at March 31, 2017 is reduced by the $25.8 million in stand-by letters of credit under which we are obligated. These stand-by letters of credit are primarily required as security for insurance policies. Based on our strong financial position, management does not foresee any significant barriers to obtaining sufficient financing, if necessary.

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Contractual Obligations and Commercial Commitments:

The following tables set forth our contractual obligations and commercial commitments as of March 31, 2017.

Payments Due by Period

(Amounts in millions)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Period Unknown
Contractual Obligations
Unrecognized tax benefits	$	6.0	$	—	$	—	$	—	$	—	$	6.0
Long-term debt including current maturities	130.0		25.0		75.0		30.0		—		—
Interest payments on debt	7.4		2.7		4.4		0.3		—		—
Property and equipment purchase commitments	99.9		99.9		—		—		—		—
Total contractual cash obligations	$	243.3	$	127.6	$	79.4	$	30.3	$	—	$	6.0
Other Commercial Commitments
Unused lines of credit	$	169.2	$	—	$	—	$	169.2	$	—	$	—
Stand-by letters of credit	25.8		25.8		—		—		—		—
Total commercial commitments	$	195.0	$	25.8	$	—	$	169.2	$	—	$	—
Total obligations	$	438.3	$	153.4	$	79.4	$	199.5	$	—	$	6.0

As of March 31, 2017, we had unsecured committed credit facilities with three banks as well as a term commitment with one of these banks. We had with Wells Fargo Bank, N.A., a $100 million credit facility which will expire on July 12, 2020, and a $75 million term commitment with principal due and payable on September 15, 2019. We had an unsecured line of credit of $75 million with U.S. Bank, N.A., which will expire on July 13, 2020. We also had a $75 million credit facility with BMO Harris Bank, N.A., which will expire on March 5, 2020. Borrowings under these credit facilities and term note bear variable interest based on the London Interbank Offered Rate (“LIBOR”). As of March 31, 2017, we had $75 million outstanding under the term commitment at a variable rate of 1.51%, which is effectively fixed at 2.5% with an interest rate swap agreement, and we had an additional $55 million outstanding under the credit facilities at a weighted average interest rate of 1.53%. Interest payments on debt are based on the debt balance and interest rates at March 31, 2017. The borrowing capacity under these credit facilities is further reduced by the amount of stand-by letters of credit under which we are obligated. The stand-by letters of credit are primarily required for insurance policies. The unused lines of credit are available to us in the event we need financing for the replacement of our fleet or for other significant capital expenditures. Management believes our financial position is strong, and we therefore expect that we could obtain additional financing, if necessary. Property and equipment purchase commitments relate to committed equipment expenditures, primarily for revenue equipment. As of March 31, 2017, we had recorded a $6.0 million liability for unrecognized tax benefits. We expect none of it to be settled within the next twelve months and are unable to reasonably determine when the $6.0 million categorized as “period unknown” will be settled.

Regulations:

Item 1 of Part I of our 2016 Form 10-K includes a discussion of pending proposed regulations that may have an effect on our operations if they become adopted and effective as proposed. Except as described below, there have been no material changes in the status of these proposed regulations previously disclosed in the 2016 Form 10-K.

The Federal Motor Carrier Safety Administration (“FMCSA”) proposed to change the method for assigning a motor carrier’s Safety Fitness Determination (“SFD”) in January 2016, which would replace the three-tier federal rating system in place since 1982 with a single determination of “unfit.” FMCSA announced on March 23, 2017 that it has withdrawn the SFD proposed rule altogether, pending completion of a study of the agency’s Compliance, Safety, Accountability program.

Interstate carriers are subject to the FMCSA Hours of Service (“HOS”) regulations. FMCSA adopted a final rule in December 2011 that included provisions affecting restart periods, rest breaks, on-duty time, and penalties for violations, and we began dispatching drivers under the revised HOS rules effective July 1, 2013. The Consolidated Appropriations Act of 2016 was passed by Congress with HOS language to reduce negative effects of restricted hours and require the FMCSA study to demonstrate results with statistically significant improvements in safety and driver health, among other things, before the agency could reinstate restart rule restrictions that became effective in July 2013. In March 2017, FMCSA released the HOS Restart study report, which indicated that the restrictions do not improve safety; as a result, the pre-July 2013 restart rule continues to be in effect indefinitely.

In an effort to increase highway safety and improve compliance, Werner supports FMCSA’s electronic logging devices (“ELDs”) mandate. The final ELD rule was issued in December 2015, and carriers have until December 2017 to adopt and use compliant ELDs. In March 2016, a legal complaint was filed by the Owner-Operator Independent Drivers Association (“OOIDA”) to overturn the ELD mandate. OOIDA asked the U.S. 7th Circuit Court of Appeals to strike down the rule, arguing the rule is an unconstitutional

22

violation of truckers’ rights and will do little to enhance safety. On October 31, 2016, OOIDA’s lawsuit was denied. OOIDA appealed the decision to the U.S. Supreme Court on April 11, 2017.

FMCSA issued its final rule for Entry-Level Driver Training (“ELDT”) in December 2016. On December 27, 2016, four groups petitioned FMCSA to reconsider the final rule. The petition was denied by FMCSA on January 19, 2017. This final rule was slated to take effect February 6, 2017, with a compliance date of February 7, 2020; however, agencies were directed by the President in January 2017 to postpone for 60 days the effective date of rules published in the Federal Register but not yet effective. On March 21, 2017, FMCSA announced a new effective date for the ELDT final rule, which is now May 22, 2017; the compliance date is set for February 7, 2020.

Critical Accounting Policies and Estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make estimates and assumptions that affect the (i) reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (ii) reported amounts of revenues and expenses during the reporting period. We evaluate these estimates on an ongoing basis as events and circumstances change, utilizing historical experience, consultation with experts and other methods considered reasonable in the particular circumstances. Actual results could differ from those estimates and may significantly impact our results of operations from period to period. It is also possible that materially different amounts would be reported if we used different estimates or assumptions.

Information regarding our Critical Accounting Policies and Estimates can be found in our 2016 Form 10-K. The most critical accounting policies and estimates that require us to make significant judgments and estimates and affect our financial statements include the following:

• Depreciation and impairment of tractors and trailers.

• Estimates of accrued liabilities for insurance and claims for liability and physical damage losses and workers’ compensation.

• Accounting for income taxes.

There have been no material changes to these critical accounting policies and estimates from those discussed in our 2016 Form 10-K.

Accounting Standards:

In the descriptions under “New Accounting Pronouncements Adopted” and “Accounting Standards Updates Not Yet Effective” that follow, references in quotations identify guidance and Accounting Standards Updates (“ASU”) relating to the topics and subtopics (and their descriptive titles, as appropriate) of the Accounting Standards Codification^™ of the Financial Accounting Standards Board (“FASB”).

New Accounting Pronouncements Adopted

In July 2015, the FASB issued ASU No. 2015-11, “Inventory: Simplifying the Measurement of Inventory,” which requires inventory to be recorded at the lower of cost and net realizable value (instead of lower of cost or market). The Company adopted ASU No. 2015-11 as of January 1, 2017. Upon adoption, this update had no effect on our consolidated financial position, results of operations or cash flows.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” to simplify several aspects of the accounting for share-based payment transactions. The new update requires excess tax benefits and tax deficiencies to be recorded in the consolidated statements of income as a component of income tax expense when share-based awards vest or are settled. The update also eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur and now allows for withholding up to the maximum statutory tax rate on certain share-based awards without triggering liability accounting.

The Company adopted ASU No. 2016-09 as of January 1, 2017. Upon adoption, share-based payment excess tax benefits and tax deficiencies are recognized in the consolidated statements of income as a component of income tax expense, rather than additional paid-in capital as previously recognized. The Company elected to report excess tax benefits as operating activities in the consolidated statements of cash flows on a prospective basis, and prior period amounts have not been adjusted. The Company also elected to

23

use actual forfeitures to determine the amount of share-based compensation expense to be recognized. This change was applied on a modified retrospective basis and resulted in a $0.3 million decrease to retained earnings in first quarter 2017.

Accounting Standards Updates Not Yet Effective

On May 28, 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The FASB has also issued ASU No. 2016-08, 2016-10, 2016-11, 2016-12, and 2016-20 in 2016, with additional guidance related to revenue recognition matters. In July 2015, the FASB voted to approve a one-year deferral of the effective date of the new revenue recognition standard and to permit early adoption but no earlier than the original effective date (annual periods beginning after December 15, 2016); such decisions were documented in the FASB’s ASU No. 2015-14 “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.” As a result of the deferral, the new standard (as well as ASU No. 2016-08 and 2016-10, 2016-11, 2016-12 and 2016-20) will become effective for us beginning January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures and have not yet selected a transition method. While we cannot yet determine the quantitative impact on our consolidated financial statements, we currently expect the new standard to affect the timing of revenue recognition. Today we recognize revenue and related direct costs when the shipment is delivered. The new standard will require us to recognize revenue over time.

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” to increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The provisions of this update are effective for fiscal years beginning after December 15, 2018. We are evaluating the effect that ASU No. 2016-02 will have on our consolidated financial position, results of operations and cash flows.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The provisions of this update are effective for fiscal years beginning after December 15, 2017. We are evaluating the effect that ASU No. 2016-15 will have on our consolidated cash flows.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows - (Topic 230) Restricted Cash (a Consensus of the FASB Emerging Issues Task Force),” which requires an entity to include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash equivalents. The provisions of this

update are effective for fiscal years beginning after December 15, 2017. We are evaluating the effect ASU No. 2016-18 will have

on our consolidated cash flows and related disclosures

Other ASUs not identified above and which are not effective until after March 31, 2017 are not expected to have a material effect on our consolidated financial position, results of operations or cash flows.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk from changes in commodity prices, foreign currency exchange rates and interest rates.

Commodity Price Risk

The price and availability of diesel fuel are subject to fluctuations attributed to changes in the level of global oil production, refining capacity, seasonality, weather and other market factors. Historically, we have recovered a majority, but not all, of fuel price increases from customers in the form of fuel surcharges. We implemented customer fuel surcharge programs with most of our customers to offset much of the higher fuel cost per gallon. However, we do not recover all of the fuel cost increase through these surcharge programs. We cannot predict the extent to which fuel prices will increase or decrease in the future or the extent to which fuel surcharges could be collected. As of March 31, 2017, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.

Foreign Currency Exchange Rate Risk

We conduct business in several foreign countries, including Mexico, Canada, China and Australia. To date, most foreign revenues are denominated in U.S. Dollars, and we receive payment for foreign freight services primarily in U.S. Dollars to reduce direct foreign currency risk. Assets and liabilities maintained by a foreign subsidiary company in the local currency are subject to foreign exchange gains or losses. Foreign currency translation gains and losses primarily relate to changes in the value of revenue equipment owned by a subsidiary in Mexico, whose functional currency is the Peso. Foreign currency translation gains were $2.4 million for first quarter 2017 and $0.1 million for first quarter 2016. These were recorded in accumulated other comprehensive loss within stockholders’ equity in the Consolidated Balance Sheets.

Interest Rate Risk

We manage interest rate exposure through a mix of variable rate debt and interest rate swap agreements. We had $75 million of debt outstanding at March 31, 2017, for which the interest rate is effectively fixed at 2.5% through September 2019 with an interest rate swap agreement to reduce our exposure to interest rate increases.

We had $55 million of variable rate debt outstanding at March 31, 2017. Interest rates on the variable rate debt and our unused credit facilities are based on the LIBOR (see Contractual Obligations and Commercial Commitments). Assuming this level of borrowings, a hypothetical one-percentage point increase in the LIBOR interest rate would increase our annual interest expense by $550,000.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). Our disclosure controls and procedures are designed to provide reasonable assurance of achieving the desired control objectives. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level in enabling us to record, process, summarize and report information required to be included in our periodic filings with the SEC within the required time period and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, concluded that no changes in our internal control over financial reporting occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have confidence in our internal controls and procedures. Nevertheless, our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the internal controls or disclosure procedures and controls will prevent all errors or intentional fraud. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect that resource constraints exist, and the benefits of controls must be evaluated relative to their costs. Because of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements and instances of fraud, if any, have been prevented or detected.

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PART II

OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On October 15, 2007, we announced that on October 11, 2007 our Board of Directors approved an increase in the number of shares of our common stock that the Company is authorized to repurchase. Under this authorization, the Company is permitted to repurchase an additional 8,000,000 shares. As of March 31, 2017, the Company had purchased 3,287,291 shares pursuant to this authorization and had 4,712,709 shares remaining available for repurchase. The Company may purchase shares from time to time depending on market, economic and other factors. The authorization will continue unless withdrawn by the Board of Directors.

No shares of common stock were repurchased during the first quarter 2017 by either the Company or any “affiliated purchaser,” as defined by Rule 10b-18 of the Exchange Act.

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Item 6. Exhibits.

Exhibit No.	Exhibit	Incorporated by Reference to:
3(i)	Restated Articles of Incorporation of Werner Enterprises, Inc.	Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007
3(ii)	Revised and Restated By-Laws of Werner Enterprises, Inc.	Exhibit 3.1 to the Company’s Current Report on Form 8-K dated May 10, 2016
10.1	Named Executive Officer Compensation	Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and Item 5.02 of the Company’s Current Report on Form 8-K dated February 8, 2017
10.2	Non-Employee Director Compensation	Filed herewith
11	Statement Re: Computation of Per Share Earnings	See Note 5 (Earnings Per Share) in the Notes to Consolidated Financial Statements (Unaudited) under Item 1 of Part I of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017
31.1	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 (Section 302 of the Sarbanes-Oxley Act of 2002)	Filed herewith
31.2	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 (Section 302 of the Sarbanes-Oxley Act of 2002)	Filed herewith
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	Furnished herewith
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	Furnished herewith
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith

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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 2, 2017	By:	/s/ John J. Steele
		John J. Steele
		Executive Vice President, Treasurer and Chief Financial Officer
Date: May 2, 2017	By:	/s/ James L. Johnson
		James L. Johnson
		Executive Vice President, Chief Accounting Officer and Corporate Secretary

28

EX-10.2

EXHIBIT 10.2

WERNER ENTERPRISES, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION

Independent members of the Board of Directors (the “Board”) of Werner Enterprises, Inc. (the “Company”) receive annual cash retainers and restricted stock awards summarized in the table below. Such fees were approved on March 21, 2017 by the Compensation Committee (the “Committee”) of the Board and became effective April 1, 2017.

Fee or Retainer	Amount
Annual Cash Retainer for Board Membership	$50,000
Annual Cash Retainer for the Audit Committee Chair	$15,000
Annual Cash Retainer for the Compensation Committee Chair	$10,000
Annual Cash Retainer for the Nominating and Corporate Governance Committee Chair	$5,000
Annual Restricted Stock Award for Board Membership	$50,000

Cash compensation is paid in equal quarterly installments. Annual restricted stock awards vest over a three-year period from the date of grant. Restricted stock awards are granted pursuant to the terms of the Werner Enterprises, Inc. Amended and Restated Equity Plan and the Form of Restricted Stock Award Agreement, both of which are filed as exhibits to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. To the extent required by SEC regulations, equity awards granted to the Company’s independent directors are reported on Form 4 filings with the Securities and Exchange Commission.

We also reimburse each independent director at cost for all of their reasonable out-of-pocket travel expenses incurred in connection with their attendance at Board and Board committee meetings and for other reasonable out-of-pocket expenses directly related to their Board and Board committee service.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13a-14(a) AND 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, Derek J. Leathers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Werner Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2017

/s/ Derek J. Leathers

Derek J. Leathers

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13a-14(a) AND 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, John J. Steele, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Werner Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2017

/s/ John J. Steele

John J. Steele

Executive Vice President, Treasurer and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Werner Enterprises, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2017 (the “Report”), filed with the Securities and Exchange Commission, I, Derek J. Leathers, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 2, 2017	/s/ Derek J. Leathers
	Derek J. Leathers
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Werner Enterprises, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2017 (the “Report”), filed with the Securities and Exchange Commission, I, John J. Steele, Executive Vice President, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 2, 2017	/s/ John J. Steele
	John J. Steele
	Executive Vice President, Treasurer and Chief Financial Officer

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Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Entity Registrant Name	WERNER ENTERPRISES INC
Entity Central Index Key	0000793074
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		72,219,768

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Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating revenues	$ 501,221	$ 482,802
Operating expenses:
Salaries, wages and benefits	160,839	156,737
Fuel	45,156	32,060
Supplies and maintenance	38,232	47,115
Taxes and licenses	20,786	20,987
Insurance and claims	19,840	18,347
Depreciation	55,336	50,164
Rent and purchased transportation	126,425	117,976
Communications and utilities	4,072	3,909
Other	4,563	3,020
Total operating expenses	475,249	450,315
Operating income	25,972	32,487
Other expense (income):
Interest expense	776	494
Interest income	(914)	(990)
Other	53	45
Total other income	(85)	(451)
Income before income taxes	26,057	32,938
Income taxes	10,038	12,846
Net income	$ 16,019	$ 20,092
Earnings per share:
Basic	$ 0.22	$ 0.28
Diluted	0.22	0.28
Dividends declared per share	$ 0.060	$ 0.060
Weighted-average common shares outstanding:
Basic	72,191	72,025
Diluted	72,447	72,353

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Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net income	$ 16,019	$ 20,092
Other comprehensive income (loss):
Foreign currency translation adjustments	2,447	56
Change in fair value of interest rate swap	214	(735)
Other comprehensive income (loss)	2,661	(679)
Comprehensive income	$ 18,680	$ 19,413

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Consolidated Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 30,804	$ 16,962
Accounts receivable, trade, less allowance of $9,301 and $9,183, respectively	247,035	261,372
Other receivables	15,604	15,168
Inventories and supplies	12,314	12,768
Prepaid taxes, licenses and permits	11,499	15,374
Income taxes receivable	15,300	21,497
Other current assets	37,261	29,987
Total current assets	369,817	373,128
Property and equipment	2,067,555	2,109,991
Less – accumulated depreciation	744,181	747,353
Property and equipment, net	1,323,374	1,362,638
Other non-current assets	52,477	57,237
Total assets	1,745,668	1,793,003
Current liabilities:
Accounts payable	63,546	66,618
Current portion of long-term debt	25,000	20,000
Insurance and claims accruals	74,483	83,404
Accrued payroll	27,034	26,189
Other current liabilities	17,000	18,650
Total current liabilities	207,063	214,861
Long-term debt, net of current portion	105,000	160,000
Other long-term liabilities	16,064	16,711
Insurance and claims accruals, net of current portion	110,960	113,875
Deferred income taxes	296,197	292,769
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; 80,533,536 shares issued; 72,219,768 and 72,166,969 shares outstanding, respectively	805	805
Paid-in capital	101,587	101,035
Retained earnings	1,096,190	1,084,796
Accumulated other comprehensive loss	(14,256)	(16,917)
Treasury stock, at cost; 8,313,768 and 8,366,567 shares, respectively	(173,942)	(174,932)
Total stockholders’ equity	1,010,384	994,787
Total liabilities and stockholders’ equity	$ 1,745,668	$ 1,793,003

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Consolidated Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Allowance for doubtful trade accounts receivable	$ 9,301	$ 9,183
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	80,533,536	80,533,536
Common stock, shares outstanding	72,219,768	72,166,969
Treasury stock, shares	8,313,768	8,366,567

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 16,019	$ 20,092
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	55,336	50,164
Deferred income taxes	3,433	6,410
Gain on disposal of property and equipment	(1,392)	(3,365)
Non-cash equity compensation	896	(315)
Insurance and claims accruals, net of current portion	(2,915)	(4,250)
Other	(3,897)	(5,006)
Changes in certain working capital items:
Accounts receivable, net	14,337	15,260
Other current assets	288	12,006
Accounts payable	(1,869)	813
Other current liabilities	(5,289)	(490)
Net cash provided by operating activities	74,947	91,319
Cash flows from investing activities:
Additions to property and equipment	(42,659)	(123,424)
Proceeds from sales of property and equipment	28,065	21,821
Decrease in notes receivable	7,206	3,394
Net cash used in investing activities	(7,388)	(98,209)
Cash flows from financing activities:
Repayments of short-term debt	(20,000)	0
Repayments of long-term debt	(30,000)	0
Dividends on common stock	(4,330)	(4,320)
Tax withholding related to net share settlements of restricted stock awards	(341)	(540)
Stock options exercised	524	99
Excess tax benefits from equity compensation	0	(19)
Net cash used in financing activities	(54,147)	(4,780)
Effect of exchange rate fluctuations on cash	430	247
Net increase (decrease) in cash and cash equivalents	13,842	(11,423)
Cash and cash equivalents, beginning of period	16,962	31,833
Cash and cash equivalents, end of period	30,804	20,410
Supplemental disclosures of cash flow information:
Interest paid	876	494
Income taxes paid	378	1,088
Supplemental schedule of non-cash investing activities:
Notes receivable issued upon sale of property and equipment	872	14,051
Change in fair value of interest rate swap	214	(735)
Property and equipment acquired included in accounts payable	671	7,240
Property and equipment disposed included in other receivables	$ 11	$ 476

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Accounting Policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Accounting Policies

Accounting Policies

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory: Simplifying the Measurement of Inventory,” which requires inventory to be recorded at the lower of cost and net realizable value (instead of lower of cost or market). The Company adopted ASU No. 2015-11 as of January 1, 2017. Upon adoption, this update had no effect on our consolidated financial position, results of operations or cash flows.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” to simplify several aspects of the accounting for share-based payment transactions. The new update requires excess tax benefits and tax deficiencies to be recorded in the consolidated statements of income as a component of income tax expense when share-based awards vest or are settled. The update also eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur and now allows for withholding up to the maximum statutory tax rate on certain share-based awards without triggering liability accounting.

The Company adopted ASU No. 2016-09 as of January 1, 2017. Upon adoption, share-based payment excess tax benefits and tax deficiencies are recognized in the consolidated statements of income as a component of income tax expense, rather than additional paid-in capital as previously recognized. The Company elected to report excess tax benefits as operating activities in the consolidated statements of cash flows on a prospective basis, and prior period amounts have not been adjusted. The Company also elected to use actual forfeitures to determine the amount of share-based compensation expense to be recognized. This change was applied on a modified retrospective basis and resulted in a $0.3 million decrease to retained earnings in first quarter 2017.

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Credit Facilities

3 Months Ended

Mar. 31, 2017

Line of Credit Facility [Abstract]

Credit Facilities

Credit Facilities

As of March 31, 2017, we had unsecured committed credit facilities with three banks as well as a term commitment with one of these banks. We had with Wells Fargo Bank, N.A., a $100.0 million credit facility which will expire on July 12, 2020, and a $75.0 million term commitment with principal due and payable on September 15, 2019. We had an unsecured line of credit of $75.0 million with U.S. Bank, N.A., which will expire on July 13, 2020. We also had a $75.0 million credit facility with BMO Harris Bank, N.A., which will expire on March 5, 2020. Borrowings under these credit facilities and term note bear variable interest based on the London Interbank Offered Rate (“LIBOR”).

As of March 31, 2017, and December 31, 2016, our outstanding debt totaled $130.0 million and $180.0 million, respectively. We had $75.0 million outstanding under the term commitment at a variable rate of 1.51% as of March 31, 2017, which is effectively fixed at 2.5% with an interest rate swap agreement, and we had an additional $55.0 million outstanding under the credit facilities at a weighted average interest rate of 1.53%. Subsequent to the end of the quarter, in April 2017, we repaid $25.0 million of debt, which we classified as current in the Consolidated Balance Sheets. The $325.0 million of borrowing capacity under our credit facilities at March 31, 2017, is further reduced by $25.8 million in stand-by letters of credit under which we are obligated. Each of the debt agreements includes, among other things, financial covenants requiring us (i) not to exceed a maximum ratio of total debt to total capitalization and/or (ii) not to exceed a maximum ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (as such terms are defined in each credit facility). At March 31, 2017, we were in compliance with these covenants.

At March 31, 2017, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2017	$	25,000
2018	—
2019	75,000
2020	30,000
2021	—
Total	$	130,000

The carrying amounts of our long-term debt approximate fair value due to the duration of the notes and the variable interest rates.

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Income Taxes

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We accrued interest expense of $55 thousand and $52 thousand during the three-month periods ended March 31, 2017 and March 31, 2016, respectively, excluding the reversal of accrued interest related to adjustments for the remeasurement of uncertain tax positions. Our total gross liability for unrecognized tax benefits at March 31, 2017, is $6.0 million. If recognized, $3.9 million of unrecognized tax benefits would impact our effective tax rate. Interest of $1.1 million has been reflected as a component of the total liability. We expect no other significant increases or decreases for uncertain tax positions during the next twelve months.

We file U.S. federal income tax returns, as well as income tax returns in various states and several foreign jurisdictions. The years 2013 through 2016 are open for examination by the Internal Revenue Service (“IRS”), and various years are open for examination by state and foreign tax authorities. State and foreign jurisdictional statutes of limitations generally range from three to four years.

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Commitments And Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

As of March 31, 2017, we have committed to property and equipment purchases of approximately $99.9 million.

We are involved in certain claims and pending litigation arising in the ordinary course of business. The majority of these claims relate to bodily injury, property damage, cargo and workers’ compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements. Moreover, the results of complex legal proceedings are difficult to predict and our view of these matters may change in the future as the litigation and related events unfold.

We are involved in class action litigation in the U.S. District Court for the District of Nebraska, in which the plaintiffs allege that we owe drivers for unpaid wages under the Fair Labor Standards Act (FLSA) and the Nebraska Wage Payment and Collection Act and that we failed to pay minimum wage per hour for drivers in our student driver training program, related to short break time and sleeper berth time. The period covered by this class action suit dates back to 2008 through March 2014. In August 2015, the court denied our motion for summary judgment and granted the plaintiff’s motion for summary judgment, ruling in plaintiff’s favor on both theories of liability (short breaks and sleeper berth time). During second quarter 2016, the court issued two rulings, the first of which dismissed plaintiff’s claims under the Nebraska Wage Payment and Collection Act (but not the FLSA) and the second of which granted our motion to strike plaintiff’s untimely damages calculations. As a result, we reduced our accrual in second quarter 2016, and we had a $1.2 million estimated liability at March 31, 2017 related to the short break matter. In February 2017, the court revised the decision from August 2015 and denied summary judgment to the plaintiffs on the sleeper berth issue. In doing so, the court also ruled that the Company had not willfully violated the law on the sleeper berth claim and dismissed the liquidated damages portion of the case, related to the sleeper berth claim. Based on the knowledge of the facts related to the sleeper berth matter, management does not currently believe a loss is probable, thus we have not accrued for the sleeper berth matter. We are currently unable to determine the possible loss or range of loss. We intend to vigorously defend the merits of these claims and to appeal any adverse verdict in this case.

We are also involved in certain class action litigation in which the plaintiffs allege claims for failure to provide meal and rest breaks, unpaid wages, unauthorized deductions and other items. Based on the knowledge of the facts, management does not currently believe the outcome of these class actions is likely to have a material adverse effect on our financial position or results of operations. However, the final disposition of these matters and the impact of such final dispositions cannot be determined at this time.

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Earnings Per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and restricted stock awards. There are no differences in the numerators of our computations of basic and diluted earnings per share for any period presented. The computation of basic and diluted earnings per share is shown below (in thousands, except per share amounts).

	Three Months Ended March 31,
	2017		2016
Net income	$	16,019	$	20,092
Weighted average common shares outstanding	72,191		72,025
Dilutive effect of stock-based awards	256		328
Shares used in computing diluted earnings per share	72,447		72,353
Basic earnings per share	$	0.22	$	0.28
Diluted earnings per share	$	0.22	$	0.28

There were no options to purchase shares of common stock that were outstanding during the periods indicated above that were excluded from the computation of diluted earnings per share because the option purchase price was greater than the average market price of the common shares during the period. Performance awards are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied.

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Equity Compensation

3 Months Ended

Mar. 31, 2017

Equity Compensation [Abstract]

Equity Compensation

Equity Compensation

The Werner Enterprises, Inc. Amended and Restated Equity Plan (the “Equity Plan”), approved by the Company’s shareholders, provides for grants to employees and non-employee directors of the Company in the form of nonqualified stock options, restricted stock and units (“restricted awards”), performance awards, and stock appreciation rights. The Board of Directors or the Compensation Committee of our Board of Directors determines the terms of each award, including the type, recipients, number of shares subject to and vesting conditions of each award. No awards of stock appreciation rights have been issued under the Equity Plan to date. The maximum number of shares of common stock that may be awarded under the Equity Plan is 20,000,000 shares. The maximum aggregate number of shares that may be awarded to any one person in any one calendar year under the Equity Plan is 500,000. As of March 31, 2017, there were 7,352,802 shares available for granting additional awards.

Equity compensation expense is included in salaries, wages and benefits within the Consolidated Statements of Income. As of March 31, 2017, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $8.1 million and is expected to be recognized over a weighted average period of 2.4 years. The following table summarizes the equity compensation expense and related income tax benefit recognized in the Consolidated Statements of Income (in thousands):

	Three Months Ended March 31,
	2017		2016
Stock options:
Pre-tax compensation expense	$	2	$	5
Tax benefit	1		2
Stock option expense, net of tax	$	1	$	3
Restricted awards:
Pre-tax compensation expense	$	633	$	130
Tax benefit	245		50
Restricted stock expense, net of tax	$	388	$	80
Performance awards:
Pre-tax compensation expense	$	283	$	(419	)
Tax benefit	110		(163		)
Performance award expense, net of tax	$	173	$	(256	)

During the three-month period ended March 31, 2016, we recorded a $1.8 million reduction in compensation expense and a $0.7 million reduction of tax benefit resulting from a change in forfeiture estimates for certain restricted and performance awards, most of which relate to a previously disclosed executive retirement that occurred in February 2016.

We do not have a formal policy for issuing shares upon an exercise of stock options or vesting of restricted and performance awards. Such shares are generally issued from treasury stock. From time to time, we repurchase shares of our common stock, the timing and amount of which depends on market and other factors. Historically, the shares acquired from such repurchases have provided us with sufficient quantities of stock to issue for equity compensation. Based on current treasury stock levels, we do not expect to repurchase additional shares specifically for equity compensation during 2017.

Stock Options

Stock options are granted at prices equal to the market value of the common stock on the date the option award is granted. Option awards currently outstanding become exercisable in installments from 24 to 72 months after the date of grant. The options are exercisable over a period not to exceed ten years, one day from the date of grant. The following table summarizes stock option activity for the three months ended March 31, 2017:

	Number of Options (in thousands)		Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at beginning of period	171		$	18.19
Granted	—		—
Exercised	(30	)	17.61
Forfeited	—		—
Expired	—		—
Outstanding at end of period	141		18.31		1.74	$	1,113
Exercisable at end of period	136		18.17		1.64	$	1,095

We did not grant any stock options during the three-month periods ended March 31, 2017 and March 31, 2016. The fair value of stock option grants is estimated using a Black-Scholes valuation model. The total intrinsic value of stock options exercised was $307 thousand and $31 thousand for the three-month periods ended March 31, 2017 and March 31, 2016, respectively.

Restricted Awards

Restricted stock entitles the holder to shares of common stock when the award vests. Restricted stock units entitle the holder to a combination of cash or stock equal to the value of common stock when the unit vests. The value of these shares may fluctuate according to market conditions and other factors. Restricted awards currently outstanding vest over periods ranging from 12 to 84 months from the grant date of the award. The restricted awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions. The following table summarizes restricted award activity for the three months ended March 31, 2017:

	Number of Restricted Awards (in thousands)		Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	293		$	25.98
Granted	69		27.01
Vested	—		—
Forfeited	(8	)	26.61
Nonvested at end of period	354		26.17

We estimate the fair value of restricted awards based upon the market price of the underlying common stock on the date of grant, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate. Cash settled restricted stock units are recorded as a liability within the Consolidated Balance Sheets and are adjusted to fair value each reporting period.

No restricted awards vested during the three-month periods ended March 31, 2017 and March 31, 2016. When restricted awards vest, we withhold shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes. The shares withheld to satisfy the tax withholding obligations are recorded as treasury stock.

Performance Awards

Performance awards entitle the recipient to shares of common stock upon attainment of performance objectives as pre-established by the Compensation Committee. If the performance objectives are achieved, performance awards currently outstanding vest, subject to continued employment, over periods ranging from 12 to 60 months from the grant date of the award. The performance awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions. The following table summarizes performance award activity for the three months ended March 31, 2017:

	Number of Performance Awards (in thousands)		Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	124		$	27.33
Granted	69		26.89
Vested	(35	)	27.07
Forfeited	—		—
Nonvested at end of period	158		27.20

The 2017 performance awards are earned based upon the level of attainment by the Company of specified performance objectives related to cumulative diluted earnings per share for the two-year period from January 1, 2017 to December 31, 2018. Shares earned based on cumulative diluted earnings per share may be capped based on absolute total shareholder return during the three-year period. The 2017 performance awards will cliff vest in one installment on the third anniversary from the grant date. In February 2017, the Compensation Committee determined the 2016 fiscal year results upon which the 2016 performance awards were based fell below the threshold level; thus, no shares of common stock were earned, and the shares not earned were included in the 2016 forfeited shares.

We estimate the fair value of performance awards based upon the market price of the underlying common stock on the date of grant, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate.

The vesting date fair value of performance awards that vested during the three-month periods ended March 31, 2017 and March 31, 2016 was $1.0 million and $1.6 million, respectively. We withhold shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes. The shares withheld to satisfy the tax withholding obligations are recorded as treasury stock.

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Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

Segment Information

We have two reportable segments – Truckload Transportation Services (“Truckload”) and Werner Logistics.

The Truckload segment consists of three operating units, One-Way Truckload, Dedicated and Temperature Controlled. These units are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting. One-Way Truckload is comprised of the following operating fleets: (i) the medium-to-long-haul van (“Van”) fleet transports a variety of consumer nondurable products and other commodities in truckload quantities over irregular routes using dry van trailers; (ii) the expedited (“Expedited”) fleet provides time-sensitive truckload services utilizing driver teams; and (iii) the regional short-haul (“Regional”) fleet provides comparable truckload van service within geographic regions across the United States. Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, utilizing either dry van or specialized trailers. Temperature Controlled provides truckload services for temperature sensitive products over irregular routes utilizing temperature-controlled trailers. (We previously utilized the name “Specialized Services” to encompass the operations of both Dedicated and Temperature Controlled.) Revenues for the Truckload segment include a small amount of non-trucking revenues which consist primarily of the intra-Mexico portion of cross-border shipments delivered to or from Mexico where we utilize a third-party capacity provider.

The Werner Logistics segment generates the majority of our non-trucking revenues through four operating units that provide non-trucking services to our customers. These four Werner Logistics operating units are as follows: (i) truck brokerage (“Brokerage”) uses contracted carriers to complete customer shipments; (ii) freight management (“Freight Management”) offers a full range of single-source logistics management services and solutions; (iii) the intermodal (“Intermodal”) unit offers rail transportation through alliances with rail and drayage providers as an alternative to truck transportation; and (iv) Werner Global Logistics international (“WGL”) provides complete management of global shipments from origin to destination using a combination of air, ocean, truck and rail transportation modes.

We generate other revenues from our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities. None of these operations meets the quantitative reporting thresholds. As a result, these operations are grouped in “Other” in the table below. “Corporate” includes revenues and expenses that are incidental to our activities and are not attributable to any of our operating segments, including gains and losses on sales of assets not attributable to our operating segments. We do not prepare separate balance sheets by segment and, as a result, assets are not separately identifiable by segment. Inter-segment eliminations in the table below represent transactions between reporting segments that are eliminated in consolidation.

The following table summarizes our segment information (in thousands):

	Three Months Ended March 31,
	2017			2016
Revenues
Truckload Transportation Services	$	385,003		$	372,917
Werner Logistics	99,853			96,577
Other	16,110			13,178
Corporate	422			373
Subtotal	501,388			483,045
Inter-segment eliminations	(167		)	(243		)
Total	$	501,221		$	482,802
Operating Income
Truckload Transportation Services	$	23,466		$	32,359
Werner Logistics	3,049			5,035
Other	145			(1,934		)
Corporate	(688		)	(2,973		)
Total	$	25,972		$	32,487

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Derivative Financial Instrument

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instrument

Derivative Financial Instrument

In the normal course of business we are subject to risk from adverse fluctuations in foreign exchange and interest rates and commodity prices. We manage our risks for interest rate changes through use of an interest rate swap. At March 31, 2017, we had one interest rate swap outstanding, which matures in September 2019, with a notional value of $75.0 million and a pre-tax fair value loss of $0.6 million. The counterparty to this contract is a major financial institution. We are exposed to credit loss in the event of non-performance by the counterparty. We do not use derivative instruments for trading or speculative purposes and have no derivative financial instruments to reduce our exposure to fuel price fluctuations.

Our objective in managing exposure to interest rate risk is to limit the impact on earnings and cash flow. The extent to which we use such instruments is dependent on our access to these contracts in the financial markets and our success using other methods.

Our outstanding derivative financial instrument is recognized as an other long-term liability in the Consolidated Balance Sheets at fair value. The interest rate swap is accounted for as a cash flow hedging instrument. At inception, we formally designated and documented the financial instrument as a hedge of a specific underlying exposure, the risk management objective, and the manner in which effectiveness of the hedge will be assessed. We formally assess, both at inception and at each reporting period thereafter, whether the derivative financial instrument is effective in offsetting changes in cash flows of the related underlying exposure. All changes in fair value of outstanding derivatives in cash flow hedges, except any ineffective portion, are recorded in other comprehensive income until earnings are impacted by the hedged transaction. Classification of the gain or loss in the Consolidated Statements of Income upon release from comprehensive income is the same as that of the underlying exposure. Any ineffective portion of the change in fair value of the instruments is recognized immediately in earnings.

We will discontinue the use of hedge accounting prospectively when (i) the derivative instrument is no longer effective in offsetting changes in fair value or cash flows of the underlying hedged item; (ii) the derivative instrument expires, is sold, terminated or exercised; or (iii) designating the derivative instrument as a hedge is no longer appropriate.

Should we discontinue hedge accounting because it is no longer probable that an anticipated transaction will occur in the originally expected period, or within an additional two-month period thereafter, changes to fair value accumulated in other comprehensive income would be recognized immediately in earnings.

FASB ASC 815-10 requires companies to recognize the derivative instrument as an asset or a liability at fair value in the statement of financial position. Fair value of the derivative instrument is required to be measured under the FASB’s Fair Value Measurements and Disclosures guidance, which establishes a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. The fair value of our interest rate swap is based on Level 2 inputs.

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Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Adoption of ASU No. 2015-11

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory: Simplifying the Measurement of Inventory,” which requires inventory to be recorded at the lower of cost and net realizable value (instead of lower of cost or market). The Company adopted ASU No. 2015-11 as of January 1, 2017. Upon adoption, this update had no effect on our consolidated financial position, results of operations or cash flows.

Adoption of ASU No. 2016-09

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” to simplify several aspects of the accounting for share-based payment transactions. The new update requires excess tax benefits and tax deficiencies to be recorded in the consolidated statements of income as a component of income tax expense when share-based awards vest or are settled. The update also eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur and now allows for withholding up to the maximum statutory tax rate on certain share-based awards without triggering liability accounting.

The Company adopted ASU No. 2016-09 as of January 1, 2017. Upon adoption, share-based payment excess tax benefits and tax deficiencies are recognized in the consolidated statements of income as a component of income tax expense, rather than additional paid-in capital as previously recognized. The Company elected to report excess tax benefits as operating activities in the consolidated statements of cash flows on a prospective basis, and prior period amounts have not been adjusted. The Company also elected to use actual forfeitures to determine the amount of share-based compensation expense to be recognized. This change was applied on a modified retrospective basis and resulted in a $0.3 million decrease to retained earnings in first quarter 2017.

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Credit Facilities (Tables)

3 Months Ended

Mar. 31, 2017

Line of Credit Facility [Line Items]

Schedule of Maturities of Long-term Debt

At March 31, 2017, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2017	$	25,000
2018	—
2019	75,000
2020	30,000
2021	—
Total	$	130,000

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Schedule of Basic And Diluted Earnings Per Share

The computation of basic and diluted earnings per share is shown below (in thousands, except per share amounts).

	Three Months Ended March 31,
	2017		2016
Net income	$	16,019	$	20,092
Weighted average common shares outstanding	72,191		72,025
Dilutive effect of stock-based awards	256		328
Shares used in computing diluted earnings per share	72,447		72,353
Basic earnings per share	$	0.22	$	0.28
Diluted earnings per share	$	0.22	$	0.28

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Equity Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Equity Compensation [Abstract]

Schedule of Equity Compensation Expense and Related Income Tax Benefit Recognized

The following table summarizes the equity compensation expense and related income tax benefit recognized in the Consolidated Statements of Income (in thousands):

	Three Months Ended March 31,
	2017		2016
Stock options:
Pre-tax compensation expense	$	2	$	5
Tax benefit	1		2
Stock option expense, net of tax	$	1	$	3
Restricted awards:
Pre-tax compensation expense	$	633	$	130
Tax benefit	245		50
Restricted stock expense, net of tax	$	388	$	80
Performance awards:
Pre-tax compensation expense	$	283	$	(419	)
Tax benefit	110		(163		)
Performance award expense, net of tax	$	173	$	(256	)

Schedule of Equity Compensation Stock Options Activity

The following table summarizes stock option activity for the three months ended March 31, 2017:

	Number of Options (in thousands)		Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at beginning of period	171		$	18.19
Granted	—		—
Exercised	(30	)	17.61
Forfeited	—		—
Expired	—		—
Outstanding at end of period	141		18.31		1.74	$	1,113
Exercisable at end of period	136		18.17		1.64	$	1,095

Schedule of Equity Compensation, Restricted Award Activity

The following table summarizes restricted award activity for the three months ended March 31, 2017:

	Number of Restricted Awards (in thousands)		Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	293		$	25.98
Granted	69		27.01
Vested	—		—
Forfeited	(8	)	26.61
Nonvested at end of period	354		26.17

Schedule of Equity Compensation Performance Award Activity

The following table summarizes performance award activity for the three months ended March 31, 2017:

	Number of Performance Awards (in thousands)		Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	124		$	27.33
Granted	69		26.89
Vested	(35	)	27.07
Forfeited	—		—
Nonvested at end of period	158		27.20

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Schedule of Segment Information

The following table summarizes our segment information (in thousands):

	Three Months Ended March 31,
	2017			2016
Revenues
Truckload Transportation Services	$	385,003		$	372,917
Werner Logistics	99,853			96,577
Other	16,110			13,178
Corporate	422			373
Subtotal	501,388			483,045
Inter-segment eliminations	(167		)	(243		)
Total	$	501,221		$	482,802
Operating Income
Truckload Transportation Services	$	23,466		$	32,359
Werner Logistics	3,049			5,035
Other	145			(1,934		)
Corporate	(688		)	(2,973		)
Total	$	25,972		$	32,487

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Accounting Policies (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($)
Retained Earnings Adjustments [Line Items]
Cumulative effect on retained earnings	$ (0.3)

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Credit Facilities (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Apr. 30, 2017	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Line of Credit Facility [Line Items]
Total of committed credit facilities with banks		$ 325,000
Credit facility repayments		20,000	$ 0
Borrowings outstanding		130,000		$ 180,000
Stand-by letters of credit		25,800
Mature September 15, 2019
Line of Credit Facility [Line Items]
Total of committed credit facilities with banks		$ 75,000
Committed credit facilities maturity		Sep. 15, 2019
Line of credit facility, interest rate		1.51%
Interest rate swap facility, fixed interest		2.50%
Borrowings outstanding		$ 75,000
Mature July 12, 2020
Line of Credit Facility [Line Items]
Total of committed credit facilities with banks		$ 100,000
Committed credit facilities maturity		Jul. 12, 2020
Mature July 13, 2020
Line of Credit Facility [Line Items]
Total of committed credit facilities with banks		$ 75,000
Committed credit facilities maturity		Jul. 13, 2020
Mature March 5, 2020
Line of Credit Facility [Line Items]
Total of committed credit facilities with banks		$ 75,000
Committed credit facilities maturity		Mar. 05, 2020
Additional Outstanding Debt Under Credit Facilities
Line of Credit Facility [Line Items]
Line of credit facility, interest rate		1.53%
Borrowings outstanding		$ 55,000
Subsequent Event | Mature July 13, 2020
Line of Credit Facility [Line Items]
Credit facility repayments	$ 25,000

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Credit Facilities (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Line of Credit Facility [Line Items]
2017	$ 25,000
2018	0
2019	75,000
2020	30,000
2021	0
Total	$ 130,000	$ 180,000

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Tax Examination [Line Items]
Accrued interest expense	$ 55	$ 52
Gross liability for unrecognized tax benefits	6,000
Unrecognized tax benefits that would impact our effective tax rate	3,900
Interest included in total liability	1,100
Significant increases or decreases for uncertain tax positions	$ 0
State and Foreign Tax Authorities | Minimum
Income Tax Examination [Line Items]
Period of statute of limitations (years)	3 years
State and Foreign Tax Authorities | Maximum
Income Tax Examination [Line Items]
Period of statute of limitations (years)	4 years

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Commitments And Contingencies (Details) $ in Millions	Mar. 31, 2017 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Commitment for property and equipment purchases	$ 99.9
Estimated litigation liability	$ 1.2

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Earnings Per Share (Basic And Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Net income	$ 16,019	$ 20,092
Weighted average common shares outstanding	72,191	72,025
Dilutive effect of stock-based awards	256	328
Shares used in computing diluted earnings per share	72,447	72,353
Basic earnings per share	$ 0.22	$ 0.28
Diluted earnings per share	$ 0.22	$ 0.28
Number of antidilutive options that were excluded from computation of earnings per share	0	0

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Equity Compensation (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Equity Compensation [Abstract]
Maximum shares of common stock	20,000,000
Maximum annual shares awarded to employee	500,000
Shares available for granting additional awards	7,352,802
Unrecognized compensation cost of non-vested equity compensation awards	$ 8,100
Unrecognized compensation cost of non-vested equity compensation awards expected to be recognized over a weighted average period (years)	2 years 4 months 24 days
Number of options granted	0	0
Intrinsic value of stock options exercised	$ 307	$ 31
Stock Options
Equity Compensation [Abstract]
Maximum period for exercisable options (years and days)	10 years 1 day
Stock Options | Minimum
Equity Compensation [Abstract]
Vesting period (months)	24 months
Stock Options | Maximum
Equity Compensation [Abstract]
Vesting period (months)	72 months
Restricted Stock
Equity Compensation [Abstract]
Fair value of awards vested	$ 0	0
Restricted Stock | Minimum
Equity Compensation [Abstract]
Vesting period (months)	12 months
Restricted Stock | Maximum
Equity Compensation [Abstract]
Vesting period (months)	84 months
Performance Shares
Equity Compensation [Abstract]
Fair value of awards vested	$ 1,000	$ 1,600
Performance Shares | Minimum
Equity Compensation [Abstract]
Vesting period (months)	12 months
Performance Shares | Maximum
Equity Compensation [Abstract]
Vesting period (months)	60 months

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Equity Compensation (Equity Compensation Expense And Related Income Tax Benefit Recognized) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock Options
Equity Compensation [Abstract]
Pre-tax compensation expense	$ 2	$ 5
Tax benefit	1	2
Stock expense, net of tax	1	3
Restricted Stock
Equity Compensation [Abstract]
Pre-tax compensation expense	633	130
Tax benefit	245	50
Stock expense, net of tax	388	80
Performance Shares
Equity Compensation [Abstract]
Pre-tax compensation expense	283	(419)
Tax benefit	110	(163)
Stock expense, net of tax	173	$ (256)
Forfeiture Estimate
Equity Compensation [Abstract]
Pre-tax compensation expense	(1,800)
Tax benefit	$ (700)

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Equity Compensation (Schedule of Equity Compensation Stock Options Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Equity Compensation [Abstract]
Number of options outstanding at beginning of period	171
Number of options granted	0	0
Number of options exercised	(30)
Number of options forfeited	0
Number of options expired	0
Number of options outstanding at end of period	141
Number of options exercisable at end of period	136
Weighted average exercise price outstanding at beginning of period	$ 18.19
Weighted average exercise price options granted	0.00
Weighted average exercise price options exercised	17.61
Weighted average exercise price options forfeited	0.00
Weighted average exercise price options expired	0.00
Weighted average exercise price outstanding at end of period	18.31
Weighted average exercise price exercisable at end of period	$ 18.17
Weighted average remaining contractual term outstanding at end of period, years	1 year 8 months 26 days
Weighted average remaining contractual term exercisable at end of period, years	1 year 7 months 20 days
Aggregate intrinsic value outstanding at end of period	$ 1,113
Aggregate intrinsic value exercisable at end of period	$ 1,095

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Equity Compensation (Schedule of Equity Compensation Restricted Stock Activity) (Details) - Restricted Stock shares in Thousands	3 Months Ended
	Mar. 31, 2017 $ / shares shares
Equity Compensation [Abstract]
Number of shares nonvested at beginning of period | shares	293
Number of shares granted | shares	69
Number of shares vested | shares	0
Number of shares forfeited | shares	(8)
Number of shares nonvested at end of period | shares	354
Weighted average grant date fair value nonvested at beginning of period | $ / shares	$ 25.98
Weighted average grant date fair value shares granted | $ / shares	27.01
Weighted average grant date fair value shares vested | $ / shares	0.00
Weighted average grant date fair value shares forfeited | $ / shares	26.61
Weighted average grant date fair value nonvested at end of period | $ / shares	$ 26.17

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Equity Compensation (Schedule of Equity Compensation Performance Shares Activity) (Details) - Performance Shares shares in Thousands	3 Months Ended
	Mar. 31, 2017 $ / shares shares
Equity Compensation [Abstract]
Number of shares nonvested at beginning of period | shares	124
Number of shares granted | shares	69
Number of shares vested | shares	(35)
Number of shares forfeited | shares	0
Number of shares nonvested at end of period | shares	158
Weighted average grant date fair value nonvested at beginning of period | $ / shares	$ 27.33
Weighted average grant date fair value shares granted | $ / shares	26.89
Weighted average grant date fair value shares vested | $ / shares	27.07
Weighted average grant date fair value shares forfeited | $ / shares	0.00
Weighted average grant date fair value nonvested at end of period | $ / shares	$ 27.20

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Segment Information (Narratives) (Details)	3 Months Ended
	Mar. 31, 2017 Segments
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment Information (Summary Of Segment Information) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Segment Reporting Information [Line Items]
Revenues	$ 501,221	$ 482,802
Operating Income	25,972	32,487
Truckload Transportation Services
Segment Reporting Information [Line Items]
Revenues	385,003	372,917
Operating Income	23,466	32,359
Werner Logistics
Segment Reporting Information [Line Items]
Revenues	99,853	96,577
Operating Income	3,049	5,035
Other Segment
Segment Reporting Information [Line Items]
Revenues	16,110	13,178
Operating Income	145	(1,934)
Corporate Segment
Segment Reporting Information [Line Items]
Revenues	422	373
Operating Income	(688)	(2,973)
Subtotal
Segment Reporting Information [Line Items]
Revenues	501,388	483,045
Intersegment Elimination
Segment Reporting Information [Line Items]
Revenues	$ (167)	$ (243)

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Derivative Financial Instrument (Details) $ in Millions	Mar. 31, 2017 USD ($)
Cash Flow Hedge Interest Rate Swap Details [Abstract]
Notional value of interest rate swap	$ 75.0
Fair value of interest rate swap	$ 0.6