-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CnAomdsoKp85ZcmeWCZnWQGpMm5E+SUl0R28NYawKKoipYVTsqIyavexhW9VmC3V 01oZpItEbu9Ek80s6Qx91w== 0000793074-96-000014.txt : 19961118 0000793074-96-000014.hdr.sgml : 19961118 ACCESSION NUMBER: 0000793074-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WERNER ENTERPRISES INC CENTRAL INDEX KEY: 0000793074 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 470648386 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14690 FILM NUMBER: 96662889 BUSINESS ADDRESS: STREET 1: P O BOX 37308 STREET 2: P O BOX 37308 CITY: OMAHA STATE: NE ZIP: 68137 BUSINESS PHONE: 4028956640 10-Q 1 WERNER ENTERPRISES, INC. 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended Commission file number September 30, 1996 0-14690 WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter) NEBRASKA 47-0648386 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) INTERSTATE 80 & HIGHWAY 50 POST OFFICE BOX 37308 OMAHA, NEBRASKA 68137 (402)895-6640 (Address of principal (Zip Code) (Registrant's telephone number) executive offices) -------------------------------------- Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] As of October 31, 1996, 37,983,281 shares of the registrant's common stock, par value $.01 per share, were outstanding. PART I FINANCIAL INFORMATION Item 1. Financial Statements. The interim consolidated financial statements contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the financial condition and results of operations for the periods presented. They have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three-month and nine-month periods ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. In the opinion of management, the information set forth in the accompanying consolidated condensed balance sheets is fairly stated in all material respects in relation to the consolidated balance sheets from which it has been derived. These interim consolidated financial statements should be read in conjunction with the Company's latest annual report (which is incorporated by reference in the Form 10-K for the year ended December 31, 1995). Consolidated Statements of Income for the Three Months Ended September 30, 1996 and 1995.....................Page 3 Consolidated Statements of Income for the Nine Months Ended September 30, 1996 and 1995......................Page 4 Consolidated Condensed Balance Sheets as of September 30, 1996 and December 31, 1995...........................Page 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1995......................Page 6 Notes to Consolidated Financial Statements.............................Page 7 2 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME Three Months Ended (Amounts in thousands, except per share data) September 30 1996 1995 (Unaudited) Operating revenues $167,155 $150,303 Operating expenses: Salaries, wages and benefits 58,543 54,252 Fuel 15,515 11,803 Supplies and maintenance 14,289 12,766 Taxes and licenses 13,158 12,485 Insurance and claims 4,682 6,520 Depreciation 16,591 15,418 Rent and purchased transportation 24,227 19,480 Communications and utilities 2,087 1,992 Other (1,175) (1,422) Total operating expenses 147,917 133,294 Operating income 19,238 17,009 Other expense (income): Interest expense 486 672 Interest income (431) (291) Other 21 30 Total other expense 76 411 Income before income taxes 19,162 16,598 Income taxes 7,430 6,473 Net income $ 11,732 $ 10,125 Average common shares outstanding (Note 1) 37,936 37,739 Earnings per share (Note 1) $ .31 $ .27 3 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended (Amounts in thousands, except per share data) September 30 1996 1995 (Unaudited) Operating revenues $474,698 $426,062 Operating expenses: Salaries, wages and benefits 167,701 155,851 Fuel 43,943 34,435 Supplies and maintenance 40,189 38,029 Taxes and licenses 38,587 36,940 Insurance and claims 14,579 15,722 Depreciation 48,056 45,595 Rent and purchased transportation 70,542 53,866 Communications and utilities 5,976 6,210 Other (2,993) (4,573) Total operating expenses 426,580 382,075 Operating income 48,118 43,987 Other expense (income): Interest expense 1,610 1,661 Interest income (1,198) (744) Other 94 95 Total other expense 506 1,012 Income before income taxes 47,612 42,975 Income taxes 18,569 16,760 Net income $ 29,043 $ 26,215 Average common shares outstanding (Note 1) 37,836 37,760 Earnings per share (Note 1) $ .77 $ .69 4 WERNER ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) September 30 December 31 1996 1995 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 30,164 $ 16,227 Accounts receivable, net 70,950 57,871 Prepaid taxes, licenses and permits 2,695 7,752 Other current assets 19,014 19,145 Total current assets 122,823 100,995 Property and equipment 564,649 526,208 Less - accumulated depreciation 137,401 119,524 Property and equipment, net 427,248 406,684 $550,071 $507,679 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 23,766 $ 15,719 Insurance and claims accruals 20,532 19,073 Accrued payroll 10,631 7,718 Income taxes payable 4,970 3,226 Other current liabilities 8,711 8,455 Total current liabilities 68,610 54,191 Long-term debt 30,000 40,000 Insurance and claims accruals 27,000 26,000 Other long-term liabilities 2,782 2,736 Deferred income taxes 83,949 75,700 Stockholders' equity 337,730 309,052 $550,071 $507,679 5 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended (In thousands) September 30 1996 1995 (Unaudited) Cash flows from operating activities: Net income $29,043 $26,215 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 48,056 45,595 Deferred income taxes 8,249 5,521 Gain on disposal of operating equipment (3,971) (5,324) Tax benefit from exercise of stock options 782 - Long-term liabilities 1,046 300 Changes in certain working capital items: Accounts receivable, net (13,079) (11,254) Prepaid expenses and other current assets 5,188 4,776 Accounts payable 8,047 766 Accrued payroll 2,913 (1,190) Other current liabilities 3,265 6,588 Net cash provided by operating activities 89,539 71,993 Cash flows from investing activities: Additions to property and equipment (89,011) (102,771) Retirements of property and equipment 24,362 27,777 Net cash used in investing activities (64,649) (74,994) Cash flows from financing activities: Proceeds from issuance of long-term debt - 10,000 Repayments of long-term debt (10,000) - Dividends on common stock (2,394) (2,140) Repurchases of common stock - (1,013) Stock options exercised 1,441 35 Net cash provided by (used in) financing activities (10,953) 6,882 Net increase in cash and cash equivalents 13,937 3,881 Cash and cash equivalents, beginning of period 16,227 11,660 Cash and cash equivalents, end of period $30,164 $15,541 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 1,686 $ 2,625 Income taxes 7,756 10,944 6 WERNER ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Common Stock Split On August 9, 1996, the Company issued shares for a three-for-two common stock split effected in the form of a 50 percent stock dividend to stockholders of record at the close of business on July 26, 1996. All references in the consolidated financial statements with regard to the number of shares of common stock and the per share amounts have been adjusted to reflect the effect of the stock split. (2) Commitments As of September 30, 1996, the Company has committed to capital expenditures of approximately $39,000,000 (net cost, after revenue equipment trade-in allowances of approximately $16,000,000). 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition: During the nine months ended September 30, 1996, the Company generated cash flow from operations of $89.5 million. After the Company made net property additions, primarily revenue equipment, of $64.6 million, repaid long-term debt of $10.0 million and paid common stock dividends of $2.4 million, cash and cash equivalents increased by $13.9 million. The Company's long-term debt to equity ratio at September 30, 1996 was 8.9%, compared with 12.9% at December 31, 1995. Results of Operations: Three Months Ended September 30, 1996 and 1995 Operating revenues increased 11% for the three months ended September 30, 1996, compared to the same period of the prior year. The average number of tractors increased by 5%, primarily due to expansion in the long-haul van fleet. Revenue per mile, excluding a temporary fuel surcharge, was comparable to the same period of the previous year. Miles per tractor during the three months ended September 30, 1996 increased 4% compared to the same period of the prior year, due to management focus on maximizing equipment utilization, an increase in freight serviced by team drivers and an improvement in freight demand. Increased revenues from logistics transportation services also contributed to the overall increase in operating revenues. Operating expenses, expressed as a percentage of operating revenues, were 88.5% for the three months ended September 30, 1996, compared to 88.7% for the three months ended September 30, 1995. Owner-operator tractors represented a larger percentage of total tractors during the quarter ended September 30, 1996 (16.9%), compared to the same period of 1995 (15.1%), which caused a shift in expenses as a percentage of operating revenues from the salaries, wages and benefits; fuel; supplies and maintenance; taxes and licenses; and depreciation categories (owner-operators are independent contractors and are responsible for these costs under their contracts with the Company) to the rent and purchased transportation category. The Company's increase in logistics transportation services also contributed to the shift in costs to the rent and purchased transportation category. Salaries, wages and benefits decreased from 36.1% to 35.0% of revenues due primarily to the increase in the percentage of owner-operator tractors. On November 8, 1996, the Company announced that it would be increasing the pay for its Company drivers and owner-operators by two cents per mile, effective January 1, 1997. The Company is contacting customers to explain 8 the reasons for the pay increase in an effort to obtain rate increases. The Company cannot predict the extent to which rate increases will be obtained to offset the additional cost associated with the pay increase. Fuel increased from 7.9% to 9.3% of revenues, due mainly to a 23% increase in average fuel prices during the quarter, partially offset by the increase in the percentage of owner-operator tractors. In April 1996, the Company began efforts to recover the increased cost of fuel from customers via the use of fuel surcharges. The amount of fuel surcharges recovered from customers typically varies as the price of fuel fluctuates on a weekly or monthly basis. The higher average fuel prices, net of fuel surcharges collected from customers, resulted in a $.03 per share decrease in earnings for the quarter ended September 30, 1996 compared to the same quarter of 1995. The Company cannot predict whether the higher fuel prices will continue or the extent to which fuel surcharges will be collected to offset such increases. Supplies and maintenance was unchanged as a percentage of revenues, as higher driver advertising costs were offset by the increased percentage of owner operator tractors. Taxes and licenses decreased from 8.3% to 7.9% of revenues due primarily to the increased percentage of owner-operators, and the increase in logistics revenues. Insurance and claims decreased from 4.3% to 2.8% of revenues due to improved claims experience. Depreciation decreased from 10.3% to 9.9% of revenues due principally to the increased percentage of owner-operator tractors and increased tractor utilization. Other operating expenses changed from (.9%) to (.7%) of revenues mainly due to a decrease in gains realized on the sale of revenue equipment to third parties. The Company's effective income tax rate (income taxes as a percentage of income before income taxes) was 38.8% and 39.0% for the three month periods ended September 30, 1996 and 1995, respectively. Nine Months Ended September 30, 1996 and 1995 Operating revenues increased by 11% for the nine months ended September 30, 1996, compared to the same period of the previous year. The average number of tractors increased 6%. Miles per tractor during the nine months ended September 30, 1996 increased 4% compared to the same period of the prior year, due to management focus on maximizing equipment utilization, an increase in freight serviced by team drivers and an improvement in freight demand. Operating expenses, expressed as a percentage of operating revenues, increased to 89.9% for the nine months ended September 30, 1996, compared to 89.7% for the same period of 1995. Salaries, wages and benefits decreased from 36.6% to 35.3% of revenues due primarily to an increase in the percentage of owner-operator tractors, partially offset by a reduction 9 in the estimated liability for accrued driver payroll of $2,400,000 during the first quarter of 1995. On November 8, 1996, the Company announced that it would be increasing the pay for its Company drivers and owner-operators by two cents per mile, effective January 1, 1997. The Company is contacting customers to explain the reasons for the pay increase in an effort to obtain rate increases. The Company cannot predict the extent to which rate increases will be obtained to offset the additional cost associated with the pay increase. Fuel costs increased from 8.1% to 9.3% of revenues due mainly to a 21% increase in average fuel prices, partially offset by the increase in the percentage of owner-operator tractors. In April 1996, the Company began efforts to recover the increased cost of fuel from customers via the use of fuel surcharges. The higher average fuel prices, net of fuel surcharges collected from customers, resulted in a $.09 per share decrease in earnings for the nine months ended September 30, 1996 compared to the same period of 1995. The Company cannot predict whether the higher fuel prices will continue or the extent to which fuel surcharges will be collected to offset such increases. Supplies and maintenance decreased from 8.9% to 8.5% of revenues due primarily to the increased percentage of owner-operator tractors and the increase in logistics transportation revenues. Taxes and licenses decreased from 8.7% to 8.1% of revenues due primarily to the increased percentage of owner-operators, increase in logistics revenues, and refunds of state sales taxes. Depreciation decreased from 10.7% to 10.1% of revenues due principally to the increased percentage of owner-operator tractors, increased tractor utilization, and the effect of an increase in the estimated salvage value of certain trailers effective April 1995. Other operating expenses changed from (1.1%) to (.6%) of revenues mainly due to a decrease in gains realized on the sale of revenue equipment to third parties. The Company's effective income tax rate (income taxes as a percentage of income before income taxes) was 39.0% for the nine month periods ended September 30, 1996 and 1995. 10 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Page Number or Incorporated Number Description by Reference to 27 Financial Data Schedule Page 12 of sequentially numbered pages (b) Reports on Form 8-K - None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WERNER ENTERPRISES, INC. Date: November 13, 1996 By: /s/John J. Steele John J. Steele Vice President, Treasurer and Chief Financial Officer Date: November 13, 1996 By: /s/James L. Johnson James L. Johnson Corporate Secretary and Controller 11 EX-27 2
5 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 30,164 0 70,950 0 0 122,823 564,649 137,401 550,071 68,610 0 0 0 387 337,343 550,071 474,698 474,698 0 426,580 (1,104) 0 1,610 47,612 18,569 29,043 0 0 0 29,043 .77 .77
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