-----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, F4E1qhcUA/xQLFHLxRU2j0zseAC6PI6wVvw69iI7TYULI+D+4WNXUFL3txe6U8vn C83K4BaUOk+qY3PbIPsABA== 0000793074-98-000014.txt : 19981116 0000793074-98-000014.hdr.sgml : 19981116 ACCESSION NUMBER: 0000793074-98-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WERNER ENTERPRISES INC CENTRAL INDEX KEY: 0000793074 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 470648386 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14690 FILM NUMBER: 98747975 BUSINESS ADDRESS: STREET 1: 14507 FRONTIER ROAD STREET 2: P O BOX 45308 CITY: OMAHA STATE: NE ZIP: 68145 BUSINESS PHONE: 4028956640 10-Q 1 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, 1998 0-14690 WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter) NEBRASKA 47-0648386 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 14507 FRONTIER ROAD POST OFFICE BOX 45308 OMAHA, NEBRASKA 68145-0308 (402)895-6640 (Address of principal (Zip Code) (Registrant's telephone number) executive offices) __________________________________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] As of October 31, 1998, 47,434,351 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, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. 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, 1997). Consolidated Statements of Income for the Three Months Ended September 30, 1998 and 1997 Page 3 Consolidated Statements of Income for the Nine Months Ended September 30, 1998 and 1997 Page 4 Consolidated Condensed Balance Sheets as of September 30, 1998 and December 31, 1997 Page 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1998 and 1997 Page 6 Notes to Consolidated Financial Statements as of September 30, 1998 Page 7 2 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended (Amounts in thousands, except per share data) September 30 - ------------------------------------------------------------------------- 1998 1997 - ------------------------------------------------------------------------- (Unaudited) Operating revenues $219,715 $200,237 --------------------- Operating expenses: Salaries, wages and benefits 83,421 71,326 Fuel 13,766 16,060 Supplies and maintenance 18,436 16,588 Taxes and licenses 17,075 14,511 Insurance and claims 5,523 4,994 Depreciation 20,604 18,338 Rent and purchased transportation 34,278 35,399 Communications and utilities 2,814 2,123 Other (2,701) (2,129) --------------------- Total operating expenses 193,216 177,210 --------------------- Operating income 26,499 23,027 --------------------- Other expense (income): Interest expense 1,242 926 Interest income (446) (385) Other 33 24 --------------------- Total other expense 829 565 --------------------- Income before income taxes 25,670 22,462 Income taxes 9,755 8,263 --------------------- Net income $ 15,915 $ 14,199 ===================== Average common shares outstanding (Note 1) 47,658 47,876 ===================== Earnings per share (Note 1) $ .33 $ .30 ===================== Diluted shares outstanding (Note 1) 47,846 48,125 ===================== Diluted earnings per share (Note 1) $ .33 $ .30 ===================== Dividends declared per share (Note 1) $ .024 $ .020 =====================
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WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended (Amounts in thousands, except per share data) September 30 - ------------------------------------------------------------------------- 1998 1997 - ------------------------------------------------------------------------- (Unaudited) Operating revenues $631,100 $565,921 --------------------- Operating expenses: Salaries, wages and benefits 237,403 205,234 Fuel 42,662 50,044 Supplies and maintenance 53,159 47,081 Taxes and licenses 49,606 42,438 Insurance and claims 18,146 16,245 Depreciation 60,435 53,562 Rent and purchased transportation 100,470 96,051 Communications and utilities 7,922 6,244 Other (8,387) (5,507) --------------------- Total operating expenses 561,416 511,392 --------------------- Operating income 69,684 54,529 --------------------- Other expense (income): Interest expense 3,486 1,961 Interest income (1,296) (1,099) Other 74 89 --------------------- Total other expense 2,264 951 --------------------- Income before income taxes 67,420 53,578 Income taxes 25,620 19,398 --------------------- Net income $ 41,800 $ 34,180 ===================== Average common shares outstanding (Note 1) 47,786 47,698 ===================== Earnings per share (Note 1) $ .87 $ .72 ===================== Diluted shares outstanding (Note 1) 48,055 47,895 ===================== Diluted earnings per share (Note 1) $ .87 $ .71 ===================== Dividends declared per share (Note 1) $ .068 $ .060 =====================
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WERNER ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) September 30 December 31 - --------------------------------------------------------------------------- 1998 1997 - --------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 21,083 $ 22,294 Accounts receivable, net 87,473 93,461 Prepaid taxes, licenses and permits 2,945 8,405 Other current assets 26,824 21,632 ---------------------- Total current assets 138,325 145,792 ---------------------- Property and equipment 779,429 698,099 Less - accumulated depreciation 195,661 176,253 ---------------------- Property and equipment, net 583,768 521,846 ---------------------- $722,093 $667,638 ====================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 35,955 $ 44,167 Insurance and claims accruals 22,600 22,161 Accrued payroll 11,859 9,116 Income taxes payable 2,369 6,983 Other current liabilities 10,011 9,364 ---------------------- Total current liabilities 82,794 91,791 ---------------------- Long-term debt 80,000 60,000 Insurance, claims and other long-term accruals 30,301 29,329 Deferred income taxes 100,827 91,400 Stockholders' equity 428,171 395,118 ---------------------- $722,093 $667,638 ======================
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WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended (In thousands) September 30 - --------------------------------------------------------------------------- 1998 1997 - --------------------------------------------------------------------------- (Unaudited) Cash flows from operating activities: Net income $ 41,800 $ 34,180 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 60,435 53,562 Deferred income taxes 9,427 7,934 Gain on disposal of operating equipment (9,624) (6,006) Insurance, claims and other long-term accruals 972 58 Tax benefit from exercise of stock options 372 1,540 Changes in certain working capital items: Accounts receivable, net 5,988 (24,511) Prepaid expenses and other current assets 268 1,828 Accounts payable (8,212) 7,934 Other current liabilities (967) 9,298 ---------------------- Net cash provided by operating activities 100,459 85,817 ---------------------- Cash flows from investing activities: Additions to property and equipment (180,325) (151,993) Proceeds from sales of property and equipment 67,592 35,689 ---------------------- Net cash used in investing activities (112,733) (116,304) ---------------------- Cash flows from financing activities: Proceeds from issuance of long-term debt 20,000 30,000 Dividends on common stock (3,063) (2,856) Repurchases of common stock (7,161) - Stock options exercised 1,287 2,784 ---------------------- Net cash provided by financing activities 11,063 29,928 ---------------------- Net decrease in cash and cash equivalents (1,211) (559) Cash and cash equivalents, beginning of period 22,294 22,136 ---------------------- Cash and cash equivalents, end of period $ 21,083 $ 21,577 ====================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 2,627 $ 1,872 Income taxes 20,029 8,043
6 WERNER ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Common Stock Split On May 13, 1998, the Company issued shares for a five-for-four common stock split effected in the form of a twenty-five percent (25%) stock dividend to stockholders of record at the close of business on April 27, 1998. 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) Committed Credit Facilities In September 1998, the Company established 364-day committed credit facilities with two financial institutions totaling $30 million. Borrowings under these credit facilities bear variable interest based on the London Interbank Offered Rate (LIBOR) or, at the Company's option, the financial institution's base lending rate. No borrowings were outstanding under these credit facilities as of September 30, 1998. The Company borrowed $10 million under one of these facilities on November 5, 1998. (3) Commitments As of September 30, 1998, the Company has commitments for capital expenditures of approximately $52,000,000. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This report contains forward-looking statements which are based on information currently available to the Company's management. Actual results could differ materially from those anticipated in forward-looking statements as a result of a number of factors, including, but not limited to, those discussed in Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition", of the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Year 2000 Issue: In January 1997, the Company began conducting a comprehensive review of its Year 2000 issues and has since completed its review of information technology (IT) systems. Most of the Company's critical software programs have been developed internally, with the remainder having been purchased from and maintained by software vendors. The Company completed substantially all of its conversion of internally developed software programs to Year 2000 compliance in September 1998. The costs of converting these programs was not material. The Company is now working with vendors to verify compliance of vendor-supplied software programs, and has also begun evaluating compliance of non-IT systems. The following is an estimate of the status of the Company's IT systems and non-IT systems:
Year 2000 Modifications being Compliant performed Internally-developed IT systems 95% 5% Vendor-supplied IT systems 70% 30% Non-IT systems 30% 70%
Based on information currently available, the Company believes that with the appropriate modifications to vendor-supplied software programs, the Year 2000 issue will not pose significant operational or administrative problems for the Company. The cost of such modifications is not expected to be material. The Company will continue to evaluate the Year 2000 readiness of third parties (primarily vendors and customers) with whom the Company has material relationships. The Company can not presently estimate the effect on its results of operations, liquidity, and financial condition should material vendors and customers fail to become Year 2000 compliant. If the Company believes it is likely that a material vendor or customer will not achieve Year 2000 compliance, the Company will develop a contingency plan at that time. Financial Condition: During the nine months ended September 30, 1998, the Company generated cash flow from operations of $100.5 million. The Company made long-term borrowings of $20.0 million, which, along with the cash flow from operations, enabled the Company to make net property additions, primarily revenue equipment, of $112.7 million, repurchase common stock of $7.2 million and pay common stock dividends of $3.1 million. The Company also established $30 million of committed credit facilities during the third quarter of 1998. See Note 2 of the Notes to Consolidated Financial Statements. If the Company continues to grow at its current rate (as 8 described below), additional financing activities may occur. Based on the Company's strong financial position, management foresees no significant barriers to obtaining sufficient financing, if necessary, to continue with its growth plans. The Company's long-term debt to equity ratio at September 30, 1998 was 18.7%, compared with 15.2% at December 31, 1997. Results of Operations: Three Months Ended September 30, 1998 and 1997 - ---------------------------------------------- Operating revenues increased 10% for the three months ended September 30, 1998, compared to the same period of the prior year, primarily due to a 10% increase in the average number of tractors in service. Revenue per mile, excluding fuel surcharges, increased 1% compared to third quarter of 1997 due to rate increases. These increases were partially offset by lower revenues from logistics transportation services. Operating expenses, expressed as a percentage of operating revenues, were 87.9% for the three months ended September 30, 1998, compared to 88.5% for the three months ended September 30, 1997. The Company's decrease in logistics transportation services contributed to a shift in costs from the rent and purchased transportation expense category to several other expense categories, as described below. Salaries, wages and benefits increased from 35.6% to 37.9% of revenues due primarily to a decrease in logistics revenues, higher employee health care costs in 1998 and favorable workers' compensation claims experience in the third quarter of 1997. At times, there have been shortages of drivers in the trucking industry, particularly the medium-to-long haul segment. The Company anticipates that the competition for qualified drivers will continue to be high, and cannot predict whether it will experience shortages in the future. If such a shortage were to occur and increases in driver pay rates became necessary to attract and retain drivers, the Company's results of operations would be negatively impacted to the extent that corresponding freight rate increases were not obtained. Fuel decreased from 8.0% to 6.2% of revenues, due mainly to significantly lower average fuel prices during the quarter compared to the same quarter of the prior year. Taxes and licenses increased from 7.2% to 7.8% of revenues due to refunds and state sales tax incentives in the prior year period, and lower logistics revenues in the current year. Depreciation increased from 9.2% to 9.4% of revenues due primarily to the decrease in logistics revenues. Rent and purchased transportation decreased from 17.7% to 15.6% of revenues due primarily to the Company's decrease in logistics transportation services. The Company's effective income tax rate (income taxes as a percentage of income before income taxes) was 38% and 36.8% for the three month periods ended September 30, 1998 and 1997, respectively. The effective income tax rate for the 1997 period was lower than normal due to favorable settlement of income tax issues. Nine Months Ended September 30, 1998 and 1997 - --------------------------------------------- Operating revenues increased by 12% for the nine months ended September 30, 1998, compared to the same period of the previous year, primarily due to an 11% increase in the average number of tractors. Revenue per mile, excluding fuel surcharges, increased 1% compared to the first nine months of 1997 due to rate increases. These increases were partially offset by lower revenues from logistics transportation services. 9 Operating expenses, expressed as a percentage of operating revenues, decreased to 89.0% for the nine months ended September 30, 1998, compared to 90.4% for the same period of 1997. Salaries, wages and benefits increased from 36.3% to 37.6% of revenues due primarily to a decrease in logistics revenues and higher employee health care costs in 1998. Fuel costs decreased from 8.8% to 6.8% of revenues due mainly to lower average fuel prices during the first nine months of 1998. Taxes and licenses increased from 7.5% to 7.9% of revenues due primarily to the decreased revenues from logistics services and refunds and favorable development of state tax issues during the prior period. Rent and purchased transportation decreased from 17.0% to 15.9% of revenues due primarily to the Company's decrease in logistics transportation services. Other operating expenses changed from (1.0%) to (1.3%) of revenues mainly due to an increase in gains on sales of revenue equipment to third parties resulting primarily from an increase in the number of units sold. The Company's effective income tax rate was 38.0% and 36.2% for the nine month periods ended September 30, 1998 and 1997, respectively. The effective income tax rate for the 1997 period was lower than normal due to favorable settlement of income tax issues. 10 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Incorporated Number Description by Reference to 11 Statement Re: Computation of Per Share Earnings Filed herewith 27 September 30, 1998 Financial Data Schedule Filed herewith (b) Reports on Form 8-K. A report on Form 8-K, filed July 22, 1998, regarding a news release on July 16, 1998, announcing the Company's operating revenues and earnings for the second quarter ended June 30, 1998. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WERNER ENTERPRISES, INC. Date: November 13, 1998 By: /s/John J. Steele John J. Steele Vice President, Treasurer and Chief Financial Officer Date: November 13, 1998 By: /s/James L. Johnson James L. Johnson Corporate Secretary and Controller 12 EX-11 2
EXHIBIT 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS ----------------------------------------------- (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30 September 30 -------------------- ------------------ 1998 1997 1998 1997 -------------------- ------------------ Net income $15,915 $14,199 $41,800 $34,180 ==================== ================== Average common shares outstanding 47,658 47,876 47,786 47,698 Common stock equivalents (1) 188 249 269 197 -------------------- ------------------ Diluted shares outstanding 47,846 48,125 48,055 47,895 ==================== ================== Earnings per share $ .33 $ .30 $ .87 $ .72 ==================== ================== Diluted earnings per share $ .33 $ .30 $ .87 $ .71 ==================== ==================
(1) Common stock equivalents represent the dilutive effect of outstanding stock options for all periods presented. EX-27 3 SEPTEMBER 30, 1998 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 21,083 0 87,473 0 0 138,325 779,429 195,661 722,093 82,794 0 0 0 483 427,688 722,093 631,100 631,100 0 561,416 (1,222) 0 3,486 67,420 25,620 41,800 0 0 0 41,800 .87 .87
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